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the minimum levels. To date this strategy has been working quite well. Mr. Moriarty suggested that the guideline should specify [[underlined]] non-equity [[/underlined]] holdings, rather than just [[underlined]] fixed income. [[/underlined]] The Committee concurred. The Committee discussed whether to reinforce the existing guidelines or amend them to reflect a more conservative stance. After further discussion, the Committee unanimously agreed [[underlined]] to require a minimum of 30% in non-equity issues, specifically fixed income instruments and cash or equivalents. [[/underlined]]

The Committee then discussed investment in high-yield "junk" bonds, and the associated difficulties with assessing the quality of these investments. Mr. English inquired as to whether such potentially speculative investments were appropriate for the Institution. A discussion ensued; it was agreed that "junk" bonds ought not to be a part of the portfolio, and the Committee asked the Treasurer to inform the managers that no investments in bonds rated lower than "A" were permissible. The Investment Guidelines will be amended accordingly.

The Committee decided after additional discussion that the Institution should not participate in the new MAS "small cap" fund, which would seem redundant in view of the Institution's planned investment with Wellington, and that it would not consider the MAS International Fund. The Committee looks forward to Dean LeBaron's presentation on global investing at the next meeting.

The Committee also discussed briefly interviews that had been held with two social responsibility-oriented funds. It gave the Treasurer permission to invest a small sum with one of the funds, Calvert-Ariel Growth Fund, to protect the Institution's option for future investment. Calvert-Ariel will close at $200,000,000 to all but investors already in the Fund. The Committee will discuss the implications of "social" investments at the next meeting.

The Treasurer then distributed a list of approximately 50 potential managers interested in serving the Institution. Prepared by staff, the list consists of firms specializing in "small cap" issues as well as those with potential as future core managers. Ms. Leven asked the Committee to review the lists and forward comments to her. Another Special Meeting of the Committee may be held in January or February to screen additional managers.

Mr. McHenry reminded the Committee that the next regularly scheduled meeting would be held during the Spring in Washington. He thanked the members for their participation and valuable advice, whereupon the meeting was adjourned at 5:30 p.m.

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A special meeting of the Investment Policy Committee to interview potential small capitalization investment managers was convened in New York City on October 18, 1989, at 1 p.m. Present were Barnabas McHenry, Chairman; Mr. Donald Moriarty, and Mr. Charles H. Mott. Also present were Smithsonian staff Ann R. Leven, Treasurer; and John R. Clarke, Assistant Treasurer.

The first candidate was the Wellington Management Corporation, represented by Mr. John Gooch and Mr. Binkley Shorts. Wellington is the investment advisor to the Review Management Corporation, which is owned by the