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Rockefeller Family and is presently under consideration for sale. Review Management is the administrator of The Over-the-Counter Securities Fund (OTC) managed by Wellington and specializing in small capitalization companies.

OTC had been in existence for about 30 years and is presently valued at about $350 million. Wellington also manages $500 million for individual accounts invested in over-the-counter securities. The fund is team managed with the ability to draw extensively on Wellington resources, including their research department.

Mr. Shorts explained that the performance of OTC has been cyclical; there is no apparent correlation to this performance record with observable economic measures (i.e. interest rates, GNP, the economy, trade, etc.). The NASDAQ OTC index has underperformed the S&P 500 for the last 7 years, but has done relatively well since October 1987.

Mr. Shorts pointed out that there is more risk associated with small companies, as well as higher trading costs; turnover is approximately 30%, about one-half of which is involuntary due to corporate takeovers. The total portfolio consists of 200-275 companies, each representing less than 1% of the fund.

The OTC Fund reflects a low-tech bias, according to Mr. Shorts. He believes that economies of scale benefit large companies, not small. Approximately 12% of the fund is high-tech, short life-cycle products and half of that is services oriented.

The average capitalization in the fund is $50 million. Wellington imposes no particular ceiling, but there are very few holdings with capitalization of $150 million or more. The average price/earnings ratio of the portfolio is 10.2 with a historic growth rate of about +26% and an annualized return of 14.8%.

The typical emerging growth holding (with a 50% likelihood of being service oriented) reflects a growing stream of earnings and dividends, assets discounted below liquidation value, undervalued franchises, and overlooked industry segments a contrarian philosophy. The OTC fund is South Africa-free.

The Chairman thanked Mr. Gooch and Mr. Shorts for their presentation and welcomed Mr. Bill Scott and Mr. Anthony Hitschler of Brandywine Asset Management. Mr. Scott stated that the firm was three years old and managed $960 million is assets for 31 clients. Seven full-time investment professionals oversee all accounts. The holdings are entirely low price/earnings equity issues, with a maximum capitalization of $2 billion. The preservation of capital is paramount, but the firm will always stay fully invested, even in times of volatility.

Mr. Hitschler pointed out that the bottom quartile of low PE stocks historically outperforms market averages without undue risk, and produces excess returns about 70% of the time. These returns are both price and value driven. The Brandywine portfolio consists of about 60 stocks which are representative of the lowest quartile of PE stocks from the total measured universe of the NYSE and AMEX.