February 1, 1999
Dear <14Salutation>:
Thank you for your interest in the Daruma Mid-Cap Value Fund. For the year
ended December 31, 1998, the Fund was down 6%. The Russell 2500, a mid-cap
benchmark ended the year up slightly at +.38% and the Russell 2000 was also
down 2.6%. It was a tough year for the small- and mid-cap stocks, and for
value stocks in particular. We believe the worst may be behind us and if
so, this may be a good time for long term investors to buy.
The Daruma Fund is 100% no-load. No sales commissions and 12b-1 fees are
charged to you, so that all of your money goes to work for you immediately.
The minimum initial investment in the Fund is $1,000; $500 for retirement
and Uniform Gift to Minors (UGMA) accounts.
We launched the Daruma Fund to offer an investment vehicle to individuals who
wanted to benefit from the same investing expertise we provide to our
institutional clients. We are value investors, who seek to generate
consistent long-term returns by purchasing companies that are undervalued
and changing for the better. This approach is well-suited to the patient
investor with a long time horizon who wants to participate in the superior
returns offered by the stock market, and who also understands that both
individual stock prices and the market overall can decline.
We have an experienced team as well as a corporate culture that puts our
clients and the Fund's shareholders first. Please read our brochure and
prospectus, which will tell you all that you need to know before deciding
whether to invest with us. We invite you to join us as fellow shareholders.
Sincerely,
Mariko O. Gordon, CFA
President
P.S. To find out what a Daruma is you must read the enclosed!
**The Russell 2500 and Russell 2000 are unmanaged indices. All performance
results are stated gross of fees and include the reinvestment of dividends
and capital gains. Past performance is not an indication of future results.
