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[[underlined]] Report of the Investment Policy Committee [[/underlined]]

Mr. Wheeler reported that the Investment Policy Committee held its regular semi-annual meeting with the investment managers on November 2, 1977.  Information on the performance, income and holdings of the endowment funds is contained on the attached table and charts.

AS of September 30, 1977, the total market value of the Smithsonian endowment funds was $46,666,000, compared to $45,908,000 on June 30, 1977, and $43,897,000 on June 30, 1971. During FY 1977, $5,500,000 was added to Unrestricted Endowment (all placed under the management of Davis, Palmer and Biggs).  Including interest and dividend income (i.e., total return), and adjusted for additions and withdrawals of capital, the percentage changes of each fund, as well as the major market indexes, are shown below (performance figures through December 31, 1977, will not be available until the last week of January, 1978):

[[5 column table]]
   | [[underlined]] Last Quarter 6/30/77 - 9/30/77 | Last 9 Mos. 12/31/76 - 9/30/77 | Last Year 9/30/76 - 9/30/77 | Since Inception 6/30/71 - 9/30/77 [[/underlined]]

T. Rowe Price | -1.5% | -6.0% | -4.3% | +2.9%
Davis, Palmer & Biggs | -3.1% | -3.2% | +1.3% | +34.2%
Thorndike, Doran, P&L | [[underlined]] -1.7% | -3.6% | -1.5% | +12.5% [[/underlined]]
Total Smithsonian Consolidated Endowment | -2.3% | -4.3% | -1.3% | +17.0%

[[underlined]] Market Averages [[/underlined]]
DJIA | -6.6% | -13.3% | -11.2% | +19.8%
S&P'S 500 | -3.0% | -7.7% | -5.0% | +18.8%
Value Line | -2.1% | +1.1% | +8.4% | +0.2%

The performance of the three managers for the fiscal year 1977, as well as the quarter ended September 30, 1977, has been equal to or better than the major market averages; only Davis, Palmer and Biggs, however,