Large Capitalization Equity Strategies

RNC Genter is a large-cap manager that employs a blended investment style, integrating fundamentally attractive value and growth stocks into a well diversified portfolio. Broad diversification is assured for all risk categories by owning 30-40 equities at any one time spread amongst many economic sectors. Securities are selected based on superior fundamental outlook and strong absolute and relative value. The portfolio is constructed to balance opportunity against risk, but not to resemble the market or the economy as a whole.

RNC Genter's equity portfolios remain virtually fully invested throughout most market environments. On occasion, RNC Genter does alter the portfolio asset mix by raising some cash. However, this is done more to "fine tune" the portfolio and usually occurs during extremes of market valuation when attractive purchase candidates may not be available.

We begin our process with the Investment Policy Committee, comprised of the firm's key investment personnel, which meets at least quarterly. The mission is to establish major inputs to the firm's investing policies, including the direction of the capital markets and the firm's asset allocation mix. A number of economic and market factors are considered by the Policy Committee in assessing the future direction of the economy, inflation as well as the equity and fixed-income markets.

Within the framework of the firm's outlook for the economy and the capital markets, RNC Genter's research group screens equities on the NYSE, AMEX and NASDAQ, over 5,000 issues in all, utilizing various screens which we consider appropriate for our investing styles. The initial screen sorts for thresholds of key balance sheet and income statement information, plus market capitalization and absolute and relative valuations. We do not select equities by computer, but we undertake this process to narrow the firm's focus. This process screens out all but approximately 700 issues. Additional screens are then employed to narrow the universe of equities to a more manageable 350 issues. The remaining set of superior equities is then assigned to the appropriate RNC Genter security analyst for a more thorough fundamental evaluation. If the analyst determines that a company meets all of the rigorous criteria set forth by RNC Genter, and offers the potential for superior performance, a presentation is made at the Equity Strategy Group's (comprised of the firm's equity Portfolio Managers and Security Analysts) weekly meeting. During the presentation, the analyst also must provide a price objective that represents "full value" for the stock as well as an earnings model of at least four rolling quarters of earnings and cash flow projections for the company. Finally the firm's portfolio managers review the suitability of the issue for inclusion in a portfolio based on client objectives and constraints.

Individual portfolio holdings are reviewed weekly by the Equity Strategy Group. These reviews focus on any meaningful changes in fundamentals, recent analyst contacts with corporate management, change in Wall Street opinions, price performance of the issue relative to the market, and realization of a stock's price objective. From a damage control perspective, sale is considered if a stock has had an earnings shortfall that alters the investment thesis under which the stock was initially purchased. This discipline is designed to minimize the negative impact on the overall portfolio's performance due to individual disappointments. If it is determined that a sale is to be undertaken, then all accounts with similar objectives do so simultaneously. In order to avoid over-concentration in any one issue, holdings are also typically reduced when an appreciated position exceeds 5% of the total portfolio.