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which complicated and protracted the negotiations. It was noted that there would be further discussion of this matter at the May 6, 1985 meeting of the Board of Regents. Reference was made to a legal opinion that Marriott-LeRoy's counsel submitted on March 19, 1985.

Dr. Robinson gave the Committee a brief overview of the Zoo and with the assistance of his staff led the Committee on a tour of both the Great Ape House and the Health and Research Facility. Throughout the tour emphasis was placed on the Zoo's commitment to the preservation of zoological spices through a variety of programs in reproductive physiology, health care and pathology, and animal behavior studies. It was noted that the extraordinary advances in zoological veterinary medicine in the last decade have made the ned for a new veterinary hospital and enlarged laboratory space at the Zoo particularly acute.

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

The Regents discussed a letter received from Congressman Clay regarding Smithsonian investments in South Africa. It was noted that the Smithsonian has no direct investments in South Africa, though it hold common stock in 47 companies which do business in South Africa. Of the 47, all but 14 have signed the Sullivan Principles. The Regents expressed grave concern regarding South Africa's policy of apartheid. Following much discussion, it was decided that non-signatories should be queried as to their reasons for not signing. Miss Leven note that, as instructed by the Investment Policy Committee, the Institution will vote all proxies with special attention to matters pertaining to South Africa and other social issues. The question of South African investments will be reviewed again at the next meeting of the Regents.

The Committee reported on its April 9, 1985 meeting which began with a lengthy discussion of the Institution's approach to investments in companies doing business in South Africa. While the Committee viewed South African investments with concern, there was some hesitation about moving precipitately in this regard since this might be regarded as an official shift of position in light of the Smithsonian's Federal status. The consensus of the Committee was that the choice of stocks and bonds should continue to be made primarily on established investment criteria.

The Committee also discussed the Smithsonian's pay rate on endowment funds for fiscal year 1986 and recommended to the Regents a payout rate equal to 5% of the per share value averaged over the five years ending December 31, 1984. This translates to $8.27 applicable to all unrestricted and restricted shares. The application of %5 on all shares is recommended for only one year and to be reviewed one year hence. This discussion was followed by investment reviews with Fiduciary Trust, Batterymarch, and the Nova Fund.

With regard to financing alternatives for the new NASM restaurant, the Committee recommended -- from a purely business viewpoint -- borrowing construction funds from a commercial bank with a view to subsequently refinancing the facility via a tax-exempt bond issue. Should a tax-exempt issue be out the the question for non-financial
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