Investment Strategy–May 18, 2012

We had an extremely high cash position in the Reynolds Blue Chip Growth Fund during the period from October 2007 to March 2009 when the stock market was in a correction phase. We started buying near the market bottom in March 2009. We believe that stocks are selling at attractive valuations based on historical valuation measures. One of these valuation measures is a company’s price earnings ratio relative to inflation, interest rates and the economic outlook. Another valuation measure is a company’s price earnings ratio relative to its forecasted earning growth rate (the PEG ratio). Many stocks of high-quality companies are currently selling at PE ratios and PEG ratios toward the lower end of their historical ranges and we believe that they are attractively valued.

Opportunistic Investing in Companies of Various Sizes and Diversified Among Various Industries

The Reynolds Blue Chip Growth Fund usually invests in companies of various sizes as classified by their market capitalizations. A company’s market capitalization is calculated by taking the number of shares the company has outstanding multiplied by its current market price. Other considerations in selecting companies for the Fund include revenue growth rates, product innovations, financial strength, management’s knowledge and experience plus the overall economic and geopolitical environments and interest rates. The Fund’s investments are diversified among various industries.

The long-term strategy of the Reynolds Blue Chip Growth Fund is to emphasize investment in worldwide “blue-chip” growth companies. These companies are defined as companies with a minimum market capitalization of $1 billion. In the long term, these companies build value as their earnings grow. This growth in value should ultimately be recognized in higher stock prices for these companies.