INVESTMENT PROCESS

Our process is based on the methods of security valuation described by Benjamin Graham and David Dodd in Security Analysis. Using fundamental analysis, we look for companies that we can purchase with a margin of safety, meaning that, while their stock price is temporarily down, the company’s fundamentals in the long run remain sound.

“Most of the time stocks are subject to irrational and excessive price fluctuations in both directions as the consequence of the ingrained tendency of most people to speculate or gamble … to give way to hope, fear and greed.”

—Benjamin Graham

4-Step Process

The Queens Road Funds are managed using a disciplined 4-step process to identify those companies with the greatest likelihood to maximize after-tax returns while limiting volatility. We begin this process as follows:

BALANCE SHEET

We look for companies with strong balance sheets, manageable debt, and strong free cash flow.

VALUATION

We attempt to normalize economic earnings over full market cycles using a classic Graham and Dodd methodology.

MANAGEMENT

We look at management’s long-term track record and their ability to layout a strategy and execute to achieve their objectives.

SECTOR & INDUSTRY

We want to own companies in growing industries with favorable economics.

Generally, these are the steps we follow, though all investment decisions are made at the discretion of the Portfolio Manager, in accordance with the then current Prospectus.

Performance Expectations

The portfolios are designed with an emphasis on controlling downside risk. Understanding the implications of this emphasis is important for investors in the portfolio. Generally speaking, we expect to perform alongside, ahead or behind our peers in different types of markets.

Market advancing, but risk is prevalent – We hope the fund will provide above average to average performance compared with appropriate benchmarks. *
Market declining – We hope the fund will protect capital and outperform peer category and indices. *
Market advancing on speculation/momentum and risk is ignored – The fund will likely trail peers and benchmark indices. *
Over a full market cycle – We hope to obtain greater returns than the relevant benchmark while assuming less risk. *

* Although the fund has consistently been shown to perform as described above since inception in 2002, there is no assurance that we will continue to achieve this objective.

FUND FACT SHEETS