SBI PORTFOLIO

IN A NUTSHELL
A conservative strategy that utilizes primarily established and seasoned moderate growth companies with high financial strength that are likely to provide steadily rising earnings and dividends. The Portfolio intends to participate fully in the long-term growth of the economy and the markets, with sensible and tolerable risk.

ASSET ALLOCATION
SBI is a medium and large-cap approach combining value with moderate growth. Comparable mutual fund categories would be "Mid-Cap," and "Equity-Income." For many investors it can be viewed as a core equity strategy, though it will not often hold many of the fifty largest stocks, or the most expensive and trendy stocks.

WHICH INVESTOR
The strategy is suitable for most investors including

• Pension and Retirement Accounts
• Foundations, Endowments, Trusts requiring some current income in addition to principal growth
• Investors seeking a managed approach which follows the discipline
• detailed in Lowell Miller’s book, The Single Best Investment.

Dividends tell the truth about earnings and about management’s attitude toward shareholders. Moderate valuation plus moderate growth, plus dividend growth, plus financial strength, is a recipe for long-term success. As important as the investment factors we seek is the fact that the approach is sensible and reasonable. It is therefore easy to hold during difficult times and easy to buy when prices are down.

THE KEY FEATURE
Primarily moderate growth stocks with a history and projected future of rising dividends. Some utilities may be drawn from our "Better Than Bonds" portfolio. Holdings are often sound companies that have experienced significant downward stock price adjustments, though their business is sound and likely to improve. There are also a small minority of "special situation," companies with unique and compelling investment stories.

WHAT TO EXPECT
Considerable academic research indicates that "value" stocks are less likely to fall as much as the market during a steep decline. In general, history has shown that dividend paying and seasoned companies are less volatile than the general market. Investors should be able to take some comfort during market declines knowing that our holdings are solid companies with proven markets that have a demonstrated history of recovery. Our strategy seeks to find worthwhile investments in any sector of the market, including, occasionally, international stocks. Stocks that meet our criteria may be found in any area, but are sometimes concentrated in just a few sectors. While the focus is on individual companies---rather than on market timing or sector rotation---we will favor a stock that helps the portfolio participate in a broad variety of sectors, all other factors being roughly similar.