• Portfolio Managers adhere to a strict value discipline, seeking fundamentally sound companies that are seen as undervalued.  
• Investment approach allows for broad diversification which can help to reduce some of the risks associated with small-cap investing.
• Each holding is expected to pay a dividend, which can offer cushioning during periods of market fluctuation.

• Screen for positive fundamentals—Apply a screen for positive fundamental characteristics to a universe of approximately 4,000 small-cap stocks.
• Conduct in-depth research and analysis— Research each of the approximately 500 remaining possible investments, looking for companies with low price-to-earnings multiples, high dividend yields, positive prospective earnings and quality operations.
• Restrict industry concentrations—Avoid overexposure to any one sector by restricting the number of stocks held in a single industry.
• Construct portfolio—Select approximately 100-150 of the most attractive securities identified, diversified across industries.  Each holding is expected to pay a dividend.
• Regularly monitor for buy and sell candidates—Continually repeat the research process to identify new buy and sell candidates. Sell a stock when an alternative stock with equally strong fundamentals demonstrates a substantially lower price-to-earnings ratio and/or a substantially higher dividend yield.

• Screen for positive fundamentals—Apply a screen for positive fundamental characteristics to a universe of approximately 4,000 small-cap stocks.
• Conduct in-depth research and analysis— Research each of the approximately 500 remaining possible investments, looking for companies with low price-to-earnings multiples, high dividend yields, positive prospective earnings and quality operations.
• Restrict industry concentrations—Avoid overexposure to any one sector by restricting the number of stocks held in a single industry.
• Construct portfolio—Select approximately 100-150 of the most attractive securities identified, diversified across industries.  Each holding is expected to pay a dividend.
• Regularly monitor for buy and sell candidates—Continually repeat the research process to identify new buy and sell candidates. Sell a stock when an alternative stock with equally strong fundamentals demonstrates a substantially lower price-to-earnings ratio and/or a substantially higher dividend yield.

Ben Fischer is Managing Director and Portfolio Manager of NFJ Investment Group. A founding partner of NFJ, Mr. Fischer's experience in the value sector began in 1966.

Paul Magnuson is a managing director and a portfolio manager at NFJ. He has worked in equity analysis and portfolio management since 1985. He received his B.B.A. in finance from the University of Nebraska.

R. Burns McKinney, CFA, is a portfolio manager who joined NFJ in 2006. His previous investment experience includes equity research and analysis at Evergreen Investments and Merrill Lynch, where he was a Vice President of equity research. He holds an M.B.A. from the Wharton School and a B.A. from Dartmouth.

Dallas, Texas

NFJ employs a deep value equity investment style that focuses on dividends, discipline and diversification. Over the years, the firm's strict adherence to this approach has helped it to deliver consistent results for investors with lower-than-average risk.