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Seven Money Managers examine portfolio management strategies in this 29-page Investing Strategies Report from The Wall Street Transcript, available at (212/952-7433) or www.twst.com

TWST: Would you begin with a brief overview of Legg Mason Capital Management and the portfolios you manage?

Ms. Legg: Legg Mason Capital Management manages institutional separate accounts. Our separate account assets under management approximate 8 billion. Our clients are predominantly from the public, corporate, and endowment and foundation sectors. The vast majority of our clients are invested in our large cap product, Value Equity. These portfolios are constructed in line with Bill Miller’s Value Trust mutual fund, which is the firm’s flagship fund. We also have a mid-cap product where portfolios are based on Lisa Rapuano’s Special Investment Trust mid-cap fund. Lisa also serves as our Director of Research. Finally, we manage several “all cap” accounts. Jay Leopold works with Bill Miller and me on these accounts, which aggregate our best ideas across all market capitalizations.

TWST: Is your overall philosophy value driven?

Ms. Legg: Our philosophy is valuation driven rather than traditional value style box driven. Our work focuses on valuing businesses. We buy fractional ownerships in companies at large discounts to our assessment of their intrinsic business values. Assessing business values is not easy. Traditional metrics such as p/e and price/book multiples are usually too simplistic on their own to be particularly useful measures. What we are trying to determine is the present value of a company’s future free cash flow. That is the value of the business. We apply as many valuation metrics as are applicable to the situation in an effort to establish a range of probable values under a variety of scenarios. We want to make purchases at large discounts to the most probable business value, or the “central tendency” of value.

TWST: What attracted you to Intuit, given that you are underweighted in IT?

Ms. Legg: We have an underweight position in the information technology sector because, in our opinion, the valuations of many companies in this area reflect overly optimistic assumptions about future growth. Investing in this area requires close attention to valuation and careful analysis company by company. We initiated our position in Intuit in early April, following a 24% plunge in its stock price after the company reduced guidance for revenue and earnings growth. We believed that the price correction was overdone. What’s more, we believed that Intuit represented a combination of dominant competitive position, strong secular growth potential, a favorable economic model and a strong management team. Intuit is the undisputed leader in electronic tax filing software, where its Internet push positions the company well for the secular online migration of tax filing activities. It is gaining momentum in the small business market, where its leading installed base gives the company an edge in up-selling more value-added services into a fast growing customer base. As a software company, Intuit boasts high incremental profit margins and low incremental capital needs, leading to significant upside in profits and free cash flow if the company can deliver on the low-teen revenue growth rate that we believe is probable. In addition, it has an excellent management team from an operational standpoint and a pristine balance sheet with almost no debt. The stock has gone up nicely since we first bought it, but we still see further potential from here.

This Investing Strategies Report includes:

1) Valuation-Based Investing - Kyle Prechtl Legg, President, Chief Investment Officer and Portfolio Manager of Legg Mason Capital Management, examines portfolio management strategies in this timely and deeply informative 4,500-word interview from The Wall Street Transcript.

2) Investing in International Equities - James M. McAlear, Senior Equity Portfolio Manager & Deborah Snee, a Portfolio Manager, Columbia Management Group, examine portfolio management strategies in this timely and deeply informative 4,500-word interview from The Wall Street Transcript.

3) Outlook for Business & the Economy - Donald C. DeLutis, Chairman of Orrell Capital Management Inc., examines portfolio management strategies in this timely and deeply informative 4,200-word interview from The Wall Street Transcript.

4) Socially Responsible Investing - Robert C. Barringer, a Vice President and Portfolio Manager for Citizens Advisers, examines portfolio management strategies in this timely and deeply informative 4,700-word interview from The Wall Street Transcript.

5) Active Management & Client Customization - H. Phillip Becker, President & Harold M. Rosen, Executive Vice President, H.P. Becker & Co., examines portfolio management strategies in this timely and deeply informative 4,000-word interview from The Wall Street Transcript.

Tickers included in this excerpt: INTU

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This interview is a small excerpt from a comprehensive interview published in The Wall Street Transcript on 09/22/03. For more information call (212) 952 7400. The Wall Street Transcript does not endorse any of the comments made by interviewees, and does not make stock recommendations.

Copyright 2003, Wall Street Transcript Corp.

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