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Five money managers examine portfolio management strategies in the latest issue of The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info545.htm

TWST: What do you feel differentiates your particular investment style from other growth managers?

Mr. Lee: I think it’s more focused on some specific factors. We use a bottom-up approach that is a multifactor model. The model combines different weightings on valuation, earnings growth, earnings surprises and earnings revisions. That model identifies several ideas for us that are driven into the portfolio by a bottom-up process.

TWST: Could you tell us about your investment decision-making process?

Mr. Lee: The first cut would be companies with market caps between 1 billion and 10 billion. That identifies approximately 9,000 companies just in that one cut. I also look at what earnings have been over the last 12 months, and what they are projected to be over the next 12 months. I screen out any companies that are expected to have negative earnings comparisons. Next, I look for companies that have had positive earnings revisions over the last month. This data is based on First Call estimates. I also look for positive revisions over the last three months. Then we get into some of the valuation characteristics. I use a cash flow multiple, specifically enterprise value divided by EBITDA. We also look at p/e multiples on 2002 and also 2003 earnings. The final criterion in our screen is return on equity. We look for return on equity over the past year of at least 15%. Over the last five years, we look for it to average at least 15%. To sum up the process, after starting with 9,000 companies, we identify 150 to 200 names that we can research in more depth. That is a manageable number that we can review on a daily basis. We have already either owned or reviewed most of those names. The screen also identifies other names that we haven’t considered. All in all, it is a pretty efficient process.

TWST: What are some of the sectors that are exhibiting growth potential at this time?

Mr. Lee: The largest sector weightings currently in our portfolio are (in order) industrials, health care, consumer and technology. Given the environment we’ve seen over the last 12 months, we’ve been more tilted toward the steady earnings growers. A lot of those names are showing up in the industrials segment of the market right now. Those companies that have been able to deliver earnings in a tough economic environment have been doing well lately.

TWST: Do you do any macro analysis?

Mr. Lee: It’s mainly a bottom-up process, although I do take a look at what the overall portfolio looks like on a sector-weighted basis. We compare our sector weights to the indices that I mentioned earlier, as well as to the Morningstar peer group. There is also some top-down looking at where we think the economy is going. For example, over the last six months, a number of consumer names have surfaced as being attractive on our model. That was consistent with my view that consumer spending would hold up nicely through the slowdown. And it did — it held up surprisingly well. Some of our best performers have been retail stocks, housing stocks and some of the early-cycle industrial stocks.

TWST: Another sector you mentioned with continuing growth is health care. What areas specifically excite you there?

Mr. Lee: We’ve always had a fairly large weighting in biotechs, including some of the genomics companies. Those haven’t been strong performers lately. The stocks that we’ve added to recently in the healthcare sector have been the less expensive names — namely in the hospital area. These include names such as LifePoint Hospitals (Nasdaq:LPNT), which is an owner of rural hospitals that tend to be in small towns with little competition. They have been able to do very well in a tough operating environment for most hospitals.

This special Investing Strategies Report includes:

1) Alexander L. Muromcew, International Equity Portfolio Manager and a Vice President at Loomis, Sayles & Company, L.P., examines portfolio management strategies in this timely and deeply informative 3,900-word interview from The Wall Street Transcript.

2) Robert L. Lee, Senior Vice President of Sentinel Advisors Company, examines portfolio management strategies in this timely and deeply informative 4,400-word interview from The Wall Street Transcript.

3) Martha Kimball Pomerantz, Investment Principal at Lowry Hill, examines portfolio management strategies in this timely and deeply informative 3,900-word interview from The Wall Street Transcript.

4) Lawrence Auriana, Portfolio co-Manager of Federated Kaufmann Fund, examines portfolio management strategies in this timely and deeply informative 3,700-word interview from The Wall Street Transcript.

5) Paul A. Magnuson, Principal, Senior Research Analyst and Portfolio Manager with NFJ Investment Group, examines portfolio management strategies in this timely and deeply informative 3,500-word interview from The Wall Street Transcript.