Latin America is now a big user of genetically modified seeds and even the European Union has relented and allowed some of this product to be sold and planted in Europeans fields. At the same time, the company has maintained a good financial position. They are earning on their cost of capital and the valuation remains reasonable, although on a relative basis, it is higher than it was when we first purchased it.

Q:  What do you do when your research idea does not work out?

A : Until recently an overall top-down concept that was not working very well was a near market allocation to Japan. That was painful in 2007. Although the overall numbers turned out all right, we would have been better off to have less of an allocation. The decision was based on a top-down view that there were a lot of good things going on in the Japanese economy that were not being reflected in terms of individual stock valuation. We went into 2008 with a full weighting in the Japanese market and it has been a much happier experience since the first of the year, but on a top-down basis, that is one we wrestled with several times during 2007.

Q:  How do you build your portfolio? Generally, how many countries or regions in the world you are? How many holdings do you have? What kind of portfolio turnover do you have? Moreover, what benchmarks do you consider yourself measured against?

A : Our official benchmark is the EAFE index, the MSCI EAFE, although we will buy stocks that are not in the EAFE index. We do include Canada and Latin America as parts of our portfolio. We maintained stockholdings of about 60-70 stocks at any given time. Because our process is based on fundamentals of companies and the valuation of their stocks, we are really looking out two or three years on a time horizon when we buy something. Consequently the portfolio turnover is anywhere from 25% to 30%. If things are moving around a lot, our portfolio turnover is maybe 35% a year. I have never seen it go any higher than that.

The top 10 holdings are anywhere from 20% to 25% of the portfolio. However, you are not going to find any one position that is going to be more than about 3%. We do take the top off positions that have done really well. We try to maintain investment in the major regions of the world at all times. This is a diversified portfolio intended for investors that do not have any other international exposures or who wish to maintain a diversified exposure through their holding in the fund. We are not going to have most of the portfolio in Asia or Europe, or have no investment at all in the Americas at any given time. It is broadly spread and we try to keep the country allocations at or below their weightings in the index and add value through the stock selection. We are not trying to add value through country weightings. It is more of a regional and economic sector view of constructing the portfolio rather than a country weightings process. We do this because many companies have multiple geographic exposures.

We have emphasized large cap companies. We will buy multiple market cap sizes in the portfolio, but our topdown strategy was really focusing on the largest companies in the past yea rand- a-half. At that level of size, almost every company you buy has exposure in almost every part of the world in varying degrees, so even regional exposure is getting more difficult to pinpoint. The same is true of currency exposure.

Q:  Do you hedge for the currencies?

A : No, we do not hedge. We have not ever directly hedged. There were times when that would have been helpful, but not in the last decade. We may eventually do that; however, we think it is much more fruitful to look at the currency exposure of the individual companies that we are buying.

Q:  How has inflation in Asia affected your global view?

A : It is going to slow economic activity simply because their money supplies are growing too fast. There is too much building, too much productive capacity put in place, and it is putting a huge strain on the cost input side of things in those markets. At the same time that the domestic end users are being squeezed on food and energy prices.

Recently, some countries like Malaysia that were subsidizing oil prices are saying they cannot afford to do it anymore. Therefore, it is going to hit the domestic consumer in some of these countries hard when those subsidies come off. Moreover, it could lead to some political upheaval.

We do not necessarily avoid those markets; however, we are careful to make sure we are not overexposed. We try to position away from the full force of the negative trends. It also makes us more cautious on valuation.