DESCRIPTION OF PROGRAMS

Good Shepherd Approach

This is an actively managed, diversified investment program which attempts to generate positive absolute returns, with below average risk, in virtually any market environment. In pursuit of these objectives, this approach necessarily avoids a buy-and-hold approach and a pre-determined asset mix, both common within the industry, and instead continually repositions client assets among those areas of the capital markets that are perceived to be most attractive in light of contemporaneous conditions--whatever and wherever they may be. This is a highly flexible, "top down" or "macro" approach. General market stock, bond and money market mutual funds are utilized, but special situation funds and individual securities, in both this country and abroad, also will be used. For example, Stocks, Bonds, Notes, Real Estate, and/or Cash equivalents will be alternately emphasized, or totally avoided, as changing market conditions dictate. Since the Good Shepherd program is managed primarily with an eye towards controlling risk, and only secondarily to maximizing return, we generally take an unleveraged, diversified approach, and any specialized holdings typically will be kept to a minority position. This program is most appropriate to clients who want the higher total returns characteristic of the stock and bond markets, but want to try to avoid the severe, prolonged sinking spells which the capital markets periodically experience. Because it follows an actively managed as opposed to a long term hold approach, the Good Shepherd style is not optimally tax efficient.

Acrobat Approach

This is a very actively managed program which attempts to generate positive absolute returns in virtually any market environment. While we take risk management seriously, this is an aggressive approach which will invest in any area that appear to offer the opportunity for high returns at the time. This will include general market funds, but it also will include individual securities and specialized sector funds such as Gold, Internet, Japan, Biotech funds, among others. We also may occasionally use mutual funds that hold derivatives, leveraged positions, and/or short positions. (However, owning a mutual fund with a short position is significantly different from, and much safer than "selling short"--which we never do in these programs). Such specialized funds typically are volatile, and therefore necessarily entail meaningful risk. However, we attempt to manage this risk by investing in such areas only briefly; by investing therein only when perceived risk is relatively low and the perceived return relatively high; and by restricting the size of any such positions. This program is appropriate to clients who want maximum flexibility, and who are willing to invest in virtually any market that offers the promise of positive returns, but who also wish to try to avoid the severe, prolonged sinking spells that these various markets periodically experience. The Acrobat approach is different from Good Shepherd primarily in that in the former, perceived return takes precedence over perceived risk, whereas in the latter, risk management is emphasized over return maximization. Since holding periods are likely to be relatively short, the Acrobat approach is not optimally tax efficient.

Variable Focus Approach

This approach attempts to enhance market returns and/or reduce market risk through active, focused asset allocation. In pursuit of this aim, this program typically focuses on one asset class at a time, taking a concentrated position in either a general equity mutual fund, a bond mutual fund, or a money market fund. The appropriate asset class is determined primarily on the basis of relative strength, trend following algorithms, and other, primarily "technical," asset allocation tools. The goal is to choose the best capital market to be invested in at the time so as to capture satisfactory returns, and to exit that market when returns begin to deteriorate. This program is "diversified" to the extent that it uses mutual funds rather than individual securities, but because it typically focuses on one asset class at a time--e.g.,100% Stocks, 100% Bonds or 100% Cash--at any given point in time, it is not diversified as to asset category. Since historically, this program has not been as diversified, nor traded as often as our other programs, the lower transaction costs may make this a suitable approach for smaller accounts. Because of its focused posture, this program is not appropriate for all of one's investment assets.

Bond-only Approach

This is a relatively conservative approach, which attempts to enhance the returns, and/or lower the risks, inherent in the interest rate market by allocating client assets among various bond mutual funds, hard currency funds, andmoney market funds. When bond mutual funds are deemed most appropriate, assets may be allocated to high-grade bond funds, high-yield bond funds, convertible bond funds, foreign bond funds, inflation protected instruments--or elsewhere--depending upon contemporaneous credit market conditions. Occasionally, a minority position in a negative beta bond fund and/or real asset-linked notes may be taken. This approach typically does not ladder maturities nor does it always seek to diversify credits, but rather allocates portfolio assets to whatever areas of the interest rate market appear to be most attractive at the time.

Aggressive Index Approach

The Aggressive Index approach attempts to profit from the short-term up and down movements in the equity markets to achieve excess returns. This approach typically does not seek to diversify. It uses a single, concentrated position in one of a variety of domestic equity index mutual funds which may employ leverage. As a result, trades may be very short term in nature, and the program has a high degree of risk and volatility. While this approach uses both long and short index funds, owning a mutual fund with a short position is significantly different from, and significantly safer than "selling short"--which we never do in these programs. The Aggressive Index Approach is managed such that perceived return takes precedence over perceived risk. Since holding periods may be short, this approach is not tax efficient, making it most attractive to tax-favored accounts.

Blend

In some cases it may be appropriate to combine some of these different approaches and thus follow a blended approach to portfolio management.

Idiosyncratic Approach

The foregoing capsule descriptions essentially exhaust our typically available management programs. In our experience one of these approaches, or a combination of two or more of these approaches, should satisfy the demands of the vast majority of investment portfolios. However, under special circumstances we can take various other steps in order to tailor a client's total asset management strategy to his unique wishes. Such an idiosyncratic approach might, for example, involve something as simple as constructing a bond ladder, or as extensive as hiring and supervising several outside managers with specialized expertise in certain alternative investment vehicles. We are available to discuss such a specialized approach.

Note on Leverage in Mutual Funds: Leverage increases an investor = s exposure to an index without increasing the investment amount. This increased exposure to an index is achieved through a fund = s use of instruments such as derivatives (i.e. futures, swaps, options on futures) as well as the underlying securities that enable the leveraged fund to pursue its objective. The objective of using leverage is to multiply the return of the index. Investing in a leveraged fund involves certain risks, which may include increased volatility due to the use of options or futures. The use of equity swaps involves risks that are different for those associated with ordinary portfolio securities transactions. Swap agreements may be considered to be illiquid. The Aggressive Index Approach frequently uses mutual funds that employ leverage. The other approaches may occasionally use such a mutual fund.