4th Quarter 2009 Investment Strategy

    MBT seeks to invest its WMG Group clients in domestic and international equities exhibiting consistent earnings growth, reasonable valuation, and above-average sector return. We seek to own securities of companies with strong balance sheets, a record of increasing earnings, and strong internal reporting safeguards. We adjust equity portfolios by overweighting S&P sectors poised for better performance relative to other market sectors, and we regularly reassess “buy” rated equities for relative valuation, earnings quality, and earnings expectations. Our individual equity and mutual fund models reflect this discipline, and we invest portfolios utilizing these securities as well as Exchange-Traded funds to create diversified equity portfolios. Our individual bond and bond fund selections reflect our discipline in creating fixed income portfolios that manage risk and enhance returns via diligent issue and sector research.

    For the 4th Quarter we recommend overweighting of the Energy, Technology, and Industrial sectors, underweighting of Consumer Discretionary, Consumer Staples, Financial, Telecom & Utilities sectors, and neutral weighting of Materials and Health Care. We continue reduced equity weightings below our neutral levels, though our negative bias has been reduced due to improvement in the macroeconomic environment. Additionally we have increased allocations to international equities and fixed income in recognition of the threat to dollar-denominated investments via currency inflation and domestic economic underperformance.

    This environment requires increasingly keen discretion in equity and bond purchase decisions. We have allocated 57.5% of our equity position weighting to quality domestic large-cap stocks, and utilize alternative asset classes and strategies to mitigate and spread portfolio risk. We have reduced our cash position to neutral levels, and our fixed income holdings remain over-weighted to high quality short and intermediate-term holdings. We feel the easy bond returns that came from asset mispricing in the depths of the crisis are now priced out of most sectors of the bond market.

    2009 has provided a rebound of confidence and relief for investors going into the 4th Quarter. The rally to recapture overdone market losses has turned into a near euphoric rise. This advance raises the risks that investors could again flee on disappointing economic progress. However, few foresaw the strength of this robust rise and the pressure to get cash working.

      Our Core Growth and Income Portfolio, reflecting our neutral portfolio asset allocation biases for the 4th Quarter 2009, is weighted as follows: