To add value to investments in a highly heterogeneous market such as the Asian and global debt markets, we believe that a bottom-up credit selection process is a vital component of the overall process. We primarily use a bottom-up credit selection approach as part of the allocation process at a particular country/industry level. In addition, the lack of supply from certain countries and the unbalanced distribution of credit quality within each country also argue for a bias towards a more subjective, bottom-up approach in the management of fixed income/debt portfolios.

Income Partners' investment team has an unparalleled track record in credit analysis having been involved in the Asian bond market since its inception in 1993. We have also developed a proprietary system in monitoring credit milestones that essentially allows us to keep track of the pulse of each individual credit in our portfolios in a systematic manner. At any moment in time, we manage between 50 to 70 different credits in various portfolios. Only with a highly systematic process can we manage such a broad range of interest rate, currency and credit risks for each of our individual portfolios.

For project-related, high risk and special situations credits, we develop corporate finance type financial models to enable us to conduct scenario analysis based on different macro or industry factors and to determine upside and downside operating/financing risks. This proprietary in-house process differentiates us from our competitors who tend to focus primarily on macro and benchmark type investments.

Each member of the Investment Team specializes in market segments based on geographic and/or sector and/or instrument parameters. From his or her own area of responsibility, the team member is responsible for generating independent trade and investment recommendations, which are reviewed and vetted by the rest of the Investment Team and subsequently accepted, rejected or sent back for further analysis. Additionally, each Team Member is also expected to form stand-alone macro economic views. Collectively, the investment team then develops a near-term, intermediate and long-term "house view" for interest rates and exchange rates, macro risk factors, and geo-political trends, which are incorporated in our overall portfolio positioning and hedging approach.

Accordingly, Income Partners' house view on key market variables will influence the Investment Team's asset allocation decisions between high grade and high yield bonds, distribution among sector/industry credits, selection of fixed, floating rate and convertible instruments and optimal combination of long and short duration issues. The objectives and constraints of each individual fund are also taken into consideration when the team makes these strategic investment decisions.

In addition, each analyst is also responsible for updating the investment team on macro economic and individual credit developments in his/her respective geographic focus. Again, a collective view on each country's macro outlook is formed and individual country weighting band is establish for both strategic and tactical allocations for each individual fund.

As a general rule, each team member provides individual investment recommendations backed by a brief exposé on the investment rationale (interest rate, credit, and currency risk and price considerations). The Chief Investment Officer (CIO) presides over the strategy and discussion sessions among team members for the various investment and trading recommendations. Ideally, the individual member recommending a particular investment will convince the other members of the team (including the Investment Committee) on his/her investment view. In the event whereby a consensus cannot be reached, the Investment Committee will make the final decision.

Portfolio optimization and scenario analyses are often used in controlling and managing risks. The Investment Committee closely monitors these important indicators in the portfolio management process.

Once an investment strategy has been formalized in an investment meeting, the Dealing Director will execute the trade based on his assessment of the prevailing market conditions. Typically, Income Partners' dealer does not leave limit orders but executes trades at the best possible time in the relevant time zone, be it Tokyo, Hong Kong, London or New York hours.

During regular portfolio reviews, performance is evaluated on a risk-adjusted basis. This part of the portfolio management is ongoing and reiterative.