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This shows that since inception, only one fund--Davis, Palmer & Biggs--has performed as well as the S&P's 500; none of our managers have outperformed the Dow Jones Industrial Average, although as recently as December 31, 1975, Davis, Palmer's fund led this market index.

Other comparisons of performance of the three managers with those of some 80 similar funds of non-profit institutions show a similar picture, with Davis, Palmer & Biggs being the only one of the three managers to perform better than the median of the 80 funds over the three calendar years 1973 - 1975. The performance of T. Rowe Price appears to have been most seriously hurt by the recent decline in the high price-earnings multiples of growth stocks which they have long favored, and also by their commitment to equities during the market decline of 1973 and 1974. Thorndike, Doran, Paine & Lewis also maintained a high equity commitment during the market decline and appears also to have suffered somewhat from choices of individual securities. 

In general, all three managers are maintaining a positive outlook on the stock market for at least the remainder of 1976 and probably longer. The question of providing more fixed or limiting guidelines for the managers was discussed at some length, and the Committee concluded that it would be best that the managers retain their present broad authority, in the same degree as originally stated at the beginning of their responsibilities with us. On the other hand, it is planned to communicate further with the managers in the immediate future to make sure there is no misunderstanding of the income needs or investment objectives of the Institution.