Q:  Would you provide a brief overview of the fund? A : The Meehan Focus Fund was established on December 10, 1999, and the fund currently manages about $35 million in assets. Edgemoor Investment Advisors, Inc., located in Bethesda, Maryland, manages approximately $400 million in total assets and serves as investment adviser to the fund. I have been the portfolio manager of the Meehan Focus Fund since its inception. Paul Meehan and Jordan Smyth have been co-managers of the fund since 2005. The fund’s 10 year performance record places it in the top 10% of large blend funds as ranked by Morningstar. Q:  What core beliefs direct your investment philosophy? A : We seek long term capital appreciation by purchasing stocks of good businesses at reasonable prices that provide a margin of safety. Our belief is that the fund’s investment objective is best achieved by investing in companies that exhibit the potential for significant growth over the long term and buying shares only when they are trading at a discount to their intrinsic value. Q:  How do you transform your investment philosophy into the fund’s investment strategy? A : The fund invests in common stocks of companies that exhibit the potential for significant growth over at least a three-year period. We try to find companies with an economic moat. This is a trait that protects companies against competition and helps them maintain pricing power in their businesses. For instance, Automatic Data Processing is a stock that we have owned for a long time. It is one of the largest providers of business outsourcing solutions and is focused on payroll processing, human resources, and benefits administration. ADP’s services cost its customers relatively little but switching costs – the time and effort of shifting to another provider -- are high, contributing to ADP’s high customer retention rate. Strong products and customer service enable ADP to cross-sell existing customers additional services over time. We also like the fact that ADP has raised its dividend for 34 consecutive years Q:  What does “focus” mean to you? Could you illustrate with an example? A : We use the word “focus” in our fund’s name because we have a limited number of stocks in the portfolio. The fund is required to hold at least 75% of its assets in 25 stocks. Currently we hold a total of 31 stocks which makes it a concentrated, or “focused”, portfolio. We seek to outperform the market by owning stocks we expect will do much better than the market, and we have done that over the past 10 years. Q:  How do you define “value?” A : We define “value” in terms of basic fundamentals such as price-to-earnings, price to cash flow, and return on invested capital. We own some stocks that are classified as growth stocks, but they meet the characteristics that we are looking for in a value stock. Currently we’re finding the best values are in large-cap dividend paying stocks like Johnson & Johnson, Procter & Gamble, Novartis, General Electric or Microsoft. Q:  What is your research process? A : We follow a bottom-up process that focuses on individual stock selection. More specifically, we start by identifying companies exhibiting some or all of the following criteria: low price-to-earnings ratio; low price-to-book value or tangible asset value; excellent prospects for growth; strong franchise; highly qualified management; consistent free cash flow; and high returns on invested capital. Although we look first at a company’s fundamentals, we also pay close attention to macroeconomic factors like unemployment, housing, and various industry-related metrics that may affect companies we are considering for purchase. The process involves a lot of research -- reading, talking with industry peers, reviewing SEC filings and gathering information from other available sources as we try to identify companies that meet our investment criteria. We often take a closer look at companies whose stock has declined after an earnings miss to see if it is a good investment opportunity. As part of the research process, we set a target price to determine if there enough upside potential for the stock from the current price and if that outweighs downside risk. Additionally, we have a selection committee that meets formally once a week to review the holdings in our portfolios. The committee makes decisions regarding buys or sells through consensus. Q:  What analytical steps do you take to evaluate the investment merits of an individual stock you invest in? A : To use an example, we own Lowe’s, a U.S.-based chain of retail home improvement and appliance stores. It’s a company in an industry hit hard by the housing downturn. Lowe’s missed earnings last summer, the stock sold off sharply, and most investors were not expecting a speedy recovery in the housing market. Lowe’s had more efficient distribution operations, less balance sheet leverage, and a reputation for better service than its main competitor Home Depot. We thought that the home renovation market would recover before the housing market and that as long as we were patient we were likely to be rewarded. Based on our analysis, we found the stock was trading at a sufficient discount to meet our margin of safety requirement. We bought our first shares in August 2009 at $20.10 and its up more than 20% since then. We still think it's attractive at its current price. Q:  How do you find investment opportunities? A : We follow companies for a long time and wait for the right opportunity. For instance, in 2000-2001 we didn't think Microsoft was a great investment opportunity. Although it was one of the largest and best managed companies in the world, we would not consider buying it because we felt it was significantly overvalued. In the last ten years Microsoft’s earnings have increased steadily and its price to earnings multiple has declined from as high as 80 to15. We started buying Microsoft about years four ago and sold it when they went after Yahoo! We felt they were paying far too much and that would have an adverse impact on the stock. Once we were convinced Microsoft was no longer going to pursue the Yahoo! transaction, and after watching its stock decline, we bought the stock back in December 2008 at a price below where we sold it. Another company we considered overvalued 10 years ago but which is now part of the fund’s portfolio is General Electric. We started buying GE last February at $11 and, within a month of our buying it, it was down 35%. But we continued to add to our position. We liked GE’s industrial business but not its financial business. We felt at the time that the company’s industrial business alone was worth more than GE’s total stock market valuation. We think that their non-financial businesses are strong and growing worldwide. In our view, there was a great disparity between the market price and our estimate of the company’s value. Q:  What is your sell discipline? A : The fund generally will sell a security if its price has reached or exceeded our estimate of its intrinsic value. The fund will also sell a stock if new information comes to light that significantly changes our opinion of company management or the nature of its business, or if we decide our initial assessment of a company was wrong. Q:  How do you build your portfolio? A : The fund’s portfolio is built using a value-oriented, buy and hold approach. We typically invest in a diversified group of 30 to 35 domestic and international stocks and we usually hold stocks from each of the S&P 500 sectors. We benchmark ourselves against the S&P 500 Index and the average turnover of the portfolio is about 25%. Q:  What risks do you perceive in the marketplace and how do you manage them? A : We manage risk in many ways. First, we try to minimize risk by being diversified and owning companies in different industries. Second, we look to buy stocks that are selling at a discount to what we believe they are worth. This discount helps to control risk by protecting us on the downside. Q:  Has the financial crisis impacted your investment process? A : Yes, it has. Before the financial crisis, we did not spend as much time looking at the balance sheet and the financing time-table of a company, assuming they could always roll over their loans or refinance their bonds. But after the economic meltdown in 2008, we have started focusing more on company balance sheets. Q:  Do you consider cash as an investable asset? A : We generally are 99% invested and do not hold cash. However, the fund is not required to be fully invested in common stocks and, during abnormal or unusual market conditions, cash reserves may be a significant percentage of the fund’s total net assets.