Annual Financial Report

With the Help of $287,007 from the Alumni Fund, College Meets Record Operating Costs for 1945-46

A LTHOUGH THE COLLEGE encountered many special problems of financ- ing during the fiscal year 1945-46, it once again closed its books on June 30 without an operating deficit, thanks to the considerable help provided by Dartmouth's record-breaking Alumni Fund for 1946. From the net Fund total of $394,096.33 the sum of $287,007.48 was applied to meet operating expenses of the College and cover what would otherwise have been a deficit. Halsey C. Edgerton '06, Treasurer of the College, also stated in his annual report to the Trustees that the remaining Fund balance of 1107,088.85 was added to the funds being accumulated for the Hopkins War Memorial program. These latter funds increased by $164,661.02 during the year and now total $972,892.04.

The grand total of Dartmouth College assets on June 30, 1946, stood at the record high of $32,390,705.43, an increase of $1,147,422.51, or 3.7%, for the year. This grand total is broken down into investments of $23,635,749.73; plant of $7,820,715.30, exclusive of dormitories and certain service properties which are carried on the balance sheet as investments; and current assets of $934,240.40.

The year's gain in total College assets was made largely in endowment funds and funds functioning as endowments, which together had a net increase of $1,083,793.41, raising their total to $23,292,247.87. Of the year's gain, $357,013.39 came from gifts and bequests; the balance represented income added to principal, certain adjustments and, in larger part, gains realized on sales of securities. Among the funds functioning as endowments are those allocated to the Hopkins War Memorial program.

Among the gifts and bequests added to Dartmouth's endowment funds during the year were $57,871 for Class Memorial Funds, $45,081 additional for Alumni Fund endowments, $37,000 from Albert Bradley '15, $25,000 for the Putney-Folsom Memorial Fund, $22,147 for the Edwin William McGowan '44 Memorial Fund, $15,406 additional from the R. Melville Cramer '77 Bequest for fellowships, $14,661 additional for the Harold C. Bullard '84 Memorial Fund, $10,358 additional from the bequest of Elizabeth G. Phelps, $10,000 for the Robert P. Brundage '45 Memorial for the Dartmouth Outing Club, $10,000 or the Robert V. Yeuell '39 Memorial Fund forscholarships, $9,014 additional from the bequest of John R. Munroe '75, $5,200 for the John Abbot Titcomb '32 Memorial for the Dartmouth Outing Club, and $5,000 from the bequest of Selden C. Smith '97 for scholarships.

Additions to the College plant during 1945-46 raised that account by $200,109.54, including $76,820.63 expended up to June 30 on the new wings of the Cummings Memorial to house the electrical and mechanical engineering departments of the Thayer School. Expenditures during the year on the construction of Sachem Village for married veterans amounted to $136,456. On the Wigwam Circle housing development, buildings and furniture are provided by the Federal Public Housing Authority with the College providing service connections and preparation of the site, and also acting as agent for the government.

INCOME AND EXPENSE FOR THE YEAR

The figure at which Dartmouth's income and expense for the year balanced was the largest in the history of the College and amounted to 12,458,826.95. This was $197,371.26 or 8.7% greater than for the preceding year. When the 1945-4,6 budget was adopted it appeared that the entire 1946 Alumni Fund would be required to meet the operating expenses for the year, but the remarkable increase in the Fund and the larger number of students made it possible to apply 27% of the Alumni Fund total to the Hopkins War Memorial program. "This was accomplished," Mr. Edgerton reported, "notwithstanding an additional payment in excess of $50,000 to members of the faculty made near the end of the year to supplement the increased salary rates which did not become effective until the new year." He also stated, "During the war years under the terms of some of the endowment funds the income was not available for use and was reserved; but with the return of civilian students we were again entitled to use this income currently and to use some-which had been reserved during the war years, thereby giving us a non-recurring relief applicable to this particular year."

Income from the U. S. Navy decreased about 1448,000 but income from students increased nearly $400,000. Direct instructional expenses, largely faculty salaries, increased about $121,000, general expenses about $42,000, and plant operation and maintenance about $36,000. Income from investments was slightly higher than for the preceding year, amounting to $859,869 as compared with $822,160 for 1944-45. The $287,007 of operating costs covered by the Alumni Fund in 1945-46 compared with $108,624 similarly covered by the Fund the previous year.

The statement of income and expense is intended primarily to show the operations of Dartmouth College as a teaching institution. It does not include expenditures of the College as a landlord or as a supplier of meals or services except as the net results of such operations enter into the figures. This applies to the Dartmouth Dining Association, Hanover Country Club, Clinical Division of the Dartmouth Eye Institute, Dartmouth Outing Club, and the Council on Student Organizations. The Dartmouth College Athletic Council operates as a separate organization. During the year the Hanover Inn showed a gain from operations of $14,965 which was carried forward to a special reserve account to provide for future contingencies. Allowances by the Navy for use of dining facilities and depreciation were primarily responsible for the favorable result of $23,967 applied to write down the Thayer Hall capital account.

Income and expense for the year, with corresponding figures for the year before and also with the percentages of the whole represented by the various figures, are tabulated below.

INVESTMENT RETURNS UNCHANGED

The average net return on all Dartmouth investments for the year 1945-46 was 3.70% as compared with 3.69% for the previous year. The rate of return realized was 6.32% on preferred and guaranteed stocks, 4.69% on common stocks, 3.13% on bonds, a.70% on real estate mortgages, 1.13% on real estate outside of Hanover, 2.50% on dormitories, and 3.74% on other Hanover real estate. The decrease in the average rate of return from bonds (from 3.38% to 3.13%), due to corporate refinancing at prevailing low interest rates, continued but was somewhat more than offset by the increase in return on common stocks and a somewhat better return on dormitories, which were not fully used during the war and which under the Navy policy on allowances for occupancy did not produce a net return comparable to that of pre-war years.

Of the total book valuation of $23,635,749.73 for all College investments, bonds represent 39.96%, common stocks 34.15%, dormitories 9.85%, preferred and guaranteed stocks 5.87%, other Hanover real estate 4.73%, real estate outside of Hanover 2.05%, real estate mortgages 1.85%, and Tuck School dormitories and refectory 1.54%. In terms of security holdings only, bonds represent 50%, common stocks 42.7% and preferred and guaranteed stocks 7.3%. Security holdings are distributed 25.2% in industrials, 23.1% in public utilities, 18.8% in railroads, 8.9% in mining and oil, 7.5% in financial, and 16.5% in U. S. and Canadian government bonds. U. S. Government bonds aggregate $2,580,107.

The investment figures used in the financial report are taken at book values, which in practically all cases represent cost at the time of purchase or market value if the securities were received by gift or bequest, reduced by any amortization of premiums. At the end of the fiscal year 1945-46 market values as compared with book values stood at 119% as compared with 112% for the previous year. For bonds the figure is 108%, for preferred and guaranteed stocks 141%, and for common stocks 129%. This excess of market value over book value totaled $3,624,614.

During the year sales of securities gave net realized gains of 1403,249.05. Of this, $309,107.05 was in the investments of associated funds and was applied to reduce the unfavorable balance in the investment profit and loss account, bringing the figure of that account at the end of the year to $76,453.34. In the separately invested funds gains and losses are added to or deducted from the principal of the funds themselves. In this connection the realized gains in excess of losses over the years the funds have been in existence have increased the Edward Tuck Fund by $1,203,088.30 and the Albert O. Brown Fund by $319,577.35.

At any given time the investment lists of institutions which receive their funds as the result of the generosity of their various benefactors usually include some securities which have been given in an invested form and which for one reason or another are held by the institution. Dartmouth is no exception. In no year does the list of securities depict accurately what might be termed the true investment policy of the College.

TRIBUTE TO ALUMNI FUND

In concluding his annual report to the Trustees, Mr. Edgerton once again paid tribute to the superlative results of the Alumni Fund and to the incalculable value which the Fund has in the financing of the College from year to year. He said:

"Once again the Dartmouth College Alumni Fund on the Tucker Foundation has made a magnificent showing and has set a new record.

"Total contributions, including the income from special funds, aggregated $416,677.55 as against a comparable high figure for the previous year of $337,367.02. After meeting the expenses of collection of the Fund and after applying the income of the general fund and certain loan fund collections, the net amount available was $394.096.33

"As Treasurer, I wish to record the deep gratitude of those having to do with the financial affairs of the College to the 13,215 contributors and to all of the loyal Class Agents and others who made possible such a wonderful showing. With the reduced rate of return now available from endowments, the increased amount of alumni gifts through this Fund has approached close to half the income secured on all the endowments which Dartmouth has accumulated in its one hundred seventy-seven years of existence. Dartmouth men may well feel proud of their accomplishment."

In the preparation of his financial report for 1945-46 Mr. Edgerton had the major assistance of Max A. Norton '19, Bursar of the College and Assistant Treasurer, and also of Donald L. Barr '18, Assistant Treasurer, who handles the investment portfolio. Printed copies of the complete report are available upon application and may be obtained by writing to the Office of the Treasurer, Parkhurst Hall, Hanover, N. H.

AWAY FROM HIS LEDGERS, Treasurer Halsey C. Edgertors 'O6 (center) is shown in the Dartmouth Grant this summer with representatives of the Pack Foundation, which surveyed the wilderness tract.

NOT A FROWN IN THE CARLOAD as this group of 1950 men pulls away from Robinson Hall for the annual Freshman Trip to Moosilauke, sponsored by the Dartmouth Outing Club before matriculation.