The value of Kamehameha Schools' endowment plunged by more than $1.7 billion in four months due to the meltdown in the nation's financial markets.

The charitable trust said the value of its investments portfolio and real estate holdings fell 18 percent, to $7.7 billion, between June 30 and Oct. 31.

The declines reverse a stellar 2008 fiscal year when the trust's endowment increased by $367.9 million to $9.44 billion.

"While the overall diversification of our portfolio enabled us to weather the initial volatility of the 2008 equity markets, we are by no means immune to the effects of the dramatic fluctuations triggered by the U.S. and global financial challenges that unfolded in the last half of the year," said Kirk Belsby, Kamehameha Schools vice president for endowment.

Kamehameha Schools is hardly alone among the multibillion-dollar endowments affected by the turmoil in the financial markets.

Last month, Harvard University said its endowment dropped by 22 percent, or about $8 billion, over a four-month period while Yale University said the value of its investments dropped by $5.9 billion, or about 25 percent.

The State of Hawai'i Employees Retirement System saw the value of its investment portfolio drop by about $1 billion to about $9 billion since June.

"What began as an apparent cyclical downturn in the financial markets has become a world economic crisis with ramifications that reach far beyond Wall Street," Kamehameha Schools spokeswoman Ann Botticelli said.

Founded by the 1883 will of Princess Bernice Pauahi Bishop, the Kamehameha Schools is a tax-exempt charity that educates children of native Hawaiian ancestry. The trust is one of the nation's wealthiest charities and is the state's largest private landowner.

The investment downturn is not expected to have a severe impact on Kamehameha Schools' educational spending policy. That policy is based not on single-year returns, but on a five-year rolling average of the value of Kamehameha Schools' endowment.

For the fiscal year ending June 30, Kamehameha Schools said it spent $273 million on its educational programs, an increase of $23 million during the year-earlier period.

During the same period, the trust said it served more than 38,100 students, which represents an increase of 2,100 or 7.2 percent.

During the past five fiscal years, the estate said it has spent more than $1.1 billion on educational programs.