Q:  How would you describe your sell discipline?

A: Since we are looking at value and relative strength in the market, we take profit when an industry gets overextended and becomes too expensive. We sell an industry when its value/price ratio drops into the lower decile of the 147 industries.

We also sell based on diminished relative strength when an industry drops into the lower 20 percentile of the 147 industries. In that case we take our profit or loss and reinvest these funds in other industries that meet our value/ price and relative strength criteria.

Q:  You mentioned that there are about 54 industries in the fund. At this time, how many specific names do you have in the fund?

A: We have around 100 stocks right now. A large position on an individual stock would be about 2.5%, as our holdings typically range from a 0.3% to a high of 2.5%. We like diversification at the individual stock level to reduce the potential for any surprise event with one stock to have a negative impact on the overall portfolio.

Q:  What is the fund turnover in names and also in dollar terms?

A: Our latest 12 month annual turnover was at 186% (as of 9/30/05). Industry themes typically last one to two years, which matches our typical holding period. Turnover the last few years has been higher than normal due to geopolitical events, turbulence and quicker than normal commodityrelated themes.

Q:  How do you handle the currency- related risks or macro economic risks?

A: We do not hedge currency risk in the fund. Within a multicurrency portfolio you get some diversification across different currencies, but we’re not hedging away the currency risk either.

We do not perform top-down macro economic forecasting. We perform value based, bottom-up industry rotation. Regarding risk, we believe international macro economic differences are what contribute to low correlation which is one reason why investors add international stocks to their portfolio.

Q:  What region do you see being undervalued most right now?

A: We believe that the Pacific region is still undervalued by 36% and there may be a greater upside in the region in the next three years.