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total portfolio to be effected as soon as possible by Fiduciary Trust and Miller, Anderson. Miss Leven and her staff will work with the managers to see that presently held funds as well as new endowment monies are allocated to ensure the achievement of the 25% level for the entire portfolio. The Committee confirmed the continuing policy of permitting the managers to invest in foreign currency bonds that are free from any South African connections.

The Chairman then spoke of the need to sustain a stable level of investment income for the Institution.  He explained the composition and purposes of the endowment funds and showed the comparative growth of the endowment since 1978.  In this context, Miss Level presented the staff's recommendation to the Committee for the fiscal year 1989 total return income payout of $9.81 per share versus $9.48 per share for fiscal year 1988.  This represents a 3.5% increase, roughly keeping pace with inflation. A copy of this memorandum detailing the rationale for this recommendation follows on the next pages along with a brief history of the Fund. After a brief discussion, the Committee voted unanimously to approve the Treasurer's recommendation and to forward the same to the full Board of Regents. Accordingly, the following motion is suggested:

VOTED that the Board of Regents accepts the Report of the Investment Policy Committee and approves a total income return rate for fiscal year 1989 which will use only interest and dividends from the Endowment Fund without invading principal.

There was further brief discussion on investment in real estate and venture capital. The Chairman stated that real estate investment for the Endowment portfolio should be distinct from meeting Institutional space needs. The Chairman agreed with Mr. Bailey's statement that the asset diversification was a prudent thing to do and that first a policy should be established and then implemented over one to three years. This topic will be more fully discussed at the next meeting.

Whereupon the chairman thanked everyone for their attendance and participation. The meeting adjourned promptly at 2:00 p.m.

M E M O R A N D U M      April 4, 1988

TO:      Members of the Investment Policy Committee

FROM:    Ann R. Leven, Treasurer

SUBJECT: Total Return Pay-Out Recommended for Fiscal Year 1989

The Institution utilizes the "total return" approach to investment management of endowment funds and quasi-endowment funds (monies designated by the Regents rather than the donors as endowment). Under this approach, the total investment return is considered to include realized and unrealized gains and losses in addition to interest and