Introduction

The Coleridge Group is a registered investment advisory firm whose sole-proprietor is Gary Gibbons. Mr. Gibbons is also the Chairman of the Board at Hanseatic Group, Inc. The Coleridge Group provides a range of financial and investment advisory services. Those services are provided to a range of clients, including:

• Taft Hartley Pension Plans

• ERISA Plans

• Agencies of Municipal Government

• Charitable Foundations

• Individual Retirement Funds

• Individual Trust Accounts

• High Net Worth Individuals

• Members of the Legal Profession

The firm provides a range of services to these clients. These services are:

• Balanced Portfolio Management

• Special Assets Management

• Valuation and Financial Advise relating to individual or portfolios of Conduit Issued Municipal Debt

• Valuation and Litigation Support

The Coleridge Group and Hanseatic Group, Inc. (and its affiliated companies) are strategic partners. As strategic partners they co-operate in the marketing of the their various products, in the performance of qualitative and fundamental securities analysis, in assessing market strategy and in the performance of fixed income securities analysis. The firms do not share client transaction information or trade and execution information. Nor do the firms share back office facilities or processes. The firms do not have interlocking ownership and are legally separate entities.

Below you will find several sections each of which will provide details relevant to specific to different aspects of The Coleridge Group' products, its history, or its Principal.

Balanced Portfolio Product

Balanced Portfolio Philosophy and Description

The Coleridge Group's Balance Fund Product is designed to achieve both growth and income. The Balanced Fund seeks diversification by investing an average 30% of its assets in stocks and 70% in bonds. However, from time to time, allocations of up to 50% equity and 50% debt may be implemented. Overall the strategy seeks to reduce risk by diversifying between debt and equity. The fund seeks long-term growth, balanced by current income consistent with overall preservation of capital. The average investment in The Balanced Fund was $37 million during the period covered by the attached reports.

Fixed Income Investment Approach For The Balanced Fund
The fixed income portion of The Balanced Fund is actively managed to reduce total portfolio risk and meet moderate-income objectives. Capital preservation and risk minimization are an integral part of our investment strategy.

The fixed income investment approach for The Balanced Fund is top down. This approach entails the prudent maximization of total return through an emphasis on the most efficient risk-return segment of the yield curve. During recent times, our emphasis has been on short to intermediate maturities with high quality. The overall quality of the fixed income portion of The Balanced Fund is the equivalent of Moody's A2 or S&P's A.

Recently duration has been generally held to within a 2 to 5 year band. By actively managing duration and using a total return approach, we have extended our duration when sectors and securities have been relatively cheap and realized gains when they have been expensive. When pursuing the latter approach, we have considered the issue of total yield. We generally try to ensure that realized gains combined with the replacement yield are larger than the yield to maturity that we could otherwise expect from the position.

To diversify individual security exposure, the portfolio holds 40 to 80 debt securities. We have adhered to a strict buy-sell discipline for the fixed income portion of The Balanced Fund. When appropriate, we use bond swaps to pick up yield or improve quality.

Equity Investment Approach For The Balanced Fund
Our equity selection process emphasizes on long-term growth and is constructed from a list of between 30 and 50 stocks carefully selected from a universe of about 1100 companies. Typically issued by large capitalization companies, these stocks will have been identified through a process that combines bottom-up company-by-company analysis with top-down screening. We do not exclusively limit our positions to large cap equities; we add small and mid-cap components to the portfolio when appropriate.

We add stocks to The Balanced Fund in order to allocate across economic sectors and to position high relative strength equities. When deciding which stocks to add, we perform fundamental, statistical and technical analysis on each security before it is placed in The Balanced Fund. We perform the same analysis to identify sell candidates.

We use proprietary portfolio optimization and modelling techniques to assure that we are positioned well vis-à-vis our benchmark.

Balanced Portfolio Performance

Performance Presentation
(Without Deducting Standard Management Fees)

Performance Presentation

(After Deducting Standard Management Fees)

Portfolio Management and Investing Experience

Gary Gibbons, the Sole-Proprietor of The Coleridge Group, is experienced in portfolio management, security selection and security trading. Over the years he has engaged in a wide range of investing activities. Over the past 16 years the services have been provided through the auspices of The Coleridge Group. Some examples of investing activities that Mr. Gibbons and/or The Coleridge Group have engaged in are found below.

1) Managed stock portfolios for various clients. For example:

a) Physician's Mutual Insurance Company
b) Home Federal
c) Billie Jean King
d) Pain Webber Trust
e) New Kaiser VEBA
f) Baker family funds
g) Kellogg family funds
h) "Tennessee" Ernie Ford
i) Merle Haggard
j) Everly Brothers

2) Managed fixed income portfolios for various clients. For example:

a) Agyros Foundation
b) Bank of Bermuda
c) Physician's Mutual Insurance Company
d) Home Federal
e) Pacific Saving Bank
f) Imperial Mortgage
g) Pain Webber Trust
h) Billie Jean King
i) New Kaiser VEBA
j) Baker family funds
k) "Tennessee" Ernie Ford
l) Merle Haggard
m) Everly Brothers

Special Assets Management

Special Assets Philosophy and Description

Special asset management is not a specifically defined product but rather a range of services that represent solutions to specific client problems in the areas of investment.  Many of these services are commonly needed by ERISA and Taft Hartley Funds to solve problems relating to investment tactics, to comply with regulatory requirements, or to prudently perform other fiduciary responsibilities.  Some of these services are commonly used by financial institutions or corporations to assess and/or hedge interest rate or equity market risk.  Examples of these services are:

1)      Managing illiquid, micro-cap, or non-trading positions for ERISA, Taft Hartley, or other significant investors.

2)      Developing and implementing strategies to hedge interest rate or equity market exposure.

3)      Developing and implementing strategies to “immunize” identifiable future liabilities.

4)      Representing ERISA, Taft Hartley, or other significant investors on corporate boards of directors.   

5)      Representing ERISA, Taft Hartley, or other significant investors in corporate restructurings.

6)      Representing ERISA, Taft Hartley, or other significant investors in secondary market transactions.

7)      Conducting “due diligence” for ERISA, Taft Hartley, or other significant investors on existing or contemplated positions.

Performance

Since these services are directed at solving unique problems we do not provide performance data.  However, we will provide references so that our abilities in this area can be researched.

Special Assets Management Experience

Over time, The Coleridge Group and/or its staff have been engaged to perform a number services for various clients relating to special assets the client may own or have an interest in.  Examples of this type of service and client are:

1)      Managed, designed or advised on quantitative strategies or due diligence analysis for various clients.  For example:

a)      Bass Brothers Enterprises

b)      New Kaiser VEBA

c)      Public Service Company of New Mexico

d)      Phil 4:12 (Holding company for Howard Ahmanson, primary owner of Home Savings and Loan)

e)      Pacific Savings Bank

f)        Imperial Mortgage

g)      San Clemente Bank

h)      The Minnesota Laborer’s Pension Fund

i)        The Washington D.C. District 6 Laborers Council

j)        Saint Paul Port Authority

k)      Miller & Schroeder Financial Co., Inc.

2)      Advised management and major shareholder of Kaiser Resources, Inc. (OTC, $120 million in market capitalization).  Represented the The NewKaiser VEBA and the Pension Benefit Guarantee Corporation in secondary offering done with Salomon and L.H. Friend, Weinress & Frankson.  The nominal value of the transaction was $35,000,000.

3)      Advised The New Kaiser VEBA on the sale of common stock in Kaiser Ventures back to the company.  The nominal value of the transaction was $41,285,000.

4)      Advised Alatenn Corporation (ASE, $120 million in market capitalization) on purchase of Colony Energy

5)      Managed and advised Carter-Miot Engineering on ESOP creation and sale

6)      Advised on restructure or recapitalization for:

a)      Pacific Midwest Gas Corporation

b)      US Sports company

c)      TennisAmerica, Inc.

d)      Century Technology

e)      Saint Paul Port Authority

f)        Maryland Energy Financing Authority – Pencor

7)      Acted as the Corporate Strategist for:

a)      Pacific Midwest Gas Corporation

b)      Windsor Energy Corporation

c)      Uni-Net, Inc.

d)      Richmark Corporation

Valuation and Financial Advise relating to Conduit Issued Municipal Debt

Philosophy and Description

Mr. Gibbons and/or the staff of The Coleridge Group have substantial experience in dealing with Conduit Issued Municipal Debt.  They have provided a range of services to issues and borrowers of this type of debt.  The services performed in this area are designed to bring the company’s experience and quantitative skills to problems experience by municipal issuers or borrowers.  Examples of those services are:

1)      Advise as to the management of Conduit Issued Municipal Debt on a discretionary or non-discretionary basis

2)      Advise, on a discretionary or non-discretionary basis, on the management of program reserves. 

3)      Value this Conduit Issued Municipal Debt and/or portfolios made up of this type of debt.

4)      Analyze and model these types of debt portfolios to perform “what if” and “simulation analysis” to be used in assessing the financing and/or investing activities of an issuer or borrower

5)      Advise on the restructuring and/or refinancing portfolios of this type of debt  

Performance

Since these services are directed at dealing with specific municipal debt programs or financings we do not provide performance data.  However, we will provide references so that our abilities in this area can be researched.

Conduit Issued Municipal Debt Experience

Examples of Mr. Gibbons’ and The Coleridge Group’s activities in this area are:

1)      Oklahoma Housing Authority - Go Ye Village – refinancing and restructuring

2)      Industrial Development Authority City of Richmond, VA - Heritage Oaks – refinancing and restructuring

3)      Saint Paul Port Authority

a)      Targeted Investment Program – creation of new financing structure

b)      Advise on reserve fund investments

c)      Resolution 876 Bond Fund – Portfolio valuation and design of Tender Offer (1998)

d)      Resolution 876 Bond Fund – Portfolio valuation and design of Tender Offer (2002)

e)      Resolution 876 Bond Fund – Restructuring representative

4)      Maryland Energy Financing Authority – Pencor – restructuring

5)      Managed various portfolios and advised on various issues

All told these various financings involved more than $450,000,000 of debt.

Valuation and Litigation Support

Philosophy and Description

The Coleridge Group and its staff have worked on many projects involving  the valuation of business or financial assets, damages resulting from improper performance of fiduciary duty, damages resulting from inappropriate investing activities, and other types of general  litigation support.  The basic goal the company has when doing this type of work is to generate analysis and opinion that is supported by fact and is both usable and authoritative.  The company uses the following guidelines in producing its valuations or case analysis:

1)      Utilize the best and most applicable industry practice or analytical techniques to establish value or describe salient issues.

2)      Be able to succinctly state relevant facts and to logically defend the statement of facts.

3)      Draw logical and defensible conclusions regarding the matter at hand.

4)      Prepare for an authoritative defense of the process employed and/or the conclusions made vis-à-vis competing processes or conclusions.

5)      Provides insightful analysis of likely counter-arguments or alternative positions.

6)      Document data collection, analysis, and conclusions in an organized and useable manner.

Performance

Since these services are directed at dealing with specific legal, regulatory, or transactional matters we do not provide performance data.  However, we will provide references so that our abilities in this area can be researched.

Valuation and Litigation Support Experience

1)      Valuation

a)      Valuation of intangible assets Van’s Inc. (NASD, $140 million in market capital, analysis was used to support petition to SEC requesting accelerated write-off of intangible assets) ($49,200,0000)

b)      Valuation of County Bank common stock for employee incentive Plan ($19,764,000)

c)      Valuation of Larex, Inc. for The Minnesota Laborers Pension Fund ($5,000,000)

d)      Valuation of CEMEC for The Minnesota Laborers Pension Fund ($5,000,000)

e)      Valuation of Technimar for Miller & Schroeder Financial ($6,275,000)

f)        Valuation of the 876 Bond Fund for the Port Authority of St. Paul ($111,000,000)

g)      Valuation of the 876 Bond Fund for Tender offer of the Port Authority of St. Paul ($53,000,000)

h)      Value of Kaiser Ventures, LLC for regulatory purposes ($16,000,000)

i)        A number of smaller valuations used in litigations involving $500,000 to $1,500,000.

2)      Litigation Support

a)      Consulted and analyzed legal cases where total case values have exceeded $80,000,000.

b)      Expert witness Minnesota Chancery Court

c)      Expert witness California Superior Court

d)      Represented plaintiff in NASD proceedings

e)      Consulted on and analyzed many legal cases involving:

i)        Valuation

ii)       Investment procedure

iii)     Investment policy

iv)     Fiduciary duty

v)      Investment returns

SEC Form ADV Part II