Risk-Controlled Portfolios

Our risk-controlled model portfolios have been designed to meet the varying objectives of conservative and moderate risk investors who want careful attention given to controlling risk.

These models are intended to assist investors in understanding the diversification strategies and the corresponding risk and reward characteristics of each.

Depending on your tax situation, existing holdings, personal preferences or bias, we can create a customized portfolio that best suits you.

Each of our seven risk-controlled portfolios is diversified among multiple investment strategies as shown below. The risk and return estimates are explained at the bottom of this page.

1. High Income Portfolio

Estimated average annual return: 6.5%

Risk level: low, potential decline of 2%

Risk similar to 10/60/30 Blended Index

Asset Class	Investment Strategy	Pct.
Cash Equiv	Money Market Fund	2%
	Short Term Bonds	10%
Bonds	High Quality Bonds	20%
	Timed Bond Fund	30%
	Trust Deed Fund	25%
Hedge Fund	Long / Short	10%

Cap Preservation Portfolio

Estimated average annual return: 7.0%

Risk level: low, potential decline of 3%

Risk similar to 20/60/20 Blended Index

Asset Class	Investment Strategy	Pct.
Cash Equiv	Money Market Fund	2%
	Short Term Bonds	5%
Bonds	High Quality Bonds	15%
	Timed Bond Fund	28%
	Trust Deed Fund	15%
Hedge Fund	Long / Short	5%
Real Estate	Real Estate Stocks	10%
Stocks	Dividend Income Stocks	15%
	Timed Stock Funds	5%

2. Conservative Inc. & Growth Portfolio

Estimated average annual return: 7.5%

Risk level: moderately low, potential decline of 5%

Risk similar to 30/60/10 Blended Index

Asset Class	Investment Strategy	Pct.
Cash Equiv	Money Market Fund	2%
	Short Term Bonds	3%
Bonds	High Quality Bonds	10%
	Timed Bond Fund	25%
	Trust Deed Fund	15%
Hedge Fund	Long / Short	5%
Real Estate	Real Estate Stocks	10%
Stocks	Dividend Income Stocks	20%
	Timed Stock Funds	7%
	Timed Large Gr Stocks	3%

3. Moderate Growth & Inc. Portfolio

Estimated average annual return: 8.0%

Risk level: low moderate, potential decline of 8%

Risk similar to 40/50/10 Blended Index

Asset Class	Investment Strategy	Pct.
Cash Equiv	Money Market Fund	2%
	Short Term Bonds	3%
Bonds	High Quality Bonds	8%
	Timed Bond Fund	23%
	Trust Deed Fund	10%
Real Estate	Real Estate Stocks	10%
Hedge Fund	Long / Short	5%
Stocks	Dividend Income Stocks	15%
	Quality Growth Stocks	10%
	Timed Stock Funds	8%
	Timed Large Gr Stocks	5%
	Timed Mid Gr Stocks	3%

4. Balanced Growth & Inc. Portfolio

Estimated average annual return: 8.5%

Risk level: average, potential decline of 11%

Risk Similar to 50/40/10 Blended Index

Asset Class	Investment Strategy	Pct.
Cash Equiv	Money Market Fund	1%
Bonds	Timed Bond Fund	23%
	Trust Deed Fund	10%
Real Estate	Real Estate Stocks	10%
Hedge Fund	Long / Short	6%
Stocks	Dividend Income Stocks	15%
	Quality Growth Stocks	15%
	Timed Stock Funds	10%
	Timed Large Gr Stocks	6%
	Timed Mid Gr Stocks	4%

5. Growth & Income Portfolio

Estimated average annual return: 9.0%

Risk level: above average, potential decline of 15%

Risk similar to 55/45/0 Blended Index

Asset Class	Investment Strategy	Pct.
Cash Equiv	Money Market Fund	1%
Bonds	Timed Bond Fund	10%
	Trust Deed Fund	10%
Real Estate	Real Estate Stocks	10%
Hedge Fund	Long / Short	7%
Stocks	Dividend Income Stocks	10%
	Quality Growth Stocks	27%
	Timed Stock Funds	12.5%
	Timed Large Gr Stocks	7.5%
	Timed Mid Gr Stocks	5%

6. Diversified Growth Portfolio

Estimated average annual return: 9.5%

Risk level: moderately high, potential decline of 20%

Risk similar to 60/40/0 Blended Index

Asset Class	Investment Strategy	Pct.
Cash Equiv	Money Market Fund	1%
Bonds	Timed Bond Fund	10%
	Trust Deed Fund	10%
Real Estate	Real Estate Stocks	10%
Stocks	Quality Growth Stocks	39%
	Timed Stock Funds	15%
	Timed Large Gr Stocks	9%
	Timed Mid Gr Stocks	6%

7. All Equity Portfolio

Estimated average annual return: 10.0%

Risk level: high, potential decline of 25%

Risk similar to 65/35/0 Blended Index

Asset Class	Investment Strategy	Pct.
Cash Equiv	Money Market Fund	1%
Real Estate	Real Estate Stocks	10%
Stocks	Quality Growth Stocks	39%
	Timed Stock Funds	25%
	Timed Large Gr Stocks	15%
	Timed Mid Gr Stocks	10%

***********************

Estimated average annual returns for the Risk Controlled Portfolios above are provided for long term financial planning purposes. These estimates are based on current market and economic conditions and are subject to change.

Risk levels are considered to be potential "worst case" estimates during severe market conditions that may occur once every 10-20 years. These estimates are based on current market and economic conditions and are subject to change.

Each model portfolio has comparable risk levels to the blended indices consisting of S&P 500 Composite Index, the Lehman Brothers Aggregate Bond Index, and the Citigroup 3 Month T-Bill index in the ratios given.

Investment Strategies

(Click on strategy

for description)

Core Bonds

Trend Bonds

Hedge Funds

Core Stocks

Quality Growth Stocks

Dividend Income Stocks

Covered Call Fund

Convertible Fund

Internat'l Value Fund

Trend Stocks

Core Real Estate

Residential Inc. Property

Definition of Terms

To assist the reader in understanding the investment philosophy and implementation, a description of how we use various investment terms is provided below.

Risk-Controlled Portfolio: This is an investors entire investment portfolio not including home, personal property, and liquid funds needed for living expenses and emergencies. The Portfolio is tailored to meet an an investors objective, and regularly maintained to control risk.

Asset Allocation: This is the division of the Risk-Controlled Portfolio into the most basic or general types of investment assets (called asset classes). This diversification is the most important factor in determining the overall behavior of the portfolio.

Investment Strategy:

This is a subset of an asset class with a very specific investment objective. For example: Within the stock asset class category, different investment strategies may be used to participate in the stock market. Such strategies may include quality growth stocks, dividend paying value stocks, international stocks, convertibles, etc.

Funds: These are mutual funds that are managed by a 3rd party to a specific investment strategy. Investors typically own a fractional portion of an entire mutual fund.

Folios: A subset of a managed brokerage account. These are a group of individual stocks or exchange traded funds (ETFs) that are managed according to a specific investment strategy. Investors own the securities outright in their brokerage account, rather than through mutual funds.

Exchange Traded Funds (ETFs): These are index funds or trusts that are listed on an exchange and can be traded intraday. ETFs are designed to generally replicate the holdings and correspond to the performance and yield of their underlying index.

Bond Ladder: A series of bonds that mature at regular intervals. The bonds are held directly in a brokerage account. These ladders are often created in the High Quality Bond Strategy.