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Investment Process

The research process at Third Avenue is team oriented. All portfolio managers consider 

themselves to be analysts first and foremost, and actively contribute to the pool of 

investment ideas.

Our team of portfolio managers and analysts meets formally twice a week. Everyone

 participates in the discussions, which review potential new purchases, possible candidates

for sale, as well as current holdings. The meetings are led by our Chief InvestmentOfficer Curtis Jensen.

The research process is guided by Third Avenue's deeply ingrained fundamental value

 philosophy and bottom-up analytical approach.

Idea Generation

Every member of our investment team contributes in the research process, creating

hypotheses and formulating ideas by researching opportunities in depressed industries,

forced sellers and industries or companies that are surrounded by neglect, pessimism or controversy. Our analysts' diverse backgrounds and networks create an opportunistic

universe. Ideas are generated from a multitude of sources including contacts, trade

 publications, company managements, industry consultants and corporate or regulatorychange.

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Due Diligence

In order to determine if a company meets our fundamental value criteria, we look at the

quality of a company's resources. We capture information on the company by reviewing

 public documents, speaking with outside experts and contacts, identifying risk and value

drivers and utilizing our past experience. Next, we conduct analysis on the companyusing risk qualification metrics and valuation metrics such as asset value, earnings value,

takeover value, break-up value and liquidation value. Our due diligence process helps us

to understand a company's management and business.

Decision Making

The investment team meets twice a week, where formal presentations are given. After the presentation, a discussion ensues where additional questions are generated and additional

diligence items are identified. The floor is open to a 360° review, as all portfolio

managers and analysts participate and provide his/her thoughts. They look for errors of 

commission and omission, distinguish between bad luck and bad judgment andcontemplate process improvements. Once approved for investment, each security has

dual coverage.

Portfolio Management

At Third Avenue, we believe that diversification is a poor surrogate for knowledge, price

consciousness and control. Our funds are fairly concentrated. No attempt is made tomirror a benchmark, either by composition or weighting. In order to minimize portfolio

risk, industry and individual security allocation will not exceed 25% by prospectus. In

 practice, however, allocations to individual securities will not exceed 10% (at cost) and

15% (at market). A 10% cash position will typically indicate a fully invested fund. Thisallocation will allow us to take advantage of opportunities as they may present

themselves in the future.

Portfolio construction decisions are the responsibility of the portfolio manager. Portfoliomonitoring is ongoing.

Sell Discipline

Since we believe that business values are dynamic, and that businesses continue to growas long as they have a strong balance sheet and are well managed, Third Avenue

Management is a long-term patient investor. Therefore, our funds typically have lowturnover. Often, sales are a result of resource conversion activity such as mergers,acquisitions, spin-offs, restructurings, management buyouts, assets sales, etc. Triggers for 

a voluntary sale in the open market include the following: the security appreciates and

 becomes excessively overweighted in the portfolio; the security becomes clearly

overvalued; the business conditions change (i.e., a portfolio company experiences, or appears to have the potential for, a permanent impairment of capital); or our analysis was

flawed.