A:Broadly diversified, we do not own any stock greater than 2.5% weight of the fund, because the markets are very volatile and we do not want too few specific stocks to impact the fund. This fact differentiates us from many of our competitors that have significantly higher weightings in stocks. . For example, some of our peers range from 5% to 8% in their funds. . We do not like to make those types of big bets. . The portfolio is truly bottom-up analysis and stock picking. The benchmark is only used as a guideline and not to too overweight any one particular sector or industry.

Q: Can we discuss some of your winners and losers?

A:Typically we find many opportunities in the tech, healthcare and consumer sectors that meet our disciplined criteria.

eResearch Technology Inc is a great example of one of our winners. Our investment screens flagged the company’s growing revenue and earnings and wemet the company’s management. The company has a proprietary technology solution that allows pharmaceutical, biotech and medical device companies todigitize clinical trial data that ultimately gets filed with the FDA in a digital format. The FDA has recently requested companies to submit clinical trial data this format. eResearch is one of a few companies that enable users to digitize data for filing. They have signed several contracts with pharmaceutical companies. This is a good example of the kind of stock that we like to own as it has strong management and a proprietary technology. . From the time we initially purchased the stock, the earnings estimates have quadrupled.

Over the course of the year Martek Biosciences (MATK) was among the largest contributors to the Fund’s performance. The company develops two nutritional fatty acids (DHA & ARA) that are sold to infant formula manufacturers. These fatty acids, when added to infant formulas are important for proper brain and eye development and have been proven to increase IQ in studies. They have also been shown to support cardiovascular health in adults. The company has a proprietary technology that derives these fatty acids from microalgae. Typically these are derived from fish oils, and since many fish are contaminated with mercury and other carcinogens, they may be a risk to developing infants. The company is experiencing triple digit growth rates. The investment was a success and the company met all the criteria that we have in stock selection such as a proprietary technology, a new product cycle, strong management and extremely strong operating fundamentals. The stock was initially not well covered by the Wall Street analysts but seems to have been discovered recently as more firms picked up coverage. The disciplined with 3 step process

Not all our picks work out. United Online is one such stock. The company through its subsidiaries NetZero, Juno and BlueLight provide free and value-priced Internet access and email over speed-band accelerated dial up services. The company has had strong subscriber gains, record profits, and has increased earnings guidance but has been under a cloud since AOL announced they would provide a competing online service. Again, despite no change in operating fundamentals, the company sold off because of a perceived threat and negative market sentiment. This was a classic 'don't fight the tape' story and we finally sold the stock because it failed to perform for us.

Another example was Carreker Corp. (CANI), which provides payments related software and solutions to financial institutions. The company basically helps financial institutions improve operational efficiency in payments processing. The company lowered guidance due to a delay in a contract and was subsequently sold due to fundamental concerns.