Our investment philosophy is based upon two approaches. The first approach is to focus on those companies, which have significant above-average growth prospects whose price/earnings ratio is below its growth rate. The second approach is to select companies with strong financial characteristics, which have experienced a short-term slowdown in its operations.

While we build the fund's portfolio on a company-by-company basis, occasionally, an overall investment theme will evolve as a byproduct of our investment process. Consequently, this will lead to over-weighting in some sectors. Generally, this will be in certain areas of technology and other high growth industries.

It should be emphasized that in pursuit of investing in companies with good growth prospects, we are very sensitive to the level of risk that is assumed

Our experience has shown that a key element of successful investment management is the avoidance of undue risk assumption. Generally, high-risk stocks, where unsuccessful, will decline precipitously and thus substantially offset the successful investments within a portfolio. The most recent examples are not only the "dot.com" companies but also the telecommunication companies. Generally, to limit risk assumption, there are two aspects that are adopted:

Undiscovered Companies
Undiscovered companies are stocks which have a limited amount of investment research coverage by the investment community. Such limited coverage will result in a low valuation for the company's stocks primarily due to a lack of awareness and thus less demand by the investment management community.

Contrarian Investing
Contrarian investing is looking at industries and companies, which are considered not especially attractive by the majority of investment research houses at any particular time. Because most of the potential company investments in this category will have low valuations, there can be numerous opportunities.

In an attempt to control risk assumption, we believe a disciplined approach should be employed.

• Company should posses a viable product and/or service within its target market.
• Company should posses a low amount of financial leverage but a high level of potential operating leverage.
• There should be the presence of a positive catalyst such as a management change, new product development, an annuities joint-venture, merger or acquisition, etc.
• All companies, which we focus upon, must be profitable on a cash basis (i.e. Net income plus Depreciation & Amortization).