Investment Manager Due Diligenceand Asset Allocation Philosophies

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Initial Investment Manager Selection

There are literally thousands of investment management firms to choose from.

Selecting investment management firms to manage assets successfully is one of

the most valuable services Brinker Capital provides. We have no affiliation with

any investment management firm, so our interests are solely aligned with yours.

When an investment manager should no longer be recommended we objectively

make that decision.

We maintain relationships with more than 50 investment management firms

representing over 70 investment disciplines. These firms are among the world’s

premier institutional and private client investment management firms—companies

we have thoroughly analyzed and selected based upon their proven investment

management expertise. Our Investment Management Group follows a disciplined

process in selecting these firms and reviewing them on an ongoing basis. We analyze

firms based on the soundness of their investment process, the quality of their

professionals, the consistency of their performance, and their capacity for investing

successfully in the future.

Our practice is to limit the number of managers we recommend. This allows us

to develop solid working relationships with each money management firm, fully

understand their investment approach, and closely monitor each manager on

an ongoing basis. We continually seek investment management firms that will be

solid additions to our current managers or capable replacements for firms we

no longer recommend.

Investment Manager Due Diligence

Representative Quantitative Criteria for Manager Selection

Rolling performance

Downside performance

Calendar year performance

Information ratio

Sharpe ratio

Relative volatility

Absolute volatility

Downside volatility

Sector weights

Relative sector weights

Performance attribution

Manager tenure

Employee turnover

Manager compensation

Selecting investment management firms is one of the most valuable services

Brinker Capital provides.

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l. Identify potential managers

We identify potential money managers through various industry databases or by referral.Then we run a series of quantitative screens utilizing Zephyr Style Analysis, Mobius, Nelson and other databases to determine if they meet our criteria.

2. Interview firm portfolio managers

If the money management firm meets our quantitative criteria, we have an initial meeting with its portfolio managers. During this meeting, we gain a detailed understanding of their investment process.

3. Complete a detailed questionnaire

If we continue to have an interest in the firm after the initial meeting, we ask the firm to complete a very detailed Investment Manager Questionnaire. The questionnaire helps us to gather important information in terms of the history of the firm, its people, buy and sell processes and detailed performance.

4. Visit manager

After a thorough review of the Investment Manager Questionnaire, we meet with the investment management firm at their location. Meeting the entire investment management team and watching their process in motion is a critical step in the manager selection process.

5. Obtain consensus

Finally, before recommending any firm, we seek consensus from the entire Brinker Capital Investment Management Group. Only when the group agrees that it would serve the best interests of our clients to bring the investment manager on board does the firm earn a place on Brinker Capital’s list of recommended money managers.

We take five important steps before we select an investment management firm:

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Ongoing Investment Manager Due Diligence

In an ever changing world, ongoing investment manager due diligence is critical to

your investment success. After we select an investment manager, we continuously

monitor their investment style, performance, philosophy and people to ensure that

they continue to meet our rigorous requirements.

The Brinker Capital Investment Management Group monitors managers in

every sense of the word. Listed below are examples of the various components

that comprise our ongoing due diligence process. These checks and balances

are performed monthly, quarterly and annually.

Daily/Weekly:

Daily review of investment manager activity is the first place to uncover manage-

ment inconsistencies. Quite often, early detection of trading patterns or perform-

ance that is out of character can be a signal that an investment manager may be

drifting from its style, requiring further investigation.

Monthly:

Although we have a long term investment philosophy, we do not overlook the short

term. Monthly performance checks to compare investment managers to their

appropriate index allow us to measure relative performance. Substantial deviation

of performance or portfolio activity is a signal for us to research the reason for

the deviation. How we react is based on the conclusions we reach after our analysis.

Quarterly:

On a quarterly basis, we use sophisticated software-group packages and databases

to analyze each investment manager’s peer performance, risk adjusted performance

and style consistency. This review helps us to ensure that client goals and objectives

are being achieved.

Annually:

Review of our annual Investment Manager Questionnaire and the firm’s ADV,

as well as at least one visit during the year, allow us to thoroughly analyze the

investment managers in our program.

Investment Manager Due Diligence

Ongoing Investment ManagerDue Diligence

Daily/Weekly

n Look for significant change.

n Monitor performance.

Monthly

n Review relative performance.

n Monitor portfolio activity.

Quarterly

n Monitor style consistency.

n Analyze performance.

n Review investment updates.

Annually

n Meet with managers.

n Review managed account questionnaire.

n Review updated ADV or prospectus.

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Asset Class Recommendations

The Brinker Capital Investment Management Group develops asset class and port-

folio construction strategies based on an investor’s risk and return objectives and

time horizon. We believe in properly allocated portfolios, and we make portfolio

recommendations that seek to enhance returns as well as manage risk. Our approach

to asset allocation is highly disciplined. We do not chase the latest fad in investing

nor do we overweight an asset class that is in favor at a certain time. We combine

different asset classes—equity and fixed income—and different styles—value, growth,

large cap, mid cap, and small cap—to create comprehensive portfolios that work for

the long term.

We do not make any bets—no asset class bets, style bets, or market capitalization

bets. Our asset allocation recommendations are based upon historical long-term

returns, correlation, and volatility of various asset classes and sub-asset classes. As you

can see from the chart below, different asset classes perform well at different times.

Maintaining a diversified asset allocation can help lessen a portfolio’s overall volatility.

Asset Allocation

Large SmallShort Term Company Company International

Reserves US Bonds US Stocks US Stocks Stocks

2003 1.1% 4.3% 28.7% 47.3% 39.2%

2002 1.7% 9.8% -22.1% -20.5% -15.6%

2001 4.1% 9.0% -11.9% 2.5% -21.2%

2000 6.0% 10.1% -9.1% -3.0% -14.0%

1999 4.7% 0.4% 21.0% 21.3% 27.3%1998 5.1% 8.4% 28.6% -2.6% 20.3%

1997 5.3% 7.9% 33.4% 22.4% 2.1%

1996 5.3% 4.1% 23.0% 16.5% 6.3%

1995 5.8% 15.3% 37.6% 28.4% 11.6%

1994 4.2% -1.9% 1.3% -1.8% 8.1%1993 3.1% 8.8% 10.1% 18.9% 32.9%1992 3.6% 7.2% 7.6% 18.4% -11.9%

1991 5.8% 14.6% 30.5% 46.1% 12.5%

1990 7.9% 9.2% -3.1% -19.5% -23.2%

1989 8.6% 12.8% 31.7% 16.2% 10.8%

1988 6.8% 6.7% 16.6% 24.9% 28.6%1987 5.9% 3.7% 5.3% -8.8% 24.9%1986 6.2% 13.1% 18.7% 5.7% 69.9%1985 7.8% 18.1% 31.7% 31.1% 56.7%1984 10% 14.4% 6.2% -7.3% 7.9%

Annualized Return 1984–2003 5.4% 8.7% 13.0% 10.2% 11.1%

Best Performing Asset ClassesAnnual Returns 1984-2003

Indices used to represent assetclass are as follows: Short TermReserves, Citigroup 3-month T-billIndex; US Bonds, Lehman BrothersGovernment/Credit IntermediateBond Index; Large CompanyStocks, S&P 500 Index; SmallCompany Stocks, Russell 2000Index; International Stocks, MSCIEAFE Index. Numbers circled rep-resent asset class with highestreturn for the year.

Source: Zephyr Associates

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12.4%29.6%

-4.2%

11.2%26.6%

-1.9%

10.0%23.6%

.03%

8.8%20.6%

1.6%

7.6%19.8%

2.0%

6.4%19.5%

.06%

100% Stocks No Bonds

80% Stocks 20% Bonds

60% Stocks 40% Bonds

40% Stocks 60% Bonds

20% Stocks 80% Bonds

No Stocks 100% Bonds

Average Return

Largest Gain

Largest Loss

Portfolio MixReturn

It is this asset allocation philosophy that serves as the foundation for constructing

a multiple manager, multiple style portfolio to meet the specific goals and objectives

of each investor.

Portfolio Construction—An Art and a Science

We pride ourselves in building diversified portfolios that are based on an investor’s

objectives and risk tolerance, and on our extensive knowledge of the investment

managers that we select. When building portfolios, we combine asset classes and

investment disciplines that seek to give investors the most consistent and highest

return possible based on an appropriate level of risk.

Brinker Capital builds well balanced portfolios that include a mix of value and growth

stocks, large, mid and small capitalization stocks, and the appropriate amount of

international and fixed income securities. We believe that proper diversification is

critical to long-term success, as evidenced by the chart below. A diversified portfolio,

combining asset classes, provides a smoother ride over the long term.

Asset Allocation

Stocks: Standard & Poor’s 500 StockIndex, Bonds: 5 Year Treasury Bonds.

Asset Allocation Risk & RewardRolling Five Year Returns, January 1950 – December 2003

Source: Crandall & Pierce

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s

s

0%

0%

5%

10%

15%

20%

25%

10% 20% 30% 35%

Standard Deviation

Retu

rn

Total PortfolioLarge Cap Value Equity

International Equity

Core Fixed Income

Large Cap Growth Equity

Mid Cap Core Equity

Small Cap Equity

S&P 500 Index

We combine managers that complement each other within a portfolio. Critically

important to our portfolio construction process is the understanding that an analysis

of a single investment manager’s risk and return is not indicative of how that same

investment manager performs in a diversified portfolio. (See chart below.) Therefore,

our portfolio construction process involves analyzing the combination of managers

in a portfolio as one entity. We look for managers that have attractive correlations to

one another and that have complementary characteristics in terms of sector weights

and security weights.

Quantitative analysis is performed to determine attractive correlations among

managers. These screens show us how managers fit together. We then use our hands-

on experience to analyze the portfolios on a qualitative basis based on our knowledge

of each investment management firm and their specific approach to investing.

Our portfolio construction process is both a disciplined art and a science that we

have developed over the years.

We believe in our disciplined approach to investing. Over the past 15 years, we have

worked to develop the highest quality investment manager due diligence and asset

allocation investment processes. Brinker Capital can provide you with the investment

services you need to meet your investment goals.

Manager Risk/ReturnRepresentative Total Portfolio vs. Individual Managers and S&P 500 Index January 1998 – December 2003

Note: Total Portfolio is equalto 50% Domestic Equity,10% International Equityand 40% Taxable FixedIncome. It is representativeof a diversified allocation fora long-term investment of$1 million or more. Returnsare gross total returns andreflect annual portfoliorebalancing. S&P 500 Indexis an unmanaged index ofstocks and is not included inthe representative portfolio.

Asset Allocation

Source: Zephyr Associates

ce

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Our guiding principles—objectivity, discipline, and perspective—form the foundation for the value and confidence that we provide to you.

ObjectivityWe have no affiliation with any investment management firm. Our interests are solely aligned with yours. When a manager should no longer be recommended we can objectivelymake that decision.

DisciplineOver the years, we have created highly specialized processes ranging from investment managerselection and ongoing review, to asset class and portfolio construction, to performance reporting. We take great care in developing and following disciplined approaches to investing.

PerspectiveBy maintaining relationships with many of the finest investment managers in the world,Brinker Capital’s capacity to serve as an investment consultant and strategist is strengthened.In turn, we utilize this knowledge to recommend investment strategies built with unique perspective and experience.

We are committed to maintaining these principles and to providing the highest quality investment management services.

1150 First Avenue, Suite 501 King of Prussia, PA 19406www.brinkercapital.com800-333-4573 BC-3-04-1M

Our Guiding Principles

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