The investment objective of the Phocas Real Estate Fund (the "Fund") is long-term total investment returns through a combination of capital appreciation and current income. Under normal market conditions, the Fund seeks to achieve its objective by investing at least 80% of its assets in equity real estate investment trusts ("REITs") and other securitized commercial real estate-oriented companies.

The commercial real estate-oriented companies in which the Fund may invest are businesses that own, manage or invest in properties such as offices, industrial properties, malls, shopping centers, apartments and healthcare facilities; they will not, however, own, manage or invest in either residential homes or residential home builders.

REITs own, manage, acquire and sometimes develop and sell commercial real estate, such as apartments, shopping centers and office buildings. Owning commercial real estate, when not financed by excessive debt, has historically been a solid, lower-risk investment. Similarly, REIT stocks have historically delivered strong returns for their investors.

REITs are often categorized as equity REITs, mortgage REITs and hybrid REITs. An equity REIT invests primarily in the fee ownership of land and buildings, and derives its income primarily from rental income. An equity REIT may also realize capital gains or losses by selling real estate properties in its portfolio that have appreciated or depreciated in value. A mortgage REIT invests primarily in mortgages of real estate, which may secure construction, development or long-term loans. A mortgage REIT generally derives its income from interest payments on the credit it has extended. A hybrid REIT combines the characteristics of equity REITs and mortgage REITs, and generally holds both ownership interests and mortgage interests in real estate.

Today, most REITs are active businesses, rather than passive investment vehicles for the holding of real estate. Smart REIT management teams create value for shareholders by making intelligent acquisition and disposition decisions, developing properties at attractive returns, and through joint ventures with large institutional investors.

Successful REIT investing requires extensive knowledge of REIT management teams, real estate markets, investor expectations, effective deployment of capital, and a thorough knowledge and understanding of the world of equity investing.

The Fund seeks to maintain a portfolio with continuous exposure to most real estate sectors, including office, industrial, retail, apartments and lodging. The Fund, however, will also seek to minimize its exposure to the riskiest real estate sectors. In order to reduce tax exposure, and avoid spreads and commission costs, the Fund will strive to keep annual portfolio turnover under 100%. The policy of investing in REITs and other commercial real estate operating companies may only be changed with 60 days prior notice to shareholders.

Phocas Financial's team of investment advisors has an average of over 16 years experience each analyzing value equities including this specialized asset class. We believe we have the knowledge and tools necessary to build and manage a diversified REIT fund that has the potential to deliver long-term value with moderate risk.