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Part 1 - Ahrens Refuses To Repent

Van Alen: At the Noah Fund, we believe that more and more investors are looking to invest in accordance with their spiritual and moral beliefs. Is it the Vice Fund's belief that investors are just looking to make a profit?

Ahrens: First of all, I want to say I think people should donate time and money to good causes that they believe in. I think people should recycle. But investing is for the purpose of making money. These vices are legal and we believe people are going to drink, smoke and gamble no matter what is going on with the economy.

Van Alen: We started the Noah Fund because there was a void in the mutual fund market for Bible-believing, God- fearing investors. Why did you start the Vice Fund?

Ahrens: Our fund exists because of the very existence of your fund and other socially responsible funds. We think it's ridiculous to exclude a great company like Anheuser-Busch for social reasons. Anheuser-Busch is a good corporate citizen. They have solid financials. They donate millions of dollars to alcohol awareness. They are one of the world's top recyclers -- they've been doing it for over 100 years. So, we don't like the hypocrisy of socially responsible funds, excluding what we believe are good companies. Thus, we launched our fund.

Van Alen: We have a strict monitoring and screening process. Do you have a screening process at the Vice Fund?

Ahrens: Absolutely. We screen with a number of social screens, but we screen for companies involved in the alcohol, tobacco, gaming and aerospace/defense industries.

Van Alen: Why is aerospace a vice?

Ahrens: Well, it's not really a vice. Not your fund, but a lot of socially responsible funds eliminate aerospace and weapons manufacturers, which we think is ridiculous, so we invest in them.

Van Alen: How many shareholders do you have?

Ahrens: We have a few thousand shareholders. I can't say an exact number because we receive a lot of assets through Fidelity and TD Waterhouse and a few others that are omnibus accounts.

Van Alen: What are your comments to those who say the Vice Fund is simply a "marketing ploy?"

Ahrens: I would say the Vice Fund is no more of a marketing ploy than your fund is. Or for that matter, the very first technology fund, or the first Asia fund. So, I don't think you can call our fund, or your fund, a marketing ploy.

Now, we think ours makes more financial sense than a number of Socially Responsible Investing funds out there. I would simply suggest anyone take a look at the 10-, 20-, 30-year history of some individual industry leaders like Philip Morris. It's actually the top performer out of the Dow Jones 30 Industrials that existed 30 years. A lot of people in the U.S. don't know that because of what I would call these "moral police" and the press which have caused such a negative impression.

Van Alen: Well, Philip Morris does produce tobacco.

Ahrens: Absolutely, and they're a great company and one of the top performers in the entire stock market over the last 30 years. And, many people don't realize the huge worldwide demand for tobacco. They're actually increasing production in places like South East Asia, Russia and Eastern Europe, where there's high demand for tobacco.

Van Alen: Many of the companies you invest in are involved in costly litigation that last a long time. Do you factor this into your screening process?

Ahrens: That leads us right back to Philip Morris. They do dominate the tobacco industry. Now, even with the litigation, over the past 30 years, their stock has still outperformed GE, Coca-Cola, Walt Disney, IBM and almost all other stocks in the Dow 30.

Van Alen: What is the redeeming feature of tobacco, besides the fact that it sells a lot?

Ahrens: People want it. People enjoy it. People have been smoking for centuries. A lot of the founding fathers of this country, George Washington, Thomas Jefferson, were tobacco farmers. It is a legal product that people enjoy and I am a big believer in personal choice and personal freedoms.

Van Alen: So you would advise your children to smoke?

Ahrens: That's a crazy statement. Absolutely not. It's a legal thing for adults. Just like alcohol, you have to be a legal adult of drinking age to drink it. I don't smoke cigarettes. I don't think they're very healthy for you, but I enjoy a cigar every now and then and I sure as heck don't want anybody taking that away from me.

Van Alen: Is anybody planning to?

Ahrens: I don't know. There are some people out there that seem to be pushing for prohibition of alcohol and tobacco. But, prohibition didn't work.

Van Alen: You're absolutely right.

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