Q:  What is your investment philosophy? A: We are looking for companies that are able to grow at a faster rate than their peers and that also have a sustainable earnings growth of more than 10% in the trailing three years. As an International fund, we mostly focus on large cap companies and select midsized companies, especially if we believe they can grow to large cap companies. Consequently, we look to invest in companies with good profitability records, strong balance sheets and with earnings growth to sustain business development. Q:  What kind of earnings are you looking for? How do you distinguish between different industries growing at the same rate? A: When we look at earnings, we are looking at the drivers of earnings and free cash flow the company can generate. We are not very keen on having the cash flow distributed to shareholders if we believe the company can do better by investing it itself. We pay a close attention to earnings per share and to the ratio of stock price to earnings growth rate. Earnings dynamics differs from sector to sector. Hence, when we look at companies, it is important for us to understand the underlying sector and the relevant earnings dynamics. For instance, retail is much different from technology or pharmaceuticals, so it is very important to stay in the framework and look at the company on a sector by sector basis when we look for ideas. Q:  What is your investment strategy? A: The fund has excelled whenever growth stocks have outperformed value stocks. Consequently, our investing strategy is to identify stocks that are in growth phase. We also believe that from 2007 we are at the beginning of a new trend where growth stocks are back in the forefront – a trend that has been underpinned by the growth, which is happening in emerging markets. The Emerging markets we believe are in a multiyear secular growth trend. Though we primarily focusing on developed markets we want to benefit from these trends by also investing directly into the emerging markets. We think that there are two secular trends that are going to last for years and affect emerging markets. There is a significant infrastructure development and consumer spending in these countries and we are trying to find ways to invest in these areas. Thus emerging market consumer and emerging market infrastructure are the two key themes in the portfolio and currently we have investments in India, China, Russia and Brazil. The other way for us to participate is to find great companies in developed markets that are now replicating their success by moving heavily into emerging markets. Companies like Nestle, Swatch, LVMH, Holcim, Siemens and Vossloh are good examples for such strategies. The broader investment strategy is to find those companies that, we believe, have superior brands which are working in attractive industries and are run by a great management, and have strong balance sheets to support 10% earnings growth. We are also trying to identify companies that are in the process of restructuring, when we feel it will result in superior earnings growth afterwards. Q:  Can you give us a few examples? A: For example, where we found good growth stocks even in an anemic environment were German retailers. German Retail sales had been flat to down for 17 years but there were a few clothing retailers that figured out the German consumer by offering fashionable products at very convenient prices. Both companies, namely H&M and Esprit are both double digit growers and are by the way successfully replicating their business model elsewhere. By the way both are non German companies. Esprit is actually traded in Hong Kong and generates more than 70 % of their business in Germany. The second company, H&M is becoming an international powerhouse but Germany is still one of its core markets. Q:  Can you give some more examples of stocks that you are excited about? A: There are many more and like I said before we are excited about the Asian consumer and the emerging market infrastructure buildup. We hold Holcim, Vossloh, China Mobile, Swatch just to name a few. A name I would like to point out is Siemens. Besides its emerging market appeal it gets an extra kicker out of a new restructuring plan which should enhance operating margins considerably over the next years. In the financial sector we have been worried about the European banks but like the stock exchanges. The biggest position we have is Deutsche Boerse - the German Stock Exchange - that has benefited from trading volume growth and market volatility. They have a new CFO; they’re aggressively trimming both workforce and costs and buying back shares, so they are taking all steps to extract more earnings. We also have a position in the Brazilian Stock Exchange and the Greek Stock Exchange. Q:  How is your research process organized? Where do your ideas come from? A: Although we do find good companies operating in difficult macro conditions, favorable macro-economic indicators do matter in most cases. For instance, we could find a company, having a great strategy in an emerging market but if that market is located in a very politically unstable country with a bad fiscal monetary policy and the stabilization of the company is at risk, then, obviously, those countries won’t fit into the Fund. We have an international economist in our team who analyzes fiscal and monetary policies. His input helps us check out and know the macro conditions of the countries and markets we are interested in. Another important layer is finding the right sectors and also understanding the dynamics of those sectors. But most importantly is for us to find great companies. We identify companies on a bottom-up basis. We spend a lot of time on fundamental analysis, which is a three-layer bottom-up process. Being an international fund, our universe comprises thousands of companies, but we mainly focus on large cap companies with market capitalization of $10 billion. We start with a quantitative screening of companies. That process is based on historic data and on future estimates. This quantitative analysis is, however, only a tool to give us a rough idea whether the company fulfills our growth requirements. The second part is the fundamental analysis which includes analyzing the balance sheet, cash-flow, earnings power, competitiveness of products just to name a few. Last but not least we dialogue with management to check strategies, willingness to deliver shareholder value and the strength of management. We believe that the constant dialogue with managements is essential for a successful Fund Manager. Q:  How do you construct your portfolio? A: At any given time we try to stay between 70 and 90 stocks in the portfolio. We are currently invested in about 20 countries and 11 industry sectors. Our portfolio diversification strategy dictates that no stock will have more than a 5% position. We also usually take only a 2% initial investment in the stock, and let it grow over time. On average, we have 10% or less exposure to emerging markets at the time we’re buying the stocks. Our benchmark is emerging market free and centers around Europe, Japan and the rest in developed Asia and Australia. Finally we limit our exposure to one single sector to 25%. Q:  What is your buy and sell discipline? A: We buy a company because it meets growth and valuation criteria. We sell a stock when a company misses earnings and our belief is that it due to deteriorating fundamentals. Another reason to sell a stock is when a company suddenly changes its strategy in a way we feel not comfortable with. The third reason to sell would be if the company reaches our price target, which is usually set when we buy the stock. However before selling we check the stock again to see if new developments justify a higher price. Q:  What is your view on risk and how do you measure it? A: There is already some risk control embedded in our portfolio diversification but we also look at market and fund volatility. If we believe that the world is heading into a recession, we will maybe construct a more defensive portfolio and invest in companies that are less economically sensitive. For instance, we were heavily invested in banks until the spring of this year. However, in the beginning of the summer when we saw that the sub-prime issue was going to affect the markets, we felt that this was a major event which was affecting the portfolio, and hence decided to sell the banks. Consequently, risk control is partly quantitative, partly qualitative and I admit a little bit subjective, too.