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COVINGTON & BURLING
888 SIXTEENTH STREET, N.W.
WASHINGTON, D.C. 20006
          
TELEPHONE: (202)293-3300
TWX (202) 965-0673
TELEX 89-593
CABLE COVLING

[[cut off]]N LORD O'BRIAN 
[[cut off]]N G LAYLIN 
[[cut off]]TAINE C BRADLEY 
[[cut off]]ARD BURLING,JR 
JOEL BARLOW 
DONALD HISS
JOHN T SAPIENZA
NESTOR S FOLEY
[[cut off]]IEL M GRIBBON
[[cut off]]RY L SHNIDERMAN
[[cut off]] V HARRIS,JR
[[cut off]]LIAM STANLEY,JR
WEAVER W DURNAN
EDWIN M ZIMMERMAN
JEROME ACKERMAN
[[cut off]]RY P SAILER
[[cut off]]N H SCHAFER
[[cut off]]RED H MOSES
[[cut off]]N LEMOYNE ELLICOTT
DAVID L MCGIFFERT
PHILIP R STANSBURY
CHARLES A MILLER
RICHARD A BRADY
[[cut off]]RBERT DYM
[[cut off]]RIL V SMITH,JR
[[cut off]]RK A WEISS
[[cut off]]RRIS WEINSTEIN
JOHN B DENNISTON
PETER J NICKLES
NEWELL W ELLISON
H THOMAS AUSTERN
HOWARD C WESTWOOD
CHARLES A HORSKY
HUGH B COX
J HARRY COVINGTON
W CROSBY ROPER,JR
JAMES H MCGLOTHLIN
ERNEST W JENNES
STANLEY L TEMKO
JAMES C MCKAY
JOHN W DOUGLAS
HAMILTON CAROTHERS
J RANDOLPH WILSON
ROBERTS B OWEN
EDGAR F CZARRA,JR
WILLIAM H ALLEN
DAVID B ISBELL
JOHN B JONES,JR
H EDWARD DUNKELBERGER,JR
BRICE MCADOO CLAGETT
JOHN S KOCH
ROBERT E O'MALLEY
EUGENE I LAMBERT
JOHN VANDERSTAR
NEWMAN T HALVORSON,JR
HARVEY M APPLEBAUM
MICHAEL S HORNE

APRIL 18, 1972

Smithsonian Institution
Washington, D.C.

Gentlemen: 

Re: Determination of Income for Permanent Endowment Funds as a Prudent Portion of Total Yield and Appreciation Based on a Percentage of Average Fund Values

Our advice has been requested regarding the use of a method whereby income of various permanent endowment funds of the Smithsonian Institution is determined as a prudent portion of total yield and appreciation based on a percentage of endowment fund values. In connection therewith we have examined copies of certain endowment instruments or portions thereof available in the files of the Institution in the light of applicable law. 1/ We are of the opinion, where the governing instrument does not otherwise specify how income on the endowment fund is to be determined, that the Smithsonian Institution may properly substitute for actual yields a prudent portion of total yield and appreciation to be treated as income of permanent endowment funds. 2/