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Davis, Palmer & Biggs, currently less fully invested in equities than the other managers, is emphasizing domestic, rather than multi-national investment.  They intend to build up their equity exposure in the months ahead, and are searching for low multiple stocks with low labor costs and good earnings growth which sell at a discount to book value. They currently lean toward stocks of financial and transportation companies.  Thorndike, Doran, Paine & Lewis is more heavily committed to equities with individual stock objectives rather similar to those of Davis, Palmer.

The Committee feels that despite the disappointing performance of T. Rowe Price, and to a lesser extent of Thorndike, Doran, no change in managers should be made at this time.  It was generally felt that the liquidation by institutional holders of the growth stocks favored by T. Rowe Price is probably nearing an end and that there may well be a significant test of the value of these stocks over the next few months.

It was agreed that in the months ahead, planned further additions to endowment of some $2.5 million by September would be directed to the funds managed by Davis, Palmer & Biggs, as has been done with the money transferred so far this year.

The Chancellor commented that the Investment Policy Committee, chaired by William A. M. Burden, keeps in close touch with these funds and their managers.  Mr. Burden feels that our results are comparable to the majority.