During the year, the Fund's board of directors wrestled with the questions of what spending policy is most appropriate in the still-uncertain financial environment, and the appropriate mix of extramural grants and intramural activities-research, program development, and communications-for advancing the foundation's mission. Like most other institutions whose sole source of income is their endowment, the Fund has found it necessary to reduce its spending plans to adjust to the current market realities and will spend 10 percent less in 2003-04 than in the preceding fiscal year. Barring worse market conditions than now predicted, the foundation plans to maintain the resulting total spending level over the next five years, which will enable the continuation of all major grants programs.

After close examination, the board reaffirmed the Fund's value-added strategy of using a professional staff to, first, work closely with grantees to shape, execute, and communicate the results of projects and, second, conduct intramural research and communications programs that enable the foundation to be an information resource for health care leaders and policymakers. The ability to maintain all grants programs and the intramural capacities that assure their effectiveness will enable the foundation to continue to fulfill a unique and highly productive role in American society.

Since its founding in 1918, the Fund has expended $624.5 million ($1.98 billion in 2003 dollars) on programs to advance its mission. The Fund's investment and spending policies should assure a continued flow of funds of this magnitude to improve the health and productivity of Americans.