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Two analysts and top management from eleven sector firms examine the Healthcare sector in this special 51-page issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info438.htm

TWST: Which sectors are you overweight in today, and how might allocation change over the next three to six months?

Ms. Haggar: Overall, we still have a relatively high cash position, as a defense against the potential market volatility during the war against terrorism. After a down first quarter, health care had a tremendous recovery in the second quarter this year. For example, our portfolio in the second quarter was up 18%. Anticipating a correction this summer and a lack of catalyst events, we increased our cash position to 30%. This turned out to be fortuitous for the third quarter performance as the market declined in the aftermath of the September 11th terrorist attack.

TWST: Is that particularly high for you?

Ms. Haggar: It is high for us, because normally we stay about 90% invested. In our long portfolio, people don’t pay us to sit in cash; they pay us to invest. We just started reducing our cash positions in early September in anticipation of medical conferences, company meetings and positioning for what we thought was going to be a better second half of the year for health care. But we just hadn’t had a chance to fully invest our spare cash by September 11.

TWST: Which sectors or specific companies are most likely to become attractive from an investor’s standpoint in terms of regulatory changes, medical, scientific developments, or quite simply because of valuation?

Ms. Haggar: In my opinion, health care in general will be one of the first sectors to recover from the recent market decline, mainly because the tragic events of September 11 may have pushed an already fragile economy into a recession — something that was not anticipated before this tragic event. In fact, everyone was looking forward to an economic recovery, albeit not robust. Therefore, healthcare stocks were just going sideways this summer, because on the eve of an economic recovery they are not as attractive as cyclicals.

TWST: Do you buy sectors or specific stocks?

Ms. Haggar: One always buys specific stocks, not sectors, unless you want to hedge with particular sector indices. However, it is important to consider each stock in the context of its particular sector and that sector’s attractiveness from a broader economic or regulatory standpoint.

TWST: Moving on to the medical technology and the hospital supply side of the equation, you mentioned that you still like Baxter (NYSE:BAX). What’s your thinking on Medtronic, Boston Scientific (NYSE:BSX) and Guidant (NYSE:GDT)?

Ms. Haggar: I like Medtronic (NYSE:MDT). Medtronic has never been a cheap stock. However, in my opinion it is one of the strongest companies in the industry. It is very well diversified; it is extremely well managed; it is financially disciplined, and it also has a tremendous number of new products in the pipeline. In terms of the new product flow, 2001 is somewhat back-end loaded, so we are expecting the final approvals of Insync ICD for congestive heart failure and Activa, for Parkinson’s disease, in the next couple of months. Next year we are expecting data on Medtronic’s drug-coated stent program, which uses anti-sense technology.

This special issue includes:

1) Investing in Healthcare Funds - In an in-depth (3,800 words) Analyst Interview, Mariola B. Haggar, President, General Partner and Portfolio Manager at Haggar Concord Partners, LP, examines the outlook for the sector and shares specific stock recommendations.

2) Healthcare Benefits Management/Outsourcing - In an in-depth (3,800 words) Analyst Interview, Michael J. Baker, Health Care Services Analyst focusing on benefits management/outsourcing at Raymond James & Associates, examines the outlook for the sector and shares specific stock recommendations.

3) CEO interviews (average 2,500 words). Top management of eleven sector firms examine the outlook for their firm and the sector.