Harvard University’s endowment posted its highest return since 1983 in the year ending June 30, 2000, increasing to approximately $19.2 billion on a 32.2 percent return despite an unremarkable year in the broader markets that saw the S&P 500 increase only 7.3 percent.

The return, largely driven by a 155.2 percent return in private equities, which includes venture capital, beat several internal and external benchmarks. It was the second-highest return since Harvard Management Company was created in 1974, eclipsed only by a 43.6 percent return in 1983.

The endowment totaled $14.4 billion at the end of the last fiscal year, June 30, 1999.

Harvard’s endowment is the result of gifts to the University over time as well as investment income from those gifts. In December 1999, the University closed a seven-year capital campaign that set a record in higher education philanthropy by raising $2.6 billion.

Endowment income provides critical long-term financial stability for Harvard’s academic programs. Historically, between 4 percent and 5 percent of the endowment is spent annually on Harvard programs. Endowment income made up about $600 million of Harvard’s roughly $2 billion yearly operating budget in fiscal year 2000. That money provides for the specific activities which donors have endowed over time including financial aid, faculty salaries, and facilities maintenance.

In fiscal 2000, the endowment continued its strong performance, beating investment benchmarks in nine of 11 categories. Returns failed to beat benchmarks only in emerging markets, where the 13.8 percent return was short of the benchmark 15 percent return and in inflation-indexed bonds, which matched the benchmark 7.4 percent.

“Venture capital drove our return this year, but we performed well in all asset classes,” said Jack R. Meyer, president and chief executive officer of the Harvard Management Company.

The endowment’s overall return might have been even higher but for the limited availability of high-quality venture capital investments, which performed very well last year. Other institutions with smaller endowments may very well have seen higher overall growth because similar venture capital investments would have a larger impact.

Over the past five years, the Harvard endowment outperformed the median institutional fund — as measured by the Trust Universe Comparison Service — by 7.4 percent, a difference that has meant an additional $5.9 billion in Harvard’s endowment.

Among other things, endowment income supports Harvard’s generous student financial aid programs, which permit the University to admit qualified students regardless of their ability to pay.

The endowment is not a single fund, but more than 8,600 individual funds, many of them restricted to specific uses — such as support of a research center or the creation of a professorship in a specific subject. The funds are invested by the Harvard Management Company (HMC), established in 1974 to oversee the University’s endowment, its pension and trust funds, and other investments.

Each school within the University uses a combination of income from investments, gifts from fundraising efforts, and tuition to cover the cost of educating students. Tuition from Harvard College, for instance, covers only about two-thirds of the total cost of a Harvard education. Harvard’s reliance on support from its endowment has increased in recent years. Ten years ago, the endowment provided 17 percent of Harvard’s operating budget. Today that figure is about 30 percent.