KEITH WALTER is a Senior Portfolio Manager, Global Equities at Julius Baer Investment Management LLC.

TWST: How is the investment climate for your Fund?

Mr. Walter: I think it's an understatement to say the first quarter of 2008 was a challenging one. We are concerned about the global economic slowdown that's unfolding and to manage through it, we invest in areas that we believe are going to be the least impacted by today's global imbalances.

For example, we are underweight the US market because of the housing-related weakness that we see spilling over to the financial and consumer sectors. We are also underweight the UK market based on the same home price concerns as well as the strong British pound which makes trade more challenging. These two markets are now paying the price for the many years of excessive consumption and negative savings rates that were the norm. We are also avoiding direct investment in China because we think that economy has become overheated after years of double-digit economic growth. While their infrastructure investment needs are still impressive, the Chinese economy's dependence on exports to the West coupled with their nascent domestic consumption profile keeps us on the sidelines.

So where are we investing? Central and Eastern Europe has been an area of interest for some time and remains so today. We believe that the economic, political and social benefits these countries are expected to achieve as they integrate into the European Union should provide our clients with substantial investment opportunities for years to come. In the near term, this path to convergence should help this region successfully navigate through a potential global economic slowdown. We also like that this area is not dependent on US consumption or Asian investment demand for growth, two bubbles that we think will prove challenging to investors for the next couple of years. Longer term, as these countries join the euro currency regime, even more benefits are expected to emerge.

TWST: When you talk about Asia, are you talking in particular about China?

Mr. Walter: Yes. China was an exciting place to invest over the last few years, perhaps a little too exciting, as the Shanghai Index was up 98% in 2007, but through April 9, 2008, was down 35% for the year. Today, the Global Equity Fund is not heavily invested in China because we think the Chinese economy is over- heating and needs to become more mature. If domestic demand were a larger percentage of the total economy today, the Chinese might be able to survive a slowdown in exports or infrastructure investment. However, without a strong base of domestic consumption to fall back on, we believe there will be a hard landing after this summer's Olympics. We took advantage of the Chinese infrastructure growth story by looking at the peripheral markets that fed this growth.

Materials stocks in Australia and Canada as well as select Japanese exporters were some of the primary beneficiaries. We anticipate these types of investments will continue to benefit from China's ongoing infrastructure demand without directly exposing the Fund to the Chinese economy.

The political environment unfolding in Taiwan is also encouraging. This economy, which has lagged the rest of Asia, is now playing catch-up on the back of stronger ties with China. As a result, we increased our exposure to Taiwan in recent months.

TWST: Why do you think Eastern Europe is pretty much immune to what the rest of the developed world is experiencing?

Mr. Walter: I'm not sure I would say anyone is immune to the current financial market turmoil. In fact, Eastern European stocks are also down in 2008 in sympathy with the global equity market correction. One of the hangover effects from the subprime loan crisis in the US and Europe is that the cost of funding for Eastern European banks made it more difficult for them to finance their growth opportunities. However, these countries are expected to continue looking westward toward developed Europe, focusing on advancing their economies and achieving the accompanying higher standard of living. So, while not immune to today's circumstances, these Eastern European countries are less swayed by today's global imbalances in Asia and the US, and it is for these reasons that today we prefer Central and Eastern Europe.

• Investing in Global Equities - Keith Walter, Julius Baer Investment Management LLC
• Momentum-Based Technical Investing - Ralph Parks, Ralph Parks Investment Group, LLC
• Investing in High Quality Global Stocks - Stephen A. Jarislowsky, Jarislowsky, Fraser Limited
• Comprehensive Financial Planning - Patricia Powell, The Powell Financial Group, Inc.
• Investing in High Quality Equities & Fixed Income - Bob Dearborn, Lodestar Investment Counsel, LLC
• Small & Mid-Cap Growth Investing - Patrick Gundlach & Ken Salmon, M&I Investment Management Corp.
• Investing in Internet-Related Stocks - Ryan Jacob, Jacob Asset Managementy
• Investing in Canadian Small Cap Stocks - Roger Dent, Mavrix Funds Management Inc.
• Investing in High Quality Mid-Cap Stocks - Robert A. Schwarzkopf, Jon K. Christensen, Sandi L. Gleason & Craig Stone, Kayne Anderson Rudnick Investment Management, LLC
• Investing in Large Cap Value Stocks - Walter A. “Bucky” Hellwig, Morgan Asset Management, Inc.
• Multi-Strategy Core Investment - Sarat Sethi, Douglas C. Lane & Associates, Inc.
• Investing in Deep Value & Relative Value Stocks - Richard H. Parry, Tom Johnson Investment Management, Inc.
• Global Thematic Equity Investing - Robert T. Lutts, Cabot Money Management, Inc.
• Relative Strength Investment Strategies - Mike Moody, Harold Parker & John Lewis, Dorsey Wright Money Management
• Behavioral Finance Investment Strategies - Christopher T. Blum & Theodore F. Dimig, J.P. Morgan Investment Management Inc.
• Outlook for Fixed-Income Investing - Paul W. Gifford Jr., 1st Source Corporation Investment Advisors, Inc.
• High Growth, Emerging Opportunities in Technology & Health Care - Matt Arens & Peter Conrad, Kopp Investment Advisors, LLC
• Multi-Asset Fund of Funds Investing - Giles Conway-Gordon & Christopher R. Wolf, Cogo Wolf Asset Management, LLC
• Investing in Emerging Markets - Louis C. Gerken, Gerken Capital Associates
• Investing in Large Cap Quality Growth Stocks - Henry B. Smith & Jason D. Pride, Haverford Investments
• Investing in Mid-Cap Value Equities - Don Wordell, Ceredex Value Advisors LLC
• Global Equity Investment Strategies - Jonathan Compton, Bedlam Asset Management Plc
• Exploiting Investment Anomalies - Alan T. Beimfohr, Knightsbridge Asset Management, LLC
• Large Cap Core Equity Investing - Richard I. Sichel, Philadelphia Trust Company
• Outlook for the Market and the Economy - Roland Manarin, Manarin Investment Counsel, Ltd.
• The Endowment Model of Investing - Mark W. Yusko, Morgan Creek Capital Management, LLC
• HSBC Taiwan Fund - Jack Chang & Shirley Yang, HSBC Investments Taiwan Ltd.

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