The investment process followed in selecting equity investments for the Funds is a value-oriented approach to investing. This involves a detailed analysis of the strengths of individual companies, with much less emphasis on short-term market factors. Far greater importance is placed upon an assessment of a company’s balance sheet, cash flow characteristics, profitability, industry position, special strengths, future growth potential and management ability.

The level of investments in the company’s securities is generally commensurate with the current price of the company’s securities in relation to its intrinsic value as determined by the above factors. That approach is designed to provide an extra margin of safety, which in turn serves to reduce overall portfolio risk.

The Manager may decide to maintain a larger portion of the Fund’s assets in short-term fixed income securities during periods of high market valuations and volatility. This temporary departure from the Fund’s core investment strategy may be undertaken to protect capital while awaiting more favourable market conditions.

Disclaimer: Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their value change frequently and past performance may not be repeated.

NOTICE:

Effective Thursday, November 1, 2007, Chou Associates Management Inc. corporate office is moving to the following location.

110 Sheppard Avenue East

Suite 301, Box 18

Toronto ON

M2N 6Y8