Treasurer’s Statement

To the Council of the National Academy of Sciences:


This Report of the Treasurer of the National Academy of Sciences presents the financial position and results of operations as well as a review of the endowment and trust activities of our Academy for the year ended December 31, 2007.

NAS Highlights

Development Office Programs

The National Academy of Sciences (NAS) is grateful for the generous support of members, friends, and philanthropic organizations in 2007, support that is vital to our continued success in addressing current and emerging challenges facing not only the scientific community and science policymakers but the well-being and economic prosperity of all our citizens.


In 2007, the NAS received new gifts and pledges totaling $15.18 million, an increase of more than 9.6 percent. The Academy’s fundraising efforts featured a series of notable contributions from individuals and foundations. These contributions have enabled the Academy to pursue important new initiatives.


Highlights of the year’s Development efforts included:

  • The National Academies received 175 gifts and grants from foundations and corporations during 2007. Notable among these are a $10 million commitment from the Cynthia and George Mitchell Foundation to increase the Mitchell Endowment that enables the Academies to undertake projects on the application of science and technology to sustainability and sustainable development; a 4-year, $5,716,027 commitment from the Robert Wood Johnson Foundation to support the Institute of Medicine’s efforts to establish a standing committee on childhood obesity prevention and undertake a series of ad hoc studies; and $2.7 million received from a consortium of funders – the Kavli Foundation, W.M. Keck Foundation, Dow Chemical Company Foundation, GE Energy, General Motors Corporation and Intel Corporation – to support a series of energy studies that will help the nation meet a rising demand for energy while ensuring long-term economic vitality, climate stability, and environmental quality.

  • The Einstein Society, which recognizes donors who have made cumulative gifts of $100,000 or more to the Academies, welcomed five new members in its third year, bringing the total membership to 111 (deceased members not included). The Elkan Blout Society, which honors donors who have made cumulative gifts of $20,000 to $99,999 to the NAS, added two new members, bringing the total membership to 59. And eight individuals joined the Heritage Society in 2007. The 73 members of this planned giving society have bolstered the future of the Academies through estate-based gifts such as bequest intentions and charitable gift annuities.

Endowment and Trust Investment Pool

With the assistance of the Finance Committee, I am responsible for the prudent management of the endowment and trust fund portfolio. The goal of the endowment is to provide stable support for the NAS General Fund, NAS Trust and Award activities, and the Presidents' initiatives within the National Research Council (NRC) program. To achieve this goal, the NAS Council, acting on the recommendation of the Finance Committee, has adopted a spending limitation designed to maintain the purchasing power of the endowment over time by reinvesting a portion of the annual total investment return. The spending limitation caps annual spending at 5 percent of the three-year average market value of the participating funds in the investment pool.


During 2007, the Finance Committee undertook a comprehensive review of its Statement of Investment Policy. The Committee updated the asset allocation guidelines which represent the desired structure and risk tolerance of the Portfolio under normal circumstances and form a basis for the composite market benchmark used to measure comparative performance. This policy was approved by the NAS Council at its June 2007 meeting.



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Treasurer’s Statement consortium of funders – the Kavli Foundation, W.M. Keck Foundation, Dow Chemical Company Founda- tion, GE Energy, General Motors Corporation and Intel Corporation – to support a series of energy To the Council of the National Academy of studies that will help the nation meet a rising demand Sciences: for energy while ensuring long-term economic vital- ity, climate stability, and environmental quality. This Report of the Treasurer of the National Academy of Sciences presents the financial position and results of • The Einstein Society, which recognizes donors who operations as well as a review of the endowment and trust have made cumulative gifts of $100,000 or more to activities of our Academy for the year ended December the Academies, welcomed five new members in its 31, 2007. third year, bringing the total membership to 111 (deceased members not included). The Elkan Blout Society, which honors donors who have made cumu- lative gifts of $20,000 to $99,999 to the NAS, added NAS Highlights two new members, bringing the total membership to 59. And eight individuals joined the Heritage Society Development Office Programs in 2007. The 73 members of this planned giving society have bolstered the future of the Academies The National Academy of Sciences (NAS) is grateful for through estate-based gifts such as bequest intentions the generous support of members, friends, and philan- and charitable gift annuities. thropic organizations in 2007, support that is vital to our continued success in addressing current and emerging challenges facing not only the scientific community and Endowment and Trust Investment Pool science policymakers but the well-being and economic prosperity of all our citizens. With the assistance of the Finance Committee, I am responsible for the prudent management of the endow- In 2007, the NAS received new gifts and pledges totaling ment and trust fund portfolio. The goal of the endowment $15.18 million, an increase of more than 9.6 percent. The is to provide stable support for the NAS General Fund, Academy’s fundraising efforts featured a series of notable NAS Trust and Award activities, and the Presidents' contributions from individuals and foundations. These initiatives within the National Research Council (NRC) contributions have enabled the Academy to pursue program. To achieve this goal, the NAS Council, acting important new initiatives. on the recommendation of the Finance Committee, has adopted a spending limitation designed to maintain the Highlights of the year’s Development efforts included: purchasing power of the endowment over time by reinvesting a portion of the annual total investment return. • The National Academies received 175 gifts and The spending limitation caps annual spending at 5 percent grants from foundations and corporations during of the three-year average market value of the participating 2007. Notable among these are a $10 million com- funds in the investment pool. mitment from the Cynthia and George Mitchell Foundation to increase the Mitchell Endowment that During 2007, the Finance Committee undertook a enables the Academies to undertake projects on the comprehensive review of its Statement of Investment application of science and technology to sustainabil- Policy. The Committee updated the asset allocation ity and sustainable development; a 4-year, guidelines which represent the desired structure and risk $5,716,027 commitment from the Robert Wood tolerance of the Portfolio under normal circumstances and Johnson Foundation to support the Institute of Medi- form a basis for the composite market benchmark used to cine’s efforts to establish a standing committee on measure comparative performance. This policy was childhood obesity prevention and undertake a series approved by the NAS Council at its June 2007 meeting. of ad hoc studies; and $2.7 million received from a 1

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to the market composite benchmark of 14.6% and, for the As a benchmark for the Portfolio’s performance, the ten years ending December 31, 2007, the NAS return is Committee has established a composite measure of 8.6% compared with the market composite benchmark of market indices that is weighted to approximate the 7.7%. allocation guideline for each asset category. The Portfolio benchmark is comprised of the Standard and The next chart presents the investment structure adopted Poor’s 500 (30%), Russell 2000 Index (6%), Standard & by the NAS Finance Committee in 2007 for its asset Poor’s MidCap 400 (6%), MSCI EAFE Index (20%), allocation strategy and compares this guideline to the MSCI Emerging Markets Index (8%), Lehman U.S. portfolio allocation at December 31, 2007. Aggregate Index (12%), Salomon Non-U.S. WGBI Index (3%), and Hennessee Hedge Fund Index (15%). Starting in July 2007, this new composite benchmark was used to Overview of Current Investment Structure Portfolio evaluate the Portfolio’s performance. Guideline Allocation Fixed- U.S. Fixed/Cash 12.0% 9.2% Income: Market values of the Endowment and Trust Investment Non-U.S. Fixed 3.0% 9.2% Pool, after withdrawals, for the years ended December 31, Equities: U.S. Large Cap Funds 25.0% 20.3% 2007 and 2006, are displayed in the following chart: U.S. Small-Mid Cap Funds 12.0% 4.6% Non-U.S.Stocks — Developed 20.0% 24.9% (dollars in thousands) Non-U.S. Stocks — Emerging 8.0% 10.7% 2007 2006 Real Estate Investments 5.0% 3.1% Cash and Fixed-Income Securities $ 80,515 $ 52,291 12.0% 14.9% Hedge Funds Equity Securities 357,530 353,265 3.0% 3.1% Other Alternative Investments $ 438,045 $ 405,556 Total 100.0% 100.0% Total • At the beginning of 2007, the NAS Endowment consisted See Schedule 2-A on page 21 for details of of $405.6 million in assets. During the year, the investments by asset class. Endowment received contributions of $15.3 million, • withdrew funds for programs of $26.8 million, and earned Included in the $438.0 million total market value of investment income of $43.9 million, resulting in an the Endowment and Trust Investment Pool as of ending asset balance of $438.0 million. For the year, the December 31, 2007, are $70.4 million for the portfolio returned 11.2%, compared with a benchmark Institute of Medicine (IOM), $11.8 million for The return of 10.6%. In 2006, the portfolio returned 19.0% National Academies Corporation (TNAC), and $8.8 versus 15.5% for the benchmark. For 2007, a significant million for the Woods Hole Endowment Funds. portion of the returns for the year, both in absolute and TNAC, which is equally owned by the NAS and the relative terms, was due to the international markets, both National Academy of Engineering Fund (NAEF), equities and fixed income. NAS’ hedge funds and foreign owns and operates the Beckman Center (see note 1 to equity holdings performed relatively well and the the financial statements on page 43). increased allocation of non-US fixed income investments • added to the good performance. In addition, Berkshire Withdrawals of $11.7 million were made to fund the Hathaway continued to perform well, returning over 17% President’s Committee, NAS General Fund’s activity, for the year. and prizes and awards for the current period. Additional withdrawals of $15.1 million were made NAS’ portfolio has consistently outperformed the market to fund IOM, Woods Hole, and TNAC activity. benchmarks over a long period. For the five years ending December 31, 2007, the NAS return is 16.0% compared 2

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The 2007 NAS General Fund activity is summarized as Prize and Award Trust Funds follows: Several award trust funds have existed for more than 100 (dollars in thousands) years, while others were established more recently. The Revenue: Home Secretary oversees the nomination process that Unrestricted Endowment $ 5,079 selects award recipients and recommends to the Council Woods Hole Endowment 343 (subject to legal and financial review) changes in the Communications Endowment 175 award cycle, amounts of the honoraria, and any other Annual Giving from Members 284 administrative changes. Membership Dues 160 Annual Meeting 150 Short-Term Investment Interest, Royalties, etc. 8 NAS General Fund $ 6,199 Total Revenue The NAS General Fund accounts for the activities of the Expenses: Council, the Officers, and the Members. The primary Development Office $ 1,096 funding for these activities is received from the NAS Member Services: Unrestricted Endowment, based on the 5% spending rule. Annual Meeting 587 Other 134 For fiscal year 2007, the General Fund revenue totaled Programs/Projects: Office of Exhibitions & Cultural Programs 366 $6.2 million and expenditures totaled $5.3 million, Evolution, Education & Communication 100 resulting in an $875,000 surplus. Comparable figures for Communications Initiative 175 fiscal year 2006 were $5.6 million in revenues, $5.3 Frontiers of Science 212 million in expenditures, resulting in a surplus of Committee on International $319,000. Security & Arms Control 184 Sackler Colloquia 390 The NAS Reserve is the accumulation of prior year Biographies of Women Scientists for surpluses, and one of the anticipated and appropriate uses Middle School Students 125 Committee on Women in Science & of the NAS Reserve is to provide a cushion for ongoing Engineering 25 operation during periods of revenue shortfalls. A balanced InterAcademy Council 144 budget was approved for the fiscal year 2007 General Woods Hole 309 Fund. The remaining balance of the NAS Reserve at Foreign Meetings 120 December 31, 2007 is $3.6 million. The $875,000 surplus President’s Office 130 from fiscal year 2007 will be added to this investment in NAS Executive Office 105 early 2008, for a net NAS Reserve balance of $4.5 NRC Operations 868 million. ISSUES Support 254 $ 5,324 Total Expenses $ 875 Surplus The NAS Council has approved a balanced General Funds budget of $6.0 million for fiscal year 2008. 3

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Last year I reported that we anticipated an agreement with Journal Publications the National Capital Revitalization Corporation (NCRC) to preserve the option to expand the Keck Building over Financial results of the Proceedings of the National the adjacent District of Columbia fire station. While we Academy of Sciences are shown below for the years ended believe that our current option has not yet expired, there is December 31, 2007 and 2006: presently no binding agreement in place for developing (dollars in thousands) the site further. We are continuing to pursue this matter 2007 2006 with the Deputy Mayor’s Office. Revenue: Subscriptions $ 5,856 $ 6,889 The plans for the NAS Restoration Project continue as Author charges 6,605 4,716 scheduled, and we have begun the process to have tax- Other 95 102 exempt financing in place in early 2009 to support this Total $ 12,556 $ 11,707 project. This financing is part of a larger refinancing proposal that will be presented to the Council in great Expense: detail during 2008. Printing $ 6,741 $ 5,991 Other 5,539 5,636 Total $ 12,280 $ 11,627 $ 276 $ 80 Net NRC Highlights Revenues Facilities The two main sources of revenue for the NRC are the NAS owns the following facilities: U.S. government and private / nonfederal entities. The total contract and grant revenue from both of these Keck Center of the National Academies at 500 Fifth • sources totaled $245.7 million in 2007 and $237.9 million St., NW in Washington, D.C. in 2006. National Academy of Sciences Building at 2101 • Constitution Ave., NW in Washington, D.C. U.S. Government Contracts and Grants J. Erik Jonsson Center of the National Academies at • 314 Quisset Dr. in Woods Hole, Massachusetts. NRC activities conducted in response to requests from a Arnold and Mabel Beckman Center at 100 Academy • broad range of U.S. government agencies are funded in Irvine, California (jointly owned with NAEF through cost-reimbursable non-fee contracts and grants. through TNAC). The total amount reimbursed by the U.S. government NAS is leasing the following facilities: agencies in the year ended December 31, 2007, was $178.0 million (see following chart and the Statements of Terrell Place Office Building (two suites) at 575 • Activities on page 41) and in the year ended December Seventh St. NW in Washington, D.C. 31, 2006, was $178.9 million. National Academies Data Center at 8619 Westwood • Center Drive in Vienna, Virginia. National Academy Press Printing Facility at 8700 • Spectrum Drive in Landover, Maryland. 4

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The private and nonfederal revenues were received in the form of contracts and grants ($48.8 million) and other U.S. Government Revenues by Agency (dollars in thousands) Agency for International Development $ 4,019 contributions ($18.9 million). (See Statements of Department of Agriculture 823 Activities on page 41.) Department of Commerce 6,892 Department of Defense: The private contracts and grants decreased from • Department of the Air Force 4,694 $51.5 million in 2006 to $48.8 million in 2007. This Department of the Army 12,493 is due to an overall decrease in the number of private Department of Defense 4,443 awards received. In 2006, NAS received 131 new Department of the Navy 12,279 private awards. In 2007, that number decreased to Department of Education 1,232 Department of Energy 8,191 112. Department of Health and Human Services 15,683 Department of Homeland Security 1,172 The other contributions revenue increased from $7.5 • Department of Housing and Urban Development 359 million in 2006 to $18.9 million in 2007. This in- Institute of Museum and Library Services 52 crease is primarily attributable to a $11.7 million Department of the Interior 3,594 contribution from TNAC to the NRC to be spent on Department of Justice 1,196 programs conducted in whole or in part at the Beck- Department of State 384 man Center in Irvine, CA. Department of Transportation 62,439 Department of Treasury 117 Election Assistance Commission 256 Environmental Protection Agency 6,090 Expenses Executive Office of the President 417 General Accounting Office 178 The NRC programs include funding from government and General Services Administration 40 private sources. Almost all contracts and grants are cost- Marine Mammal Commission 4 reimbursable agreements. Therefore, even if the revenues National Aeronautics and Space Administration 9,342 National Geospatial Intelligence Agency 111 and expenses are not equal in any one given year, the National Science Foundation 15,722 revenues and expenses will be the same over the life of National Security Agency 41 the award. Nuclear Regulatory Commission 335 Smithsonian Institution 15 As in many universities and nonprofit institutions, Social Security Administration 1,230 managing indirect cost expenditures for funding of Veterans Administration 5,181 necessary support services while keeping these costs in Adjustment to Indirect Cost Receivable & Other (1,003) reasonable proportion to program expenditures continues Total U.S. Government Agencies $ 178,021 to be a challenge. Historically, NRC management has successfully maintained a relatively steady relationship In the past ten years, the basic core of NRC programs, between program and support costs, i.e., the growth rate which is represented by the government contracts and of indirect costs was approximately equal to the growth grants, has experienced relatively small percentage rate of direct costs. In 2007, total indirect expenses were changes from one year to the next. In 2007, the NRC $64.9 million compared to an approved budget of $67.9 programs funded by the government decreased 0.5%. In million. As the 2008 program revenues are expected to 2006, the government funded programs had decreased remain consistent with the prior year, the NAS Council 0.5% from the previous year. authorized a 2008 indirect expense budget of $69.3 million in order to maintain the desired relationship Private/Nonfederal Contracts and Grants between indirect and direct costs. This budget includes a 4.0 percent increase in the base salary compensation Private sponsors supplemented government projects and structure in order to maintain a competitive position in the provided for new initiatives by funding $67.7 million of marketplace for hiring and retaining staff. awards in 2007, compared with $59.0 million in 2006. 5

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Related Entities Each year, the overall financial condition of the NAS can be reviewed by taking into account the increase or decrease in the net assets of the organization. During There are many financial transactions exchanged between 2006 and 2007, the NAS has been able to increase its net the member organizations of the National Academies. The assets, due in large part to the favorable results from the NRC serves as the clearinghouse for these transactions. Endowment investments and generous gifts from donors. However, it is important to note that only the financial activity and results of the NAS, NAE, IOM, and NRC are included in these financial statements. Conclusion The financial activity and results of the National Academy of Engineering Fund (NAEF) and the National Academies Corporation (TNAC) are audited and reported As my twelve years as the NAS treasurer comes to a separately. Financial information for the NAEF is conclusion, I am happy to once again report that the NAS available on request from the NAE Finance Office; continues to be in sound financial condition. The NAS information for TNAC is available from the NAS and NRC continued to demonstrate financial strength and Controller’s Office. stability during 2007. The NRC program remained stable, and the indirect expenses were well under control. The investment return achieved in the NAS Endowment in 2007 continues to outperform the benchmark and helps to Overall Financial Condition provide additional financial support to NAS initiatives in the future. The results of operations, per the NAS Statements of I would like to thank the Council, the Committee on Activities, are summarized as follows: Budget and Internal Affairs, the Finance Committee, and NRC management for their continued input and support. (dollars in millions) Also, thanks to the Controller’s Office for preparation of 2007 2006 Total Revenues $ 320.5 $ 335.5 the financial statements and to all of the finance staff for Total Expenses 276.5 265.4 maintaining strong financial controls and reporting. $ 44.0 $ 70.1 Change in Net Assets Ronald L. Graham Treasurer 6

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I. Investments 7

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SCHEDULE 1 Capital Endowment and Trust Investment Funds – Description of Funds Contribution for the Year Ended December 31, 2007 (Column 1 of Schedule 1–A) I. ENDOWMENT A. Unrestricted 1. NAS Unrestricted Endowment Agassiz Fund – Bequest of Alexander Agassiz, a member of the Academy. $ 50,000 Carnegie Fund – Balance of the original gift of $5,000,000 from the Carnegie Corporation of New York, for the purposes of the National Academy of Sciences/National Research Coun- cil, $1,725,000 of which has been used to cover the cost of the Academy building and the 3,275,000 acquisition of other property. Commonwealth Fund – A grant of the Commonwealth Fund for capital endowment of the Academy. 500,000 Carl Eckart Fund – Bequest of Carl Eckart received for the general purposes of the Academy. 1,246,366 Ford Foundation Fund – A grant of the Ford Foundation for capital endowment of the Academy. 5,000,000 Henrietta and Alexander Hollaender Fund – A bequest to the Academy from Dr. Alexander and Mrs. Henrietta Hollaender. 500,000 Grayce B. Kerr Fund – A grant from Grayce B. Kerr for the general purposes of the Academy. 250,000 Nealley Fund – Bequest of George True Nealley for the general purposes of the Academy. 19,556 Simon Ramo Fund – A gift from Simon Ramo for the general purposes of the Academy. 14,000 Rockefeller Foundation Fund – A grant of the Rockefeller Foundation to the National Academy of Sciences for the general purposes of the Academy. 1,000,000 Dorothea and Herbert Simon Fund – A gift from Dorothea and Herbert Simon for the general purposes of the Academy. 644,616 Sloan Foundation Fund – A grant of the Alfred P. Sloan Foundation for the general purposes of the Academy. 1,000,000 Amy Prudden Turner Fund – Bequest of Amy Prudden Turner for the general purposes of the Academy to serve as a memorial to her husband Scott and herself. 29,662 Anonymous Endowment Fund – A gift for the general purposes of the Academy from a donor who wishes to remain anonymous. 7,146,660 General Endowment Fund – Bequest of David Lloyd Fillman and others for the general purposes of the Academy. By action of the Council, the International Critical Tables were transferred into this fund during fiscal year 1976, and proceeds from the sale of the Audu- bon Folios were transferred in fiscal year 1981. 3,606,295 Members Endowment Fund – Contributions from various members to be used for the general purposes of the Academy. 2,647,813 $ 26,929,968 Subtotal: NAS Unrestricted Endowment 2. IOM Unrestricted Endowment General Endowment Fund – Contributions from various sources, including members of the Institute of Medicine, for capital endowment of the Institute of Medicine. $ 1,113,039 Robert Wood Johnson Foundation Fund – An endowment grant, the income from which is to be used for core support of the Institute of Medicine. 5,000,000 Institute of Medicine Kellogg Fund – A grant from the Kellogg Foundation to be used for the general purposes of the Institute of Medicine. 282,500 Institute of Medicine Members’ Dues 197,500 8

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SCHEDULE 1 Capital Endowment and Trust Investment Funds – Description of Funds Contribution for the Year Ended December 31, 2007 (Column 1 of Schedule 1–A) Henry J. Kaiser Family Foundation Fund – Contribution to an endowment fund to support core activities of the Institute of Medicine. The grant indicates the Foundation’s view that the Institute of Medicine is of great importance to the development of sound social policy related to health. In 1989 this grant was amended by the Kaiser Family Foundation to provide for the transfer of $250,000 as a matching contribution to the endowment contribu- tion to the Institute of Medicine’s Food and Nutrition Board. 488,485 John D. and Catherine T. MacArthur Foundation Fund – A grant to be used exclusively as an endowment to the Institute of Medicine, the income from which is restricted to the general purposes of the Institute. 5,000,000 Pharmaceutical Discretionary Fund – A grant from W. K. Kellogg to further the Institute of Medicine’s long–range program development. 480,000 Pharmaceutical Endowment Fund – Contributions of $250,000 over a period of five years from Glaxo, Inc., and $10,000 from Eli Lilly Company, the income from which is to be used for the general purposes of the Institute of Medicine. 259,448 Miscellaneous Private Sector Fund – Contributions from Kaiser Permanente to be used for core support requirements of the Institute of Medicine. 26,346 $ 12,847,318 Subtotal: IOM Unrestricted Endowment B. Restricted for Specific Purpose 1. Program a. NAS Restricted Program Arts in the Academy Fund – Contributions from various sources for sponsoring free cultural programs of merit for local residents and for providing a platform for musicians and artists. $ 13,934 Basic Science Fund – Earth Sciences – Contribution from an anonymous donor to match a gift from the Palisades Geophysical Institution of New York. Together these contributions will be used to establish the Maurice Ewing and Planetary Sciences Fund of the National Acad- emy of Sciences. 503,231 Biology and Biotechnology Fund – Contributions from various individuals to be used for studies and other activities that address emerging research and policy issues affecting biol- ogy and biotechnology, especially cross–disciplinary aspects and those involving the inter- face of science, technology, and commerce and used for dissemination and outreach efforts that seek to inform policymakers about the findings of the results. 420,232 Blakeslee Fund – Bequest of Albert Francis Blakeslee, the income from which is to be used in support of genetics research. 886,902 Thomas Lincoln Casey Fund – Bequest of Thomas L. Casey as a memorial to his father, Thomas Lincoln Casey, to be used in the advancement of engineering in all its applications. 258,081 The Coca–Cola Foundation Fund – A grant to be used for initiatives in precollege science and mathematics education. 50,000 Henry and Bryna David Endowment – A bequest of Henry and Bryna David to support the communication of insights and discoveries from the social and behavioral sciences to policy makers and other decision makers to promote informed public policy and staff development through various Academy activities. 850,000 Arthur L. Day Fund – A bequest of Arthur L. Day, a member of the Academy, for the purpose of advancing studies of the physics of the earth. 5,047,846 Cecil and Ida Green Fund – A gift from Cecil and Ida Green to be used to support activities dedicated to improving the quality of life of our people. 467,256 Global Commons Project Fund 39,058 9

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SCHEDULE 1 Capital Endowment and Trust Investment Funds – Description of Funds Contribution for the Year Ended December 31, 2007 (Column 1 of Schedule 1–A) W. K. Kellogg Foundation Fund – A grant of the W. K. Kellogg Foundation for an endowment in the areas of education, health, and agriculture. The income will be used to fund studies and other activities within these program areas such as enhancing the quality of U.S. educa- tion, assuring access to quality health care, assessing the role of biotechnology in the future of agriculture, and similar issues as they arise. 20,000,000 Kobelt Fund – Bequest of Nina I. Kobelt to be used for research scholarships for worthy students. 296,593 Andrew W. Mellon Foundation Fund – A grant from the Andrew W. Mellon Foundation to endow a program of Academy–initiated studies. 1,000,000 George and Cynthia Mitchell Endowment for Sustainability Sciences – Contribution from the George and Cynthia Mitchell Foundation to be held and used by the Academy in perpetuity to guide academic, government and other institutions in the development of sustainability science and to encourage the world’s business community to apply knowledge from this new field in business practices. 12,000,000 George and Cynthia Mitchell Matching Endowment – Contributions from public and private sources to be used to support the same purposes as the original George and Cynthia Mitchell Endowment for sustainability Sciences. Also, to raise funds to be eligible for a matching gift from George and Cynthia Mitchell. 38,750 New Canaan Library Fund – Contribution from the Board of the New Canaan Library to perma- nently maintain a current National Academies book collection in honor of Dr. H.R. Shepherd at their library. 4,000 Kumar and Shela Patel Endowment for US–India Dialogs – To support US–India scientific and technical communication and dialogue through various Academy activities. 600,000 Frank Press Fund for Dissemination and Outreach – Established with contributions from members of the Presidents’ Circle of the NAS, NAE, and the IOM, the income from the fund is to support a variety of dissemination and outreach activities that seek to share the Academy’s complex knowledge and resources with the policy making community and the general public. 1,167,255 Arthur M. Sackler Colloquia of the National Academy of Sciences Fund – A gift from Mrs. Arthur M. Sackler to endow a series of scientific symposia that promote interaction among world–class researchers in rapidly advancing scientific fields. 3,750,000 Scientists and Engineers for the Future Fund – Contribution from an individual who wishes to remain anonymous. The income from this fund is used to support educational projects focused on maintaining the health of American science and technology by ensuring an ade- quate supply of well–prepared American scientists and engineers for the future. 1,000,000 NAS Members Endowment(s) – Additional member contributions that have been designated for special purposes, such as the Board on Chemical Sciences Fund and the Section 14 Chemis- try Discretionary Fund. 60,966 $ 48,454,104 Subtotal: NAS Restricted Program b. IOM Restricted Program Distinguished Scholar Fund – Contributions from various IOM members to permit the selection of one or more persons of senior caliber to spend a period of time at the IOM in scholarly pursuits related to key program initiatives. $ 16,550 Food and Nutrition Board (FNB) Fund – Grant of $250,000 to the Institute of Medicine as a contribution to the endowment fund to support core activities of the Food and Nutrition Board. This award was contingent on the Institute of Medicine transferring a matching amount from the 1986 unrestricted contribution from the Kaiser family for general core support of the Institute. Further contributions to the FNB endowment would be matched by one dollar from the earlier grant for every two dollars of new contributions. 525,350 10

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SCHEDULE 1 Capital Endowment and Trust Investment Funds – Description of Funds Contribution for the Year Ended December 31, 2007 (Column 1 of Schedule 1–A) Food and Nutrition Board Corporations Fund – Contributions from Monsanto Company and Nestle, USA, Inc., to provide support for FNB activities. 125,000 Food and Nutrition Board Members Fund – Contributions from various members to be used for general purposes of the Food and Nutrition Board. 4,800 David and Betty Hamburg Endowment Fund – Contributions from various individuals in support of communication/dissemination programs, collaborations among key public health stakeholders, and forward–looking studies. This fund honors former IOM president David Hamburg and his wife, colleague, and longtime NRC participant Beatrix Hamburg. 969,275 Howard Hughes Medical Institute Fund – Contribution for the exclusive use of the Institute of Medicine to initiate and maintain a program of studies whose purpose is to foster the trans- lation of science into advances in health. 5,000,000 Kellogg Health of the Public Fund – Contribution for the establishment of the Kellogg Health of the Public Fund, an endowment which shall be held and used by the National Academy of Sciences to advance the Institute of Medicine's capacity to contribute to the improvement of the health of America's communities. 3,767,082 Kellogg Health of the Public Fund Matching Contributions – In response to the Kellogg chal- lenge grant to match dollar for dollar up to $2.5 million to support communication and out- reach activities now and for future projects. 2,191,869 Richard and Hinda Rosenthal Lecture Series – Through the generosity of the Richard and Hinda Rosenthal Foundation, a lecture series was established in 1988. In 2000, the Richard and Hinda Rosenthal Lecture Series was endowed at the Institute of Medicine of the National Academy of Sciences to bring greater attention to some of the critical health policy issues facing the country. 1,000,000 Women’s Health Issues Fund – Contribution from Syntex (U.S.A.), Inc., to be used for purposes related to women’s health issues. 20,000 $ 13,619,926 Subtotal: IOM Restricted Program 2. Prizes and Awards a. NAS Prizes and Awards American Psychological Association (APA) Science Directorate Fund – A gift from the APA to conduct activities that will help inform the public of the knowledge base, value, and impor- tance of behavioral science research. $ 30,000 Henryk Arctowski Fund – Bequest of Jane Arctowski in memory of her husband Henryk Arctowski, for the promotion and study of solar activity changes of short or long duration and their effects upon the ionosphere and terrestrial atmosphere. 95,736 Bache Fund – Bequest of Alexander Dallas Bache, a member of the Academy, to aid research in the physical and natural sciences. 60,000 Blaauw Fund – Bequest of Marianne Blaauw to establish the Edmond and Marianne Blaauw Fund to support research in the field of ophthalmology. 71,299 John J. Carty Fund – Gift of the American Telephone and Telegraph Company in recognition of the distinguished achievements of John J. Carty and as a lasting testimonial of the love and esteem in which he was held by his many thousands of Bell System associates, for a gold medal and award for noteworthy and distinguished accomplishments in any field of science. 25,000 Comstock Fund – Gift of General Cyrus B. Comstock, a member of the Academy, to promote research in electricity, magnetism, or radiant energy through the Comstock Prize to be awarded for notable investigations. 10,400 Draper Fund – Gift of Mrs. Henry Draper in memory of her husband, a former member of the Academy, to found the Henry Draper Medal to be awarded for notable investigations in astronomical physics; the balance of income is applied to aid research in this science. 6,000 11

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SCHEDULE 1 Capital Endowment and Trust Investment Funds – Description of Funds Contribution for the Year Ended December 31, 2007 (Column 1 of Schedule 1–A) National Academy of Sciences Award in Chemical Sciences – An annual award currently sponsored and endowed by The Merck Company Foundation to recognize distinction in research and broad fundamental impact in pure chemistry. This award was originally estab- lished by the Occidental Petroleum Corporation in honor of Armand Hammer. 478,277 National Academy of Sciences Award in Neuroscience – Established by the Fidia Research Foundation for an award in neuroscience, to be given every three years. 140,206 National Academy of Sciences Fund for Sciences and Technology in International Affairs – Contributions from Cecil and Ida Green, J. Erik Jonsson, Jerome B. Wiesner, and Academy sources to establish the National Academy of Sciences Fund for Sciences and Technology in 49,119 International Affairs in honor of Walter A. Rosenblith. Pradel Fund – A bequest of Jules Pradel to be applied to work on the human central nervous system and allied subjects. 16,392 H. P. Robertson Lectureship Fund – Contributions by friends of H. P. Robertson, former foreign secretary of the Academy, to establish a lectureship under which distinguished scientists would be invited from anywhere in the world to present lectures to be known as 20,325 the Robertson Memorial Lecture of the National Academy of Sciences. Helen P. Smith Fund – A bequest of Helen P. Smith in memory of her husband, Gilbert Morgan Smith, to establish a triannual medal and honorarium to be conferred in recognition of pub- lished research in marine and freshwater algae. 67,107 Mrs. J. Lawrence Smith Fund – Gift of Mrs. J. Lawrence Smith in memory of her husband, a former member of the Academy, to found the J. Lawrence Smith Gold Medal to be awarded for important investigations of meteoric bodies and to assist, by grants of money, research concerning such objects. 8,000 Thompson Fund – Gift of Mrs. Mary Clark Thompson for a gold medal of appropriate design, to be known as the Mary Clark Thompson Gold Medal, to be awarded for important ser- vices to geology and paleontology. 10,000 Troland Fund – Bequest of Leonard T. Troland to be known as the Troland Foundation for Research in Psychophysics. The income is to be expended with a view to the actual ad- vancement of scientific knowledge in the field of psychophysics. 505,359 Walcott Fund – Gift of Mrs. Mary Vaux Walcott in honor of her husband, a former member and president of the Academy, for the award of medals and honoraria to persons, the results of whose published research, explorations, and discoveries of pre–Cambrian or Cambrian life and history shall be judged most meritorious; the award is to be known as the Charles Doolittle Walcott Medal. 5,000 G. K. Warren Fund – Gift of Miss Emily B. Warren in memory of her father, a member of the Academy, the income from which is to be used for an award to be known as the G. K. Warren Prize in any field of science. 15,000 Watson Fund – Bequest of James Craig Watson, a former member of the Academy, for the promotion of astronomical sciences through the award of the Watson Gold Medal and grants of money in aid of research. 25,000 $ 2,905,141 Subtotal: NAS Prizes and Awards b. IOM Prizes and Awards Gustav O. Lienhard Award – Initially established by an annual grant award in 1986, the Robert Wood Johnson Foundation in 1991 approved a grant for endowment of the Gustav O. Lienhard Award to be given annually in recognition of an outstanding contribution to the advancement of health care. $ 1,200,000 13

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SCHEDULE 1 Capital Endowment and Trust Investment Funds – Description of Funds Contribution for the Year Ended December 31, 2007 (Column 1 of Schedule 1–A) Rhoda and Bernard G. Sarnat International Prize in Mental Health – A grant from Rhoda and Bernard G. Sarnat for the purpose of honoring an individual, group, or organization for distinguished accomplishments in the field of mental health. 1,009,179 $ 2,209,179 Subtotal: IOM Prizes and Awards 3. Woods Hole Restricted Endowment Peter C. Cornell Trust Fund – To memorialize Detlev W. Bronk, former member and president of the Academy, for his contributions to science and the nation and to recognize the leader- ship and notable accomplishments of John S. Coleman as a member of the Academy’s staff. The gift may be fully expended for its intended purpose. $ 100,000 J. Erik Jonsson Woods Hole Fund – A gift for the Woods Hole Study Center of the NAS in honor of J. Erik Jonsson, one of the founders of Texas Instruments and a former mayor of Dallas. The donor wishes to remain anonymous. 2,002,500 Penzance Foundation Fund – A grant for the J. Erik Jonsson Woods Hole Study Center especially for support of the property’s Clark Carriage House. 502,500 Woods Hole Endowment – Contributions from the Brown Foundation and various individuals for maintenance of the Woods Hole Study Center. 971,400 Woods Hole Fund – Contributions from various individuals for maintenance of the Woods Hole Study Center. 12,874 Richard King Mellon Foundation Fund – Grant from the Richard King Mellon Foundation for maintenance of the building and grounds at the Woods Hole Study Center. 50,000 Subtotal: Woods Hole Restricted Endowment $ 3,639,274 4. PNAS Restricted Endowment Billings Fund – Bequest of Mrs. Mary Ann Palmer Draper (Mrs. Henry Draper) to support publication of the Proceedings of the National Academy of Sciences or for other purposes to $ 50,102 be determined by the Academy. II. FUNDS FUNCTIONING AS ENDOWMENT A. Unrestricted Funds National Academy of Sciences Reserve Fund – Accumulated surplus from prior years' NAS General Fund operating budget. The reserve provides additional funding for ongoing operations during periods of market decline. $ 3,176,075 IOM Reserve Fund – Unexpended balance earned on endowment based on IOM Council spending plan. The IOM reserve permits the effective management of unanticipated finan- cial emergencies. 500,000 TRB Reserve Fund – Holds income in excess of expenditures for TRB core support activities in a fiscal year. This fund is used to cover temporary shortfalls and extraordinary one–time expenditures. 1,500,000 $ 5,176,075 Subtotal: Funds Functioning as Endowment, Unrestricted 14

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SCHEDULE 1 Capital Endowment and Trust Investment Funds – Description of Funds Contribution for the Year Ended December 31, 2007 (Column 1 of Schedule 1–A) B. Restricted for a Specific Purpose Henry G. Booker Fellowship Fund – Contributions from various individuals to provide a travel grant to one young American radio scientist to attend each International Union of Radio Science Assembly as a Henry G. Booker Fellow. $ 20,826 Marian Koshland Science Museum Fund – Contributions from Dr. Daniel E. Koshland, Jr. and the Koshland Foundation to fund the operation and activities of the museum for the purpose of extending the resources of the National Academies and increasing public understanding of the nature and value of science. Dr. Koshland’s original commitment of $30 million was completed in 2004. The gift was used to fund the museum’s opening in April 2004 and ongoing operations until November 2004, when the remainder was invested in the Endow- 22,786,243 ment Pool. Bruce Alberts Fund of the Marian Koshland Science Museum – Contributions from Dr. Daniel E. Koshland, Jr. and the Koshland Foundation to support the traveling costs of the museum's exhibits, to fund new exhibits to replace traveling exhibits, and to extend the museum's outreach to school districts. 5,194,909 National Science Resources Center Fund – Funded by royalty revenues from elementary and middle school science kits developed by the National Science Resources Center. Funds will be used to provide core support of NSRC programs to enhance and improve the learning and teaching of science in domestic and international schools. 4,986,474 Proceedings of the National Academy of Sciences Fund 1,000,000 U.S. National Committee for the International Astronomical Union (USNC/IAU) Fund – Contributions from USNC/IAU to provide funds in support of participation by U.S. as- tronomers in the activities of the International Astronomical Union Triennial General Assemblies. 100,000 Arnold and Mabel Beckman Fund of the National Academies of Sciences and Engineering – A fully expendable fund designated for support of programs at the Beckman Center. The fund was established to receive contributions of unexpended income from the TNAC operations endowment as well as earnings from the TNAC program endowment. 11,678,041 $ 45,766,493 Subtotal: Funds Functioning as Endowment, Restricted for a Specific Purpose III. FUNDS HELD ON BEHALF OF OTHERS A. The National Academies’ Corporation (TNAC) Operations Endowment – An endowment from the Arnold and Mabel Beckman Foundation to TNAC to support operations of the Beckman Center in Irvine, California. The endowment is held on behalf of TNAC and invested by the NAS. $ 8,000,000 Program Endowment – An endowment from the Arnold and Mabel Beckman Foundation to TNAC to support NRC program activities conducted in whole or in part at the Beckman Center. The endowment is held on behalf of TNAC and invested by the NAS. 1,939,644 $ 9,939,644 Subtotal: TNAC Endowment TOTAL $171,537,224 15

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SCHEDULE 1-A Endowment and Trust Investment Funds - Financial Detail of Funds for the Year Ended December 31, 2007 (Dollars in thousands) ENDOWMENT AND TRUST INVESTMENT POOL Capital Market Market Contributions Value at 2007 2007 Value at as of Dec. 31, Dec. 31, 2007 Investment Expenditures Dec. 31, 2007 2006 Contributions Income & Transfers 2007 I. Endowment A. Unrestricted 1. NAS Agassiz Fund $ 50 $ 602 $ -$ 65 $ (27) $ 640 Carnegie Fund 3,275 41,667 - 4,464 (1,834) 44,297 Commonwealth Fund 500 2,700 - 290 (116) 2,874 Carl Eckart Fund 1,246 2,754 - 295 (121) 2,928 Ford Foundation Fund 5,000 26,552 - 2,847 (1,142) 28,257 Henrietta and Alexander Hollaender Fund 500 1,186 - 127 (51) 1,262 Grayce B. Kerr Fund 250 589 - 63 (25) 627 Nealley Fund 20 239 - 26 (11) 254 Simon Ramo Fund 14 40 - 5 (2) 43 Rockefeller Foundation Fund 1,000 5,385 - 577 (232) 5,730 Dorothea and Herbert Simon Fund 644 1,233 - 132 (53) 1,312 Sloan Foundation Fund 1,000 5,368 - 575 (232) 5,711 Amy Prudden Turner Fund 30 136 - 15 (6) 145 Anonymous Endowment Fund 7,147 17,247 - 1,849 (739) 18,357 General Endowment Fund 3,606 10,203 64 1,101 (431) 10,937 Members Endowment Fund 2,648 5,754 6 617 (247) 6,130 $ 26,930 $ 121,655 $ 70 $ 13,048 $ (5,269) $ 129,504 2. IOM General Endowment Fund $ 1,113 $ 2,074 $ 2 $ 226 $ (59) $ 2,243 Robert Wood Johnson Foundation Fund 5,000 12,268 - 1,336 (365) 13,239 IOM Kellogg Fund 283 513 - 56 - 569 IOM Members Dues 198 358 - 40 - 398 Henry J. Kaiser Family Foundation Fund 488 957 - 104 (28) 1,033 John D. and Catherine T. MacArthur Foundation Fund 5,000 12,198 - 1,332 (364) 13,166 Pharmaceutical Discretionary Fund 480 916 - 100 - 1,016 Pharmaceutical Endowment Fund 259 580 - 63 (17) 626 Miscellaneous Private Sector Fund 26 68 - 8 (2) 74 $ 12,847 $ 29,932 $ 2$ 3,265 $ (835) $ 32,364 B. Restricted for Specific Purpose 1. Program a. NAS Arts in the Academy Fund $ 14 $ 17 $ 10 $ 2 $ -$ 29 Basic Science Fund - Earth Sciences 503 1,313 - 144 41 1,498 Biology and Biotechnology Fund 420 906 - 99 (12) 993 Blakeslee Fund 887 2,740 - 287 (117) 2,910 Thomas Lincoln Casey Fund 258 6,746 - 739 (70) 7,415 Coca-Cola Foundation Fund 50 124 - 13 23 160 Henry and Bryna David Endowment 850 1,418 - 154 (32) 1,540 Arthur L. Day Fund 5,048 18,625 - 2,040 (133) 20,532 16

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SCHEDULE 1-A Endowment and Trust Investment Funds - Financial Detail of Funds for the Year Ended December 31, 2007 (Dollars in thousands) ENDOWMENT AND TRUST INVESTMENT POOL Capital Market Market Contributions Value at 2007 2007 Value at as of Dec. 31, Dec. 31, 2007 Investment Expenditures Dec. 31, 2007 2006 Contributions Income & Transfers 2007 Cecil and Ida Green Fund $ 467 $ 1,599 $ - $ 175 $ (10) $ 1,764 Global Commons Project Fund 39 163 - 18 - 181 W. K. Kellogg Foundation Fund 20,000 46,488 - 5,091 (75) 51,504 Kobelt Fund 297 2,100 - 230 (10) 2,320 Andrew W. Mellon Foundation Fund 1,000 1,877 - 205 (33) 2,049 George and Cynthia Mitchell Endowment for Sustainability Sciences 12,000 14,011 2,000 1,622 (206) 17,427 George and Cynthia Mitchell Matching Endowment 39 60 4 6 - 70 New Canaan Library Fund 4 11 - 1 - 12 Kumar and Shela Patel Endowment for US-India Dialogs 600 902 - 98 (12) 988 Frank Press Fund for Dissemination and Outreach 1,167 2,578 - 281 (86) 2,773 Arthur M. Sackler Colloquia Fund 3,750 5,783 - 634 - 6,417 Scientists and Engineers for the Future Fund 1,000 1,802 - 197 8 2,007 NAS Members Endowment(s) 61 281 - 31 (1) 311 $ 48,454 $ 109,544 $ 2,014 $ 12,067 $ (725) $ 122,900 b. IOM Distinguished Scholar Fund $ 17 $ 69 $ - $ 7 $ -$ 76 Food & Nutrition Board (FNB) Fund 525 1,619 1 179 (130) 1,669 FNB Corporations Fund 125 435 - 47 - 482 FNB Members Fund 5 24 - 3 - 27 Hamburg Endowment Fund 969 1,121 105 130 (5) 1,351 Howard Hughes Medical Institute Fund 5,000 15,972 - 1,716 (1,031) 16,657 Kellogg Health of the Public Fund 3,767 4,707 533 564 (38) 5,766 Kellogg Health of the Public Fund Matching Contributions 2,192 2,070 465 245 (32) 2,748 Richard and Hinda Rosenthal Lecture Series 1,000 1,536 - 168 (13) 1,691 Women's Health Issues Fund 20 80 - 9 - 89 $ 13,620 $ 27,633 $ 1,104 $ 3,068 $ (1,249) $ 30,556 2. Prizes and Awards a. NAS American Psychological Association Science Directorate Fund $ 30 $ 70 $ - $ 8 $ -$ 78 Henryk Arctowski Fund 96 3,475 - 381 (2) 3,854 Bache Fund 60 428 - 47 (21) 454 Blaauw Fund 71 925 - 102 (45) 982 John J. Carty Fund 25 836 - 90 (28) 898 Comstock Fund 11 831 - 91 - 922 Draper Fund 6 353 - 39 - 392 17

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SCHEDULE 1-A Endowment and Trust Investment Funds - Financial Detail of Funds for the Year Ended December 31, 2007 (Dollars in thousands) ENDOWMENT AND TRUST INVESTMENT POOL Capital Market Market Contributions Value at 2007 2007 Value at as of Dec. 31, Dec. 31, 2007 Investment Expenditures Dec. 31, 2007 2006 Contributions Income & Transfers 2007 Elliot Fund $ 8 $ 196 $ - $ 21 $ - $ 217 Estes Award in Social and Behavioral Sciences 80 284 - 31 - 315 Gibbs Brothers Fund 24 315 - 35 - 350 Gibbs Fund 5 134 - 15 (7) 142 Ralph E. Gomory Award for the Application of Science 179 547 - 60 (3) 604 Gould Fund 50 767 - 84 (37) 814 Joseph Henry Fund 40 500 - 55 (24) 531 Alexander Hollaender Award in Biophysics 100 355 - 37 (23) 369 Hunsaker Fund 25 438 - 47 - 485 Franklin Livingston Hunt Fund 11 235 - 25 - 260 Kovalenko Fund 63 1,442 1 157 (30) 1,570 Marsh Fund 10 219 - 24 (11) 232 George P. Merrill Fund 10 693 - 76 (32) 737 Monsanto Award in Molecular Biology 421 1,197 - 129 (29) 1,297 Murray Fund 6 201 - 21 (19) 203 NAS Award for Chemistry in Service to Society 182 429 - 46 (23) 452 NAS Award in Mathematics 54 71 - 8 - 79 NAS Award in Chemical Sciences 478 605 - 66 (19) 652 NAS Award in Neurosciences 140 532 - 57 (29) 560 NAS Fund for Sciences and Technology in International Affairs 49 253 - 27 - 280 Pradel Fund 16 1,694 - 186 (1) 1,879 H. P. Robertson Lectureship Fund 20 292 - 32 - 324 Helen P. Smith Fund 67 665 - 73 - 738 Mrs. J. Lawrence Smith Fund 8 726 - 80 - 806 Thompson Fund 10 270 - 29 - 299 Troland Fund 505 4,699 - 509 (108) 5,100 Walcott Fund 5 97 - 10 (14) 93 G. K. Warren Fund 15 199 - 22 - 221 Watson Fund 25 1,464 - 158 (43) 1,579 $ 2,905 $ 26,437 $ 1$ 2,878 $ (548) $ 28,768 b. IOM Gustav O. Lienhard Award $ 1,200 $ 4,408 $ - $ 477 $ (81) $ 4,804 Rhonda and Bernard G. Sarnat International Prize in Mental Health 1,009 1,548 - 169 (29) 1,688 $ 2,209 $ 5,956 $ -$ 646 $ (110) $ 6,492 18

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SCHEDULE 1-A Endowment and Trust Investment Funds - Financial Detail of Funds for the Year Ended December 31, 2007 (Dollars in thousands) ENDOWMENT AND TRUST INVESTMENT POOL Capital Market Market Contributions Value at 2007 2007 Value at as of Dec. 31, Dec. 31, 2007 Investment Expenditures Dec. 31, 2007 2006 Contributions Income & Transfers 2007 4. Woods Hole Peter C. Cornell Trust Fund $ 100 $ 290 $ -$ 31 $ (13) $ 308 J. Erik Jonsson Woods Hole Fund 2,002 5,016 - 539 (216) 5,339 Penzance Foundation Fund 503 1,260 - 136 (54) 1,342 Woods Hole Endowment Fund 971 1,451 - 156 (64) 1,543 Woods Hole Fund 13 45 - 4 (2) 47 Richard King Mellon Foundation Fund 50 212 - 23 (9) 226 $ 3,639 $ 8,274 $ -$ 889 $ (358) $ 8,805 5. PNAS Billings Fund $ 50 $ 916 $ -$ 99 $ - $ 1,015 $ 50 $ 916 $ -$ 99 $ - $ 1,015 II. Funds Functioning as Endowment A. Unrestricted National Academy of Sciences Reserve Fund $ 3,176 $ 3,041 $ -$ 334 $ (51) $ 3,324 IOM Reserve Fund 500 883 - 96 - 979 TRB Reserve Fund 1,500 2,241 - 246 (1) 2,486 Due to (from) National Academy of Sciences - 300 - - (317) (17) $ 5,176 $ 6,465 $ -$ 676 $ (369) $ 6,772 B. Restricted for a Specific Purpose Henry G. Booker Fellowship Fund $ 21 $ 60 $ -$ 6 $ -$ 66 Marian Koshland Science Museum Fund 22,786 27,422 - 2,895 (1,963) 28,354 Bruce Alberts Fund for the Marian Koshland Science Museum 5,195 6,796 - 736 (203) 7,329 National Science Resources Center Fund 4,987 6,289 507 696 (1,002) 6,490 Proceedings of the National Academy of Sciences Fund 1,000 1,053 - 117 (1) 1,169 Communications Initiative Fund - 3,927 - 420 (184) 4,163 USNC/IAU 100 176 - 19 - 195 Arnold and Mabel Beckman Fund of the NAS and NAE 11,678 - 11,678 1,125 (1,504) 11,299 $ 45,767 $ 45,723 $ 12,185 $ 6,014 $ (4,857) $ 59,065 III. Funds Held on Behalf of Others A. The National Academies' Corporation Operations Endowment $ 8,000 $ 9,520 $ - $ 966 $ (1,459) $ 9,027 Program Endowment 1,940 2,329 - 238 (371) 2,196 Building Maintenance Reserve - - - 47 534 581 Reserve for Program Expense - 11,172 - 45 (11,217) - $ 9,940 $ 23,021 $ - $ 1,296 $ (12,513) $ 11,804 TOTAL $ 171,537 $ 405,556 $ 15,376 $ 43,946 $ (26,833) $ 438,045 19

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SCHEDULE 2 Endowment and Trust Investment Pool – Asset Allocation as of December 31, 2007 U.S. Large Cap Equities U.S. Small-Mid Cap Equities 20.3% 4.6% Other Alternative Investments Non-U.S. Stocks - 3.1% Developed Equities 24.9% Hedge Funds 14.9% Real Estate 3.1% Non-U.S. Stocks - Emerging Equities 10.7% Non-U.S. Fixed Income 9.2% U.S. Fixed Income/Cash 9.2% 20

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SCHEDULE 2-A Endowment and Trust Investment Pool - Change in Valuation and Market Value Summary Change in Valuation from 12/31/06 to 12/31/07 (Dollars in Thousands) Market Value at 12/31/06 $ 405,556 Realized Capital Gains 12,635 Unrealized Capital Gains 5,218 Reinvested Income 26,093 Contributions 15,376 Expenditures and Transfers (26,833) Market Value at 12/31/07 $ 438,045 Holdings and Market Value Summary as of 12/31/07 U.S. Large Cap Equities U.S. Fixed Income Berkshire Hathaway A $ 32,143 PIMCO Funds Total Return $ 17,669 Berkshire Hathaway B 43 Cash Equivalents 22,086 Biotech Index 2,397 Other 431 Vanguard Index 500 34,141 Subtotal $ 40,186 Vanguard Windsor 20,327 Subtotal $ 89,051 Non-U.S. Fixed Income T. Rowe Price International $ 3,083 U.S. Small - Mid Cap Equities PIMCO Foreign Bond $ 32,752 Tamarack Enterprise $ 3,346 PIMCO Developing 4,494 Third Avenue Value 8,486 Subtotal $ 40,329 Vanguard Extended 4,632 Vanguard Small 3,640 Real Estate Subtotal $ 20,104 iShares Dow Jones RE Index $ 6,887 Third Avenue RE Fund 6,710 Non-U.S. Developed Equities Subtotal $ 13,597 Dodge & Cox International $ 12,274 Driehaus Int'l Discovery 10,599 Hedge Funds Templeton Foreign 30,315 GT Offshore $ 10,288 Vanguard European 18,509 Goldman Sachs Princeton 20,312 Vanguard Pacific 10,840 Renaissance Equities 34,887 Vanguard Intl. Growth 13,248 Subtotal $ 65,487 Vanguard Intl. Value 13,219 Subtotal $ 109,004 Other Alternative Investments $ 13,622 Non-U.S. Emerging Equities Capital International $ 27,040 Templeton Emerging 18,659 Morgan Stanley India 966 Subtotal $ 46,665 GRAND TOTAL $ 438,045 21

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II. Private Contributions 23