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

Mr. Hohenlohe summarized the following report which had been distributed in advance of the meeting:

*  *  *  *  * 

As of June 30, 1983, the market value of the Smithsonian Endowment Funds under outside management was $127,426,000, compared to $114, 952,000 on March 31, 1983, and $77,411,000 on June 30, 1982. The increase in market value of $12,474,000 over the last quarter consisted of: (1) interest and dividend income of $576,000 in excess of total withdrawal income of $959,000; (2) new money of $136,000 transferred to Batterymarch; and (3) market appreciation of $10,803,000, or +9.4% on March 31, 1983 assets. Total return performance (including interest/dividends as well as market appreciation) by individual manager is shown below for various periods ending June 30, 1983; returns for periods in excess of one year are shown on an annualized basis: 

[[table, 6 columns]]
--- | --- | [[underlined]]Annualized [[/underlined]]
--- | [[underlined]] Last Quarter | Last Year | Last 2 Years | Last 3 Years | Last 5 Years [[/underlined]]

Batterymarch | +13.9% | +68.3% | +26.3% | +27.3% | +22.1%
Fiduciary Trust | +12.0% | +64.6 % | +21.3% | +22.5% | +20.7%
Torray Clark | [[underlined]]+6.5% | +62.6% | +24.0% | +26.7% | +21.8%[[/underlined]]
Composite SI | +11.5% | +65.4% | +23.4% | +24.8% | +20.4%*

DJIA | +0.3% | +58.0% | +18.2% | +18.5% | +14.6% 
S&P 500 | +11.0% | +61.0% | +19.4% | +19.8% | +18.0%
Balanced Fund** | +9.2% | +53.7% | +19.2% | +18.0% | +16.1% [[/table]]

With the exception of Torray's performance in the last quarter which was hampered by their reduced participation in equities (45% of portfolio), the managers have again outperformed the averages in the period measured. Total return performance of all Smithsonian endowments over the past five years exceeds an annual return of 20%. The cumulative performance of the three managers plotted against the S&P 500 is shown on Chart B, while

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*Includes BEA from 6/30/78 - 12/30/79.
**Based on S&P 500 (80,4%), Salomon Brothers Index (11.0%), and Treasury Bills (8.6%), reflecting historic asset mix of SI Composite.