|Tenure: Managed fund since July 22, 1996|
|Assets: $3.15 billion|
|Five-Year Average Annual Return: 6.2% (Top 9% of Mid-Cap Growth Peers)|
|Top Three Holdings: Northrop Grumman Corp. Samsung Electronics ACE Ltd. ADR|
|Hartford Funds Information: |
|Sources: Morningstar, Hartford Web site.|
I expect that market will eventually reflect the strong likelihood that the recovery in economic activity will not collapse, that interest rates will remain benign and that a war with Iraq would be winnable, but unfortunate. In the near-term, there is a risk that corporate earnings could fail to meet even recently subdued expectations. However, in the intermediate- to long-term I expect that the economy will prove its resilience and that the Fund's opportunistic approach to picking stocks will again reward its investors with satisfactory returns. 2. Your "performance is where your find it" strategy has put fund holders in good stead the past few years, especially in 1999 and 2000. Where are you finding the best opportunities today? What sectors will outperform, in your opinion? The portfolio is strictly total return-oriented. In seeking high total return, the investment approach seeks maximum capital appreciation from all companies regardless of market capitalization -- smaller company stocks with high earnings growth potential and larger-cap stocks with attractive valuations and catalysts for appreciation. I continue to be opportunistic and am finding investment opportunities in all areas of the market -- upgrading the portfolio on attractive valuations. As of the end of October, 43% of the fund is invested in stocks over $10 billion in market capitalization and 50% is invested in mid-cap stocks -- $2 billion to $10 billion market cap. There has been a shift toward higher market-cap stocks during the year, reflecting the compression in P/Es that the market has been seeing this year. As of Oct. 31, large-cap stocks were trading at 14 times projected earnings, mid-caps were 14 times projected and small caps looked expensive at 17 times. Two areas that I would highlight where I have added to recently are health care and consumer discretionary. Within health care, the sector suffers from the "baby being thrown out with the bath water" syndrome, where the sector is under pressure due to a few stocks.