Since its inception in 1993, the Fund has been managed by Steven Romick, Trustee, President, and Chief Investment Officer. Dennis M. Bryan and Rikard B. Ekstrand also assist in portfolio management. Analytical support is provided by Gregory R. Nathan, John E. Peetz and Jason C. Bidwell. In addition, Mr. Romick manages separate account portfolios, and he serves as a manager of the FPA Multi-Advisor Funds and the FPA Hawkeye Funds. He joined First Pacific Advisors in 1996.

The Fund actively seeks value in all parts of a company's capital structure, including common and preferred stocks, as well as corporate and convertible bonds. The manager invests in securities "that the consensus does not wish to own," searching for stocks and convertible bonds that reflect low price/earnings ratios (P/Es) and trade at discounts to private market value. Corporate bonds with yields substantially higher than those of government securities are also considered.

This contrarian style leads to those investments that offer absolute rather than relative value. An absolute value is an investment that trades at a substantial discount to private market value, rather than one that might appear inexpensive based on a discount to its peer group or the market average. Attention is directed toward those companies offering the best combination of such quality criteria as strong market share, good management, and high normalized return on capital. A company purchased might not look inexpensive, considering current earnings and return on capital; however, its valuation may reflect such conditions as a weak economy, an increase in raw material costs, a management misstep, or any number of other temporary conditions. The price drops caused by such developments can and often do provide buying opportunities.

The manager's intensive research identifies these opportunities. The process includes looking for ideas by reviewing stock price or industry group underperformance, insider purchases, management changes, and corporate spin-offs. Researching a prospective investment involves communicating directly with company management, suppliers, and customers, better defining future potential, financial strength, and the company's competitive position. Fundamental analysis provides a thorough view of financial and business characteristics, allowing for the determination of absolute value. The manager's confidence in this research must be high enough to allow him to purchase and hold such companies for an average of one to three years.

Opportunities frequently present themselves in parts of the capital structure beyond common stock, including preferred stock, and convertible and high-yield bonds (i.e., less than investment grade). Generally, these investments provide a yield in excess of government securities and can provide the potential for capital appreciation. Understanding the credit risk of these investments is paramount and has historically provided better returns than a government securities portfolio. When combined with common stocks, the ownership of selected corporate fixed income securities not only broadens the universe of contrarian opportunities, but offers additional diversification and can help lower portfolio volatility.

The manager applies this contrarian style in the belief that the path to superior equity returns lies in "buying what others are selling and selling what others are buying." Providing calm, rational judgment in an inherently emotional market can offer the opportunity for excellent returns.