Report of the Treasurer for the Year Ended December 31, 2007 (2008)

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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 

As a benchmark for the Portfolio’s performance, the to the market composite benchmark of 14.6% and, for the Committee has established a composite measure of ten years ending December 31, 2007, the NAS return is market indices that is weighted to approximate the 8.6% compared with the market composite benchmark of allocation guideline for each asset category. The 7.7%. Portfolio benchmark is comprised of the Standard and Poor’s 500 (30%), Russell 2000 Index (6%), Standard & The next chart presents the investment structure adopted Poor’s MidCap 400 (6%), MSCI EAFE Index (20%), by the NAS Finance Committee in 2007 for its asset MSCI Emerging Markets Index (8%), Lehman U.S. allocation strategy and compares this guideline to the Aggregate Index (12%), Salomon Non-U.S. WGBI Index portfolio allocation at December 31, 2007. (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- Market values of the Endowment and Trust Investment Income: U.S. Fixed/Cash 12.0% 9.2% Pool, after withdrawals, for the years ended December 31, Non-U.S. Fixed 3.0% 9.2% 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 Hedge Funds 12.0% 14.9% Equity Securities 357,530 353,265 Other Alternative Investments 3.0% 3.1% Total $ 438,045 $ 405,556 Total 100.0% 100.0% 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 

Prize and Award Trust Funds The 2007 NAS General Fund activity is summarized as follows: Several award trust funds have existed for more than 100 years, while others were established more recently. The (dollars in thousands) Home Secretary oversees the nomination process that Revenue: 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, NAS General Fund Royalties, etc. 8 Total Revenue $ 6,199 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: $6.2 million and expenditures totaled $5.3 million, Office of Exhibitions & Cultural Programs 366 resulting in an $875,000 surplus. Comparable figures for Evolution, Education & Communication 100 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 of the NAS Reserve is to provide a cushion for ongoing Committee on Women in Science & 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 Total Expenses $ 5,324 Surplus $ 875 The NAS Council has approved a balanced General Funds budget of $6.0 million for fiscal year 2008. 3 

Journal Publications Last year I reported that we anticipated an agreement with the National Capital Revitalization Corporation (NCRC) Financial results of the Proceedings of the National to preserve the option to expand the Keck Building over Academy of Sciences are shown below for the years ended the adjacent District of Columbia fire station. While we December 31, 2007 and 2006: believe that our current option has not yet expired, there is 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 Author charges 6,605 4,716 The plans for the NAS Restoration Project continue as Other 95 102 scheduled, and we have begun the process to have tax- Total $ 12,556 $ 11,707 exempt financing in place in early 2009 to support this project. This financing is part of a larger refinancing Expense: proposal that will be presented to the Council in great Printing $ 6,741 $ 5,991 detail during 2008. Other 5,539 5,636 Total $ 12,280 $ 11,627 Net $ 276 $ 80 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 

The private and nonfederal revenues were received in the U.S. Government Revenues by Agency (dollars in thousands) form of contracts and grants ($48.8 million) and other 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: Department of the Air Force 4,694 • The private contracts and grants decreased from Department of the Army 12,493 $51.5 million in 2006 to $48.8 million in 2007. This Department of Defense 4,443 is due to an overall decrease in the number of private Department of the Navy 12,279 awards received. In 2006, NAS received 131 new Department of Education 1,232 private awards. In 2007, that number decreased to 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 Institute of Museum and Library Services 52 million in 2006 to $18.9 million in 2007. This in- Department of the Interior 3,594 crease is primarily attributable to a $11.7 million Department of Justice 1,196 contribution from TNAC to the NRC to be spent on Department of State 384 programs conducted in whole or in part at the Beck- Department of Transportation 62,439 man Center in Irvine, CA. Department of Treasury 117 Election Assistance Commission 256 Environmental Protection Agency 6,090 Expenses Executive Office of the President 417 General Accounting Office 178 General Services Administration 40 The NRC programs include funding from government and Marine Mammal Commission 4 private sources. Almost all contracts and grants are cost- National Aeronautics and Space Administration 9,342 reimbursable agreements. Therefore, even if the revenues 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 Social Security Administration 1,230 As in many universities and nonprofit institutions, Veterans Administration 5,181 managing indirect cost expenditures for funding of Adjustment to Indirect Cost Receivable & Other (1,003) necessary support services while keeping these costs in Total U.S. Government Agencies $ 178,021 reasonable proportion to program expenditures continues to be a challenge. Historically, NRC management has In the past ten years, the basic core of NRC programs, successfully maintained a relatively steady relationship which is represented by the government contracts and between program and support costs, i.e., the growth rate grants, has experienced relatively small percentage of indirect costs was approximately equal to the growth changes from one year to the next. In 2007, the NRC rate of direct costs. In 2007, total indirect expenses were programs funded by the government decreased 0.5%. In $64.9 million compared to an approved budget of $67.9 2006, the government funded programs had decreased million. As the 2008 program revenues are expected to 0.5% from the previous year. remain consistent with the prior year, the NAS Council authorized a 2008 indirect expense budget of $69.3 Private/Nonfederal Contracts and Grants million in order to maintain the desired relationship between indirect and direct costs. This budget includes a Private sponsors supplemented government projects and 4.0 percent increase in the base salary compensation provided for new initiatives by funding $67.7 million of structure in order to maintain a competitive position in the awards in 2007, compared with $59.0 million in 2006. marketplace for hiring and retaining staff. 5 

Related Entities Each year, the overall financial condition of the NAS can be reviewed by taking into account the increase or There are many financial transactions exchanged between decrease in the net assets of the organization. During the member organizations of the National Academies. The 2006 and 2007, the NAS has been able to increase its net NRC serves as the clearinghouse for these transactions. assets, due in large part to the favorable results from the However, it is important to note that only the financial Endowment investments and generous gifts from donors. activity and results of the NAS, NAE, IOM, and NRC are included in these financial statements. The financial activity and results of the National Conclusion 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 Activities, are summarized as follows: I would like to thank the Council, the Committee on Budget and Internal Affairs, the Finance Committee, and (dollars in millions) NRC management for their continued input and support. 2007 2006 Also, thanks to the Controller’s Office for preparation of 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. Change in Net Assets $ 44.0 $ 70.1 Ronald L. Graham Treasurer 6 

I. Investments 7 

SCHEDULE 1 Endowment and Trust Investment Funds – Description of Funds Capital for the Year Ended December 31, 2007 Contribution (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 acquisition of other property. 3,275,000 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 Subtotal: NAS Unrestricted Endowment $ 26,929,968 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 

SCHEDULE 1 Endowment and Trust Investment Funds – Description of Funds Capital for the Year Ended December 31, 2007 Contribution (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 Subtotal: IOM Unrestricted Endowment $ 12,847,318 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 

SCHEDULE 1 Endowment and Trust Investment Funds – Description of Funds Capital for the Year Ended December 31, 2007 Contribution (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 Subtotal: NAS Restricted Program $ 48,454,104 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 

SCHEDULE 1 Endowment and Trust Investment Funds – Description of Funds Capital for the Year Ended December 31, 2007 Contribution (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 Subtotal: IOM Restricted Program $ 13,619,926 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 

SCHEDULE 1 Endowment and Trust Investment Funds – Description of Funds Capital for the Year Ended December 31, 2007 Contribution (Column 1 of Schedule 1–A) Elliot Fund – Gift of Margaret Henderson Elliot to found the Daniel Giraud Elliot Gold Medal and Honorarium for the most meritorious work on zoology and paleontology published each year. 8,000 Estes Award in Social and Behavioral Sciences – A gift from William K. and Katherine W. Estes to be used initially for an award relating to contributions to the prevention of nuclear war. After several awards are given for this purpose, the remaining money will be set aside for use by the Division of Behavioral and Social Sciences and Education. 79,849 Gibbs Brothers Fund – Gift of William Francis Gibbs and Frederic H. Gibbs to found the Gibbs Brothers Medal for outstanding contributions in the field of naval architecture and marine engineering. 24,000 Gibbs Fund – Established by gift of Wolcott Gibbs, a member of the Academy, and increased by a bequest of the late Morris Loeb in 1914 for the promotion of research in chemistry. 5,173 Ralph E. Gomory Award for the Application of Science – A grant from the International Business Machines Corporation for an award to be given in honor of Ralph Gomory. 179,046 Gould Fund – Gift of Mrs. Alice Bache Gould in memory of her father, former member of the Academy, for the promotion of research in astronomy, bequest of $20,000 from the estate of Alice Bache Gould received in 1954, and bequest of $10,000 from the estate of Elizabeth Chandler Hockley received in 1979. 50,000 Joseph Henry Fund – Contributions by Fairman Rogers, Joseph Patterson, George W. Childs, and others as an expression of their respect and esteem for Joseph Henry, for the establish- ment of a fund to assist meritorious investigators, especially in the direction of original research. 39,740 Alexander Hollaender Award in Biophysics – A bequest of Alexander Hollaender, the income from which is to be used to provide a prize to an outstanding biophysicist. The prize is to be given at the Annual Meeting of the Academy, with selection of the recipient at the Acad- emy's discretion. 100,000 Hunsaker Fund – Gift of Mr. and Mrs. J. C. Hunsaker to found an Academy award in the field of aeronautical engineering. 24,750 Franklin Livingston Hunt Fund – Bequest of Franklin Livingston Hunt to aid research in physics, chemistry, and preventive medicine. A portion of the income may also be used from time to time to provide a medal to be known as the Franklin Livingston Hunt Medal for distinguished accomplishment in scientific research. 10,465 Kovalenko Fund – Gift of Michael S. Kovalenko, in memory of his wife, to found the Jessie Stevenson Kovalenko Gold Medal for meritorious research in medical sciences. 63,089 Marsh Fund – Bequest of Othniel Charles Marsh, a member of the Academy, to promote original research in the natural sciences. 10,000 George P. Merrill Fund – Gift of Mrs. George P. Merrill, the income from which is to be used for studies of meteors, meteorites, and space. 10,000 Monsanto Award in Molecular Biology – A grant from the Monsanto Company for an award to be given in recognition of contributions in the field of molecular biology. 421,374 Murray Fund – Gift of the late Sir John Murray to found the Alexander Agassiz Gold Medal in honor of a former member and president of the Academy, to be awarded for original contri- butions to the science of oceanography. 6,000 National Academy of Sciences Award for Chemistry in Service to Society – Established by the E. I. DuPont de Nemours & Company to recognize contributions to chemistry, whether in fundamental science or its applications, that clearly satisfy a societal need. Given in alter- nate years to chemists working in industry, academia, government, and nonprofit organiza- tions. 181,838 National Academy of Sciences Award in Mathematics – Established by the American Mathematical Society for a prize to be awarded every four years in mathematics. 53,597 12 

SCHEDULE 1 Endowment and Trust Investment Funds – Description of Funds Capital for the Year Ended December 31, 2007 Contribution (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 International Affairs in honor of Walter A. Rosenblith. 49,119 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 the Robertson Memorial Lecture of the National Academy of Sciences. 20,325 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 Subtotal: NAS Prizes and Awards $ 2,905,141 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 

SCHEDULE 1 Endowment and Trust Investment Funds – Description of Funds Capital for the Year Ended December 31, 2007 Contribution (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 Subtotal: IOM Prizes and Awards $ 2,209,179 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 be determined by the Academy. $ 50,102 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 Subtotal: Funds Functioning as Endowment, Unrestricted $ 5,176,075 14 

SCHEDULE 1 Endowment and Trust Investment Funds – Description of Funds Capital for the Year Ended December 31, 2007 Contribution (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- ment Pool. 22,786,243 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 Subtotal: Funds Functioning as Endowment, Restricted for a Specific Purpose $ 45,766,493 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 Subtotal: TNAC Endowment $ 9,939,644 TOTAL $171,537,224 15 

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 

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 

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 

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 

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 3.1% Non-U.S. Stocks - Developed Equities 24.9% Hedge Funds 14.9% Real Estate 3.1% Non-U.S. Stocks - Emerging Equities Non-U.S. Fixed Income 10.7% 9.2% U.S. Fixed Income/Cash 9.2% 20 

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 



II. Private Contributions 23