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The Committee then addressed the issue of portfolio diversification. Over the course of the past year, staff has investigated numerous managers with specialization in many different areas: venture capital, small capitalization stocks, low-grace bonds, real estate, international funds, and leveraged buy-out funds. Mr. McHenry asked the Committee whether or not they felt the Smithsonian should still maintain a focus in the technology sector, given the departure of Nova, or look to some of these other alternatives.

Mr. Mott and Mr. Moriarty pointed out that there were numerous managers who invested in technology, but that few, except for venture capitalists, were focused on solely technological issues. Mr. Watson indicated that a specific venture opportunity was a difficult choice. Messrs. Mott and Moriarty agreed. The consensus of the Committee was that given current price earnings ratios, venture capital-like investments could be as easily attained in the established markets by directing monies to managers investing in small capitalization stocks. Mr. McHenry suggested that the Committee reconvene in a month or two  and requested staff prepare a list of such managers from which the Committee could choose to interview, perhaps three or four.

The Chairman thanked the members of the Committee for their continued active participation in the Institution's activities. The meeting was adjourned at 5:00 p.m.