( D R A F T )

Asset Allocation and Manager Changes

The overall favorable equity portfolio performance and the slackening performance of the small cap managers raises the following questions:

1.	Should any of the small cap managers be replaced?

2.	Is there a need to rebalance the equity portfolio?

a)	Given the relatively high stock market valuations, should the Foundation fund the $20 million commitment to the Stadium District by reducing the equity portfolio by $20,000,000 now and invest the proceeds in low risk, low volatile short term investments?

b)	If (a) above is not approved, should the equity portfolio be rebalanced to the target allocation?

SMALL CAP MANAGER EVALUATION/CHANGES

The small cap portfolio at July 31, 1997 is summarized below:

($000 Omitted)

U.S.	Foreign

Manager	Domestic	Equities	Other	Total

TCW-Small Cap	$57,860	1,957	207	60,024

Founders Asset

Management	25,919	243	4,729	30,891

Acacia Institu -

tional Partners

($50% classified

as small cap)	25,443	2,827	0	28,270

$109,222	$5,027	$4,936	$119,185

% of Total

Portfolio	18.78%	0.86%	0.84%	20.48%

Target

Allocation	18.0%

The following factors were considered in evaluating the changes, if any, for the Foundation's small cap manager team:

1.	Asset Allocation Targets

2.	Performance

3.	Investment Style

4.	Costs

Asset Allocation Targets

The target allocation for U.S. domestic small cap stocks is 18% compared to an actual allocation of 19.62% (includes cash and other) at July 31, 1997. Some rebalancing of the small cap asset allocation may be necessary, but the current excess allocation does not have a significant impact on the manager selection.

Performance

Presented below is a performance summary of the small cap managers compared to various indices:

Year	Trailing	Trailing

July	June	Trailing	To	12	3

1997	1997	3 Months	Date	Months	Years

TCW Small Cap	5.98	5.28	26.81	1.61	-5.25	31.71

Founders Asset

Management	8.59	4.38	15.76	-0.16	5.28	26.55

NASDAQ Composite	10.52	3.01	18.13	11.87	22.10	27.53

Russell 2000	4.65	4.29	16.21	10.20	16.33	20.05

Russell 2000 Value	4.19	5.06	16.09	14.81	28.24	21.20

Russell 2000 Growth	5.12	3.39	17.55	5.23	4.60	18.52

The net performance deviation for the small cap managers is as follows:

Cumulative Since

Inception To 7/31/97

YTD 7/31/97	Favorable (Unfavorable)

TCW Small Cap	($6,780,400)	$1,835,098

Founders Asset Management	($3,786,000)	($2,624,743)

Acacia Institutional

Partners (50% assigned

to small cap)	$847,559	$1,077,799

The performances of both TCW Small Cap and Founders have been less than acceptable during the past year. However, for the trailing three year period TCW Small Cap has exceeded the target NASDAQ composite index. They both have exceeded the Russell 2000 index. In addition, both managers had relatively strong performances in June and July 1997. Founders has a cumulative unfavorable net performance deviation of ($2,624,743).

It should be noted that the Russell 2000 index may be a more appropriate benchmark for these portfolios given their market capitalizations and investment style. The NASDAQ index can provide distorted results because of the following reasons:

1.	More than half of the NASDAQ universe is with companies with less than $60 million market capitalization. Many of these companies are uninvestable penny stocks.

2.	In 1996 the top five names (Microsoft, Intel, Cisco , Oracle and Amgen ) contributed 17.9% (80%) to the total NASDAQ composite return of 22.7%. The top five represent 19.3% of the overall index capitalization.

Investment Style

The Foundation's current small cap portfolio clearly has a significant bias to growth style investing. In prior years this created above average returns. In the past year the Foundation's small cap managers have incurred subpar performances. Growth style managers in general have had a difficult year as evidenced by the following results of the Russell 2000 index for the trailing 12 months June:

Russell 2000 Value	14.81%

Russell 2000 Growth	5.23%

The debate between growth and value style investment can be confusing depending on the statistics and periods of time used in presenting the debate. However, there is substantial merit in creating a portfolio that is more style neutral as suggested by Wilshire Associates in their Asset Allocation Study.

Investment performance statistics do support the fact that value style investing provide returns that are equal to or exceed the growth style. Exhibits A and B include various statistics comparing growth and value style investing. As indicated on Exhibit A the trailing 5 year performance for the Russell 2000 Value index was 20.17 compared to 15.13 for the Russell 2000 Growth index. Exhibit B provides more dramatic comparisons for the 20 years through December 1976.

Costs

Changing managers can be costly because of transactions costs, taxes on realized gains and impairment of investment performance during the transition period.

Recommendation

Depending on what benchmark is used, the small cap manager performances can be considered acceptable or unacceptable. However, the marginal performance in the prior year provides the opportunity to consider shifting the portfolio to a more style neutral position by adding one or two small/mid-cap value style managers. Based on the above factors, the following recommendations are proposed:

1.	Given the 3 year performance record of TCW Small Cap, the cumulative favorable net performance deviation, and the aforementioned cost considerations, complete termination of TCW Small Cap does not appear appropriate at this time. It is recommended that the portfolio be reduced by $15 million and reallocated to a new small/mid-cap investment manager. Additional reductions should be considered as needed to rebalance the small cap portfolio to the 18% asset allocation target.

2.	Terminate Founders Asset Management and reallocate portfolio to a new small/mid-cap manager. Their performance has not met expectations and the organization may undergo changes from a merger or sale in the near future.

3.	Employ one new small cap value manager and one new mid-cap value manager.

The proposed reallocations are presented in the table below:	($000 omitted)

Present Allocation	Proforma Proposed

7/31/97	Reallo -	Allocation 7/31/97

Growth	Value	Total	cation	Growth	Value	Total

TCW Small Cap	$60,024	--	60,024	-14,109	45,915	--	45,915

Founders Asset

Management	30,891	--	30,891	-30,891	--	--	--

Acacia Institutional

Partners	28,270	--	28,270	28,270	--	28,270

Small Cap Value

Manager	+25,000	--	25,000	25,000

Mid-Cap Value

Manager	+20,000	--	20,000	20,000

$119,185	--	119,185	74,185	45,000	119,185

Percent	100%	0%	100%	62%	38%	100%

REBLANCING THE EQUITY PORTFOLIO

The Foundation's equity portfolio is summarized below:

Target Allocation	Actual Allocation

Amount	Percent

U.S. Stocks-Large Cap	37.0%	$211,460	36.36%

Foreign Stocks:

Foreign	79,396

ADR Purchased securities:

Large cap	31,917

Small cap	5,027

Emerging markets	7,875

Total foreign stocks	20.0%	124,215	21.36%

U.S. Stocks-Small Cap	18.0%	109,222	18.78%

Total Equities	75.0%	$444,897	76.5%

After five years of growing the equity portfolio and spending the fixed income portfolio, the Foundation has exceeded the 75% target allocation for equities in July, 1997. Accordingly, guidelines and actions need to be implemented to rebalance the portfolio as necessary. Two approaches are presented for consideration:

1.	Current funding of Stadium District $20 million commitment with a low risk, low volatile short term investment.

2.	Selective reduction of equity portfolio.

Current Funding of Stadium District Commitment

Background

The Foundation has committed a $20,000,000 charitable investment to the Southeast Wisconsin Professional Baseball Park District for the development and construction of a new stadium complex in Milwaukee. The charitable investment will be in the form of a refundable grant (loan) at a below market interest rate with flexible repayment terms. The refundable grant agreement and related documents have been finalized and signed.

The current schedule, although tentative, requires the $20,000,000 to be disbursed beginning July 1, 1998. The total amount would be disbursed over approximately three months.

Question

Most likely the funding of the $20,000,000 commitment would require sale of a portion of the equity portfolio. Given the relatively high price level existing in the current stock market and the equity portfolio exceeding the target allocation at July 31, 1997, should the Foundation reduce the equity portfolio by $20,000,000 now and invest the proceeds in low risk, low volatile short term investments?

Discussion

The Foundation's investment performance returns over the past five and one-half years are as follows:

Fixed

Year	Equity	Income

1997 YTD	22.33%	5.12%

1996	19.45%	6.30%

1995	26.80%	16.24%

1994	(0.89)%	(1.82)%

1993	12.60%	9.88%

1992	7.61%	5.96%

Average Return	14.65%	6.94%

(assumes 1997 as

full year)

A review of the investment returns of a $20,000,000 investment based on various alternatives are as follows:

$20,000,000 over 1 year

Balance After

12 Months	Increase

Six year average equity

return	$22,930,000	$2,930,000

Six year average fixed

income return	$21,388,000	$1,388,000

Five year average Portico short

term portfolio (5.73%)	$21,146,000	$1,146,000

Current 1 year U.S. Treasury

note (5.70%)	$21,140,000	$1,140,000

One Year U.S. Treasury bill

(5.50%)	$21,100,000	$1,100,000

If the six year average equity return is achieved over the next year, the investment return on $20,000,000 would be approximately $1,790,000 higher than the return on a one year U.S. Treasury note. In other words, the $1,790,000 would be the insurance cost to remove the volatility and risk to achieve a guaranteed investment return of $1,140,000.

Recommendation

We believe the Foundation should seriously consider funding the $20,000,000 charitable investment commitment through a current reduction of the equity portfolio and the investment in short term U.S. Treasury notes or bills.

Reasons for this recommendation are as follows:

1.	The stock market is at historically high levels resulting from the largest bull market in history. Achieving even the historical equity performance returns is doubtful, especially in a one year time period.

2.	Opinions regarding further gains in the stock market, especially in the short term, are widely diverse.

3.	The Foundation's equity portfolio has a relatively high beta at 1.47 and a P/E ratio of 33.55. The investment manager beta's range from 1.00 to 1.55 and the P/E ratio's range from 17.95 to 52.12.

4.	The $20,000,000 reduction represents approximately 4.49% of the equity portfolio and 3.43% of the total portfolio. Accordingly, the proposed equity reduction is not a major asset allocation change but recognizes the need to provide funding for an unusual short term financial commitment. Proforma asset allocation amounts reflecting the $20,000,000 equity reduction as of 7/31/97 are summarized below:

Actual 7/31/97	Proforma 7/31/97

($000's omitted)

Amount	%	Amount	%

Equities	$444,897	76.5%	$424,897	73.1%
Fixed	109,727	18.9	129,727	22.3

Alternative

Investments	20,959	3.6	20,959	3.6

Other	5,985	1.0	5,985	1.0

$581,568	100.0%	$581,568	100.0%

A suggested equity reduction is presented below:

Amount	Reason

Fayez Sarofin	$10,000,000	Lock in recent gains!
Future increase in large cap stocks in the short term is uncertain.

Capital Guardian	7,000,000	Foreign stocks at 7/31/97

Global	represent 21.36% of the portfolio versus a target allocation of 20%. Reduction would reduce allocation to more comparable actual/target relationship of other

stock classes.

TCW Small Cap	3,000,000	Reduce small cap allocation

to a more comparable

actual/target relationship.

$20,000,000

Selective Rebalancing of Equity Portfolio

If the current funding of the Stadium District Commitment is approved, no additional rebalancing is necessary. A plan for selective rebalancing of the equity portfolio to achieve a 75% equity allocation, if necessary, is presented below and is based on the same reasons as set forth for the Stadium District funding:

Portfolio

Portfolio	Reduction

Fayex Sarofim	$4,500,000

Capital Guardian Global	3,500,000

TCW Small Cap	1,000,000

$9,000,000

Exhibit A

U.S. Equity Markets

Performance Summary

Russell 2000 Index

As of June 30, 1997

Russell	Russell	Russell

2000	2000	2000

Composite	Value	Growth

June 1997	4.29	5.06	3.39

Trailing 3 Months	16.21	16.09	17.55

Year to Date	10.20	14.81	5.23

Trailing 12 Months	16.33	28.24	4.60

Trailing 3 Years	20.05	21.20	18.52

Trailing 5 Years	17.87	20.17	15.13

Source: Wilshire Report