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SMITHSONIAN INSTITUTION 1299

business situation throughout the country.  While safety for our endowments is naturally the prime factor in our investments, the necessity for operating income was brought out during the discussion.

The Secretary has been careful in expenditures to the end that he has accumulated a cash surplus of approximately $65,000 to serve as a cushion for any unforeseen decrease in return on our capital.

You will recall that our investments are handled in two main groups, that of the Freer Fund, segregated because of its size, and that of the Consolidated Fund which includes the other funds of the Institution. 

Sales and purchases under the two funds are listed in memoranda on the table. Very little change in total value of the portfolio is indicated through these operations. Total gains in book value under the Freer Fund have been $34,953.60 and losses $23,376.54, leaving a plus balance of $11,577.06. Similar figures for the Consolidated Fund show gains of $4,532.35 and losses of $14,193.92, leaving a minus figure of $9,661.49. The total operation in both funds has resulted in a total gain in book value of $1,915.49.

The changes in income, however, offer an interesting picture. The various stocks and certificates sold on behalf of the Freer Fund total $951,454.15, with an estimated annual income of $26,130.25. The purchases under the Freer Fund to the amount of $951,478.43 have an estimated income of $31,789.00, an increase of $5,658.75. Under the Consolidated Fund, sales to a total of $209,979.47 had an estimated income of $7,267.25. Purchases amounting to $201,437.03 have an estimated income of $9,422.00, an increase of $2,154.75. Thus there has been an estimated increase of $7,813.50 in the annual yield of the two funds.

The investment of $500,000 from the cash account of the Institution in the United States Treasury Certificates of Indebtedness was continued. The yield of $5,830.48 

A.W.