History shows that Towle & Co.'s deep value investment strategy and asset composite can under-perform market benchmarks during periods of stock market disruption. Managed portfolios and individual stocks may decline in market value if the following occurs:

• The overall stock market declines. Typically, the portfolio will decline more than the broad market.
• The market favors growth stocks over value stocks or favors large capitalization companies over small capitalization.
• An adverse event, such as an unfavorable earnings report or restructuring announcement, temporarily weakens a particular company's investment profile.
• Our judgment about the attractiveness, value and appreciation potential of a stock proves to be incorrect.

The Towle Deep Value strategy is appropriate for investors:

• Willing to accept stock market risk and the volatility of smaller capitalization equities.
• Possessing a minimum investment horizon of four years.
• Seeking above average (after tax) growth of capital without the need for current income.