Viewing page 57 of 272

This transcription has been completed. Contact us with corrections.

- 41 -

or required rates of current dividend and interest income to be achieved, it is the expectation of the Institution, therefore, that these investment portfolios will be managed in such a way that they will both provide for amounts withdrawn and also for long-term growth in portfolio values.

(5) Types of investments utilized by the portfolio manager may include common and preferred stocks, bonds, convertible issues and cash or high-grade, short-term securities for investment reserves. No restrictions are placed on investments in large, medium or small companies, although high risk, speculative situations should be avoided and adequate diversifications should be provided to assist in minimizing portfolio risk. No portfolio manager will invest in more than 5% of any issue, sell securities short, purchase securities on margin, invest in commodities or commodity contracts or employ any similar speculative devices. In addition, the fund will not invest for the purpose of exercising control of management, pledge any securities or make loans except by the purchase of bonds or other obligations of types commonly distributed publicly or privately to financial institutions.

(6) Investment managers will not purchase unregistered stock or non-marketable private placements without the prior approval of the Investment Policy Committee.

(7) Except as mentioned in (6) above, the investment manager will not be required to receive prior approval from the Institution before making purchases and sales. Although the Smithsonian Board of Regents must retain final authority over endowment investments, it will not--except in special circumstances--force investment actions on the part of an investment manager.