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Smithsonian Institution    1366

It may be noted that in the Consolidated Fund which holds our investments for the general purposes of the Institution, investment to produce income is definitely necessary since the endowment is smaller than the needs of the Institution. In the Freer Fund, on the other hand, income is ample for the stipulated purposes, so that investment there permits holdings of a larger proportion of growth stocks that at the present time may return a smaller yield, but that in future promise a greater result. In the general overall picture, approximately 90% of the stocks now held in both Smithsonian funds are in conventional fields that are yielding good income, leaving 10% in the growth group. Under existing circumstances this is held to be a reasonable situation. 

Last year I reported that one-half of our holdings in the Iowa Apartment House Company, received originally under the Walcott bequest, were recalled for redemption. I am pleased to report that the entire number of shares that we hold have now been redeemed, with the result that an investment carried on our books at a valuation of $29,610, has now returned to us a total redemption of $77,903.91, or a profit over book value of $48,293.91. 

In the Walcott bequest, the Institution received a considerable interest in real estate in the Philadelphia area. From time to time there has been opportunity to sell these holdings until finally there remained only 1/3 interest in an undeveloped tract of 14.49 acres in Bryn Mawr. This was entirely unproductive of income. We have just concluded agreement with the other participants in ownership to purchase our 1/3 share for a little over $9,000. The papers on this are still in process so that we do not have an exact figure as there will be a certain commission to be paid to cover costs in the transaction. This closes out the real estate holdings under this bequest so that now all these funds may be invested where they will yield income.