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When mutual fund portfolio managers are interested in researching a company, they've got all sorts of tools available to them that the average individual investor doesn't. But here's a fund manager who thinks some of the best findings about a company can be found in its annual report.

Sheridan Reilly, portfolio manager of the Ivy International Fund, (800-777-6472), has been in the money management arena for the past 16 years. During the first four years he was a fixed-income bond guy. Over the past dozen years, equities have been his passion. More specifically, international equities.

Reilly recently joined the Boca Raton based Ivy Funds family as a senior vice president and chief investment officer. Currently, he's repositioning assets in the Ivy International Fund, previously managed by Hakan Castegren, and changing it from a value-oriented fund to a blend fund with both value and growth opportunities in it.

Recently I caught up with Reilly to talk about the fund.

Q: I've read that you're a big fan of annual report reading. So much so that reviewing a company's annual report for the past five years is standard procedure.

Sheridan: It really is. And you know what the most surprising thing about it is, very few people do it. Even guys who are paid millions of bucks on Wall Street to follow companies don't all read a company's annual report.

Q: What do you look for in those reports?

Sheridan: Every annual report is chock-full of management promises and forecasts. Promises that management makes about how they are going to run their business and how they are going to improve their businesses and what they are going to undertake.

Why the exercise becomes so fruitful is that after you've followed these people for five years you really get to know them. You'll learn if management has done what they said they were going to do, what businesses they decided to target in on or products they were going to invent or improve.

Q: The fund had been closed to new shareholders and just reopened June 1. You're repositioning assets in the fund and will invest mostly in large- and some mid-cap companies. But no small-caps. Why not?

Sheridan: Because liquidity is an issue. And because you need a different approach to international small-cap investing because disclosure is terrible in a lot of markets. So you can get yourself into a situation where you can't trade the stock.

Q: Once the portfolio gets repositioned, where are the assets likely to be placed?

Sheridan: We'll have about 100 stocks in total with a pretty serious weighting in Europe, about 60 to 65 percent. And we'll have about 20 to 25 percent in Japan.

Q: Why do you think Europe is so exciting now?

Sheridan: In the past, the biggest and best parts of industry were owned by the state....which made most equity investing almost a waste of time. But what makes it exciting now is that things have changed and their are ground rules in place that you need for successful equity markets.

Last year the international markets outperformed the U.S. And, I would be glad to go on record saying that's going to be happening much more frequently in the next 10 years.

Q: Any investment ideas you'd like to share?

Sheridan: There are some areas that are clear clear winners. One is wireless technology outside of the United States. Why? Because great companies, like Nokia, are years ahead of U.S ones. So WAPs---that's the acronym for wireless application protocol companies--- are big. Ones that I like include companies like Nokia, Seimens, Murata, Vodafone and Ericsson.

Another tier of companies that I think will benefit from the Internet and Internet technology are banks. The type of profits that they are able to make, and the relationship with their customers they'll be able to forge, will really be enormously enhanced by the Internet. And, it's not very expensive for them to do that business.

Outside of Europe, we also like some companies in Taiwan, South Korea and Hong Kong.

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