Process to Execute Strategy

1. Research -- identify the best funds with a history of surpassing the performance within their peer group of funds with similar objectives,

2. Act -- implement investment decisions, adjusting and realigning portfolios as needed, and adding and deleting funds as required, and

3. Review & Monitor -- ongoing analysis of each fund and its investment process, progress and contribution to your portfolio, investment goals and desired results.

Mutual funds selected are our "A" list of balanced no-load and load-waived mutual funds available to our clients through Schwab Institutional. The selection process is based largely on the premise that balanced mutual funds that have attained superior investment results during the past 3, 5, and 10 year periods, and especially during declining markets, favor continued achievement of above average results in the future. Additional considerations are continuity of fund managers, the consistency of their investment philosophies, and statistical measures concerning how well a chosen composite of selected funds interacts to increase portfolio stability.

Although no assurances can be given concerning future investment results, and past performance does not guarantee future performance, we believe that funds with a history of exceptionally good performance over an entire market cycle, spanning periods of prosperity and adversity, in both up markets and down markets, are logical candidates to continue to achieve above average results going forward.

A carefully selected portfolio of 8-12 mutual funds, compared to two or three, offers additional layers of portfolio diversification and capital stability. While all balanced fund managers include both stocks and bonds in their portfolios, their specific management styles, methods, and investment selections may vary widely, causing different funds to look and behave differently. Our investment process also factors in how funds chosen for your portfolio work in aggregate, as much as for the individual attributes of each fund.