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Attachment C

[[underlined]]SMITHSONIAN INSTITUTION[[/underlined]

[[underlined]]INVESTMENT GUIDELINES[[/underlined]

In order to take into account the proposed revision to the total return income payout policy, the Committee reviewed and recommended changes to the guidelines to be provided our investment managers. The proposed new guidelines are as follows:

The investment objective for the Institution's endowment funds is to secure, over the long term, the optimum total investment return (interest and dividend income plus realized and unrealized capital gains) that is commensurate with a reasonable degree of risk and subject to the following qualifications:

(1) Long-term preservation of capital is, of course, an essential need for these funds.

(2) It is expected that any future withdrawals from the funds, other than those outlined in (4) below, will be minimal, and that, on the other hand, there will be modest additions to the endowments from time to time.

(3) It is the intent of the Institution to establish prior to the beginning of each fiscal year (October 1st) dollar maounts to be withdrawn monthly from each manager's portfolio as income to the Institution. In the year beginning October 1, 1978, these amounts will approximate 5% of the market values of the portfolios as of June 30, 1978. It is the desire to increase such withdrawals annually thereafter by amounts at least commensurate with the rise in the Consumer Price Index during the preceding fiscal year.

(4) Achievement of this objective will, of course, require, on a long-term basis, increases in annual market values of "units" of these endowment funds. Without establishing any prescribed equity-bond ratios

Transcription Notes:
Corrected one typo. Ready for review.