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Six 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/info562.htm

TWST: What was the performance of the portfolio over the last year and in the first quarter?

Mr. Burke: Our historical total return performance has been in line with our investment model over the time we have been in business. The past year and first quarter investment results were in line with our clients’ expectations. During the first quarter of 2002, we maintained a relatively sizable cash position that affected the equity allocation; the fixed income allocation performed well.

TWST: What is the outlook for large cap growth investing going forward?

Mr. Burke: We believe that certain large cap equities have a significant upside. Stock prices over long periods of time will ultimately reflect the earnings growth of companies. Since 1960, the S&P 500 posted an average annual profit of 7%. After reviewing historic trendlines and making reasonable assumptions for earnings growth, we project increasing S&P 500 operating earnings in 2002. 2002-2003 earnings will be enhanced by increased productivity and lower material and interest costs. At some point in late 2002, early 2003, the improved financial and operating leverage will be recognized in the share price of large capitalization companies. We are not oblivious to the current disconnect between economic growth and share price. Market history demonstrates that the malaise or disconnect will lift before increased earnings are recognized; therefore, I believe the market is approaching a point at which the share value of certain large capitalization companies will increase.

TWST: How is the current volatility of the marketplace impacting your portfolio investing?

Mr. Burke: Large company stocks have had a compounded annual return in excess of 10% during the past 75 years. The equity risk premium, i.e., the difference between the returns from large company stocks and the return from Treasury bills, has not been materially different over five-year periods. The short-term volatility caused by a continuing series of corporate governance concerns has reduced the current appetite for equity investment. We believe the lack of interest will dissipate with a consequent reduction in volatility.

TWST: Last time you talked at length about Microsoft (Nasdaq:MSFT), which had just received the Federal Appeals Court ruling. Tell us how that has progressed since then and why you’re still attracted to Microsoft.

Mr. Burke: We are attracted to Microsoft because of its cash flow and the organizational ability to deploy that cash flow and develop new products and new services. Microsoft has been able to reconfigure existing products and services on a two- to three-year cycle. They don’t have concerns with patent expirations or generic competition. I like to compare Microsoft with pharmaceutical companies, such as Eli Lilly. The drug companies are seemingly always in a race to fill up their pipeline with new drugs. The generic producers create earnings concerns as the established drug patent nears expiration. Consequently, Microsoft refines existing systems with minimal concerns for the “generic.” Microsoft develops software and operating systems and application software that can be re-tuned every three years, and they don’t have to worry about developing a new “gorilla” product. We think that their management is very adept at recognizing the needs of the marketplace and the capabilities of their organization. The interesting change in Microsoft from my perspective is their new understanding of the power of politics. Microsoft seemingly now understands that lobbying or visible representation can help fend off competitors that have used the regulators to create obstacles for the company to go forward. They have a well-financed lobbying office that is able to educate government officials early on with respect to regulations that might hurt their company. That’s a new strategy and it’s one that will help avoid the blockages that they didn’t acknowledge in the past. Microsoft was a well-run company, and it’s now, frankly, a better-run operation. They have always understood how to produce earnings.

This special Investing Strategies Report includes:

1) Sarat Sethi, Principal and Portfolio Manager/Equity Analyst of Douglas C. Lane & Associates, Inc., examines portfolio management strategies in this timely and deeply informative 3,600-word interview from The Wall Street Transcript.

2) Frederic G. Burke, President of Johnson Lemon Asset Management, examines portfolio management strategies in this timely and deeply informative 2,600-word interview from The Wall Street Transcript.

3)Arnold R. Schmeidler, President of A.R. Schmeidler & Co., examines portfolio management strategies in this timely and deeply informative 6,500-word interview from The Wall Street Transcript.

4) Jerome H. Walther, Chief Operating Officer of Church Capital Management, examines portfolio management strategies in this timely and deeply informative 3,000-word interview from The Wall Street Transcript.

5) Donevan E. Kukul, Portfolio Manager with Cohen Klingenstein & Marks, Inc., examines portfolio management strategies in this timely and deeply informative 4,000-word interview from The Wall Street Transcript.

6) Paul C. Hogan, Investment Research Analyst at Fenimore Asset Management, examines portfolio management strategies in this timely and deeply informative 3,900-word interview from The Wall Street Transcript.