We believe that the following steps are appropriate:

1. Harvard should, in cooperation if possible with sister institutions and the administrators of the Sullivan Principles, expand the scope and strengthen the content of the existing principles defining the ethical responsibilities of companies with South African operations in relation to employment conditions and other opportunities enjoyed by non-white employees and their families. Recently the ACSR and the CCSR endorsed several shareholder proposals calling on U.S. companies with South African operations to embrace goals recently enunciated by Bishop Desmond Tutu. Some of these goals go beyond the Sullivan Principles and the principles of socially responsible behavior adopted by Harvard in 1978. Bishop Tutu has called on U.S. companies to help ensure that workers' families should be allowed to live with them; to permit unionization by black workers; to promote labor mobility by opposing influx controls; and to make "massive" investments in educational and training programs for blacks of a sort that have credibility in the black community.

We believe that Harvard's existing policies should be expanded to include and implement these policies, which have already been endorsed (in the contest of votes on shareholder proxy resolutions) by both the CCSR and ACSR.

We believe that portfolio companies should commit themselves to implement these policies. If a company is unable to achieve compliance within a specific period of time it should withdraw from South Africa or Harvard should divest.

If U.S. companies are unable to implement the Tutu principles because the South African government actively proscribes them as a violation of South African law, then withdrawal is the proper course.

The Tutu principles need further specification and a system for monitoring implementation. We believe that these steps can best be accomplished on a multilateral basis through cooperation with other institutional investors, the IRRC, and the administrators of the Sullivan Principles. These multilateral monitoring practices should be expanded to include the Tutu principles.

We also believe that a deadline should be established to ensure prompt implementation of the Tutu principles. We believe it appropriate to set an outside deadline of three years for substantial compliance by portfolio companies with the Tutu Principles. If such compliance is not achieved within the deadline, divestment should automatically follow.

2. Harvard, in cooperation if possible with other institutional investors, the IRRC, and the administrators of the Sullivan Principles, should develop information on the direct involvement in apartheid of U.S. firms, including those supplying computers and electronic equipment, petroleum, and motor vehicles to the South African police and military. It should, on a multilateral basis if possible, seek through dialogue, publicity, and other means to bring about the elimination of such involvement. Harvard should in cooperation with others if possible, develop specific principles defining the types of direct support for apartheid that should be eliminated. If portfolio companies fail to achieve substantial compliance with such principles within three years. Harvard should call on such companies to withdraw from South Africa. If they refuse to do so, Harvard should divest.

3. To the extent consistent with its role as an independent university. Harvard should support governmental initiatives to end apartheid and seek in its role as investor to persuade portfolio companies to accept such initiatives.

C. Ensuring Future Implementation of Harvard's Policies

1. Harvard should make an annual report to the Harvard community concerning its portfolio companies. The report should (a) identify the current number of such companies; (b) provide information concerning extent of compliance by each company with the Sullivan Principles or their equivalent, the Tutu Principles, and the principle forbidding direct support of the apartheid apparatus; (c) describe the number of portfolio companies with South African operations that have been the subject of dialogue during the past year, the nature of such dialogue, and its results (including divestment).

2. The Management Company should annually report to the CCSR and the ACSR concerning its policies and practices with respect to the acquisition and evaluation of information concerning the South African operations and policies of companies which it is considering for investment.