Bill Miller
Legg Mason Funds Management, Inc.
100 Light Street
Baltimore, MD 21202

Bill Miller is the portfolio manager for the segment of the Fund’s assets run by Legg Mason Capital Management, Inc. (“Legg Mason”). Miller has been in the investment business and with Legg Mason since 1981. He was co-manager of the Legg Mason Value Trust since its inception in April of 1982 and has been sole manager of the fund since the end of 1990. Miller is also the sole manager of the Legg Mason Opportunity Trust. Miller has been an investment manager to Masters’ Select Equity Fund since March 2000.

Miller manages approximately 20% of the Fund’s assets. His investment approach is valuation driven with a focus on companies trading at significant discounts to his team’s assessment of intrinsic business value. Most of Miller’s investments for the Fund will be in mid-sized and larger companies, although he may also invest in some smaller companies. He may invest up to 20% of his position of the portfolio in foreign stocks. Miller and his team define intrinsic business value as the present value of the future cash flows of a business. They seek to purchase companies that are trading at least a 50% discount to their assessment of underlying intrinsic value in order to build in a margin of safety between what they believe a company is worth and what they are willing to pay for it.

Legg Mason’s process begins with a quantitative approach that helps to identify a universe of stocks that look statistically inexpensive relative to historical stock factors. The process then moves to the more important, qualitative assessment of underlying business value where Miller and his team employ a multi-factor valuation approach focusing on the cash flows of the companies and the returns on invested capital. The team spends a great deal of time meeting with companies and understanding the capital allocation process employed. Their research often involves valuing companies under a variety of scenarios with varying probabilities associated with those scenarios. They attempt to determine the underlying economic value of the business through research, which may involve private market analysis, liquidation analysis, leveraged buy-out analysis and other analyses they deem appropriate. Valuation factors that are most important in evaluating companies are balance sheet strength, return on investment capital, the ability to generate free cash flow, pricing flexibility and position in their respective industries. The team focuses heavily on management’s ability to demonstrate and articulate a clear, value-creating capital allocation process. Other important qualitative factors that are incorporated into the analysis include their assessment of management, business strategies, the competitive position of a company and the long-term outlook for the industry. Research focuses on evaluating a company’s intrinsic business value and its ability to generate sustainable returns on capital above its cost of capital, thereby creating value for shareholders.

The portfolio will be constructed and re-balanced so that the companies that are believed to offer the highest risk-adjusted rates of return represent the largest proportion of the portfolio. As a long-term investor, Miller prefers to let his winners run and will not seek to arbitrarily target percentage weightings within the portfolio.

Miller’s sell discipline is an integral part of his investment process and is critical to the generation of excess returns and controlling risk in the portfolio. He will sell a stock when one of three things occurs: (1) a stock has reached what he believes is fair value for the company; (2) he determines that the original analysis is no longer operative or the competitive environment has changed in some way since their initial analysis (e.g., new legislation or regulation); or (3) a more attractive investment alternative emerges which offers a better long-term risk-adjusted rate of return.

References to other mutual funds should not be deemed an offer to sell or solicitation of an offer to buy shares of such funds.