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respective divisions of the Museum, emphasizing the increasing significance of both highly focussed research projects (which often emanate from vague interests and sometimes serendipitous origins) and interdisciplinary approaches to research which lead to coordinated forms of dissemination and to broader themes of American history and culture.  At the conclusion of the Committee's formal meeting Mr. Kennedy led the members on an analytical tour of certain exhibitions in the Museum.

Moving into an executive session with selected staff, the Committee considered in detail a proposal to recommend a Regents' policy on the periodic rotation of the Institution's independent auditors.  The Committee expressed an interest in learning about the practices and experiences of a variety of quasi-public, not-for-profit institutions.  After discussion the Committee concluded that it would be prudent to schedule further consideration of these matters approximately 1 1/4 years prior to the end of the current auditors' tenth year at the Smithsonian, with a goal of making a recommendation to the Regents at a subsequent meeting of the Board.

REPORT OF THE PERSONNEL COMMITTEE

In a letter to the Chancellor the Personnel Committee reported that they had reviewed the financial interests statements of the executive staff of the Institution and they had found no conflict of interest whatsoever.  The Committee also discussed a report of the General Counsel/Ethics Counselor entitled "Submission and review of Forms SI-1085, 'Confidential Statement of Employment and Financial Interests,' for Calendar Year 1986," from which the Committee agreed that the financial reporting procedures for those key staff who must report have functioned in accordance with established guidelines.

REPORT OF THE INVESTMENT POLICY COMMITTEE

The Investment Policy Committee met on November 13, 1987.  After a discussion with each of the investment managers on how they had fared during the recent decline in the stock market, the Committee concluded that the present managers were doing a good job.  Divestment as mandated by the Regents was complete as of the week of November 3.

The Committee held a special meeting on January 19, 1988 to discuss the overall asset strategy for the entire portfolio in light of the investment climate following "Black Monday," October 19, 1987.  It was noted that the Institution's endowment funds had ended the calendar year at about the same value they had at the beginning of the year.  In the final analysis, the endowment performed slightly better than the market averages.

The Committee's next meeting will focus on setting explicit guidelines as to the balance between equities and fixed income instruments within the portfolio.  The staff is considering proposing at some future date real property as an investment option.

Addendum: The Status of the Endowment

The Institution's pooled endowment fund finished fiscal year 1987 with a market value of $232.8 million.  This compares to a market value of