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Brandywine does [[underlined]] not [[/underlined]] offer a "small cap" approach; initially eliminated are all companies with capitalization of less than $250 million and a PE of 10.2 or less. Brandywine utilizes a reward/risk price objective by establishing upside and downside factors for each holding. Clients are offered either a standard universe return, or a value added return (perhaps an additional 200 basis points), dependent on desired risk.

All accounts hold virtually the same equities. Mr. Hitschler would be the Smithsonian's account representative. The company is privately held by nine owners (six insiders) and can manage South Africa-free portfolios.

Mr. McHenry thanked Mr. Scott and Mr. Hitschler for their insights into Brandywine's philosophy and introduced Mr. Ted Aronson and Mr. Russell Fogler of Aronson and Fogler. Mr Aronson stated that the firm presently has six clients and a portfolio of $175 million serviced by six investment professionals located in Philadelphia and Gainesville, Florida. Aronson and Fogler's emphasis is selecting companies that are well managed, with cash profits, low PE ratios, low price to book ratios, below average risk, and high yield.

The firms looks for companies that have competitive advantages, liquidity, good credit qualifications, and positive earnings, as determined by computer modeling. This reduces the universe of stocks from 7000 to about 700, which are then broken down into 9 market segments (i.e. technology, non-durable consumer goods, etc). The final portfolio consists of 200-250 stocks from this list for maximum diversification. The turnover rate is 88%.

Aronson and Fogler stress corporate management, portfolio management, and trading management in their stock selection. They emphasized that they rely on computer-driven stock selection, similar to Batterymarch. While Aronson and Fogler admitted that the stocks that usually show desired management characteristics are typically low cap, the average capitalization for their total portfolio is about $3 billion. Two-thirds of the portfolio is [[underlined]] not [[/underlined]] in the S&P 500.

After thanking Messrs. Aronson and Fogler, the Chairman introduced Mr. John Wiley and Mr. Arthur Nicholas of the Nicholas-Applegate Capital Management Co. (N-A). Mr. Wiley stated that the company was founded in 1984 by Mr. Nicholas. They presently have a diverse list of 72 clients and a total portfolio of $1.9 billion. The average capitalization in their stocks is $1.7 billion. The firm considers itself one of stock specialists, with capitalizations above $500 million; 85% of holdings are in domestic equities; each portfolio is always fully invested and holds 30 to 50 stocks. N-A can manage South Africa free.

Nicholas-Applegate's Emerging Growth Fund is presently closed. The performance of their emerging growth fund was in the top 1% for the last year. They do not deal with absolutes (i.e. strict computer models) but make decisions based on overall judgement of potential.

Nicholas-Applegate uses external research resources, computers, and their investment teams to arrive at final selections. They feel that high-growth stocks will outperform others in a slow-growth environment, such as the present economy. They believe that diversification lowers volatility and that