ALTERNATIVE INVESTMENTS

UNRELATED BUSINESS INCOME TAX

CONSIDERATIONS

This memo is intended to provide the Investment Committee a brief summary of the unrelated business income tax considerations associated with alternative investments. No action is necessary.

As a private foundation, the Bradley Foundation is exempt from U.S. federal income tax except to the extent of the entity's Unrelated Business Taxable Income (UBTI). UBTI is generally defined as:

1.	Income from a trade or business regularly carried on by a tax-
exempt entity that is unrelated to its exempt purpose. This includes unrelated trade or business regularly carried on by a partnership of which the entity is a partner.

2.	Debt financial investment of a tax exempt entity in a limited partnership.

3.	Income associated with "acquisition indebtness " incurred by the limited partnership.

4.	Fee income of the limited partnership.

Pages 2-4 include a summary of the K-1 schedules for the year ended December 31, 1998 for the Bradley Foundation's investments in limited partnerships. In 1998 unrelated business taxable income totaled $42,317 for federal tax purposes. Since there were $90,123 of operating loss carry forwards available from 1997 and prior years, no federal taxes are due by the Bradley Foundation in 1998.

The federal taxes associated with UBTI are manageable and the increased administrative burden is tolerable. The "hidden landmine" is the exposure associated with the need to file state tax returns in those states where the limited partnership operates and generates UBTI.

Page 5 includes a summary of the Bradley Foundation's limited partnerships indicating those states where filing a state tax return may be necessary in future years. Since most partnerships have had losses, filing of tax returns has not been required.

State tax return filings create two major issues:

1.	The "headache," cost and administrative burden to file tax returns in multiple states.

2.	Exposing the tax exempt income of the Foundation to unknown taxes, surcharges or filing requirements imposed by different states.

The state tax filing issue is being reviewed and researched by KPMG Peat Marwick . More specific information and recommendations will be provided to the Investment Committee at the next meeting.

Page 1

ALTERNATIVE INVESTMENT

QUARTERLY REPORTS

The Following quarterly investment reports are provided for information purposes only:

1.	China Automotive

2.	Alliance Brewing

3.	TCW Special Credits Fund

4.	TCW High Yield Limited Partnership