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was $110, and the annual rate of dividend and interest yield was $6.22 per unit, a return of 5.7%. Thus, it is currently estimated that the interest and dividend yield on the total portfolios of all managers in FY 1979 will exceed the $4.74 per unit payout proposed herein and thereby allow some restoration to endowment funds capital of amounts (shown above) previously withdrawn under the total return payout principle.

Accordingly, it is suggested that the present "4-1/2% - five-year market average" formula be replaced. Instead of this fixed formula, tied directly and solely to stock market experience, [[underlined]] it is proposed that a set amount to be determined at the beginning of each year which would take into account a number of factors: [[/underlined]]

(1) The present 4-1/2% - five-year formula which reflects market valuations.
(2) Current dividend and interest yield.
(3) Support needs for bureaus and scientists.
(4) Inflationary increases as measured by the Consumer's Price Index.
(5) Possibly other factors.

[[underlined]] For FY 1979, it is proposed that the payout be the same as for the previous year 1978, namely, $4.74 per unit, plus an amount to pay manager's fees, the total equaling approximately 5.1% of current endowment fund values. [[/underlined]]

The payout rate would thereafter be reviewed annually by the Investment Policy Committee and reestablished in light of the factors cited above. If warranted, the rate of payout should be increased to provide income to endowment fund beneficiaries in line with inflationary increases in costs.

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December 19, 1978