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[[underlined]] REPORT OF THE INVESTMENT POLICY COMMITTEE [[/underlined]]

Mr. McHenry introduced the following reports of the Investment Policy Committee. In its second meeting, held on January 19, the Committee discussed alternate strategies in light of the investment climate following "Black Monday." Mr. McHenry added, though, 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, he stated, the endowment performed slightly better than the market averages.

In discussion it was noted that the Committee's next meeting will focus on setting explicit guidelines as to the balance between equities and fixed income instruments within the portfolio. Mr. Adams mentioned that the staff is considering proposing at some future date real property as an investment option.

* * * * *

The autumn meeting of the Investment Policy Committee was held in New York on Friday, November 13, 1987. In attendance were Chairman Barnabas McHenry, Donald Moriarty, Charles H. Mott, William R. Salomon, and Jane Mack Gould. Also present were Treasurer Ann R. Leven and Assistant Treasurer John R. Clarke. Mr. Adams called during the meeting to register his concern over the ratio of equities in the Fund.

The Chairman convened the meeting at 3:00 p.m. and welcomed the members of the Committee. He then called upon Miller, Anderson & Sherrerd (MAS) to make their presentation. Representing MAS was Mr. Jay Sherrerd, Mr. Daniel Forrestal, and Mr. James Kichline who has recently joined the firm.

Mr. Forrestal presented the performance statistics of the portfolio versus several standard indices. He pointed out that the portfolio's relatively poor performance (16.10% return versus 51.52% return for the Dow for the year ending September 30, 1987) was due to a premature moving into cash from equities, a combination of under-weighting in energy and an over-weighting in financial stocks, and the effects of South Africa-free exposure. While MAS had been reallocating assets to the fixed income sector through September 30, there has been a modest increase in equity exposure since the October market decline. Fixed income instruments have