Decision Making Process - Our investment decision making process is based upon an interplay of our Investment Committee, portfolio managers and external research and recommendations. Our Investment Committee meets regularly to discuss topics of strategic importance to determine our intermediate to longer term investment strategy. We discuss the overall international economic environment, interest rate trends, corporate profits, domestic and international political factors, stock market valuations, technical factors and the relative attraction of smaller company investments to the overall market. These meetings determine our overall asset allocation mix as we manage our portfolios in conjunction with the needs and objectives of our clients.

Security Analysis - The method of security analysis is a fundamental economic and investment valuation process. We consider factors such as management ability and depth, marketing strength, research and development, productive capacity, foreign sales and industry market position. These factors are compared with projected future revenue and earnings growth, relative price earnings multiples, capitalization size, sales, tax rate trends and the current and projected outlook for profitability and financial strength. We supplement this with attendance at seminars and conferences specializing in smaller companies and sponsored by industry and the research brokerage community. This gives us the opportunity to meet periodically with the management teams of our investments. A continuous analysis of the economic outlook is also conducted to identify cyclical and secular trends and those economic sectors that appear favorably positioned over the intermediate term.

Stock Selection Process - The stock selection process concentrates on small and medium sized companies that meet specific qualitative and quantitative criteria. Candidates must possess a minimum growth rate 50% greater than the Standard and Poor's "500" with high profitability and financial strength. Primary emphasis is placed on companies with managements of demonstrated competence, effective marketing organizations, strong research efforts and dominant market positions for their products. We favor companies with accelerating earnings momentum that appear undervalued.

Technical Analysis - Our fundamental economic and investment analysis is combined with a technical review of the overall market, the smaller company segment and those fundamentally favored issues to enhance stock selection and the timing of purchases and sales. Flexibility is emphasized and we adjust our equity commitments to capitalize on market volatility and enhance the preservation of capital. However, we are long term investors and prefer to hold our investments to minimize turnover as long as their fundamentals remain strong and the stock market outlook appears favorable.

Fixed Income Investments - Fixed income management emphasizes preservation of capital, current income and marketability through quality investments of short to intermediate term investments. Investment strategy is tailored to provide safety and value added through a disciplined research effort that emphasizes interest rate trends, yield curve opportunities, sector yield relationships and growth with convertible securities. We invest in U. S. Government and Agency debt, corporates, preferreds, tax exempts, variable rate demand obligations and convertible bonds and preferreds.

Sources of Information - The principal sources of information utilized are company 10Ks, prospectuses and quarterly and annual reports. This information is supplemented by industry and company research reports from professional firms and analysts that specialize in researching small and medium sized companies. Other sources include industry conferences, management meetings and presentations, financial periodicals, trade journals and research material published by Moody's and Standard & Poor's.