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[[underline]] REPORT OF THE INVESTMENT POLICY COMMITTEE [[/underline]]

At the request of Mr. Burden, Mr. Wheeler summarized the following report.

The Smithsonian Investment Policy Committee met with the three investment managers on November 5, 1975, and reviewed their performance since their appointment on July 1, 1971, as well as their views on economic conditions and the future investment climate. Since that meeting, updated performance evaluation figures through December 31, 1975 have been received and are contained in the attached table. The total market value of the funds, including the Special Endowment Fund, which is now part of the Smithsonian Consolidated Endowment, was $37,450,000 on December 31, 1975. If it is assumed that the equity portion of the security holdings has appreciated in the first 15 days of January at the same rate as the Dow Jones Industrial Average, the market values of the Endowment would now approximate $40,000,000; if adjusted for the $1,500,000 of net withdrawals from the funds (income paid out less new money and interest and dividends added), the resulting market value of $41,500,000 would be about 5-1/2% below the July 1, 1971 starting total market value of $43,897,000.

Since July 1, 1971, when the present managers assumed responsibility, the stock market (as measured by the Dow Jones Industrial Average and the Standard and Poor's 500) has shown almost a complete cycle; the DJIA has gone from 891 on July 1, 1971, up to 1,067, down to 570, and closed on December 31, 1975 at 852, for a net decline of 4% during the four and one-half year period. (As of January 15th the sharp rise has carried the Dow Jones Industrial Average to about 930.) The percentage changes over this period of the endowment funds by manager have been as follows, after adjustments for additions and withdrawals of capital, but without consideration of interest and dividend income: