Q:  What is your growth-investing philosophy?

A: I work under a philosophy that I call ‘Accelerating Tangible Operating Momentum’. I am looking for companies that are going to show accelerating revenue growth and improving operating margins, that will lead to stronger-than-expected earnings or freecash- flow growth in the near future. I am trying to identify companies that have drivers and catalysts that are going to drive better quantitative-operating performance.

The key is to be early in that process, and identify these companies before they start to show visible earnings progress. This requires a great deal of interaction with a company’s management team, talking with Wellington Management’s 51 global industry analysts, talking with my team of five analysts, and visiting and meeting with more than 30 companies a month.

I take the philosophy that growth is where I find it. There are numerous instances in which companies that I own in the growth area are outside of traditional growth sectors. I look at growth companies globally, not just in the US. Overall, the Hartford Capital Appreciation II Fund can invest 35% in non-US stocks, and each manager will vary that allocation by sleeve.

Q:  How is your research process organized?

A: My team’s research process in managing my sleeve of the Fund involves looking at the company’s earnings, and understanding what drives the earnings. Once my team and I identify specific catalysts and drivers of earnings, we develop our models of future earnings and free cash flow. These models help us to discover companies that are likely to generate superior earnings through improving sales and operating margins.

The next stage is to determine what we think this company is worth based on the level of free cash flow, the quality and sustainability of the earnings, the quality of management, and the attractiveness of the industry.

That is how we determine the right earnings multiple to pay for this business. We are looking to invest in companies that are trading at a discount of 30% or more to our estimate of the company’s intrinsic value. We generally hold between 40 or 50 stocks in the opportunistic growth sleeve of the Fund, and the overall Fund has about 250 stocks. The top 10 holdings in the Fund range between 1% and 2% of assets.

Q:  Do you look at the historical earnings growth and then define the forward- looking earnings growth?

A: It is nice to see a company that has sustainable growth, but in my sleeve of the Fund, we really focus on future earnings capacity. We have a 24-month horizon, and we try to arrive at our estimates based on our understanding of historical earnings and their sustainability. The holding periods for these stocks vary depending on the velocity of change in the stock’s price, and our view of the near-term outlook.

Q:  Could you give us one or two historical examples of how you identified some stocks, and then how they ended up in the portfolio, and when and why you decided to harvest the gains?

A: I will talk about a stock that is currently in my sleeve of the Fund. Schering Plough, the pharmaceutical company, is a company that I bought a couple of years ago. First, they had a change in management. Fred Hassan, who had been a very successful manager at a couple of other pharmaceutical companies, was appointed as CEO of the company, and we had invested successfully with Fred when he was with Upjohn. His prior track record and management reorganization at Schering Plough attracted our interest.

We were also very excited about one of their drugs—a cholesterol lowering drug called Zetia. There was a joint venture between Schering Plough and Merck that markets Zetia and combination pill Vytorin. The combination pill combines Zetia and Zocor, which lost its patent protection in mid-2006. Knowing the data from pharmaceutical analysts, we were able to conclude that the drug is likely to increase market share in the coming quarters.

The company was also undergoing a coststructure reorganization, and taking a lot of cost out of the business, which we felt was going to have a positive impact on the operating margin.

Finally, we were very excited about the pipeline of drugs. Several drugs are through phase two, a couple of them are going into phase three, and we didn’t feel that investors fully recognized the value of drugs in the pipeline.

This is typically where we get a big advantage in pharmaceuticals. A lot of investors are too short-sighted in terms of how they view the industry, and pharmaceutical companies, and we have been able to make a lot of successful calls by being longer-term thinkers, and thinking about the possibilities of drugs that are in the pipeline.

Q:  Can you give us another example?

A: Another company that I have invested in my sleeve of the Fund is Activision, a video game software company. Some of the games are licensed products of films such as Shrek, Spiderman, and their hottest game of late is Guitar Hero—a game in which you mimic a guitar player to get to different levels.

The company actually did very poorly in 2006 because there was no Shrek sequel, there was no Spiderman sequel, and so they faced very tough growth comparisons, but we felt that there were a few solid catalysts for 2007. There will be a new game for Spiderman, a new game for Shrek, and there’s a movie coming out this summer called Transformers, which we think will do well at the box office. This usually translates into better sales for computer game.

Last year, their acquisition of Guitar Hero was not well known, but our analyst was very excited about it, and felt that the company could take this game to the next level. So we felt that this was going to be a big driver to the top-line and bottom-line earnings in 2007, and into 2008.