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possible to recommend later that $500,000 or more be added to our Endowment Funds or perhaps held to insure the financing of the West Court construction.

[[underlined]] PRIVATE RESTRICTED FUNDS [[/underlined]]

Exhibit B also sets forth results of our Restricted Funds.  These include the Freer Gallery operations which derive support largely from private funds, (i.e., mainly from the Freer Endowment Fund).  "Other Restricted Funds Supported by Endowment Income" include some 55 varied funds, established principally for scientific research purposes and deriving their support entirely from the Consolidated Endowment Fund, and also the Underwater Oceanographic Research activity funded by income from the Seward Johnson Endowment Fund.  Endowment income for all these funds ($1,721,000 in FY 1975) has thus far held up well under the total return principal of utilizing 4 1/2% of the 5-year valuation average regardless of actual interest and dividend yield, but will fall off in the next year or more because of the drop in these fund valuation averages resulting from present depressed securities markets.

"All Other Restricted Funds" accounting for the bulk of our restricted funds, includes a huge number of funds, large and small, for varied purposes.  The larger ones in this category include those for Cooper-Hewitt Museum, Archives of American Art, Hillwood, the new Maritime Hall in NMHT, Zoo Parking receipts, various museum "discretionary funds," and funds donated for a number of new exhibits.  Expenditures from all of these restricted funds are, of course, limited to the amount of income received for the specified purposes.  There are strong indications that new gifts totalling