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Annual Report
2006
Robeco Groep N.V.
Reports 2006 of the Supervisory Board & the Management Board
Contents
Preface
1 General information
Special The Investment Engineers
2 Report of the Supervisory Board
Special Experimental Garden
3 Corporate governance
Special Quantitative Strategies
4 Principles on fund governance
Special Clean Tech Private Equity: Financing the next wave of innovation
5 Report of the Management Board
Key figures
Challenges and achievements
Strategy – The next layer
Organization
Investment performance
Business development
Financial results
Compliance, risk management & internal audit
Corporate social responsibility
Robeco in 2007
Special Robeco’s expertise in a changing institutional environment
Addresses
Special Customized asset growth with Younique by Robeco
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Financial Statements 2006
The annual financial statements are published in a seperate document.
Together with this report, these form Robeco Groep N.V.’s annual report over 2006.
A new identity
Those among you who have seen a Robeco annual
report before will probably have noticed that this year
Robeco has assumed a new visual identity. This new
look represents the important changes that Robeco has
undergone as an organization. Over the last ten years,
we have acquired more and more clients outside the
Netherlands and now Europe, the United States, the
Middle East and Asia are all important markets for us.
At the same time, institutional clients and distribution
partners have become increasingly important, and for
many of them we have evolved into strategic partners.
We have summarized our new brand identity in
three words: The Investment Engineers. These three
words enable us to make clear to our clients that our
portfolio managers and researchers are not only very
knowledgeable but, more importantly, that they use this
knowledge to achieve practical solutions and to deliver
superior investment results. It is not just a question of
having the necessary skills, what you are ultimately able
to achieve with these skills is what counts. Using
‘The Investment Engineers’ as the basis, we developed
a new logo and a new house style which reflect the
Robeco of today and tomorrow. You can read more about
‘The Investment Engineers’ on pages 8 through 11.
We are also revitalizing other aspects of our image.
In February 2004, Robeco was the first asset manager in
the world to introduce a clean-tech private-equity fund of
funds (and a follow-up fund was launched in September
2006). In December 2006, Robeco acquired SAM Group,
one of the world’s leading asset managers for sustainable
Preface
4 | Robeco Groep N.V. | Annual Report 2006
investments. This Swiss-based company has a dedicated
and uniquely positioned research department that carries
out systematic research to identify succesful companies
that meet sustainability criteria, and is universally
recognized for constructing and licensing the Dow Jones
Sustainability Indexes (DJSI), a joint initiative with Dow
Jones Indexes.
The introduction of Clean Tech Private Equity (see page
34 through 39) and the acquisition of SAM, has enabled
Robeco to seriously enhance its sustainable-investing
capabilities. This is important, not only because socially
responsible entrepreneurship contributes to a better
world, but also because environmental pollution and
depletion of natural resources will force mankind to
embrace more efficient and cleaner technology. Investing
in this area will generate attractive returns in the future.
This combination of factors makes sustainable investing
an inspiring activity, and an activity that requires inspired
investing, two words central to our mission statement.
We are convinced that by expanding our position in
sustainability investments now, we will create
a considerable competitive advantage for the future
which will enable us to provide our clients with best-in-
class sustainable capabilities.
In last year’s annual report we emphasized the
importance of integrity and acting in the best interests
of clients. In addition to this we also stressed the necessity
for asset managers to operate using a clearly formulated
set of their own corporate values, standards and
principles in order to safeguard that integrity. Since then,
Robeco has taken a further step to promote integrity by
introducing its own set of principles on fund governance in
January 2007.
Fund governance has been an important topic in the
fund-management industry for several years. One of the
main issues is the inherent potential conflict of interests
between the manager and the investors in the fund.
Robeco has now developed a set of clear, transparent
principles aimed at resolving conflicts of interests in
its fund-management activities. Robeco has drafted
these principles in the absence of uniform national or
international standards, anticipating the outcome of
discussions in the European and especially the Dutch fund-
management industry on this subject.
Of course, integrity and a strong brand cannot exist in
isolation. They need to be complemented by superior
investment results. This is why in 2006 our primary
focus was on strengthening and acquiring investment
capabilities that are of strategic importance. To further
boost innovation, we have established an ‘Experimental
Garden’, where new investment strategies can build up
a track record (see pages 16 through 17). We can now
offer our clients a truly all-weather product line, including
enhanced indexing and other beta strategies as well as a
number of unique alpha engines. We are convinced that
Robeco is ready for the future and we hope that you will
share this future with us.
George Möller
CEO Robeco Groep
Robeco Groep N.V. | Annual Report 2006 | 5
6 | Robeco Groep N.V. | Annual Report 2006
Supervisory Board
Paulus C. van den Hoek, chairman
Johan C. ten Cate, vice chairman
Gilles Izeboud
Philip Lambert
Petrus J.A. van Schijndel1
Diederik J.M.G. Baron van Slingelandt
Dirk P.M. Verbeek
Management Board
George A. Möller, chairman
Leni M.T. Boeren
Sander van Eijkern
Constant T.L. Korthout
Frank L. Kusse2
Niek F. Molenaar
Company Secretary
David H. Cross
1 As of 23 May 2006.2 As of 2 February 2007.
General information1
Supervisory Board
Paulus C. van den Hoek, chairman (68)
Dutch nationality. Appointed in 1997 and last
reappointed in 2004. Scheduled to resign and
eligible for reappointment in 2008.
Former Dean of the Dutch National Bar
(1981/84). Lawyer and partner at Stibbe in
Amsterdam since 1965. Supervisory director of
ASM International, Buhrmann, Robeco, Rolinco
and Rorento.
Johan C. ten Cate, vice chairman (60)
Dutch nationality. Appointed in 2001 and
reappointed in 2005. Scheduled to resign and
eligible for reappointment in 2009. Member of
the Executive Board of Rabobank Nederland.
Gilles Izeboud (64)
Dutch nationality. Appointed in 2004. Scheduled
to resign and eligible for reappointment in 2008.
Partner and director at PricewaterhouseCoopers
(1977/2002). Former member of the Corporate
Governance Committee in the Netherlands.
Deputy justice of the Enterprise Section of the
Amsterdam Court of Appeal. Supervisory director
of Buhrmann, Endex, Robeco, Rolinco and
Rorento.
Philip Lambert (60)
Dutch nationality. Appointed in 2005. Scheduled
to resign and eligible for reappointment in 2009.
Former Head of Corporate Pensions of Unilever N.V.
and PLC in London. Chairman of the investment
committee of Algemeen Burgerlijk Pensioenfonds
(ABP) and member of the investment committee
of ABN AMRO Pension Fund. Supervisory director
of Robeco, Rolinco and Rorento.
Petrus J.A. van Schijndel (56)
Dutch nationality. Appointed in 2006. Scheduled
to resign and eligible for reappointment in 2010.
Member of the Executive Board of Rabobank
Nederland.
Diederik J.M.G. Baron van Slingelandt (60)
Dutch nationality. Appointed in 2002 and
reappointed in 2006. Scheduled to resign and
eligible for reappointment in 2010.
Former member of the Executive Board of
Rabobank Nederland.
Dirk P.M. Verbeek (56)
Dutch nationality. Appointed in 2001 and
reappointed in 2003. Scheduled to resign and
eligible for reappointment in 2007.
Member of the Executive Board of Aon
Corporation in Chicago and chairman of the
Executive Board of Aon Holdings in Rotterdam.
Supervisory director of Robeco, Rolinco and
Rorento.
Management Board
George A. Möller (59)
Dutch nationality. Employed at Robeco since 1 July 2004.
Former president of Amsterdam Exchanges N.V. and
member of the Management Board and Chief Operating
Officer of Euronext N.V. Supervisory director of Dubai
International Financial Exchange, member of the
Investment Committee of Egeria II. Chairman and Chief
Executive Officer since 1 July 2004.
Leni M.T. Boeren (43)
Dutch nationality. Employed at Robeco since 1 January
2005. Former Managing Director of Information
Services and member of the Operational Committee of
Euronext N.V. Head of the Robeco Direct business unit
since 1 January 2005.
Sander van Eijkern (42)
Dutch nationality. Employed at Robeco since 1989.
Head of the Robeco Alternative Investments (RAI)
business unit since 2000.
Constant T.L. Korthout (44)
Dutch nationality. Employed at Robeco since 1992.
Chief Financial Officer of the Robeco Group since 2002.
Frank L. Kusse (45)
Dutch nationality. Employed at Robeco since 2007.
Former Managing Director – Head of Gobal Retail, ABN
AMRO Asset Management. Head International Affairs
since February 2007.
Niek F. Molenaar (46)
Dutch nationality. Employed at Robeco since 1987.
Head of the Robeco Asset Management (RAM) business
unit since September 2004.
Robeco Groep N.V. | Annual Report 2006 | 7
Special
Robeco’s client base is a reflection of our global ambition. Our international distribution partners and institutional
clients now play an important role in realizing our international reach. These changes have called for a repositioning
of the Robeco brand: the Rotterdam-based asset manager needed a more international identity with stronger
emphasis on business-to-business activities. Robeco summarises its new brand strategy in three words:
The Investment Engineers.
The Investment Engineers
8 | Robeco Groep N.V. | Annual Report 2006
These three words reflect the redefined positioning
of Robeco. The Investment Engineers demonstrates
exactly what the Robeco brand stands for: commitment,
consistency and craftsmanship (see ‘The Investment
Engineers – who we are and what we believe in’ on
this page) in addition to state-of-the-art expertise and
innovation in investing. Robeco is not just concerned
about the knowledge of its portfolio managers, but, more
importantly, about the skills with which those portfolio
managers are ultimately able to convert knowledge into
solutions. By launching The Investment Engineers, Robeco
wants to demonstrate that its portfolio managers use
their knowledge and skills to devise practical investment
solutions tailored to their clients’ needs, in order to
achieve superior results.
Distinctive positioning
Robeco’s new positioning is distinctive in a number of
ways. Most of Robeco’s competitors focus either on
input, such as the knowledge and the expertise of their
employees, or on output, for example the performance
achieved. None, however, focus on the investment
process, which is actually very important. In fact,
commitment, consistency and craftsmanship are Robeco’s
key traits. Positioning a brand around the process does
not necessarily mean that we will not also talk about
performance and output. In fact, it gives a refreshing new
distinctive angle from which to address these important
aspects of Robeco’s business.
The Investment Engineers – who we are and what we believe in
Commitment, consistency and craftsmanship are the key traits of The Investment
Engineers. Robeco provides a large number of skilled and specialized investment
teams in the US and Europe. We are experts in investing. We know the pulse of the
market. And with our broad product range, we are committed to deliver investment
solutions tailored to the needs of both private and institutional clients. At Robeco,
we are driven by solutions.
The Investment Engineers are known for their well-structured and model-based
approach. Our investment teams have the expertise needed to develop alpha
engines and sophisticated constructions. We design innovative products with
multiple performance drivers, which we refine and adapt to market developments.
This approach has proved its value over the years.
The Investment Engineers are highly motivated to succeed. We manage
investments carefully and consistently. We are geared to deliver superior results at
agreed upon risk levels. Robeco has focused on doing just that for over 75 years,
with solutions that really work.
Robeco Groep N.V. | Annual Report 2006 | 9
Special The Investment Engineers
10 | Robeco Groep N.V. | Annual Report 2006
The asset manager Robeco
Robeco also developed a new logo and a new house
style for both printed material and the internet, using
The Investment Engineers as the basis. Robeco, the asset
manager, will use The Investment Engineers every time
it communicates with its target and existing audiences
through advertising or non-customized marketing.
Strengths and capabilities
The Investment Engineers also became the central
message in Robeco’s new pan-European campaign for
the business-to-business market in 2006. In this
campaign, Robeco communicates the strengths and
capabilities of The Investment Engineers: being able to
convert considerable investment knowledge into state-
of-the-art investment solutions and investment strategies
that realize steady outperformance (alpha engines).
The Investment Engineers in advertisements
In the pan-European advertising campaign, Robeco
substantiates the capabilities of The Investment Engineers
with examples of actual products and solutions. In other
words, Robeco’s products and investment solutions are
the direct proof of the capabilities of The Investment
Engineers. In all advertisements for the business-to-
business market an Investment Engineer, either a man
or a woman, is placed in an environment where he or
she does not belong, and is thus part of a metaphor that
establishes the link to the Robeco product or solution. The
Investment Engineer demonstrates a specific advantage
or a characteristic of the specific product, with a consistent
use of our newly developed corporate identity and the
colour turquoise. The basic elements of this business-to-
business campaign will be translated into a specific retail
campaign for the Netherlands.
One of the strengths of The Investment Engineers is to make volatility
profitable. In the advertising campaign, this strength is illustrated
with a picture of an Investment Engineer catching waves on a
surfboard. This strength is substantiated with Robeco’s Active Duration
Management: The Investment Engineers’ proprietary quantitative
duration model takes advantage of volatile interest-rate movements.
All advertisements will be supported integrally by separate
web pages on www.robeco.com where further details
are provided about the specific characteristics of every
claim and product as well as background information
and by special events for Robeco’s business partners, like
seminars and presentations.
Robeco Groep N.V. | Annual Report 2006 | 11
The Investment Engineers make volatility profitable
Active Duration Management
Out- Informationperformance* ratio*
1 year (Aug 05 – Aug 06) 2.0% 1.2
5 year (Aug 01 – Aug 06) 1.4% 0.6
Since inception (Jan 95 – Aug 06) 2.0% 0.9
* Source Robeco duration model
This advertisement is intended to provide additional information on Robeco’s duration expertise. This expertise is offered by Robeco Institutional Asset Management B.V., which is registered
with the Netherlands Authority for the Financial Markets in Amsterdam. The value of your investments may fluctuate. Results obtained in the past are no guarantee for the future.
The Investment Engineers’ proprietary
quantitative duration model takes advantage
of volatile interest-rate movements. Based
on this disciplined and transparent approach,
highly skilled investment teams take
significant bets. This has resulted in strong
outperformance and a high information
ratio in the last 11 years.
For more information go to
www.robeco.com/duration or call
+31 10 224 2412.
Robeco is part of the Rabobank Group. Rabobank Group has been assigned the highest possible credit rating by leading
rating agencies.
Report of the Supervisory Board
We herewith present the Robeco Groep N.V. accounts for
the financial year 2006 together with the report of the
Management Board.
Composition of the Supervisory Board
The composition of the Supervisory Board changed in
2006. At the General Meeting of Shareholders on 23 May
2006 Mr. D.J.M.G. Baron van Slingelandt was reappointed
as supervisory director. At the same meeting Mr. P.J.A. van
Schijndel, member of the Executive Board of Rabobank
Nederland, was appointed as supervisory director of the
company with immediate effect. According to schedule,
Mr. D.P.M. Verbeek will resign at the General Meeting
of Shareholders to be held in April 2007. Mr. Verbeek
is eligible for reappointment. It is proposed that he be
reappointed as supervisory director of the company.
All supervisory directors, except Messrs. Ten Cate,
Van Schijndel and Van Slingelandt, are independent
within the meaning of the Dutch Corporate Governance
Code.For information about each of the supervisory
directors, please refer to page 7 of this annual report.
2
12 | Robeco Groep N.V. | Annual Report 2006
Robeco Groep N.V. | Annual Report 2006 | 13
Meetings of the Supervisory Board
In 2006 the Supervisory Board met five times. Overall,
the Supervisory Board meetings were attended by almost
all the Supervisory Board members. The meetings were
also attended by the Management Board. The meeting
held in March was attended by the external auditor,
Ernst & Young, too. The members of the Management
Board were not present when their functioning and
remuneration were discussed. With the exception of the
discussion on his own performance and remuneration,
the CEO did attend these discussions.
As in the previous financial years, the Supervisory Board
met in the USA, this time at the Robeco Investment
Management (RIM) offices in Boston, in October for
a Supervisory Board meeting. Prior to this meeting
the management of Robeco Investment Management
and Harbor Capital Advisors gave presentations and
exchanged ideas with the Supervisory Board on various
business subjects, like, for example, the business
development, the investment policies, the US mutual-fund
market, regulatory developments and HR issues.
On the basis of frequent and detailed reporting, the
Supervisory Board discussed the company’s quarterly
and year-end results in the context of the budgetary
targets set, the investment results and the development
of assets under management with the Management
Board. Various strategic initiatives, based on the strategic
plan 2005-2009, approved in 2005, were extensively
discussed. The Supervisory Board approved the acquisition
of a 40% participation in AIM, a Belgian hedge-fund
manager and the acquisitions of a 64 % participation in
sustainable asset management (SAM Group), established
in Switzerland. The announcement of this acquisition
was made in December. Moreover, initiatives related
to proposed activities in Poland, Egypt and India were
frequently discussed in the Supervisory Board meetings.
In Poland initiatives are being undertaken to develop
a distribution network for Robeco products, while in Egypt
a newly founded local asset-management initiative has
been financed as a strategic partner. More recently
the Supervisory Board approved a 49% participation
in Canara Robeco Asset Management, an asset-
management joint venture with Canara Bank in India.
With respect to the existing foreign operations special
attention was paid to France; the newly appointed CEO of
Robeco France, Jean-Louis Laurens, presented his business
plan in the Supervisory Board meeting of May.
As for the Rotterdam operation the Supervisory Board
discussed the outsourcing project of Robeco Direct.
RAM’s proposals to further develop the institutional
business, were discussed in the context of a strategy
plan regarding the institutional market, presented to
the Supervisory Board. The Supervisory Board endorsed
Robeco’s rebranding operation, which was executed in the
fourth quarter of the year. Next to the above mentioned
issues the Supervisory Board, on the basis of reporting
from the Supervisory Board committees, discussed
subjects such as the risk related to the investment policy
and the instruments to control this risk, internal-audit
and compliance issues and HR related subjects. The
Supervisory Board discussed and adopted the Robeco
Fund Governance Principles, which serve among other
things as guiding principles to address conflicts of interest.
The integral text of these Principles, which apply to the
Robeco organization as a whole, is included in this annual
report, on pages 28 through 33. The Supervisory Board
discussed its own performance and that of its individual
members in addition to its profile, composition and
competence.
A compliance workshop was organized, attended by
all supervisory directors. In this workshop various cases,
derived from day-to-day business, were discussed.
The issues discussed concerned Robeco Groep N.V. and
all its subsidiaries, and also the investment institutions
for which management services are provided.
Supervisory Board committees
In its May meeting the Supervisory Board decided to
establish two committees from its members:
an Audit & Compliance Committee and a Nomination,
Remuneration & Corporate Governance Committee,
replacing the existing Audit & Remuneration Committee.
Both committees consist of three supervisory directors.
The Audit & Compliance Committee consists of Messrs.
Izeboud (chairman), Van den Hoek and Van Schijndel.
The Nomination, Remuneration & Corporate Governance
Committee consists of Messrs. Ten Cate (chairman),
Van den Hoek and Lambert.
In the September meeting of the Supervisory Board
the Audit & Compliance Committee Charter was adopted.
In this charter the objectives, roles and responsibilities of
the Audit & Compliance Committee with respect to both
internal audit and compliance are laid down.
The Audit & Remuneration Committee met three times,
the two new committees both met three times too. The
meetings were attended by the CEO and as far as audit
and compliance issues were concerned the CFO too.
Representatives of the external auditor, Ernst & Young, and
the head of the Internal Audit department attended the
meetings of the Audit & Remuneration Committee when
subjects related to audit were discussed, and they attended
the meetings of the Audit & Compliance Committee. Parts
of the meetings were also attended by the head of Corporate
Compliance and the head of Group Risk Management.
In the Audit & Remuneration Committee the medium-
term audit plan 2006-2010 and the Audit plan 2006
were discussed. The Audit & Compliance Committee
discussed various regulatory issues, amongst others,
the consequences of the Sarbanes-Oxley legislation and
an impact analysis of MiFID. The head of Fiscal Affairs
informed the Audit & Remuneration Committee on various
tax issues, like, for example, the fiscal monitoring of
investment funds/products, and a number of actual issues.
operational-risk-management issues were discussed on
the basis of a presentation given by the head of Group
Risk Management, while the state of affairs of Robeco’s
ICT was explained in a presentation given by the Chief
Information Officer. Compliance issues were extensively
discussed on the basis of quarterly compliance reports.
The Year Plan 2006 of Corporate Compliance was
discussed and endorsed. The Audit & Remuneration
Committee respectively the Nomination, Remuneration
& Corporate Governance Committee discussed various
issues related to the remuneration of the members of
the Management Board. The proposed allocation 2006
under the Equity Notes plan (see below in paragraph
IV) was discussed and agreed to. With respect to Human
Resources, the personnel development scheme and the
Succession & Continuity Plan 2006 were discussed on
the basis of a presentation given by the head of Human
Resources. A number of searches for top-management
functions were discussed as well.
Composition of the Management Board
Mr. S.T. Bichsel, responsible for International Affairs,
stepped down as member of the Management Board on
1 January 2006. Mr. F.L. Kusse was appointed in this
vacancy as of 2 February 2007.
Remuneration report
I Robeco’s remuneration policy
The structure of the remuneration policy for members
of the Management Board is in line with Robeco Groep
N.V.’s general remuneration policy. The objective of the
remuneration policy is to position Robeco Groep N.V.
competitively in the international asset-management
market, enabling it to attract and retain employees who
perform well. The employment package and remuneration
systems are also structured to promote a long-term
relationship with the organization.
The Supervisory Board’s Nomination, Remuneration
& Corporate Governance Committee decides on the
14 | Robeco Groep N.V. | Annual Report 2006
Report of the Supervisory Board
employment benefits for the individual members of the Management
Board. The remuneration package consists of the following components:
fixed remuneration, variable short-term remuneration (bonus), variable
long-term remuneration (equity notes) and fringe benefits.
II Fixed remuneration
The fixed remuneration component aims to provide a good and
competitive remuneration basis relative to the international
asset-management market, and taking into account the relevant
function’s level of responsibility, results and competences. The level of
responsibility is established using the Hay function-valuation system.
III Variable remuneration (bonus)
For the Management Board the variable remuneration component
depends on Robeco Groep N.V.’s gross result (worldwide). For
Management Board members who are responsible for a business unit,
this component is also linked to the relevant business unit’s results.
The ratio between the actual gross result and the budgeted gross result
determines the level of the eventual payment. Any bonus payments
are made in three installments. 60% is paid in the first year (after the
applicable financial year) and two other portions are deferred. The 30%
portion is paid in the second year and the 10% portion in the third year.
Both the deferred portions are converted into Equity Notes (see below
in paragraph IV). These E-notes vest at the end of these deferred periods
in year two and three. If the recipient is no longer employed by Robeco
Groep N.V. or has handed in his notice at the time of payment on or
before the day of vesting, the right to this remuneration component
lapses. In the course of the year the decision has been taken to
increase the variable component and at the same time to attach more
importance to the discretionary power to adjust bonus payments.
IV Equity notes (E-notes)
A limited group of employees (less than 5% of the total workforce),
including the Management Board, are given the opportunity to
participate directly in Robeco’s future value development through virtual
shares in Robeco Groep N.V. E-notes are a way of additionally rewarding
key employees with the aim of increasing their long-term commitment
to the group. In the case of the Management Board, the Nomination,
Remuneration & Corporate Governance Committee decides on whether
or not to grant E-notes and on the quantity to be granted.
In the case of all other employees, the Management Board decides on
whether or not to grant E-notes. The individual allocation of E-notes is
linked to the employee’s individual performance. There is also a link
to the contribution to the realization of the strategic targets of the
Robeco Group as a whole and the individual’s own business unit.
The E-notes represent a value that directly corresponds to the value
of Robeco Groep N.V., the valuation of which is based on ‘profit from
continuing operations adjusted downward for the expenses related to
the long-term incentive plans and adjusted for the results related to
the foreign-currency hedge’. E-notes have a minimum life of 4 years
and a maximum life of 6 years. During this life, dividend is generated.
V Investment notes (I-notes)
Next to the E-notes scheme an Investment notes (I-notes) scheme is
in place. This scheme enables employees, who are granted E-notes,
to invest themselves in additional ‘virtual shares’. Like E-notes,
the I-notes are linked to the value/earnings development of Robeco
Groep N.V. I-notes have a maximum life of 5 years, during which
dividend is generated. If I-notes are retained for the full 5 years the
investor receives a loyalty premium.
VI Fringe benefits
Robeco offers a competitive package of fringe benefits, which includes
a lease car, expense allowance, insurance, supplementary mortgage
benefit, and a pension plan made up of a final-salary plan and a
defined-contribution scheme.
Recommendation to adopt the annual financial
statements
We have taken note of the contents of the report presented by Ernst &
Young Accountants and recommend approval of the annual financial
statements. We concur with the Management Board’s proposal to
distribute no dividend.
Rotterdam, 22 March 2007
The Supervisory Board
Robeco Groep N.V. | Annual Report 2006 | 15
Special
With the introduction of ‘The Investment Engineers’, Robeco has enhanced its positioning as an innovative asset
manager. One way of proving this positioning is introducing new investment strategies. However, new investment
strategies have an important handicap: their lack of track record. Although past performance does not guarantee
or reflect future results, when making a choice between different investment strategies, many investors regard the
track record as an indication of the asset manager’s ability within a certain strategy. This leaves the asset manager
and the investor with the same problem: how to develop or invest in new investment strategies?
Robeco Asset Management’s
Experimental Garden
16 | Robeco Groep N.V. | Annual Report 2006
Back tests
Investors often respond to this dilemma by either choosing
not to invest in unproven investment strategies or by
relying on the reputation of the asset manager. Asset
managers often use ‘back-tested results’ to determine
which new investment strategies to offer. In back testing,
the asset manager uses historical data to try to replicate
an investment strategy, as it would have been executed
in the past. This approach can be useful; however, it does
have some well-documented limitations. In practice, actual
results are often disappointing when compared to their
theoretical back-tested results.
Live tests
Robeco Asset Management established the ‘Experimental
Garden’ in 2005 in order to determine which new
investment strategies to offer in light of the limitations of
back testing. This concept involves thoroughly testing new
innovative investment strategies in ‘live’ conditions before
they are offered to the public. While the Experimental
Garden cannot guarantee results, it does provide more
confidence in new investment strategies. RAM’s Product
Initiative Committee selects new investment strategy ideas
to participate in the Experimental Garden. Strategies within
the Experimental Garden may be managed as a ‘paper’
portfolio, as part of another fund, as a fund seeded by
Robeco or in cooperation with a professional client.
Client pressure
If a paper portfolio is selected, the portfolio manager makes
investment decisions as though he or she were managing
a real portfolio, but without using any real money. To make
this simulation as realistic as possible, Robeco takes into
consideration both the timing of the investment and all
the relevant costs. The paper portfolio approach, however,
lacks the crucial pressure of a real, sizeable portfolio of
client assets. When seed capital is used, the Robeco Group
is the sole investor in the fund and assumes the investment
risk. This approach addresses some of the limitations of
the paper portfolio, as the fund manager has to deal with
‘client’ pressure from Robeco management. However,
because this approach is capital intensive only a limited
number of investment funds can be seeded at the same
time. A third option is to cooperate with a professional client
who is willing to seed a new investment fund. This approach
reduces the capital required by Robeco while benefiting
the client by allowing them to invest exclusively in a new,
innovative investment strategy at a low cost.
Graduation or termination
The Experimental Garden includes about ten new
investment strategies at any given time. The pre-defined
duration of the test period is dependent on the type of
strategy but it is generally longer than one year. At the
end of the test period, the investment strategy either
‘graduates’ and is then offered to Robeco clients or the
experiment is terminated and we have saved our clients
from making a disappointing investment. RAM expects to
launch 50% of the investment strategies that it tests, but
this figure is subject to the quality of the strategies tested.
Rating agencies like S&P and Morningstar have agreed to
take into account any live track record in assigning ratings.
Robeco Groep N.V. | Annual Report 2006 | 17
Corporate governance3
18 | Robeco Groep N.V. | Annual Report 2006
Like in the past years, in 2006 corporate governance
remained a widely discussed subject. Although Robeco
Groep N.V. is not a listed company and, as such, is
not bound by the Dutch Corporate Governance Code
(hereafter referred to as the Code), Robeco Groep N.V.
does find it important to comply with the Code’s principles
and best-practice provisions where possible. It should
be noted here that the shares of Robeco Groep N.V. are
all held by one shareholder, the Coöperatieve Centrale
Raiffeisen-Boerenleenbank B.A. (‘Rabobank Nederland’).
As a result several of the Code’s principles do not apply or
are irrelevant.
Below you will find a list of the issues included in the Code
that are most relevant to Robeco Groep N.V. Furthermore,
the principles and best-practice provisions of the Code that
are not or cannot be applied by Robeco Groep N.V. and the
current corporate-governance structure are described and
explained.
I Compliance and enforcement of the Code
The corporate governance of Robeco Groep N.V. is
established in the company’s Articles of Association and
in the shareholder agreement between Robeco Groep
N.V. and Rabobank Nederland, which was made in 1997
and amended in 2004. Within this framework, Robeco
Groep N.V.’s Management and Supervisory Boards are
responsible for the company’s corporate-governance
structure and compliance with the Code. They are
accountable to Robeco Groep N.V.’s only shareholder,
Rabobank Nederland. Although Robeco Groep N.V. is not
listed on the stock-exchange, and as such, is not bound
by the Code, the company intends to comply as fully as
possible with the Code.
II The Management Board
Robeco Groep N.V. is managed by a Management
Board, currently consisting of six board members. The
Management Board is supervised by the Supervisory
Board. According to the appointment procedure, the
General Meeting of Shareholders puts forward a proposal
which should be approved by the Supervisory Board before
the General Meeting of Shareholders actually appoints a
member of the Management Board.
The Supervisory Board has undertaken that proposals for
appointments will not be rejected without good reason.
On account of the abovementioned nature of the
company the maximum four-year membership term for
board members as recommended by the Code is not
complied with and members of the Management Board of
Robeco Groep N.V. are appointed for an indefinite period.
After prior consultation with the Supervisory Board,
the General Meeting of Shareholders appoints one of
the members of the Management Board as chairman.
The General Meeting of Shareholders is also authorized
to suspend or dismiss any member of the Management
Board at any time. Dismissal arrangements for
Management Board members are determined reasonably
and fairly on a case-by-case basis.
The Management Board is responsible for managing
the company meaning that, among other things, it is
responsible for realizing the company’s strategical and
operational targets, policy and the resulting performance.
The Management Board reports to the Supervisory Board
and to the General Meeting of Shareholders on this.
Furthermore, the Management Board is also responsible
for compliance with all relevant legislation and
regulations, risk management and for the financing of all
the corporate activities. Finally, the Management Board
Robeco Groep N.V. | Annual Report 2006 | 19
is responsible for the provision of information, relating to
the company and the Robeco Group, to the Supervisory
Board in order to enable it to satisfactorily execute its task.
As recommended by the Code, Robeco Groep N.V.’s
regulatory environment and its risk-management
structure are explained on pages 54 through 55
respectively of the report of the Management Board.
The remuneration policy for members of the Management
Board is explained in the report of the Supervisory Board.
The way in which it was implemented in this reporting
period is explained in the notes to the annual financial
statements. The remuneration policy for the coming years
(as included in the remuneration report) was adjusted at
the end of the reporting period and will soon be published
on the company’s website.
The remuneration per individual board member is found
in the notes to the annual financial statements. The
value of the options granted to the Management Board
and staff is also given here together with an explanation
of how this value is determined. As explained in the
remuneration report, members of the Management
Board and a number of employees are granted E-notes
in lieu of the profit-sharing plan (terminated) and the
management option scheme (which will no longer apply
to the Management Board).
Employees, except those participating in the E-notes
scheme, are granted options on shares in several Robeco
Group investment institutions. The granting of options
is based on the employee’s income. The exercise price is
based on the price of the underlying shares at the time
when the options are granted.
The company does not grant loans or guarantees to
members of the Management Board. Robeco Direct N.V.,
a 100% subsidiary of Robeco Groep N.V. and
a credit institution, can grant loans to members of the
Management Board under the same conditions that
apply to other Robeco employees. In the opinion of the
Management Board there were no conflicts of interest
or semblance thereof between the company and the
members of the Management Board in 2006.
Robeco Groep N.V. does not have separate regulations
covering securities transactions by members of the
Management Board. The applicable ‘Rules and
regulations regarding private investment transactions by
employees and insiders of Robeco Nederland B.V.’, which
are based on the regulations of the Dutch 1995 Act on the
Supervision of the Securities Trade, is published on the
company’s website. These rules should guarantee that any
insider trading or a semblance thereof, and any mixing of
business and private interests is avoided.
The company continuously strives to strengthen its
internal risk-management and control framework. During
the reporting period (see section 7 of the report of the
Management Board) various measures were taken,
including the efforts to participate in the Rabobank SOx
related initiatives. Robeco aims to issue the first full year
In Control Statement according to the Dutch Governance
Code in 2008.
III The Supervisory Board
It is the duty of the Supervisory Board to supervise
the Management Board’s activities and the general
developments at the company and its affiliated
enterprises. The Supervisory Board also advises the
Management Board. Robeco Groep N.V. has laid
down the specific tasks of the Supervisory Board in
the Articles of Association of the company and in the
abovementioned shareholder agreement. These tasks are
thus not laid down in separate regulations. Information
about the Supervisory Board’s activities in the past
financial year and the information required by the Code
can be found in the report of the Supervisory Board on
pages 12 through 15.
Corporate governance
20 | Robeco Groep N.V. | Annual Report 2006
The Robeco Groep N.V.’s Supervisory Board consists of nine
persons: four supervisory directors A, four supervisory
directors B and one chairman. There are currently two
vacancies. The chair cannot be a supervisory director B
nor an employee of Rabobank Nederland. Supervisory
directors A cannot be or have been supervisory directors B,
nor can they be employees of Rabobank Nederland. The
General Meeting of Shareholders appoints the supervisory
directors and is authorized to dismiss any supervisory
director at any time. Supervisory directors will be
appointed on the basis of a binding proposal consisting of
at least two persons, formulated by the Supervisory Board.
The Supervisory Board is structured in such a way that
it can satisfactorily fulfill its task and that its members
can operate critically and independently of each other,
the Management Board and any other participating
interests. It should be noted that two supervisory directors
are employed by Rabobank Nederland. In line with the
principle of the Code, each Robeco Groep N.V. supervisory
director is able to assess the general overall policy and has
the necessary expertise to fulfill his task. The Supervisory
Board meets the Code’s recommendation to have at least
one financial expert as supervisory director; please refer
to the short CVs of the supervisory directors on page 7. In
order to get a proper insight into the company and the
activities of Robeco Groep N.V. newly appointed members
of the Supervisory Board follow a customized introduction
program.
All members of the Supervisory Board also meet the
recommendation regarding the maximum number
of supervisory directorships at Dutch listed companies
Robeco Groep N.V. | Annual Report 2006 | 21
(please refer to the information regarding supervisory
directors on page 7) and all the supervisory directors
(except for Messrs. Ten Cate, Van Schijndel and Van
Slingelandt) are independent within the meaning of
the Code.
In accordance with the Articles of Association and the
recommendation of the Code, the Supervisory Board
has drawn up a retirement schedule. According to this
schedule, supervisory directors should, in principle, resign
on the day of the General Meeting of Shareholders four
years after they were appointed. Reappointment can
take place with immediate effect but only after careful
consideration and not if the person involved has reached
or will reach the age of 72 in that year. No maximum term
is applied for supervisory directors, as recommended by
the Code. The company published the retirement schedule
on its website.
In close consultation with and after approval by the
Supervisory Board, the General Meeting of Shareholders
appoints a chairman and one of the supervisory directors
B as vice chairman. As mentioned above, the chairman
may not be a supervisory director B or an employee of
Rabobank Nederland. The chairman chairs the meetings
of the Supervisory Board and ensures that the Supervisory
Board functions satisfactorily. Furthermore, the chairman
of the Supervisory Board has regular contact with the
CEO on all issues relating to the responsibilities of the
Supervisory Board. The secretary of the company assists
the chairman of the Supervisory Board with the actual
organization of the meetings of the Supervisory Board.
In mid-2004 a presidium was formed consisting of the
chairman and the vice chairman of the Supervisory Board.
The vice chairman is a supervisory director B who, in
contrast to a supervisory director A, may be an employee
of Rabobank Nederland. This is indeed currently the case.
The CEO, in particular, keeps the presidium informed
and discusses issues with them. Prior to the meetings
of the Supervisory Board and the Audit & Compliance
Committee and the Nomination, Remuneration &
Corporate Governance Committee the items on the
agenda are discussed with the presidium.
The Supervisory Board has appointed an Audit &
Compliance Committee and a Nomination, Remuneration
& Corporate Governance Committee from among
its members. In conformity with the Tabaksblat
recommendations the two committees are not chaired by
the chairman of the Supervisory Board. Both committees
consist of three persons.
Corporate governance
22 | Robeco Groep N.V. | Annual Report 2006
The Audit & Compliance Committee and the Nomination,
Remuneration & Corporate Governance Committee have
taken on the tasks as described in the recommendations
of the Code. The Report of the Supervisory Board gives
details about the composition of both committees, the
number of meetings and the main items discussed in
these meetings.
In the opinion of the Supervisory Board there was no
conflict of interests or semblance thereof between the
company and the members of the Supervisory Board in
2006.
The General Meeting of Shareholders determines
the remuneration for the supervisory directors. This
remuneration is independent of the results of the
company. The notes to the annual financial statements
contain the information required by Dutch law (articles
2:383c through 2:383e of the Dutch Civil Code) about
the level and structure of the remuneration for each
supervisory director. The supervisory directors of Robeco
Groep N.V. do not receive shares and/or rights to shares
in the company as remuneration. The company does not
grant loans or guarantees to its supervisory directors.
IV Shareholders and the General Meeting
of Shareholders
Each year within six months of the close of the financial
year the General Meeting of Shareholders of Robeco
Groep N.V. is held in Rotterdam to discuss the reports of
the Management and Supervisory Boards, to adopt the
annual financial statements and to take decisions on the
dividend proposal and other items on the agenda.
The minutes of the General Meeting of Shareholders
are available for the shareholders within three
months of the meeting, in accordance with the Code’s
recommendations.
As Robeco Groep N.V. has only one shareholder, the
recommendations of the Code relating to proxy voting
are irrelevant. The other recommendations of the Code
relating to dividend and discharge are followed.
The recommendations of the Code with regard to supply
of information to the General Meeting of Shareholders
relating to price-sensitive information or analysts’ reports
do not apply, as Robeco Groep N.V. is not a listed company.
Finally, the recommendations relating to the
responsibilities of institutional investors do not apply to
the shareholder of Robeco Groep N.V. in that capacity
either. Robeco does have an active voting policy for most
of the investment funds and institutional mandates,
on the basis of which voting rights are exercised on the
underlying stocks. For more information on this subject,
please see pages 57 of this annual report, and the
company’s website, www.robeco.com.
V Financial reporting
The Management Board is responsible for the quality
and completeness of the published financial reports. The
Supervisory Board ensures that the Management Board
takes this responsibility.
Each year the General Meeting of Shareholders, at
the recommendation of the Supervisory Board,
commissions the external auditor to audit the annual
financial statements. The external auditor reports his
findings to the shareholder, the Supervisory Board and
the Management Board. Robeco Groep N.V. complies with
the Code’s recommendations relating to the internal and
external auditors. Robeco Groep N.V.’s annual financial
statements are published on the company’s website.
Robeco Groep N.V. | Annual Report 2006 | 23
The asset-management industry has undergone fundamental changes over the past few decades. Whereas
in the past investing may have bore more resemblance to an art than to a science, today the opposite seems to
hold true. Modern-day portfolio managers are expected to understand and make use of quantitative concepts
such as ex-ante risk measurement and attribution, ex-post performance measurement and attribution, portfolio
construction and optimization algorithms and quantitative forecasting models. All these elements are intended
to support the portfolio manager in structuring and overseeing the investment process and in taking the best
investment decisions in a way that controls risk. One could compare today’s portfolio manager to a Boeing 747
pilot who uses many devices and indicators to guarantee a safe flight. As flight engineers are vital in modern
aviation, quantitative researchers are vital in modern asset management. Robeco Asset Management, with its
17 quantitative researchers, has one of the largest quantitative-research departments in Europe.
Quantitative Strategies
Special
24 | Robeco Groep N.V. | Annual Report 2006
Long-standing experience in quantitative
research
Robeco has been committed to quantitative investment
research since the early 1990s. From the outset
quantitative researchers have worked closely together
with fundamental analysts and portfolio managers to
develop quantitative investment tools. The key research
areas at that time were global duration allocation and
bottom-up stock selection. A significant amount of time
was spent on building and analyzing historical back-test
databases and on back testing quantitative strategies.
The first quantitative risk-management, portfolio-
management and forecasting models were introduced
into the investment process in the mid-nineties. Over the
years the quantitative research at Robeco has spread to
other areas such as currency allocation, asset allocation,
private equity, emerging-market equity and corporate-
bond investing.
In the last two areas Robeco has actually played
a pioneering role. At the end of the nineties Robeco
was among the first practitioners to investigate the
effectiveness of quantitative stock-selection strategies
across a broad range of emerging markets. Academic
papers based on this innovative research were published
in the Journal of Empirical Finance and Emerging
Markets Review. The research was conducted by Robeco
quantitative researchers and emerging-markets portfolio
managers in cooperation with a professor of the Erasmus
University in Rotterdam.
In terms of corporate-bond investing, Robeco was one
of the first asset managers in the world to develop
a quantitative corporate-bond selection model. The
research was carried out using a unique dataset that
Robeco Groep N.V. | Annual Report 2006 | 25
26 | Robeco Groep N.V. | Annual Report 2006
Special Quantitative Strategies
coupled data on corporate bonds with data on the same
company’s listed shares. Since 2000 both these models
have played a major role in the emerging-market and
credit-investment processes respectively.
In 2005 Robeco developed an innovative approach
to measure the risk in corporate-bond portfolios. This
approach was adopted in 2006 by several leading
providers of risk-management solutions in the US.
Unique approach to quantitative research
Quantitative research within Robeco Asset Management is
organized in a unique way. Key elements in our approach
are an integrated quantitative-research team and a
close and intensive cooperation between quantitative
researchers and portfolio managers. We have opted for
a central research department, engaged in both equity
and fixed-income research, because it is our firm belief
that this creates synergy. Many of the research challenges
that one faces in terms of data gathering, data cleaning,
programming, back testing, and tool development are
similar for both equities and fixed income. For example,
when we started our innovative quantitative-research
efforts in the field of corporate-bond selection, we
benefited tremendously from our extensive experience in
stock selection. The exchange of experiences and ideas
between equity researchers and fixed-income researchers
has proved to be very fruitful and has led to many
innovative solutions.
Every researcher in the Quantitative Strategies depart-
ment has a strong theoretical background in quantitative
modeling. In terms of educational qualifications they have
at least an MSc degree in mathematics, physics or
econo metrics and many quants even hold a PhD degree.
The team maintains close relationships with leading
universities in the Netherlands. Several researchers have
a part-time appointment as Associate Professor at the
Erasmus University, and each year between five and eight
students carry out their final projects in the department.
Although the researchers are located in a central depart-
ment, they continuously and intensively cooperate with
portfolio managers and analysts from the investment
departments. Every quantitative research project at
Robeco is carried out by a project team consisting of
quantitative researchers and portfolio managers. In this
way we combine theoretical modeling knowledge and
experience with practical market knowledge and
experience. This cooperation is essential in order to develop
sound quantitative models that are applicable in the
investment process. Today more than fifteen quantitative
models are used in the investment process at Robeco. The
models cover all areas of traditional asset management,
including developed equity markets, emerging equity
markets, money markets, government-bond markets,
corporate-bond markets and currency markets.
Quantitative investment products
All quantitative models are used in the investment
process, but not all are used to the same degree.
Some models serve as an advisory tool for the portfolio
manager, whereas other models are at the very heart
of quantitative investment strategies and products.
We define a quantitative investment strategy as an
investment approach which derives its primary added-
value from quantitative signals. For example, since
1998 the active investment strategy of the Lux-o-rente
fund has been based solely on the signals provided by
Robeco Groep N.V. | Annual Report 2006 | 27
the quantitative duration model. Due to the success of
this quantitative investment approach over many years,
assets under management in RAM’s quantitative duration
capability have grown to nearly EUR 6 billion today.
In 2003 a quantitative enhanced-indexing equity
capability was launched. This investment approach is
based entirely on the output of the quantitative stock-
selection model. The RAM Disciplined Equity team
is responsible for managing the enhanced-indexing
portfolios. Several new, innovative quant products were
launched in 2005 and 2006. In 2005 both an active
quant product for global mid-caps and a global long-
short quantitative hedge fund were started. In 2006 the
Disciplined Equity team added Quant Pacific, Emerging
Markets Enhanced Indexing and Conservative Equity
products to its range. This last product is very innovative in
the sense that it does not take a benchmark as a starting
point for stock-selection decisions, but instead has a pure
focus on absolute return and absolute risk. Assets under
management in quantitative equity products managed by
the RAM Disciplined Equity team have grown to over
EUR 6 billion today. In 2007 we expect to launch more
new quantitative investment strategies, both for equities
and for fixed income. In the same way that the flight
engineers leave the actual flying to the pilots, the
quantitative researchers leave the actual investing to the
portfolio managers. Robeco’s quantitative investment
engineers devote all their time and energy to developing
state-of-the-art quantitative models, strategies and
investment products and at the end of the day Robeco’s
clients profit from these investment-engineering efforts.
Principles on fund governance4
28 | Robeco Groep N.V. | Annual Report 2006
1. Introduction
Robeco is an organization that manages on a professional
basis assets entrusted to it by third parties. In this capacity
Robeco assumes a fiduciary responsibility. Robeco’s mission
statement is:
| To deliver superior results through inspired investing |
The company has defined a set of core values including
integrity, quality, client focus, result orientation – defined
as creating value for our clients – and cooperation.
These core values have been incorporated into a Code
of Business Conduct which describes our principles
with regard to the various aspects of the company’s
activities. It is important to ensure that Robeco delivers
on these principles through corporate governance.
Where Robeco’s interests are in line with the interests of
third-party customers this involves running a professional
organization with the necessary checks and balances.
When interests conflict, however, the issue becomes more
sensitive and the principles of fund governance come fully
into play.
2. Fund governance
Nevertheless Robeco would like to establish a global
corporate standard of its own that crosses geographical
boundaries. In Robeco’s view this means that paramount
attention must be given to managing potential conflicts
of interest. Should conflicts of interest nevertheless occur,
Robeco should deal with these situations in accordance
with its fiduciary duty to act in the best interest of the
investor. Robeco has defined the set of principles given
below for specific situations commonly defined as conflicts
of interest, mostly between Robeco as fund manager
and the investors in said funds. It is therefore that these
principles are restricted to the area of fund management.
When dealing with potential conflict-of-interest situations,
Robeco will primarily endeavor to reasonably and
fairly apply the specific principles defined herein. In
situations that may not be covered by these principles,
Robeco will in general seek to apply international best
practices to the extent available. Robeco pledges to
resolve any such situation, having due regard for the
interests of the investor and Robeco’s fiduciary duty, after
reasonable and fair consideration of all the relevant facts
and circumstances. We call this process ‘conscientious
consideration’. It is supported by a structure in which
Robeco is accountable for compliance with the principles
and the procedure to maintain them within
the governance structure of the Robeco Group.
The final part of Robeco’s fund-governance mechanism
is formed by a quarterly fund-governance review within
Robeco’s business operations.
These reviews are carried out by the Corporate Compliance
Department and they focus on all identified governance
issues as described below. The outcome of these reviews is
reported to the Audit & Compliance Committee of Robeco
Groep N.V.’s Supervisory Board, also on a quarterly basis.
3. Managing governance issues
3.1 Principles
Product quality
Robeco is firmly committed to the development of quality
products designed to provide added value for investors.
The timely consultation of all relevant parties involved
in the fundstructuring process improves such quality and
Robeco Groep N.V. | Annual Report 2006 | 29
reduces reputational risk. All product proposals (since
2005) are therefore reviewed by the Product Quality
Committee (PQC) which focuses on product quality and
the identification and proper addressing of conflicts of
interest. The PQC consists of all statutory directors of the
Robeco Group as well as the head of Compliance and
the head of Risk Management.
Transparency
Robeco strives for an open relationship with the investors
by providing relevant, clear and understandable
information. This includes information on investment
policy, investments, risks, costs and management fees,
affiliated parties and outsourcing. Clearly Robeco observes
the applicable laws and regulations as a minimum
requirement. Examples are:
– The characteristics of a fund are clear, the risks are
explained and there are no ambiguous conditions.
– All fees charged by Robeco and their connection to
services rendered are clear.
– The maximum subscription and minimum redemption
prices in relation to the net asset value (NAV) are clear.
– All performance-related information is aligned with
Global Investment Performance Standards (GIPS)
guidelines.
Change in the conditions of a fund
During the lifetime of an investor’s investment it is
possible that a fund’s conditions may change. In that case
Robeco will suitably inform the investors in good time
in accordance with the applicable laws, regulations and
the fund’s conditions. Robeco strives to ensure that such
information is easily accessible, clear and understandable
for all investors. If the proposed changes have a negative
impact on conditions for the investor (e.g. a rise in fees),
or if changes in the investment policy of a fund are
proposed, the investor in an open-ended fund shall always
have the right to divest on the then prevailing conditions
within a reasonable period before the proposed changes
are effected.
Unforeseen costs in the lifetime of a fund
A fund may be confronted with unforeseen, extraordinary
costs and expenses. These may be caused by changes in
tax treatment, increased regulatory costs, administration
and custody fees, or by unusual circumstances such as
nationalization, a moratorium, market disruption or
other irregular market circumstances.
If the costs are the result of circumstances outside
Robeco’s control, or if the costs are made in the best
interest of the investors, such costs are in general borne
by the fund. In all other cases, Robeco shall bear these
costs or may elect to propose to change the conditions
such that these costs shall then be borne by the fund
(see ‘Change in the conditions of a fund’ above).
Best execution
In implementing and executing investment decisions,
Robeco shall as a general rule take reasonable steps to
obtain the best possible result, taking into account price,
costs, speed, likelihood of execution and settlement, size,
nature or any other relevant consideration. In particular,
transactions with members of the Rabobank group will be
executed on arm’s length terms customary in the market.
Fair allocation
Robeco may generally execute transactions on an
aggregated basis to obtain more favorable commission
rates or other transaction costs than if such orders
are placed individually. When aggregating orders, all
portfolios shall be treated fairly and systematically.
Transaction fees and soft commissions
Transaction fees only cover those services that directly
benefit the fund or the collectivity of the funds belonging
to the Robeco Group. Soft-commission arrangements
30 | Robeco Groep N.V. | Annual Report 2006
Principles on fund governance
are permitted as long as the services paid for with soft
commissions are directly instrumental for improving the
investment decision-making process, and on condition
that the transaction fees are customary and reasonable
relative to the brokerage services provided. Services paid for
with soft commissions may include research and securities
advice. These services improve the investment process
and are therefore beneficial to the investors in the Robeco
funds. In the annual reports of the funds the policy on soft
commissions is explained.
Securities lending
Robeco is transparent in a fund’s prospectus and annual
report with regard to the possibility of lending the portfolio
securities of such a fund (e.g. maximum percentage,
conditions, risks, counterparties). The risk/reward
relationship of lending activities for the fund shall in essence
be reasonable and fair and in line with market practice.
Robeco will act in accordance with best practices from the
ICGN Stock Lending Code of Best Practice, October 2005,
from the International Corporate Governance Network.
Personal interest and remuneration
Robeco endeavors to structure its remuneration systems in
line with market practices and in such a way that conflicts
with investors’ interests are avoided. Where potential
conflicts are conceivable, monitoring measures will be
implemented in order to ensure that these conflicts are
properly managed and addressed. We consider the fact
that staff and members of the Supervisory Board can
participate in Robeco’s funds a ‘stake of confidence’. Almost
all securities transactions involving staff or members of a
Supervisory Board are monitored. This is to ensure that we
can stay clear of appearing to act with inside information.
Costs and damages
As a result of operational errors Robeco’s ambition is to
deliver services to its clients through faultless processing.
Nevertheless, in a human environment operational errors
can never be entirely excluded. Damages exceeding a
certain de minimis hurdle and caused by errors in the
calculation of the net asset value of a fund shall always
be compensated by Robeco. For other operational errors,
Robeco carries, at its own expense, customary insurance
coverage for damages and costs incurred by the fund as a
consequence of operational errors by Robeco and these
damages shall be compensated by Robeco to the extent of
such insurance coverage.
Voting rights
Robeco, in its function as shareholder, acts as an engaged
shareholder and therefore makes use of the relevant
voting rights. Robeco may refrain from using voting rights
in case voting is not deemed in the interest of its clients
(e.g. when the costs of voting are disproportional, when
voting could lead to shareblocking while the portfolio
managers wish to keep their freedom of selling during
the blocking period, or when stock is lent to third parties).
The best interest of the client is a driving factor in
the consideration. The voting policy is published on the
relevant website.
With respect to the use of voting rights relating to stock
that is lent, it is both difficult and undesirable to have the
borrower vote for the stock. In case a situation is identified
in which voting our stock on loan in an upcoming share-
holders meeting may significantly influence the outcome
of the voting process and may have a significant impact
on shareholder value, Robeco will consider a recall of the
stock on loan.
Public communications
It is Robeco’s conviction that all public communications in
respect of its funds must give true, accurate and complete
information on the character, the costs, the risks and, if
included, the past performance of such product to the
extent reasonably practicable. Advertisements for Robeco
Robeco Groep N.V. | Annual Report 2006 | 31
products will maintain a healthy balance between sound
commercial information as well as the technical facts
necessary for potential investors on which to build their
judgment. Robeco will be transparent in its commercial
information in a manner that is in line with the statements
below. Naturally, application of and compliance with
applicable legal and regulatory standards shall serve as
a minimum requirement.
Market abuse
Robeco has installed ‘Chinese walls’ in order to manage
the flow of price-sensitive information and other
confidential market information. Since Robeco is part
of the Rabobank Group, there is an organizational,
physical and personnel segregation up to the highest
possible level between Robeco and the other parts of the
Rabobank Group. Furthermore, there is an organizational,
physical and personnel segregation between the Robeco
business units to the extent that this is reasonably
necessary relative to their activities. This means that
employees report hierarchically only to their managers
and appropriate information-sharing barriers are in place
to prevent dissemination of sensitive market information.
No price-sensitive or confidential market information is
exchanged between business units other than is required
to effectively carry out their work.
3.2 International best practices
In specific conflict situations where the above principles
would not provide clear guidance Robeco endeavors to
apply international best practices to the extent available.
This means that Robeco may apply those standards that
are commonly applied by peers in comparable situations
and comparable markets or those standards which are
endorsed by organizations of market practitioners and
which are widely accepted and applied in the market.
Robeco will closely monitor the work currently undertaken
by IOSCO and other relevant organizations with regard
to fund governance and will review its procedures on
a continuous basis in the light thereof.
3.3 The principle on ‘conscientious
consideration’
However well defined and refined, a system of specific
principles, even while supplemented with a set of
international best practices, cannot always guarantee
sufficient external guidance to deal with specific conflict
situations. A fund-management organization should
reach a solution independently which does justice to
its fiduciary role and responsibilities. Robeco therefore
pledges that it shall, in all cases, endeavor to resolve any
governance issues having due regard for the interests of
the investor and Robeco’s own interest as a management
company, and after reasonable and fair consideration of
all relevant facts and circumstances. This process, which
we call ‘conscientious consideration’ shall be conducted
within the Management Board of Robeco Groep N.V. as
the highest authority within the Robeco management
organization.
4. Implementation and
enforcement of fund governance
The above mechanism of principles, international
best practices and conscientious consideration shall be
implemented within the Robeco organization in the
following manner:
1. Robeco has defined its best practices; this is the set of
business principles of the Code of Business Conduct. One
of these business principles is fund governance. Robeco
has identified the main areas for conflicts of interest
between the management organization on the one hand
and the investors in the funds on the other.
32 | Robeco Groep N.V. | Annual Report 2006
Principles on fund governance
2. Robeco’s Compliance department shall draw up a
review program in which it monitors the application of the
principles on fund governance. The focus of this program
will be on the acts and decisions of all relevant officials
and corporate functions relating to the management of
conflicts of interests.
3. The Compliance department shall inform the
Management Board of Robeco Groep N.V. and the Audit
& Compliance Committee at least four times per year
about the outcome of its compliance reviews. The Audit
& Compliance Committee is a sub-committee of Robeco
Groep N.V.’s Supervisory Board and consists in majority of
so-called ‘external’ supervisory directors, i.e. persons not
previously or currently employed by Robeco, Rabobank,
or any of its other affiliates.
4. The director(s) of the fund or the fund-management
organization will in the daily conduct of their business
encounter situations that are not covered by the above
principles or that require the principles to be updated.
The director(s) of the fund or the fund-management
organisation will meet with the statutory directors of
the Robeco Group to deal with these situations in order
to resolve these points through applying the concept
of ‘conscientious consideration’ and/or by amending
the principles themselves. The Audit & Compliance
Committee shall be kept informed about the outcome of
these discussions. The director(s) of the fund or the fund-
management organization can be invited at least once
a year to attend the meeting of the Audit & Compliance
Committee and to report on the issues mentioned above.
5. Robeco Groep N.V. has published its Code of Business
Conduct as well as the above principles on fund
governance on its website. The report of the Supervisory
Board of Robeco Groep N.V. shall contain a paragraph
specifically devoted to this subject. The annual reports
of the funds shall contain, in addition to the legal
requirements of the relevant regulator, a statement on
compliance with the principles on fund governance as of
2008.
5. In conclusion
The mechanisms provided for herein are a living
instrument offering standards and good practices.
To stay abreast of constantly changing circumstances
in the financial environment, Robeco will closely follow
developments in fund governance, identifying trends
and seeking remedies to new challenges.
Robeco is aware that trust and integrity play an important
role in the financial industry. It is Robeco’s sincere
intention that these principles on fund governance,
together with the Code of Business Conduct and further
internal policies will help to maintain a culture in which
professional and ethical behavior of the staff of Robeco is
recognized, valued and promoted.
Robeco Groep N.V. | Annual Report 2006 | 33
Clean Tech Private Equity:
Financing the next wave of innovation
Special
Threats and opportunities: the need for clean tech
The world is entering into a particularly innovative period, caused by the inevitability of having to transform
current production and consumption patterns into more sustainable alternatives. The increasing scarcity of natural
resources and their rising prices, changing consumer preferences, measures combating climate change, stricter
environmental legislation and the need for businesses to remain competitive, are all trends that will accelerate this
transformation process.
34 | Robeco Groep N.V. | Annual Report 2006
There is a clear need for technology that allows us to
produce energy, materials, products and services in a
more efficient way, thereby using less natural resources
and creating less pollution and waste, while at the same
time securing an (uninterrupted) energy supply or stable
water quality, both now and in the future. This technology
is known as clean tech and comprises a wide range of
industry segments: from alternative energy to water
purification to advanced materials. Clean technologies
and products can be defined as those technologies or
products that increase the productive use of natural
resources, while eliminating or reducing environmental
impact, and adding economic value.
Clean tech is an important instrument in the bid to achieve
sustainable development, and a number of sustainability-
related drivers fuel the growth of clean tech. One major-
related sustainable challenge is that of meeting the
rising worldwide demand for energy, water and other
natural resources such as metals. The growth of China
and India has augmented this demand and has drawn
attention to the fact that reserves in natural resources are
finite. In addition, securing the supply of these resources
from politically unstable or undemocratic regimes
is increasingly problematic. Climate change and the
attempts to combat it (such as the Kyoto protocol) have
lead to increased emphasis on ‘low-carbon’ technologies
and products. All in all, the impetus for sustainable energy
technologies and for energy production from renewable,
locally available sources has never been stronger.
Meanwhile, worldwide pollution levels are still rising, and
the resulting degradation of our ecosystems is increasing.
Our consumption patterns are unsustainable in the sense
that in a year we use more of the planet’s resources
than it can annually regenerate. In response to this ,
consumer preferences are shifting towards sustainability,
creating a demand for green or clean-tech products. At
the same time, however, a large proportion of the world’s
population lives below the poverty line. It is clear that the
development of these poverty-stricken areas will only be
possible if it occurs in a much more resource-efficient way
than it did in the developed world.
Finally, technological innovation in recent years has driven
down the cost of cleaner, resource-efficient technologies,
making them competitive in terms of price and perfor-
mance. Other clean technologies are not competitive yet,
but will be in a couple of years given the rapid techno-
logical progress. This means that the time-to-market of
numerous clean technologies has been shortened to
periods that are acceptable to investors and financiers.
The clean-tech investment market
Investors are starting to recognize the opportunities
offered by clean tech and are starting to pour money into
this sector. As usual private-equity investors and venture
capitalists have been the first to identify and capitalize
on this trend. They are also in the best position to profit
from the value created within clean-tech companies, long
before public investors are given the opportunity to do so.
Robeco Groep N.V. | Annual Report 2006 | 35
Special Clean Tech Private Equity
1. Cleantech Venture Network, Cleantech Venture Investment - Patterns & Performance, March 2005
2. New Energy Finance, study presented at European Energy Venture Fair 2006
North America
Europe
North America
Europe
2000
1800
1600
1400
1200
1000
800
600
400
200
01999 2000 2001 2002 2003 2004 2005
Cleantech venture investments North America and Europe
Am
ount
(USD
mill
ion)
300
250
200
150
100
50
0
Num
ber of deals
121 134
108
222
191205
246
106128
140
Source: Cleantech Venture Network, 2006
36 | Robeco Groep N.V. | Annual Report 2006
In a comprehensive study of the clean-tech investment
market, the Cleantech Venture Network found that
between 1999 and 2005, more than USD 8.2 billion of
venture capital was invested in North-American clean-tech
companies. Preliminary findings from a similar report
on European clean-tech venture capital show that total
European clean-tech venture investing from
2003 - 2005 was over USD 2 billion. In the last quarter of
2005, clean tech accounted for 9.1% of overall venture-
capital investments in North America, the highest
percentage ever recorded. Clean tech now ranks 5th in size
as an industry segment moving ahead of semiconductors
and just behind biotechnology, software, medical and
telecommunications. In our view it will move up the
ladder further and probably pretty fast as well.
Return drivers for clean tech
Research1 shows that the historical returns of investing in
clean tech have been good: a hypothetical portfolio of
North-American clean-tech companies in the period 1987-
2003 would have returned an estimated 6.2x invested
capital with an IRR of approximately 30%. A similar study2
for European clean-tech companies shows that in the
period 1999-2005 investors in these companies have
made an overall 86.7%. Robeco believes that conditions
are favorable for continuing to achieve above-average
returns in the future from clean-tech investing:
a. There is a strong demand for clean tech because
of the global drive towards sustainable development.
The issues of energy security, climate change and
depletion of natural resources are prompting a move
towards clean tech.
b. Innovation has driven down the cost of clean
technologies and many are now competitive in
terms of price and performance. Many companies
are already moving from the technology-develop-
ment stage to the market-development or
commercialization stage: they have developed their
clean technologies and are now introducing these to
and businesses in the biofuels and materials segment
c. There is a strong clean tech IPO market. After a
Special Clean Tech Private Equity
Robeco Groep N.V. | Annual Report 2006 | 37
number of very successful solar-energy company IPOs,
2005 and the first half of 2006 saw a large number of
renewable-energy companies going public, evidence
of the increased investor appetite for clean tech.
London’s AIM (Alternative Investment Market) has
proved to be an especially attractive market for
clean-tech IPOs, followed by NASDAQ and Frankfurt.
d. There is a strong clean-tech M&A market, due to the
interest that large (industrial) corporations show
in this segment. They are looking to acquire clean
tech, often as a new technology to complement their
existing ones. Major corporations making clean-
tech venture investments include: BASF, Boeing, GE,
Honda, Intel, Norsk Hydro, Motorola, Royal Dutch
Shell, Siemens and Unilever.
Investing in clean tech through a fund-of-funds
To offer investors the opportunity to take advantage
of this shift towards more resource-efficient and clean
technologies, Rabobank and Robeco are introducing
Robeco Clean Tech Private Equity II (the ‘Fund’). This fund-
of-funds, which has a target size of USD 500 million, is the
successor to Robeco Sustainable Private Equity, a USD 200
million investment program that was launched in 2004.
Based on years of experience and research, Robeco
has developed an investment approach which enables
investors to take advantage of the specific opportunities in
clean-tech private equity. Robeco Clean Tech Private Equity
II will consist of a basket of approximately 15 to 25 of the
Robeco Clean Tech Private Equity II – Key points
– Target fund capitalization of USD 500 million
– Minimum commitment of USD 5 million
– Invests in resource-efficient technologies
– Predominantly private-equity fund investments (15-25 funds), with up to 40%
in direct (co-)investments
– Globally diversified across venture capital, mid-market transactions and large
buyouts
– Managed by a team of experienced private-equity investment professionals at
Robeco
– Advised by a team of dedicated clean-technology experts at Rabobank
– Provides financial and strategic advantages to investors
38 | Robeco Groep N.V. | Annual Report 2006
most prominent clean-tech private-equity funds in the
world. These funds will also act as a deal-flow accelerator,
enabling the Fund to select from the most attractive direct
co-investment opportunities that these clean-tech private-
equity funds offer to Rabobank and Robeco. Robeco’s
and Rabobank’s own attractive deal flow will be another
source of direct (co-)investment opportunities for the
fund. The Fund’s investments will be diversified across
clean-technology private-equity funds (60 - 100%) and
direct (co-)investments (0 - 40%). The investments of the
Fund will be further diversified in terms of private-equity
investment stage, geography, sector, technology and
time. In terms of technology and sector, the Fund will be
diversified across various sectors, including renewable
energy (solar, biofuels, wind, wave, and thermo), energy
efficiency, waste-to-energy, advanced metering, material
recycling and biomaterials, water technology and air
treatment technology.
Successful cooperation with Rabobank in the
field of clean tech
As the manager of the Fund, Robeco will be advised on
the clean-tech characteristics of transactions as well
as on clean-tech market developments by Rabobank’s
Corporate Social Responsibility department, which is in
charge of maintaining and further developing Rabobank’s
leadership in sustainability and clean technology.
Rabobank sees clean technology as one of its core value
drivers and therefore employs a number of experts in
energy and water technology and other areas in the
clean-technology universe. Rabobank and Robeco have
been actively looking at the clean-technology investment
market since 2003, and have over the past years built up a
comprehensive database containing detailed information
on over 180 clean-technology funds and direct co-
investment opportunities. In order to provide additional
added value for their investors, Rabobank and Robeco
will launch a new body dedicated to clean-tech research,
which will be a center of competence on the trends and
developments in clean-tech investing. Investors will be
granted access to this research.
The Robeco Clean Tech Certificate: designed
for the retail market
Robeco has decided to not only offer the clean-tech
fund-of-funds product to institutional investors, but also
to private investors. A special structure has therefore
been designed to enable private investors to invest in the
clean-tech segment: the Robeco Clean Tech Certificate
(the ‘Certficate’). The Certificate is issued by Robeco
Bank Holding and provides the investor with exposure to
the fund Robeco Clean Tech Private Equity II. In order to
profit as much as possible from the results of this Fund,
an investor in the Certificate will participate for 130% in
the Robeco Clean Tech Fund II. This means that Robeco
Bank Holding will pay the investor 130% of the difference
between the contributions and distributions. The
Certificate’s return will consist of semi-annual payments
during its life. The level and the timing of these
payments depend on the contributions and distributions
Special Clean Tech Private Equity
Robeco Groep N.V. | Annual Report 2006 | 39
of the Robeco Clean Tech Fund II, but are not expected to
begin before year 5 or 6. Private-equity funds generally
need this sort of time frame to develop the full potential
value of their investments. The Certificate is traded
on the Euronext stock exchange, so that investors are
offered liquidity in this product. The issue price is EUR
1,000, so an investor can gain exposure to the clean-tech
private-equity market with a relatively small amount of
money.
Conclusion
The ‘Clean Tech Engineers’ made a lot of progress last
year. A number of attractive investments in clean-tech
private-equity funds were made already from the first
fund, Robeco Sustainable Private Equity. A follow-up
fund for the institutional market, Robeco Clean Tech
Private Equity II, was also launched and received with
great enthusiasm. Finally, a retail product based on
this – Robeco Clean Tech Certificate – was developed
and marketed to private investors in a large number of
European countries. We expect the success of clean tech
to continue and we are determined to play a trend-setting
role. In a few years, Robeco together with Rabobank,
have grown into one of the leading clean-tech investment
managers worldwide. We plan to consolidate this position
and further enhance our knowledge and expertise and
by doing so, we can make an actual contribution to
sustainable development.
Report of the Management Board5
40 | Robeco Groep N.V. | Annual Report 2006
Profile Robeco
Robeco Groep N.V. | Annual Report 2006 | 41
Robeco is a pure-play asset manager with an active
investment style, offering a broad range of specialist,
alpha-generating products. Established in Rotterdam,
the Netherlands, in 1929, Robeco is now a leading
international investment boutique with asset-
management platforms in Europe and the US. Assets
under management currently amount to EUR 142 billion
(status on 31 December 2006).
Our mission statement is ‘To deliver superior results
through inspired investing’. ‘To deliver’ means to
actively offer our products and solutions, structuring
and packaging them where necessary, to fulfill clients’
needs and wishes. ‘Superior results’ refers to outstanding
investment returns which beat the benchmark, stand
out against our competitors’ performance and meet
our clients’ expectations. These are also results superior
to those that clients could achieve by investing directly
themselves. ‘To deliver superior results’ refers to our
results-oriented approach; trying hard is not enough
– achievements are what count. ‘Inspired investing’
indicates that we are passionate about what we do and
that we devise innovative investment opportunities. Our
pioneering work in the field of clean-tech private equity is
a good example of this.
Robeco offers a wide range of investment products and
solutions, based on specialized investment capabilities in
the major asset classes of equity, fixed income and money
market, and in alternative investments, such as hedge
funds and private equity. Robeco introduces innovative
structured and packaged products to the market which
combine the best-of-breed investment capabilities with
guarantees to accommodate the return, risk, regulatory
and liquidity requirements of our clients.
We have around 700 institutional and 1.5 million private
clients worldwide. Private investors are serviced via
banks and other distribution partners, and through direct
channels. To provide local services to our institutional,
B2B and retail clients, we have sales teams in Bahrain,
Belgium (also servicing Luxembourg), France, Germany,
Japan, Poland, the Netherlands, Spain (from where we
also service certain Latin American countries), Switzerland
and the US. The acquisition of SAM Group in December
2006 has now also given Robeco (indirect) sales offices in
Sweden and Australia.
Robeco is fully owned by Rabobank, one of the few
privately owned banks in the world with the highest credit
rating (AAA) from the major international rating agencies.
Rabobank also has the highest sustainability cluster score
within the banking sector.
Key figures
42 | Robeco Groep N.V. | Annual Report 2006
02 03 04 05 06
107.1
181.3
158.2
221.0233.6
97.7
106.6111.1
131.6
141.7
02 03 04 05 06
Assets under Management
(EUR x billion)
02 03 04 05 06
499.3
573.9
535.2
622.8
657.5
Operating income
(EUR x million)
Operating profit
(EUR x million)
02 03 04 05 06
70.6
112.8
127.9
152.0
193.0
Net profit
(EUR x million)
01 Market environment and achievements
A good year for equities in an increasingly
global market environment
Global equities had another good year as a strong
appetite for risk and ample liquidity propelled major
markets to double digit gains. The market environment
was positive with a short period of correction in the
second quarter of the year. The market for alternative
investments experienced ongoing interest which led to
greater diversification. The outlook for the market remains
positive and we expect an increase in volatility.
An eventful year for the bond markets
The bond markets were characterized by rising interest
rates and increasing demand for corporate bonds. The
year started with central banks worldwide increasing their
interest rates which resulted in downward pressure on bond
prices and therefore on bond market returns. At its August
meeting, the Fed decided for the first time in two years
not to raise interest rates. The rates for the euro zone were
increased once more in December to 3.5%. This was the
sixth time that the ECB had raised its interest rates by 25
basis points since December 2005. Corporate-bond market
returns were stronger than those of government bonds,
with the high yield part of the market leading the way.
Robeco’s business model is geared to
international developments
The continuing growth of the asset management industry
combined with a focus on core activities is a trend that
is constantly having an impact on profitability. Asset
management is becoming more and more international
with a trend towards groups with a global presence.
Financial institutions are being confronted with important
decisions relating to their asset management activities
in terms of manufacturing, distribution, general, niche
or exits. This means that a further consolidation within
the asset management industry can be expected.
Robeco’s business model is well adjusted to cope with
these developments through the organic growth of its
international activities as well as selective acquisitions and
new distribution and strategic agreements.
Within the institutional client segments, large institutional
clients such as pension funds are continuously having
to adjust to new legislation and changing market
circumstances which has led to a shift to specialist
mandates. Open or guided architecture continued to
become more prominent in 2006 and is resulting in
operational distribution-oriented models. Our cross-
border focus has led to new large institutional mandates
for all our business units in the different regions where
we operate: Europe, US, the Middle East and the Far East.
This shows that size is not the only factor but that the
international cooperation within our group is also really
taking off.
From a quantitative perspective, 2006 was a good year
for cash flow. Robeco met its corporate cash flow target
and managed to even exceed it in certain areas.
Robeco Groep N.V. | Annual Report 2006 | 43
At the end of 2005, Robeco introduced a new strategic
motto for the coming years: “Invest in Europe, grow in
the US, seed in emerging markets.” The year 2006 was
the first full year Robeco has had to implement and live
up to its new strategic motto.
Invest in Europe
The key theme for Europe was the strengthening of our
strategically important investment capabilities through
development and acquisitions. In the hedge-fund sector,
Robeco’s position was strengthened by combining the
fund-of-hedge-funds teams in Rotterdam and New York
(Robeco Sage) and through the acquisition of a 40% stake
in hedge-fund manager Analytic Investment Management
(‘AIM’) in Belgium. AIM is one of Europe’s pioneers in
the field of systematic intra-day currency trading and
its investment strategy is based solely on quantitative
models. AIM exclusively manages institutional accounts
mostly for pension funds and hedge funds and had
assets under management of above USD 200 million
at the end of 2006. Early 2007, Robeco acquired the
remaining shares in Transtrend having acquired an initial
shareholding of 49% in 2002. Transtrend is a managed-
futures trader based in Rotterdam.
In terms of private equity Robeco enhanced its position
by expanding the private equity team and by introducing
products investing in clean technology both for
institutional investors (Robeco Cleantech Private Equity II)
and for private investors (Robeco Cleantech Certificate).
In the area of sustainability, Robeco concluded an
important transaction through the acquisition of a
majority interest in SAM Group, a leading Swiss asset
manager in the field of sustainable investing. Two leading
players in the world of sustainable investing Robeco and
SAM Group joined forces to form a global “powerhouse”
in sustainability investing, capitalizing on the booming
demand for sustainability products and services. SAM
Group is one of the world’s most visible and dedicated
asset managers for sustainability investments, universally
recognized for its water and energy funds and for
constructing and licensing the Dow Jones Sustainability
Indexes (DJSI), a joint initiative with Dow Jones Indexes.
Robeco and SAM Group have ambitious growth objectives
and will target new client segments and invest in product
development and new markets. Although Robeco has
taken a 64% stake in SAM Group, 36% of the shares
continue to be held by SAM Group’s management and
employees in order to keep interests aligned. SAM Group’s
assets under management and assets under advice
amounted to a total of CHF 10 billion at the time of the
announcement of the transaction.
In 2005 we adopted a hub-and-spokes model to facilitate
further growth in Europe and the US. To this end we
established the Financial Service Center in Rotterdam
in September 2006. This will make it easier to connect
investment engines from outside Rotterdam to our back
office, mid office and other supporting services.
A number of other projects connected with strengthening
our capabilities in European equities are also under
way. The institutional sales teams were strengthened in
2006. This led to promising new net cash flow within the
European continent. Robeco has added a number of new
products to its product range including six liquidity funds
developed in cooperation with Rabobank.
Other examples of new strategies are two opportunity
funds, Robeco Emerging Stars and Robeco European
Opportunities Equities, and a telecom hedge fund.
Furthermore, Robeco is now also able to offer investments
in real estate and commodities by making use of
sub advisors. The positioning of Robeco Direct in the
Netherlands was defined more clearly by the introduction
of a service concept named Younique by Robeco. This
service concept entails the removal of all transaction costs
for online buying and selling of Robeco investment funds.
All investment advice is therefore impartial and not aimed
at generating revenue. The first priority is to increase
customer’s investment returns. By abolishing transaction
costs any hurdle that may have existed to prevent clients
from taking Robeco’s advice has been completely
removed.
02 Strategy; implementation and realization
44 | Robeco Groep N.V. | Annual Report 2006
Robeco Direct’s Younique by Robeco, makes bespoke and
tailor-made investment advice available to the medium-
net-worth individuals. In short Younique by Robeco stands
for:
– Tailor-made advice and support in wealth growth;
– Access to a team of specialists on workdays from 8.00
hours to 21.00 hours and on Saturdays;
– No transaction costs for online buying and selling of
Robeco investment funds;
– Low initial amount for wealth management and
coaching from EUR 25,000.
Tailor-made investment advice from Younique by Robeco
is not limited to a one-off consultation. The service aims
to constantly help clients accumulate wealth.
This continuous support truly sets Robeco Direct apart.
This support is offered through two different concepts:
Wealth Coaching and Personal Wealth Management.
Younique by Robeco has significantly boosted cash
flow into the funds and also made Robeco Direct more
attractive to a younger client base.
Grow in the US
The goal for the past year for our US-based activities
was to grow organically at a substantial pace. Robeco
Investment Management had a difficult start but during
the year the circumstances improved and culminated in
successes which included two major mandates for our
emerging-markets strategy managed from Rotterdam.
Harbor Capital Advisors realized a significant cash flow,
breaking records once again and seeing their total
number of clients increase. The offices of Harbor Capital
Advisors will move from Toledo to Chicago early 2007
in order to gain better access to the relevant markets for
clients and asset-management professionals.
Seed in Emerging Markets
It is Robeco’s aim to be a truly international asset
manager. We have therefore defined certain key markets
where we want to be active. Some of these markets are
the high-growth markets of today and the major markets
of tomorrow. In 2006, Robeco realized a couple of goals in
terms of implementing this part of the strategy. Emerging
markets are defined as certain high-growth markets in
Eastern Europe, the Middle East and the Far East.
Poland has been identified as an interesting growth
market. In 2006, Robeco established a representative
office in Warsaw and registered a selection of funds from
the Capital Growth Fund range in Poland. A distribution
agreement was concluded in Poland with Bank BGZ
(of which Rabobank owns 35% of the shares) to sell a
selection of Robeco investment products. The goal is to
conclude similar agreements with other Polish distribution
partners in 2007.
In Saudi Arabia, which is strictly speaking not an emerging
market, a strategic alliance was concluded with Rana
Investment Company. Rana and Robeco are going to
develop investment products together for the Saudi
Arabian market. In Egypt, Robeco has co-financed a newly
founded Egyptian asset-management company called
Obelisk Portfolio and Investment Fund Management.
In the near future, Robeco expects to launch a ‘MENA’
(Middle East North Africa) equity fund for which Obelisk
is expected to be the local manager. The overall objective
of these two initiatives is on the one hand to increase the
distribution network in the Middle East and on the other
to build a regional investment capability.
In 2006 we explored opportunities in the Indian and
Chinese markets. Several steps have been taken by Robeco
to capitalize on these opportunities (see also pages 13 and
59). Our goal is to gain access to these large, promising
high-growth markets with large distribution power to sell
both local and international investment products.
Robeco Groep N.V. | Annual Report 2006 | 45
03 The organization
RAM: Robeco Asset Management (Europe) comprises the European
equity, fixed-income and money-market investment departments,
the departments responsible for serving institutional clients and
supporting our third-party fund distribution activities in Europe.
RAI: Robeco Alternative Investments is our global alternative-
investments platform, offering (guaranteed) notes, certificates,
leveraged products, collateralized debt obligations, funds-of-hedge-
funds, single-strategy hedge funds and private-equity funds of funds.
RIM: Robeco Investment Management (US), which has its
headquarters in New York, is our institutional platform in the US,
offering a full range of disciplined and value equity, US fixed income
and US (fund of) hedge funds. RIM is made up of the original product
platforms of Weiss Peck & Greer, Boston Partners and Sage.
HCA: Harbor Capital Advisors, based in Toledo, is our US subsidiary that
offers a family of mutual funds through selecting and monitoring best-of-
breed external managers. HCA provides management services to Harbor
Funds, a mutual-fund complex, and to institutional segregated accounts.
Business units
46 | Robeco Groep N.V. | Annual Report 2006
Robeco Management Board
George A. Möller Chief Executive Officer
Leni M.T. Boeren Robeco Direct
Sander van Eijkern Robeco Alternative Inv.
Constant T.L. Korthout Chief Financial Officer
Frank L. Kusse International Affairs
Niek F. Molenaar Robeco Asset Management
Robeco Asset
Management
– Europe
– Traditional
products
Robeco Alternative
Investments
– Europe
– Alternative
products
Robeco Investment
Management
– United States
– Traditional &
alternative
products
Harbor Capital
Advisors
– United States
– Manager selection
– Mutual funds
Robeco Direct
– Netherlands
– Retail direct-sales
channel
International
Offices
– Europe, Middle
East, Japan
– Retail and Inst.
sales offices
Corporate departments
During the last year Robeco has worked on further implementing its
global strategy for the asset-management industry and incorporating
it into the organization. Robeco was established in Rotterdam in 1929
which means it has European roots but is at the same time gradually
moving towards becoming a truly global asset manager. In 2006, the
success of Robeco’s global activities was demonstrated by the fact
that RIM’s Premium Equity products were successfully sold in Europe
and that RAM’s emerging markets product in the USA. In both these
investment centers we create alpha that can be successfully used in the
other market. A further integration and exchange of US and European
sales people will ensure that this trend continues.
Robeco Groep N.V. | Annual Report 2006 | 47
The transfer of Robeco’s funds-of-hedge-funds operation in the
US to Robeco Sage, coincided with the decision to integrate the
management of Robeco’s European and US funds-of-hedge-funds
activities under new leadership and under the Robeco Sage label.
We now have a global funds-of-hedge-funds operation that manages
well over USD 2 billion, has an excellent track record and will build a
presence in other parts of the world.
Robeco is currently in a phase where it is creating global capabilities
for its different product and subproduct lines. In this context Robeco
Sage has received a global mandate incorporating the hedge-fund
operations in Rotterdam to create a global offering. The same applies
for our fixed-income operations in Rotterdam and New York, for which
Robeco is currently establishing a Global Fixed Income Platform.
There have been no major changes to the Robeco organization.
A few minor changes are listed below:
– The Financial Services Center has been created to centralize all
reporting and performance measurement activities;
– Harbor Capital Advisors offices will move from Toledo to Chicago;
– Our German representative office has been relocated;
– Research institute IRIS (Institute for Research and Investment
Services) has been repositioned;
– The structured finance activities of the business units RAM and
RAI have been integrated into one team.
For 2007 Robeco foresees a steady growth of the organization in line
with the activities defined.
Management
Frank Kusse was appointed as a member of the Robeco Management
Board on 2 February, 2007. As International Director, Mr. Kusse is
responsible for managing a large part of Robeco’s international
business and international expansion. Mr. Kusse worked at ABN AMRO
Asset Management for over 19 years, from 2004 through 2006 as
Managing Director Global Retail where he was responsible for global
retail business and for activities in Brazil and Italy. From 1999 through
2004, as CEO of ABN AMRO Asset Management Asia Pacific in Hong
Kong, he led the company’s expansion in Asia.
Michael Abbott was named Chief Executive Officer of Robeco Sage
Capital as per 1 January, 2007. Robeco Sage is Robeco’s fund-of-hedge-
funds group. Mr. Abbott, spent six years with Goldman Sachs in various
management positions in the firm’s convertibles and structured-
products groups before leaving in 2002 to found Elysium Capital Group,
a macro discretionary hedge fund specializing in foreign exchange.
Lex Hoogduin, who joined Robeco in 2005 as Chief Economist, was
also appointed as head of IRIS in July 2006. Mr. Hoogduin is also
active as Professor of Monetary Economics and Financial Institutions at
the University of Amsterdam, the Netherlands.
In May 2006 Reinoud van den Broek became head of Institutional
Sales at Robeco Asset Management to run the Rotterdam-based sales
team. Before rejoining Robeco, Mr. Van den Broek was Chairman
of the management board of the Achmea business unit, Achmea
Pensions and shared responsibility for the merger process between
Achmea Pensions and Interpolis Pensions.
Jean-Louis Laurens was appointed head of Robeco France in January
2006. Before joining the company he was deputy CEO at AXA
Investment Managers.
RD: Robeco Direct is our direct distribution channel. In the Netherlands
the bank serves approximately half a million retail clients via Internet
and telephone and offers a wide range of financial products and
services which include mutual funds, savings products, mortgages,
insurances and brokerage services.
Robeco Direct also has a branch in Brussels: Robeco Bank Belgium and
a 100% subsidiary in France: Banque Robeco SA.
International Offices: Our sales offices in France, Belgium, Germany,
Spain, Switzerland, Japan, Poland and Bahrain are organized under
International Offices. These offices acts as a gateway for the business
units to sell their products.
IRIS: The Institute for Research and Investment Services has been a
joint venture between Rabobank and Robeco since 1990. IRIS operates
as an internal service provider for Rabobank and Robeco in the area
of independent research and publishing. IRIS provides strategic,
thematic, equity, product and portfolio research.
Group performance*
At group level, over the last twelve months, 72% of the
assets under management have outperformed compared
to the relevant benchmark.
Equity: strong 3-year track records for all
business units
All business units have excellent 3-year track records.
Over the last 3-year period 87% of equity investments
outperformed at corporate level, with each business unit
showing a percentage above 80%.
In 2006 60% of Robeco’s assets in equity outperformed
their benchmark with the domestic business unit
achieving 70% and the overseas business units 51%.
The fund Robeco (EUR 7.1 billion) outperformed its
benchmark by 0.2%, Rolinco (EUR 1.6 billion) beat its
benchmark by 2.8%, Robeco Emerging Markets Equities
(EUR 2.1 billion) underperformed its benchmark by -1.7%.
Robeco Chinese Equities (EUR 0.2 billion) showed a
performance of 65.1% and outperformed its benchmark
by 2.2%.
The USD 8.8 billion Capital Appreciation Fund
underperformed by 5.5% (after an outperformance of
9.1% in 2005 ).The USD 18.5 billion International Fund
realized an excess return versus the benchmark of 5.9%
(2005: +7.4%). Both funds are managed by Harbor
Capital Advisors. Robeco North American Equities (EUR
0.8 billion), which is managed out of New York by Robeco
Investment Management, underperformed by 1.1%.
Fixed Income
The period of outperformance by fixed-income assets,
which has lasted for several years, continues. The average
excess return versus the benchmarks amounted to 0.2%
over 2006. This year 86% of the assets outperformed and
for the last three years this figure is 93%.
In 2006 flagships Rorento (EUR 3.0 billion) and
Lux-o-rente (EUR 4.3 billion) had excess returns versus
their benchmarks of 0.2% and 0.6% respectively. The
Harbor Bond fund (USD 2.4 billion) outperformed by
0.2%.
Alternatives
Private equity fund of funds: Robeco Private Equity (our
listed fund of funds with EUR 0.02 billion in assets)
performed extremely well in 2006 with a return of
13.0%. As a reference, the MSCI World index of worldwide
equities had a return of 7.9%.
Hedge fund of funds, Robeco Sage Capital International
(the USD 0.7 billion offshore investment fund of Robeco
Sage) realized a return of 10.8% over 2006, which was
above its peer group’s average performance of 10.3%.
For managed futures, Transtrend’s Enhanced Risk USD
program (USD 1.8 billion) had a very good performance
of 12.0% over 2006, which was in line with its long-term
track record. As a reference USD cash returned 5.2% over
the same period.
Securitizations/CDOs: The performance of Robeco’s CDOs is
in line with expectations and all realized an excess coupon
over Euribor. For example the CDO AA Bond Jun 09 (EUR)
has so far realized an excess coupon of 2.4% over Euribor.
The results for our principal-protected products structured
on hedge-fund strategies were mixed. Some relatively good
performances were realized but unfortunately we also had
to face some disappointing returns. For instance the Robeco
Multi Market Bond Jul 03/13 (EUR) (EUR 0.3 billion) had
a performance of 4.5% over 2006. Whereas the Robeco
Diversified Income Bond Dec 04/14 (EUR) (EUR 0.2 billion)
had a performance of -3.3% and the Robeco Hattrick
Bond Apr 05/15 (EUR 0.6 billion) had a performance of
-1.9%. As a reference for all three examples, the EUR cash
performance was 2.9%.
04 Investment performance
48 | Robeco Groep N.V. | Annual Report 2006
Growth of assets under management
During 2006 Robeco’s assets under management
increased by 7.7%. This increase was driven by a cash
inflow of EUR 5.8 billion and an investment result of
EUR 5.0 billion. The investment result was negatively
affected by a EUR 6.3 billion depreciation of the
US dollar.
Cash flow
With a net cash flow of EUR 5.8 billion we exceeded the
target set for 2006. The institutional cash flow was strong
in Europe. In the US however we experienced cash outflow.
The new Rabo Liquidity fund range (EUR 2.0 billion) made
an important contribution to the institutional cash flow in
Europe. Inflow into retail funds was mainly generated by
Harbor Capital Advisors’ mutual funds.
05 Business development
Robeco Groep N.V. | Annual Report 2006 | 49
Global business development
(EUR x billion)
AuM 31 December 2005
Investment result
Net cash flow
Other gains / losses
AuM 31 December 2006
Total
131.6
5.0
5.8
– 0.7
141.7
Retail
66.2
2.7
2.0
– 0.7
70.2
Institutional
65.4
2.3
3.8
0.0
71.5
50 | Robeco Groep N.V. | Annual Report 2006
European business development
Mutual funds generated an overall inflow of EUR 0.8
billion, mainly driven by fixed-income and balanced
funds. Robeco Flex-O-Rente and Robeco Global Bonds
especially showed considerable inflow of EUR 0.6 billion
and EUR 0.4 billion respectively. Equity funds however
experienced cash outflow and the considerable inflow into
Robeco Emerging Markets Equities (EUR 0.4 billion) was
offset by outflow from several other funds.
Sales of mutual funds via the European distribution
network continue to grow. Several new share classes have
been introduced in 2006. This enables us to better meet
the specific demands of our clients. This year Robeco also
established a presence in Poland and introduced several
tailor-made funds for the Polish market.
The performance of structured products was below
expectations. This was reflected in the cash flow into
retail structured products. The introduction of the Robeco
Emerging Mix Note was very successful, but on balance an
outflow of EUR 0.5 billion was recorded.
In 2006 considerable inflow was generated via
institutional products. Several large mandates were
won worth a total of EUR 2.0 billion. Institutional
funds experienced significant inflow mainly due to the
introduction of the Rabo Liquidity fund range.
European business development
(EUR x billion)
AuM at opening date
Investment result
Net cash flow
Other gains / losses
AuM at closing date
2006
86.0
3.8
4.4
– 0.7
93.5
2005
73.3
9.1
3.6
0.0
86.0
Business development
Robeco Groep N.V. | Annual Report 2006 | 51
US business development
Mutual funds in the US generated EUR 2.7 billion in cash
inflow. Both Robeco Sage and Harbor Capital Advisors
generated substantial new investments from clients.
Institutional products recorded outflows of EUR 1.3 billion.
The majority of the withdrawals were in fixed income and
were related to lagging performance.
US business development
(EUR x billion)
AuM at opening date
Investment result
Net cash flow
Other gains / losses
AuM at closing date
2006
45.6
1.2
1.4
0.0
48.2
2005
37.8
9.7
– 1.9
0.0
45.6
Equities - 45%
Fixed income - 29%
Structured products - 7%
Balanced - 7%
Money market - 8%
Hedge funds - 4%
Private equity - 0%
Europe - 66%
US - 34%
Institutional - 50%
Retail - 50%
06 Financial results
Financial results
(EUR x million)
Operating income
Operating expenses
Operating profit
Non operating income
Tax
Minority interest
Net profit
Assets under management (EUR x billion)
2006
657.5
– 436.5
221.0
31.9
– 59.5
– 0.4
193.0
141.7
2005
622.8
– 389.2
233.6
– 8.3
– 72.8
– 0.5
152.0
131.6
52 | Robeco Groep N.V. | Annual Report 2006
In 2006 operating income improved by 6% to EUR 657.5
million. The main contributor to this increase in income
was the significant improvement in management
fees which was a direct result of the increase in assets
under management. The 8% increase in assets under
management was positively influenced by a net cash
inflow of EUR 5.8 billion and a EUR 11.3 billion positive
investment result. However, the dollar depreciation of
EUR 6.3 billion had a negative impact on the total assets
under management and the asset related revenues.
Furthermore, in 2006 Robeco generated a higher
performance fee income as a result of the improved
investment returns of performance-fee related products.
Traditional markets enjoyed solid returns in 2005 and
2006. As a result of this, in 2006, the appetite for
structured products diminished, not helped by their
lagging performance and structuring fees declined
accordingly. In 2005, Robeco had introduced several
structured products which resulted in EUR 2.0 billion in
cash inflow and significant related one-off net revenues.
In general the influence of alternative products, including
products with less standardized revenues, on the profit
and loss of Robeco is increasing and therefore results will
tend to be more volatile. Lower structuring fees meant
that their contribution to operating income was reduced
by 6%.
In the past two years Robeco has made substantial
efforts to improve its internal organization, strengthen its
internal audit and compliance departments and improve
internal procedures. in 2006 further steps were taken
with the introduction of IFRS, the ongoing improvements
to Business Continuity Management and the finalization
of the documentation of our administrative processes.
In addition, projects such as SOx, Basel II and new Dutch
legislative ‘In Control’ requirements have put a significant
burden on the organization. To maintain its external focus
on clients, product and performance, Robeco chooses to
use external employees in combination with in-house
experience for these projects. The large number of
external personnel employed for such temporary projects
Robeco Groep N.V. | Annual Report 2006 | 53
is reflected in Other Expenses in 2006. Finally, in 2006
Robeco Direct and Robeco France repositioned their
strategy for the coming years which also had an impact
on the expenses incurred in 2006. Operating expenses
increased by 12% to EUR 436.5 million.
The effective corporate tax rate amounted to 24% in
2006 and 32% in 2005. The lower tax rate for 2006 was
primarily caused by a number of one-off tax benefits last
year and the impact of a decrease in the corporate tax rate
in the Netherlands as of 2007.
Shareholders’ equity amounted to EUR 960.5 million
at year end 2006, which represents an increase of EUR
163.3 million. The increase was, to a large extent, realized
through the 2006 net result of EUR 193.0 million, an
upward adjustment of the deferred tax assets relating
to acquisitions made in previous years and a negative
unrealized revaluation result on the investment portfolio.
Financial risks and the use of derivatives
By the nature of its activities, Robeco is exposed to market
risk, interest rate risk, credit risk and liquidity risk. Specific
risk types are described in note 43 of the consolidated
financial statements. Robeco uses derivatives to hedge
(part of) these exposures.
Due to Robeco’s overseas activities and the fact that
a significant part of its fee-income is related to USD
denominated portfolios, Robeco is particularly exposed
to changes in the EUR/USD exchange rate. This exposure
relates both to balance sheet and income statement
items. These currency risk exposures are hedged using FX
forward contracts. For income statement items the horizon
of the hedge is one (calendar-) year.
Robeco uses interest rate derivatives (mainly swaps) to
hedge part of the interest rate exposure in the ALM book
of its banking subsidiary, Robeco Direct. Additionally,
Robeco hedges substantial parts of its trading book
exposures resulting from the provision of seed capital,
the issue of structured products and secondary market
support for several products. Positions include both linear
and non-linear instruments.
All market, interest rate and credit risk exposures resulting
from these transactions are measured and monitored
periodically, consistent with regulatory (Dutch Central
Bank) requirements for trading and investment books.
All fair value movements related to these exposures
are recognized, in line with the IFRS requirements. For
selected items, hedge accounting applies. For a further
explanantion, reference is made to the accounting policies
and the notes to the consolidated financial statements.
54 | Robeco Groep N.V. | Annual Report 2006
07 Compliance, risk management &
internal audit
Overall management and control framework
During 2006 Robeco further strengthened its
management and internal control framework. A
considerable effort has been made to integrate
activities relating to the various internal control and
corporate-governance codes that affect Robeco and its
subsidiaries. These efforts are guided and supported by
our Risk Management, Internal Audit and Compliance
departments.
One very important project in 2006 was a SOx project,
initiated as a part of a Rabobank Group-wide project to
comply with the COSO guidelines to internal processes
relevant to financial reporting. This project was completed
successfully within the year. All activities that relate to SOx
compliance will now be integrated into the operational
risk management framework. For 2007 we foresee a
further integration of the control and monitoring activities
related to the different codes and a roll out to Robeco’s
international offices.
Risk management
In the field of risk management significant efforts were
put in place to further document processes, procedures
and related internal controls for the entire organization.
This project, initiated during 2005 was further embedded
in the operational risk-management framework to
prevent operational incidents and to provide for more
effective remedial action if required. In order to increase
awareness throughout the organization, identify possible
opportunities for improvement and most importantly
in order to comply with the Basel-II requirements for
operational risk management, Robeco initiated its so-
called Control & Risk Self Assessments in 2006.
As part of the management control framework, Robeco
further refined its economic capital model. The model
quantifies credit, market, interest rate, operational and
business risk and takes into account the diversification
benefits within and between risk categories and entities.
For operational risk, the international roll-out of Control
& Risk Self Assessments enables the allocation of
operational risk capital to the entities to become more
sophisticated and provides information on historical
losses and internal audit ratings. From 2007 onwards,
risk-adjusted return on capital calculations, which relate
economic capital to risk-adjusted returns, will become an
integral part of the management control cycle.
Risk governance has been further strengthened by the
installation of a Group Risk & Compliance Committee.
This committee, that monitors the completeness and
consistency of risk oversight throughout Robeco Group,
complements the local risk-management committees that
were already in place.
Internal audit
During 2006, the Internal Audit department participated
in the aforementioned SOx project, by testing the
operational effectiveness of the identified key controls.
Furthermore, Internal Audit developed a management-
control framework for Robeco and its subsidiaries that
supports a more integrated approach to the Group’s
control activities. This framework incorporates the various
codes to ensure that company-level controls are in place
and indicates which controls are relevant for an entity,
taking into account the size, complexity and applicable
rules and regulations. This framework will be the
prevailing standard for entity-level internal audits in 2007.
During operational and IT audits Measures of
Improvement are agreed upon with management in
order to increase the level of control. Quarterly follow-up
monitoring in 2006 showed that the implementation of
Measures of Improvement is meeting its goal.
Robeco Groep N.V. | Annual Report 2006 | 55
Compliance
During 2006, our Compliance department developed
a set of policies for our organization that provide the
organization with a clear framework for a number of
areas. In addition, Robeco developed a set of fund
principles. Where Robeco’s interests are in line with
those of third-party customers this involves running a
professional organization with the necessary checks and
balances. When, however, interests conflict, the issue
becomes more sensitive and the principles of corporate or
fund governance come firmly into play.
Substantial efforts have been put into the further
development of the content of our information material.
In the Netherlands extra time and attention has been
spent on the information leaflet (‘de financiële bijsluiter’).
This gives the investor a good overview of a fund’s key
points in such a way that the investor is able to make a
well-considered decision regarding his/her investment.
Another important project was the timely and successful
implementation of several new rules and regulations
worldwide which were carried out in close consultation
with the legal department. This same approach will be
used for the implementation of The Markets in Financial
Instruments Directive (MiFID); anticipated in 2007, the
preparations for which already started in 2006.
In Control
In 2005 and 2006 significant efforts were made to build
a strong risk management & control framework, to further
upgrade the design and documentation of processes and
related internal control measures, to increase awareness for
both internal control and compliance to external laws and
regulations and to strengthen the risk management and
monitoring functions. In 2007, similar steps will be taken at
the foreign offices. Based on all these steps and achievements,
the Management Board of Robeco feels comfortable
regarding Robeco’s risk control and risk management.
In 2006 Robeco successfully completed its participation
in the Rabobank SOx related initiatives and issued an
In Control Statement regarding its fund management
activities as part of the annual reports of registered
funds in the Netherlands. For 2008 Robeco aims
to issue the first full year In Control Statement according
to the Dutch Corporate Governance Code.
56 | Robeco Groep N.V. | Annual Report 2006
08 Corporate responsibility
Corporate responsibility objectives for
2006 were met
In 2005 Robeco formulated two key objectives for 2006: to
strengthen its reputation in the field of socially responsible
investing (SRI) and increase the SRI assets under
management, such as SRI niche and overlay products, and
to increase the transparency of products and processes.
The second closing of Robeco Sustainable Private Equity I
and the launch of the engagement product have helped
to substantially increase Robeco’s sustainable assets under
management. Furthermore, by producing research reports
on, for example, clean technology and organizing and
sponsoring seminars Robeco has enhanced its reputation
in this field. The acquisition of SAM Group has significantly
increased Robeco’s presence in sustainable investing.
Moreover, SAM has extensive research skills in this area.
In terms of the second key objective; in 2006 a policy was
formulated on transparency. This policy has been adopted
by all business units. Furthermore several concrete projects
were realized. As part of the Younique by Robeco concept
online, transaction costs for Robeco funds were abolished.
The management fees of listed structured products were
harmonized and reduced to lowest level charged for any of
the tranches. Last but not least Robeco Direct established
a customer ‘sounding board’. The board consists of 18
customers who are encouraged to give their views and
opinions on Robeco’s products and services. Their views
will be used to help improve the products we offer.
Sustainable funds
In 2006 Robeco Sustainable Private Equity I had its final
closing. In combination with parallel investment vehicles
Robeco Groep N.V. | Annual Report 2006 | 57
the total commitment amounted to USD 200 million.
At the end of 2006 well over 80% had been committed to
private-equity funds. The successor of this fund, Robeco
Clean Tech Private Equity II was introduced in December
2006. This is, in essence, an institutional product also
suitable for large family offices. Within the scope of this
fund we introduced a certificate which allows private
investors to participate: Robeco Cleantech Certificate.
Robeco Duurzaam Aandelen (sustainable equities; EUR 0.1
billion) had a good result in 2006. The fund’s performance
was 12.6%, which was better than the benchmark FTSE
4 Good’s performance of 7.8%. In terms of sustainable
investment funds however, the most important step was
the acquisition of the Sustainable Asset Management
(SAM) Group, one of the world’s leading asset managers
for sustainability investments. Besides knowledge and
a good reputation in the area of sustainable investments,
SAM adds global sustainable funds as well as theme-
based funds (water, smart energy and smart materials)
and sustainable indices (in collaboration with Dow Jones)
to Robeco’s sustainability fund range.
Responsible investing
By responsible asset management we mean being an
involved and active shareholder. Robeco therefore actively
exercises its voting rights and pursues discussions with
companies on corporate governance and sustainability
issues (engagement). In 2006 Robeco started the
engagement product for its first clients and engaged
with 80 companies. Not only corporate governance, but
also environmental and social issues were discussed with
these companies. The voting policy was continued in
2006. A new development was the fact that Robeco spoke
or was represented in 19 shareholders’ meetings in the
Netherlands. Furthermore in 2006 Robeco subscribed to
the United Nations Principles for Responsible Investing,
which provide a framework to incorporate social,
environmental and governance issues into traditional
investment portfolios. Robeco also joined the Enhanced
Analytics Initiative (EAI) as a full member. EAI is an
international collaboration of asset owners and asset
managers that encourages investment research that
considers the impact of extra-financial issues on long-term
company performance.
Internal organization
In terms of its internal operations, Robeco has
incorporated corporate responsibility into the financial
management reporting cycle. Management is kept
updated on the progress of the corporate-responsibility
objectives on a quarterly basis. The main achievements
of an environmental and social nature were the decisions
to start using FSC (Forest Stewardship Council) certified
paper worldwide for all printing purposes, to introduce
the ABC policy for lease cars (environmental classification)
and thereby increase the amount of energy-efficient
cars and to support several good causes and community
projects. As a result of the employee satisfaction survey,
the Human Resources department has developed several
career development programs. A third key objective
was added in 2006: to increase employee awareness of
Robeco’s social responsibility policy.
Outlook for 2007
In 2007 Robeco will remain focused on increasing
its sustainable and socially responsible assets under
management and on promoting transparency. The
acquisition of SAM Group will give the combined platform
new areas of growth for sustainable funds. SAM’s
sustainability expertise in long-only equity funds in mature
markets, combined with Robeco’s structuring, bond and
emerging-equity market capabilities will lead to product
innovation. Furthermore SAM’s products can be sold
through Robeco’s global distribution platforms. In 2007
Robeco will start engaging with companies on the subject
of responsible investment on behalf of its retail funds.
58 | Robeco Groep N.V. | Annual Report 2006
09 Robeco in 2007
Robeco Groep N.V. | Annual Report 2006 | 59
The Management Board’s outlook for 2007 is positive.
From a market perspective we expect that prices for
securities will still continue their upward trend, but at a
slower pace and with increased volatility. Growth may
slow down somewhat because the US economy has
shifted down a gear compared to what we have become
accustomed to in recent years. Equity valuations are
generally reasonable so the appetite for ‘traditionals’
will remain healthy, and emerging markets in particular
– such as the ‘BRIC’ countries (Brazil, Russia, India and
China) – will continue to be popular with investors. As
the trend of rising interest rates is expected to slow,
fixed-income products are likely to regain some ground.
Expectations with regard to interest-rate movements and
inflation are compelling investors to focus on the short
term in 2007. Finally, with current market circumstances
and investor risk appetite, alternative products can expect
increased interest from both institutional and private
investors.
From an internal point of view, we are positive about
further realizing Robeco’s international expansion
both from a stand-alone perspective and together with
Rabobank. One important step in this area was taken in
March 2007, when Robeco entered into an alliance with
Canara Bank, one of the largest banks in India. In addition
to this, we will also continue our search to strengthen
our portfolio with specific investment capabilities both in
Europe and the US.
It is Robeco’s ambition to be able to offer a high profile
fiduciary-management proposition for existing and
new institutional clients in 2007. The acquisition of SAM
Group, in December 2006, has substantially increased our
presence in the field of sustainability investments and in
2007 this will be reflected in our product offering. In our
home markets we aim at continuous growth, using third-
party distribution (including Rabobank), institutional sales
and direct distribution. Internationally the priority will be
on third-party distribution and institutional sales.
All in all, Robeco is ready for a year of internatio-
nalization, good performance and healthy cash flow.
Rotterdam, 22 March 2007
The Management Board
Special
Robeco’s expertise in a changing
institutional environment
Introduction / trends
The increasing complexity of investment markets, combined with the pressure to meet future liabilities and tackle
the mountain of rules emanating from regulators, is stretching the internal resources of institutional investors
worldwide. This trend has resulted in a change in what these investors want.
60 | Robeco Groep N.V. | Annual Report 2006
Robeco Groep N.V. | Annual Report 2006 | 61
Outsourcing is a developing trend in the institutional
investment market. Pension funds are increasingly
outsourcing their pension assets and insurers are opting
to have their technical reserves managed externally. At the
same time central banks which, particularly in emerging
markets, have growing levels of reserves are starting to
outsource their investments and are developing a greater
risk appetite.
Since 2003 the popularity of multi-manager and fund-of-
fund solutions has increased with private and retail banks.
This demonstrates just what a professional business
third-party asset management has become in a very short
period of time. Together with the growth of fiduciary
management, this represents yet another step in the
evolution of the investment markets.
Obviously institutions have moved away from placing big
balanced mandates with managers, towards selectively
awarding them to specialists in particular asset classes
or geographical markets. Traditional asset-management
products are being replaced by (enhanced) indexing
at the portfolio’s core , and specialist and alternative
investments in the satellite strategies.
These specialist funds are now being selected more and
more by fiduciary managers, who claim that they can
efficiently build portfolios on the basis of careful risk
budgeting and tactical asset allocation, and can use their
buying power to negotiate favorable contract terms for
clients.
Robeco’s institutional strategy
In anticipation of these trends Robeco honed its
institutional strategy at the end of 2005.
The core of this strategy is to focus on a more concentrated
range of active asset-management capabilities creating
value for institutional investors across all asset classes
(fixed income, equity and alternatives).
These capabilities will be offered to more institutional
target groups in order enhance our growth potential.
For example in 2006 Robeco started to actively target
multi managers and is already seeing the benefits of this
strategy.
Simultaneously we decided to offer fiduciary services to
institutional investors to help them combat the increased
complexity of pension-fund management.
Robeco’s strengths
Robeco thrives on a number of core strengths.
Globally we have made our name through the successful
application of quantitative investment techniques and
we are a pioneer in this field. Our Quantitative Strategies
department is manned by experts with outstanding
academic records in econometrics, mathematics,
economics or physics, some of whom are connected to
universities as assistant or associate professors.
Robeco can either act as advisor to institutional investors,
allowing them to draw upon the company’s research
expertise and quantitative analysis to provide strategic
asset allocation for their investment portfolios (a crucial
62 | Robeco Groep N.V. | Annual Report 2006
element in the fiduciary service towards pension funds) or
can directly harness the extensive range of quant products
we have developed in recent years.
While in the leading investment houses quantitative
analysis is always complemented by the human touch
– qualitative views and portfolio constructions – Robeco
has earned the title of ‘investment engineer’ with its long
track record and the pedigree of its model builders. It is
this skill that will also benefit institutional investors and
enable them to optimize the returns on their investment
portfolios.
In the future we will continue to emphasize our strategic
choice to offer actively managed products in all major
asset classes, both fixed income and equity. This means
global and European fixed income, enhanced cash and
high yield. In the equities universe our outlook remains
global, with a specialist focus on European, US and
emerging-market equities. We also expect the dynamism
of the alternative-investments markets to continue and
are committed to building on our reputation in this area
and creating more alpha (market outperformance)
engines as overlays for portfolios.
The experience of our investment teams is reflected in
the impressive breadth of our client base which includes
pension funds, insurers and central banks worldwide.
Around half of Robeco’s EUR 142 billion assets under
management are from institutional investors.
In the past we have also been rewarded for the high level
Special Robeco’s expertise in a changing institutional environment
Robeco Groep N.V. | Annual Report 2006 | 63
of our client service and the quality of our consolidated
reporting.
We are keen to offer a senior level of account
management and a high standard of client service. It is
this, in combination with our transparency of information,
knowledge sharing and risk management awareness,
that makes Robeco a seasoned partner in investment
management in the eyes of pension fund professionals.
Robeco and fiduciairy management
Pension funds and insurance companies are turning to
companies that have in-depth knowledge of financial
markets and sufficient credibility to provide strategic
advice. This requires the ability to execute consolidated
reporting of positions, performance monitoring, manager
selection and to handle the relationship with the
custodian.
These requirements play to the strength of Robeco’s
existing asset-management and strategic investment
skills. Pension funds worldwide acknowledge Robeco as
their partner in strategic investment issues. They trust us
to manage their portfolio against a liability benchmark,
while they maintain control and the final responsibility for
their participants and future pension liabilities. They also
ask us to assess the consequences of outsourcing (part of)
their activities: how to retrieve control, and still retain and
develop the necessary knowledge within their pension
and investment committee; and how to communicate
investment results to their participants.
We are convinced that the ultimate solution depends on
the way the pension fund is structured, the goals it tries
to achieve, its ambitions in terms of contribution and
indexation levels and finally the level of expertise the
pension fund has and wants to retain. We have developed
an approach which systematically guides pension funds
through these questions.
Dutch institutions have shown particularly strong interest
in Robeco’s existing fiduciary services. They take comfort
from the fact that while we are a well-known international
investment manager with a strong investment track
record, we are also Rotterdam-based. This means that we
are Dutch native speakers with a thorough understanding
of the local regulatory climate and excellent contacts in
the Dutch political arena. As a result of this our knowledge
of the investment culture and market in the Netherlands is
better than that of our overseas competitors.
64 | Robeco Groep N.V. | Annual Report 2006
Robeco Groep N.V. | Annual Report 2006 | 65
Headquarters
Robeco Groep N.V.
Coolsingel 120
3011 AG Rotterdam
The Netherlands
Postbus 973
NL-3000 AZ Rotterdam
Tel. + 31 10 224 1224
Fax + 31 10 4115288
Internet: www.robeco.com
Offices Robeco Europe
Brussels – Robeco Bank Belgium
Louizalaan 81, box 6
1050 Brussels
Belgium
Tel: +32 2 533 1600
Fax: +32 2 533 1699
Internet: www.robeco.be
Frankfurt am Main – Robeco
Deutschland
Taunusanlage 17
60325 Frankfurt am Main
Germany
Tel: +49 69 959 0858
Fax: +49 69 959 0850
Internet: www.robeco.de
Paris – Banque Robeco S.A. and
Robeco Gestions S.A.
21, Boulevard de la Madeleine
75039 Paris
France
Tel: +33 15 535 4535
Fax: +33 15 535 4501
Internet: www.robeco.fr
Zurich – Robeco (Schweiz) AG
Uraniastraße 12
8001 Zurich
P.O. Box 2068
Switzerland
Tel: +41 1 227 7272
Fax: +41 1 227 7200
Internet: www.robeco.ch
Madrid – Robeco Asset
Management Spain
Paseo de la Castellana 41 - 6b
28046 Madrid
Spain
Tel: +34 91 702 0705
Fax: +34 91 702 0671
Internet: www.robeco.com/esp
Offices Robeco USA
Robeco Investment Management
(RIM)
– Boston
28 State Street, 21st floor
Boston, MA 02109
United States
Tel: +1 617 832 8200
Fax: +1 617 832 8222
Internet: www.boston-partners.com
– New York
909, Third Avenue, 32nd floor
New York, NY 10022
United States
Tel: +1 212 908 9500
Fax: +1 212 908 9672
Internet: www.robecoinvest.com
Harbor Capital Advisors
Toledo
One SeaGate, 14th floor
Toledo, Ohio 43666
United States
Tel: +1 800 422 1050
Internet: www.harborfunds.com
Other
Robeco Antilles
Robeco Antilles N.V.
Ara Hill Top, unit A5
Pletterijweg Oost 1
Willemstad, Curaçao
Netherlands Antilles
Tel: +59 99 465 8177
Fax: +59 99 465 7449
Robeco Middle-East
Bahrain - Robeco Group
Suite 401 - 2, 4th floor, Entrance Four
Manama Centre
Government Avenue
P.O.Box 1552
Manama, Kingdom of Bahrein
Tel: +973 1722 6625
Fax: +973 1722 6640
Robeco Japan
Robeco Institutional Asset
Management B.V. Japan
Tokyo Sankei Building 16F
1-7-2 Otemachi, Chiyoda-ku
Tokyo 100-0004 Japan
Tel: +81 3 5200 8222
Fax: +81 3 5200 8229
Addresses
Special
In the Netherlands Robeco Direct is our direct distribution channel, serving around half a million private clients
and offering a wide range of products and services for asset accumulation, including investment funds, savings
products, mortgages, insurance and brokerage services.
Robeco Direct services its clients according to the ‘customer advocacy ‘principle: we put the success of the client
first, a principle which extends beyond customer satisfaction. Robeco Direct wants its customers to be successful in
terms of their investments because in the end the client’s success will also benefit the company.
Customized asset growth
with Younique by Robeco
66 | Robeco Groep N.V. | Annual Report 2006
Younique by Robeco
All the aspects of this unique client approach come
together in the service concept ‘Younique by Robeco’.
Robeco Direct introduced this service to the retail market
last May and at the same time was the first market party
to dispense with transaction costs for online purchase
and sell orders for Robeco funds. This means that every
recommendation Robeco Direct makes is altruistic and
its first priority is to optimize returns for the client. By
dispensing with transaction costs any barrier that existed
to following up on recommendations have been removed.
Younique by Robeco enables Robeco Direct to make
customized asset growth available for mid-net-worth
investors. In a nutshell Younique by Robeco stands for:
– A customized service, advice and support for asset
growth
– Access to a team of specialists
– No transaction costs for online purchase and sell
orders for Robeco funds
– Low minimum deposit of EUR 25,000 for Personal
Asset Management [Persoonlijk Vermogensbeheer ]
and Asset Coaching [Vermogenscoaching]
The client comes first
Robeco Direct’s clients know that Younique by Robeco will
give them the advice and guidance that suits their needs.
The way in which clients wish to manage their assets will
determine the service Robeco Direct offers. This leads
not only to client-driven recommendations but also to
continual support to ensure asset growth. Personal advice
from Robeco Direct incorporates all the client’s wishes
and requirements from financial situation to investment
experience and the client’s maximum risk threshold. It
also incorporates possible future plans, the client’s interest
in financial affairs and the amount of time the client
wishes to spend managing his assets.
Would you rather do it yourself or let someone
else do it for you?
Customized asset growth with Younique by Robeco is not
limited to giving a one-off recommendation. The service
aims to continue to advise clients on their asset growth.
This continual support given by experts makes Robeco
Direct’s approach really different. Robeco Direct offers two
ways of doing this: Personal Asset Management and Asset
Coaching.
In both of these options Robeco Direct checks what the
effects of market developments are on clients’ individual
investment portfolios. The client will be given personal
advice to make any necessary adjustments. The most
important difference between the two services lies in
the decision-making process attached to actually taking
a different course of action. The Asset Coaching option
allows the client to decide whether to follow the advice
given, which is free of charge and without obligation. This
is in contrast to Personal Asset Coaching where Robeco
Direct carries out the adjustments it advises directly. The
same low initial deposit of EUR 25,000 applies for both
types of asset guidance.
Robeco Groep N.V. | Annual Report 2006 | 67
Forrester forms the basis
The basic principle behind Robeco Direct’s customized
approach is the segmentation of financial customers as
defined by Forrester Research. According to this renowned
research bureau, financial customers can be divided into
the following:
– DIY investors
– team players
– outsourcers
– avoiders
Each segment regards their finances in a different way
and also wishes to be kept informed about their assets in
a different way. Robeco Direct has developed a suitable
service for each of these groups both in terms of financial
advice and guidance. Asset Coaching is, for example,
available in three types Alert [Alert], Planned [Gepland]
and Peace of Mind [Rust]. The first type targets DIY
Investors who manage their own asset growth with
the help of tips and information from IRIS (Institute for
Research and Investment Services). The second type
targets team players who need personal support and
like to work together with Robeco Direct’s specialists.
The last type is for the outsourcers and the avoiders who
would rather let someone else handle the management
of their assets. Especially for this last group, Personal
Asset Management is a solution that aims to achieve
asset growth in a responsible and worry-free way with the
options of doing it yourself or letting someone else do it
for you.
Do it yourself or let someone else do it for you?
A summary of the differences
Asset Coaching: make your own investments with the support of a coach in
the background
– make the investment decisions yourself
– monthly portfolio check by Robeco Direct and where necessary practical and
up-to-date advice
– adjust your investments yourself without incurring any costs
– no costs are charged for advice
Personal Asset Management: let someone else take care of your investments
– specialists make the investment decisions
– weekly portfolio check by Robeco Direct
– investments are directly adjusted where necessary by Robeco Direct’s
experts without any transaction costs being incurred.
– management fees are low and straightforward in structure. (EUR 40 per
month and 0.05% of the managed assets).
Special Younique by Robeco
68 | Robeco Groep N.V. | Annual Report 2006
Working together with clients to improve the
service
In order to make sure that the service contributes to
client success, Robeco Direct is involving its clients more
and more in the formulation of this service. This is also
the reason why Robeco Direct started up KlankBoard
(which means sounding board) at the beginning of 2006.
KlankBoard is a Robeco Direct advisory body made up of
private investors. The group has been put together in such
a way that it exactly mirrors the whole client base. The
members of the KlankBoard think in the broadest possible
terms about all aspects of Robeco Direct’s service that are
important to all the clients. The KlankBoard acts as a think
tank, sparring partner and critical consumer all rolled into
one. In this way Robeco Direct and the client are together
continually looking for opportunities to improve.
Winner Customer Relationship Management
(CRM) Award 2006
Robeco Direct’s ideas and approach have been rewarded,
not only by its clients but also by a jury of professionals.
In 2006 Robeco Direct was named as the winner of the
CRM Award. This prize is awarded to the organization that
is considered to give the best example of client-oriented
entrepreneurship to other organizations. This is not the
first time that Robeco Direct has won the prize: in 2003
the CRM Award was also won by Robeco Direct. The
jury of professionals felt that Robeco Direct had made
significant progress in the move from client-oriented
entrepreneurship to ‘giving customer-driven and altruistic
advice’. Robeco Direct also has all the necessary conditions
in place to continue its drive to achieve success for its
clients.
Robeco Groep N.V. | Annual Report 2006 | 69
70 | Robeco Groep N.V. | Annual Report 2006
Robeco Groep N.V. | Annual Report 2006 | 71
I
This Robeco annual report and the information contained
herein has been prepared and is presented by Robeco
Groep N.V., incorporated in the Netherlands. It is solely
intended to supply the reader with general information
about the investment-management activities and
Assets under Management of Robeco Groep N.V. and its
subsidiaries worldwide. It does not constitute an offer
to sell or solicitation of an offer to buy any investment
product or program offered by Robeco Groep N.V. or any
of its subsidiaries, and is not intended to be used as the
basis for an investment decision with respect to any such
product or program or a decision to retain Robeco Groep
N.V. or any of its subsidiaries to provide such services.
Readers should be aware of the fact that the shares in
the capital of Robeco Groep N.V. and the shares in the
capital of all its subsidiaries are not listed on any stock
exchange and are not otherwise for sale to the public. The
information in this Robeco annual report is not intended
to solicit the purchase or sale of any securities in any
investment funds or other financial products of Robeco
Groep N.V. and its subsidiaries in any country where the
offering and/or distribution thereof is not allowed or not
available to the public. Readers of this Robeco annual
report should be aware of the fact that they are solely
responsible for full compliance with all laws and/or other
regulations in their respective jurisdictions with respect
to any decision on such purchase or sale. Robeco Groep
N.V. only provides investment-advisory services, including
investment advice with respect to investment products
and programs, through its authorized local subsidiaries.
All its banks, investment-adviser subsidiaries and affiliates
are registered with their respective local regulators.
II
This annual report may contain statements that amongst
others relate to future net profit and operating expenses.
These statements are not historical facts nor do they
contain any guarantee of future performance, but are
statements of future expectations or forward-looking
statements based on management’s current views and
assumptions and involve known and unknown risks and
uncertainties that could cause actual results, performance
or events to differ materially from those expressed or
implied in such statements.
Actual results,performance or events may differ materially
from those expressed or implied in such statements due
to, without limitation, [I] general economic conditions,
[II] performance of financial markets, [III] interest-rate
levels, [IV] currency exchange rates, including but not
limited to the EUR/USD exchange rate, [V] changes in
laws and regulations, including monetary convergence
and the European Monetary Union, [VI] changes in the
policies of central banks and/or foreign governments,
[VII] cost overruns and [VIII] competitive factors, in each
case on a global, regional and/or national basis.
Except as required by law Robeco Groep N.V. on behalf
of itself and its subsidiaries expressly disclaims any
obligation or undertaking to update or revise any
statements of future expectations or other forward-
looking statements contained herein whether as a result
of new information, change of events, circumstances or
conditions on which any such statement is based on, or
otherwise .
Disclaimer
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