Following an evaluation of client financial goals, including risk tolerance, current financial status and tax issues, Contravisory will normally recommend one of three investment portfolios---growth, balanced, or income. The Contravisory Equity Portfolio, which has been available to institutional money managers since 1972, is the foundation for the equity investments in client portfolios.

Growth
Growth portfolios are typically invested in individual equities and/or mutual funds that seek capital appreciation as their primary objective. Current income, if considered at all, is a secondary objective. Capital appreciation is sought through investments in equity securities, both domestic and international. Market risk is normally higher than in income and balanced portfolios. Accordingly, long-term returns should be commensurately higher.

Our growth portfolios are typically invested in the Contravisory Equity Portfolio. A Contravisory hedge fund may also be appropriate to add diversification, enhance returns and reduce risk.

Balanced
Balanced portfolios seek total return by investing in individual equities and/or mutual funds whose objective is a combination of regular income, conservation of capital, and long-term growth of principal. These portfolios invest in a combination of stocks and bonds, the relative proportions of which may vary with market conditions. Market risk is comparatively moderate.

Equity portions of a balanced account are typically invested in the Contravisory Equity Portfolio. The fixed income portion of the portfolio may be invested in individual bonds and/or bond mutual funds. A Contravisory hedge fund may also be appropriate to add diversification, enhance returns and reduce risk.

Income
Income portfolios invest in a mixture of equity and fixed income securities and/or mutual funds for the purpose of preserving capital while realizing high levels of current income. Capital appreciation is a secondary consideration. This portfolio generally invests less than 50% of its assets in equities, while committing the remainder of its assets to current income-generating vehicles. Income portfolios normally exhibit the lowest comparative level of market risk.

Alternative Investments
The Contravisory methodology, which has been effective in many changing markets since 1972, is well suited to profit from an acceleration in long-term industry rotation. We have concluded that the needs of investors would increasingly benefit from a hedge fund portfolio format since it provides opportunities to generate positive results in both rising and falling markets.