How should I measure the performance of my account?

We feel that the Frank Russell Indices supply the best comparative returns for our Small-Cap and Small -to Mid-Cap accounts. Our small capitalization value approach is best compared to the Russell 2000® Value and the Russell 2000® Indices. The Russell 2500™ Value and the Russell 2500™ Indices are appropriate benchmarks for our small- to mid-capitalization value approach. The S&P 500 and the S&P Global 100 Indices are the recommended benchmarks for our Large-Cap/Globally Dominant approach.

What is the Russell 2000 Value Index? The Russell 2500 Value Index? The S&P 500? The S&P Global 100?

The Russell 2000 Index consists of the smallest 2000 companies (measured by market capitalization) in the Russell 3000 Index. We believe the Russell 2000 Index is regarded as the measure of small-capitalization stock performance. The Russell 2000 Value Index measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth.

The Russell 2500 Index consists of the bottom 500 companies (measured by market capitalization) in the Russell 1000 Index and all 2000 companies in the Russell 2000 Index. We believe the Russell 2500 Index is regarded as the measure of small-to-medium stock performance. The Russell 2500 Value Index measures the performance of those Russell 2500 companies with lower price-to-book ratios and lower forecasted growth.

The S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market-value weighted index (stock price times the number of shares outstanding), with each stock's weight in the index proportionate to its market value. The "500" is one of the most widely used benchmarks of U.S. equity performance.

The S&P Global 100 Index is a capitalization-weighted index. The index measures the performance of 100 large companies from around the world whose businesses are global in nature. The S&P Global 100 is derived from the S&P Global 1200 Index.

What is market capitalization?

Market capitalization is the total market value of a company, calculated by multiplying the company's price per share by the number of shares outstanding. For example, if a company has 1,000,000 shares outstanding and the current market price of the stock is $10, the total market capitalization is $10,000,000.

What is the difference between Value and Growth investment styles?

Value managers try to purchase companies when earnings expectations are at or near their lowest point. In theory, there is little down-side risk, other than buying a company too early. In addition, value managers buy companies they expect will have an increase in their stock price due to some catalysts for this stock price increase, such as cost/debt reductions, technological breakthroughs, or new sources of earnings.

Growth managers try to purchase companies that have exhibited consistent earnings growth over several quarters. They are willing to pay higher prices for this consistency and strive to find companies that are able to sustain this growth for lengthy periods. As positive press and favorable public opinion increases, stock prices are expected to increase.

What size of companies would be found in your small- to mid-cap product?

The small- to mid-cap value strategy focuses on companies with market capitalizations ranging predominantly from $500 million to $5 billion.

Within your literature, you state that you conduct fundamental research for your small- and small- to mid-cap value equity products. How does that differ from technical research?

The technical analyst uses charts and computer programs to identify and project price trends in a security or sector. They are not overly concerned with the financial position of a company. At ICM, we feel it is extremely important to understand a company's financial statistics to determine if a stock or sector is under or overvalued. We are also concerned with the validity of each company's business plan and how this plan will contribute to stock value.

In your average small- or small- to mid-cap accounts, approximately how many positions do they hold and what is the annual turnover?

Unlike a mutual fund containing hundreds of stock positions, a typical ICM portfolio contains 30 to 50 issues and will be diversified among 8 to 12 industry sectors. The annual average portfolio turnover rate is 50 to 70 percent.

At times, excess cash appears in the account. Why does this cash position fluctuate? Is cash used for strategic purposes?

Cash levels fluctuate based on two factors. ICM will sell stocks when they reach designated price targets and will purchase stocks when they are attractive in relation to our value-investment style guidelines. At times, due to various reasons, we do not immediately reinvest the cash from positions we sell. As more stocks become attractive, we add them to the portfolio. We are continually searching for these value stocks, but in the meantime, cash levels can be higher than normal. This pattern is much more a natural consequence of adherence to our value discipline than any overt market timing.

As always, taxes are a burden. Does ICM take into account an individual's tax consequences?

Unlike a mutual fund, ICM has the ability to provide investors with individualized tax management. If you direct ICM to pay particular attention to the tax consequences in your account, we will review the account and will attempt to make trading decisions that minimize your tax liability, if practical. However, we believe that long-term performance, not taxes, should drive the portfolio management process.

Who can I call if I have questions about the management / performance of my account?

Anytime you have questions regarding your account, we encourage you to call your Financial Advisor or Consultant. He or she can then set up a conference call with one of our client service representatives, marketing associates, or portfolio managers.