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| Epoch Investment Partners
was founded in April 2004 by experienced
professionals who foresee a significant change
in both the drivers of investment returns and the
structure of investment management firms. Following
almost 20 years of expanding P/E ratios, interest
rates are poised to begin rising, thereby eliminating
P/E ratios as the major driver of total equity returns
as was the case over the 1980-2000 period. Free
cash flow and its intelligent use for shareholder
value creation will replace earnings as the dominant
explanatory variable of investment returns. In addition,
dividend yield will regain its historical role as
a significant contributor to total return. Whereas
clarity of investment
processes has always been relevant to investors,
a similar demand will be made of an investment firm's
business practices. |
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| In view of the events
that occurred at the turn of this century reflecting
inadequate institutional oversight at the corporate,
accounting, and regulatory levels, greater transparency
of conduct and business processes are required.
As a result, we chose to become a public company
with all of its rigorous disclosure requirements.
There can be no greater transparency requirement
than that of being public. We are a well capitalized
and stable firm composed of experienced people.
As of June 30, 2008, approximately 52% of our firm was owned by active employees and directors. This widespread employee ownership is an important part of our business plan and we believe that it directly binds employees with our client's interests. |
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| We foresee a desire
for clients to place funds with experienced, accomplished
professionals within a firm that has the following
characteristics: |
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A client first
focus
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Pursuit of best practices in
all of its business aspects
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Widespread employee ownership
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A transparency of employee
behavior as evidenced in the firm's code of
ethics |
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A substantial capital base |
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| As you examine
our philosophy, our products, and our professional
staff, we hope you will agree with us that there
is no better time than now to begin a new investment
firm without legacy issues — a new “epoch”
in the investment business. |
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