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Investment Approach

Process:

Investment Products:

Not FDIC Insured
No Bank Guaranty
May Lose Value

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Investment Approach—Process

Our investment process was developed to address the following question:

What is the most prudent way to invest given the objectives of our clients and the uncertainties of the investment markets?

Step One—Understand the client

Our process begins with a client meeting during which we gather information and gain an understanding of what you want to accomplish. This includes gathering information regarding objectives and goals, time horizon, risk tolerance, spending requirements and other special requirements.

Step Two—Establish Long-term Investment Strategy

We then establish a long-term strategy that involves selecting the appropriate broad asset allocation – how much in stocks, bonds and stable investments. The risk and return expectations for the selected strategy are communicated to the client for review and approval. The strategy is documented in the form of an Investment Policy Statement.

Step Three—Determine appropriate tactical asset allocation

We identify the optimal combinations of asset classes to minimize risk while maximizing returns. Examples of asset classes include: Larger Cap, Smaller Cap and International Stocks; Short-term, US Investment Grade, High Yield and International Bonds; Real Estate Investment Trusts and Commodities.

Step Four—Identify and hire the most successful money managers

The next step is to identify and hire the most successful money managers within each asset class. Merchants Trust has chosen not to directly employ portfolio managers. Hiring independent managers provides us with the objectivity and flexibility necessary to always act in our clients’ best interest. Extensive due diligence is conducted to identify the most talented mutual fund managers within each asset class.

Step Five—Monitor the investment process

All aspects of the investment program are closely monitored on an ongoing basis. Adjustments are made in response to changing market opportunities or the needs of the client.

Step Six—Communicate Results

We provide information about your investment portfolio and perspective on the investment markets to insure that any changes to your investment program are based on reason and careful analysis rather than emotion.