Q:  Could you give us another example of a larger-cap investment?

A: Apple(11.33% as of 7/31/07) is another large holding in the fund. Considering Apple’s market share in the computing market, there is room for growth, particularly having in mind that this market is several times the size of the iPod market. Certainly, the iPod and the iPhone helped to create the Apple brand and are pushing it forward over the last few years. That has translated into greater market share for Apple’s computing business.

Q:  What was the original thesis for investing in Apple?

A: The original investment thesis was that the iPod was a revolutionary product, which would reinvigorate the Apple brand and culture, boosting other products of the company as well. We have been big believers in their laptop business, the iPod, and we think that the iPhone is one of the most revolutionary products. Apple Computers already is a brand company, maybe even a fashion company to some extent. It is a technology company and Steve Jobs is a leader in those areas.

Q:  What are the fundamental factors that you deem most important in your analysis?

A: One of the characteristics that I want to see in the companies is high return on capital, or the understanding of how the business model is going to generate high return on invested capital. The management has to understand that its job is to allocate, invest, and achieve a return on the capital.

The second characteristic is the prospect of generating substantial free cash flow, so the value for an investor who owns the entire company would be, theoretically, the discounted value of that free cash flow. I would also like to see a management team that not only understands that its job is to maximize the value of that stream of cash flow, but also to be aware of returning it to investors. It is fine if the management team has plenty of investment opportunities to invest the cash back into the business, but if there is excess cash flow, we’d like to see the management either buying back stock or paying out dividends.

Q:  When constructing the focused portfolio, do you consider or ignore the sector and industry exposure?

A: We tend to be conscious of diversification but we are not the type of managers who put limits on themselves based on the S&P 500 weightings. We prefer to be right about the winners, and if we don’t find any good investments in utilities, then we wouldn’t own any utilities. Certainly, we wouldn’t feel extremely comfortable investing 100% of the portfolio in Apple if that was the only good investment that we found. I believe that we have investment themes that touch almost every industry.

Q:  What is your buy and sell discipline when building the positions in the portfolio?

A: We have some limits regarding the purchase of stocks, although they are quite large. We cannot buy anything higher than 10% of the portfolio at purchase. But we don’t have many small positions. By the time we have decided to buy something, we’ve done a lot of work on the name and we have built the conviction necessary to start with a position of between 2% and 5%.

My favorite reason for selling a stock is finding something better to buy. As a portfolio manager, I always prefer my buys to drive my sell decisions, not vice versa. Another reason to sell a stock would be if it reaches valuation that is far beyond our long-term view.

Also, we would sell a stock if there is a change in the investment thesis that we didn’t anticipate. As long-term investors, we are willing to hold through periods of weaker quarterly performance. We have some flexibility built into our outlook when we start owning a company, just like any owners of any business would. But if the heart of the investment thesis has changed, then we would step aside.

Q:  What kind of risks do you perceive? How do you measure and then control them?

A: I believe that our sector diversification and the strategy of using multiple managers help to mitigate the risk. Actually, I believe that a concentrated portfolio has better risk controls than a diversified portfolio, because every position is really well-thought and researched. The managers who run diversified portfolios would let a bit more risk because they think that a small position wouldn’t hurt the entire portfolio that much.

Another risk control is embedded in our long-term investment approach of being real owners of the business as opposed to investors who only buy and sell stocks. That approach leads to a focus on understanding the business model, the cash flows, the industry, and management. Finally, I believe that the emphasis on cash flow and returns on capital is also a significant risk control.

Q:  What type of investors should consider a concentrated all-cap fund, in your opinion?

A: If you really believe in an investment team, then you would want to give it the opportunity to invest in its best ideas. You wouldn’t want to put them in a box and limit the type of companies they can buy. I believe that this portfolio should be viewed as a total return fund, suitable for a core plus holding, or for the assets that you would allocate when you really want to beat the market.

Mutual funds are subject to market risk, including the loss of principal.Investments in non-diversified funds may be subject to specific risks such as susceptibility to single economic, political, or regulatory events, and may be subject to greater loss than investments in diversified portfolios.

Before investing, consider the funds investment objectives, risks, charges and expenses. Contact Transamerica for a prospectus containing this information. Read it carefully. Transamerica Premier Funds are distributed by Transamerica Capital, Inc.