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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: Could you briefly give us an overview of the Federated Kaufmann Fund and your responsibilities there?

Mr. Auriana: The Federated Kaufmann Fund is a fund that invests in growth companies, irrespective of capitalization. Lipper has us categorized as multi-cap growth. Morningstar has us as mid-cap growth and that’s what we do. We invest in growth companies. That’s what Hans Utsch and I have done for our entire careers, which, by the way, go back to the mid-1960s. We’ve been running the Fund since 1986. It’s one of the longest terms of any fund manager. I think we’ve been running the Fund longer than 90% of the mid-cap growth funds have been in existence, and maybe longer than 85% of most usual funds that have been in existence. So it’s been a long-term commitment to investing in growth companies. Our investment criteria and process have remained basically unchanged for the last 15 years. We like to invest in companies that are leaders in their industry for the most part. If you look at our portfolio, you’ll see that that’s borne out by investments, for example in Lincare (LNCR), which is our largest holding and is the leader in home respiratory therapy, and a company like PETsMART (PETM), which is the biggest factor in retailing pet supplies. J D Wetherspoon Plc is, I think, our fifth largest holding and is the best-run, the most rapidly growing chain of pubs in the United Kingdom. Concord EFS (CEFT) is one of the two most significant processors of credit and debit card transactions. We invest in companies that are established leaders in their industry, companies that are already profitable. We do thorough analysis of a company’s business. We feel we are investing in a business rather than a stock, so we want to understand the dynamics of the businesses that we invest in — what factors have caused past growth and what factors will generate future growth. We meet with the management of virtually all the companies we invest in and have a continued dialogue with them. We think that’s an important ingredient in successful investing. We invest in well-financed companies with the right product and with the right management. As part of the process, we do a thorough analysis of the financial statements of companies. We pay particularly close attention to cash flow statements to see if a company is generating real profits, or real cash, as opposed to accounting profits. The only exception to investing in profitable companies is in the biotech area, where we do participate. We have about 7% of the Fund committed to biotech investments. So I think that’s a brief overview. We are located here in Manhattan. The management company was acquired last April by Federated Investors but we have a free hand to manage the Federated Kaufmann Fund, and we’re managing it with the same team of individuals who managed the Fund prior to the acquisition. We have very substantial incentives to do well. There is a very important back-end payment based upon the growth of this Fund over the next five and a half years. So we’re all here and all working as hard as we ever did.

TWST: Are you generally fully invested and to what extent do you use cash?

Mr. Auriana: Historically, we’ve been anywhere from fully invested to, let’s say, 10% in cash. Currently, we are 10% cash. So we are not trying to make calls on the market because we don’t figure that’s our function. Our function is to find good investments.

TWST: Could you briefly give us a rundown on some of your core holdings — you’ve mentioned Lincare and Concord EFS — and the reasons why they are core holdings?

Mr. Auriana: Lincare is our largest holding. Our second largest holding has been a company that’s been up and down like a yo-yo over the last few years — Cendant (NYSE:CD). We’ve owned it since 1994. We went through that whole mess of the scandal with CUC but we believed in the underlying business, which generates a lot of cash flow. Last year, it was our best individual performer as a stock, in terms of generating the biggest dollar return for us.

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.