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emphasize road improvement at Mt. Hopkins, completion of plans for the History and Technology Sixth Floor Library (to house the Dibner gift), renovation of the Arts and Industries Building, and improvements to the yard area south of the original Smithsonian Building.

[[underlined]] PRIVATE UNRESTRICTED FUNDS [[/underlined]]

The current projection for FY 1975 (Exhibit B) shows a $2,100,000 surplus in private unrestricted funds, before designating portions of such surplus to be used for approved construction projects.  This is somewhat higher than the $1,975,000 surplus projected for the last Board of Regents meeting and also higher than last year's figure of $1,890,000.

The upward revision of expected surplus for this year can be attributed principally to the continued growth of our revenue-producing activities (Exhibit C) and particularly to the [[underline]]Smithsonian[[/underline]] magazine which continues to enjoy increasing popularity, both among advertisers and its subscriber-members.  As of December 31, 1974, about 725,000 Associates were receiving the magazine, 200,000 more than the 525,000 subscribers at December 31, 1973.  Advertising revenue also continue to exceed those of comparable periods a year earlier despite the fact that many other magazines are currently showing less favorable results.

Nor are our Museum Shops reflecting the down-trends in the nation's economy.  On the contrary our investments in better merchandise and shop design are resulting in substantially higher sales and earnings with a projected net income of $525,000 this year, more than double the $226,000 earned in FY 1974.

The Product Development Program should produce around $100,000 this year over and above related expenditures due to the enthusiastic acceptance