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"true"* endowment funds as well as for "quasi-endowment" funds.  (see Treasurer's memorandum and related attachments in Appendix B.)  The adoption of this policy for quasi-endowment funds was approved by the Regents in October 1970.  The recommendation to apply it now to true endowment funds follows the receipt of a strong legal opinion from the Washington firm of Covington and Burling indicating that there is no legal impediment to adoption of this policy for such funds (subject to certain minor exceptions specified in the opinion).

Since its first meeting in September 1970, the Investment Policy Committee has discussed internally and with many investment managers the use of the Total Return Concept of Income.  The members of this Committee present at its meeting of April 26, 1972, (Mr. Greenewalt was unavoidably absent) were unanimously of the opinion that Total Return is the prudent and logical policy to be established for the guidance of the management of the Institution's investment funds and indeed that failure to follow such a policy might well handicap achievement of the best long-term investment results.

The Committee concurred, therefore, with the recommendation of the Treasurer as to the adoption of the Total Return policy for the Institution's investment funds (other than those specifically excluded) and also with the corollary recommendation for determining income on these funds as a prudent portion of expected long-term total return.  Broad guidelines on the latter, already in effect for quasi-endowment funds, provide for the distribution of annual income from the funds at  
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*"True" Endowment funds are those in which only income may be distributed; in the case of "quasi-endowment" funds, by the terms of the gift principal as well as the interest and dividend yield may be used if necessary.