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[[underlined]] RESOLUTION ON INVESTMENT OF CURRENT FUNDS [[/underlined]]

As indicated by the Balance Sheet chart included in the Financial Report, the current funds of the Institution have grown considerably over the last two years, due primarily to an increase in the unexpended Restricted Funds balance, additions to Unrestricted Funds from favorable operating results, and a growing amount of [[underlined]] Smithsonian [[/underlined]] Magazine pre-paid subscriptions.

A portion of the current funds are held in the Special Endowment Fund, managed by Davis, Palmer & Biggs, under the supervision of the Investment Policy Committee; the market value of this fund was $1,285,000 on March 31, 1974. A far larger portion of current funds, however, is kept in cash and short-term investments -- $8,423,600 as of March 31, 1974. The actual cash balance is kept as low as possible, consistent with payroll and other operating needs, and the remainder is invested by the Treasurer in short-term investments (staggered maturities of one year or less) consisting of Bank Certificates of Deposit, high-grade commercial paper, and debt of U.S. Government instrumentalities. As of March 31, 1974, $7,100,000 was invested with a weighted average maturity of 116 days, an annual rate of return of $575,000 and an annual yield of 8.4%. For FY 1974 as a whole, income should total over $400,000.

The current funds of the Institution have included such short-term investments since 1947. The Treasurer maintains these investments under his responsibility to manage and account for current funds. Due to the increasingly large amounts of money in these short-term investments,