The University of Michigan’s long-term investment strategy continues to provide a steady stream of endowment funding, with fiscal year 2016 distributions to the general fund exceeding $300 million for the first time. The total value of the endowment stood at $9.7 billion at the close of the fiscal year, June 30.

The return on investment for the university’s long-term portfolio, which includes the endowment, was -1.36 percent in FY ’16. The market value of the endowment fell to $9.7 billion, a decline from $10 billion the previous year, reflecting the small investment loss and endowment spending, which was partially offset by new endowment gifts.

The 10-year annualized return of 6.7 percent places U-M in the top decile for long-term investment performance among university endowments. This performance has helped sustain and grow the U-M endowment in real terms net of spending.

The figures were presented to the Board of Regents on Thursday during a meeting on the UM-Flint campus.

Distributions from the endowment that help fund university operations totaled $304.3 million in FY ’16, up from $294.5 million the previous year. Over the last 15 years, distributions from the endowment have increased each year and total more than $3.4 billion.

The university’s endowment is a collection of about 9,800 separate endowment funds that provide support for specific purposes such as scholarships, educational programs or professorships. For example, roughly $2 billion, or 21 percent of the endowment, is dedicated for use by the U-M Health System. Another $2 billion is earmarked for student scholarships and fellowships.

Endowment gifts are part of the university’s Victors for Michigan fundraising campaign, which has a goal of raising $4 billion. Donors have made gifts and pledges totaling $3.6 billion so far.

To ensure continuing support for future generations, the endowment funds are invested so part of the annual distribution can provide a steady flow of dollars each year. This long-term approach also is designed to protect and grow the endowment corpus in real terms.

U-M annually distributes 4.5 percent of the endowment’s average market value calculated over the last seven years for operating purposes. Basing the spending on a trailing average market value instead of the current market value allows the university to stabilize endowment distributions so operating budgets are insulated from the volatility in financial markets and receive dependable support over time.

The U-M endowment is ranked the 10th largest among all U.S. universities and third among public universities after two university systems. On a per-student basis, U-M’s endowment is the 84th-largest endowment, much smaller than many private school peers, indicating the U-M endowment supports a much larger number of students.