SELECTOR® is a trend-following asset allocation program. Asset allocation also has both dynamic and defensive properties. SELECTOR® allocations always include multiple funds, representing multiple asset classes. The dynamic advantages reside in the multiple opportunities afforded by owning a portfolio of diversified securities. Today's equities markets are very complex and volatile. Rotation between various asset classes, known as sector rotation, is a common theme utilized by professional investment managers. This rotation can be extremely difficult to predict. By being positioned in a variety of attractive, well-performing securities, the odds of participating in sector rotation is increased. Simply said, it is easier to hit the target when you have multiple targets available.

The primary function of maintaining a diversified portfolio, however, is defensive. Diversification is the key to success and survival when investing in variable markets. It is critical to be diversified in a volatile market. Immediate market risk is very real, and needs to be addressed. The objective of asset allocation is to remain constantly diversified among various asset classes.

Diversification can be classified by portfolio capitalization, investment style, industry parameters, and geographic parameters when investing internationally. Portfolio capitalization refers to the size of the companies owned within the funds. Large cap, mid cap, and small cap weightings correspond to large, medium, and small size corporations, which can enjoy institutional favor or disfavor independent of each other. Style may vary between growth, value, or blended styles. Growth refers to rapidly growing companies, value to undervalued companies, and blended to combinations of the two. Industry diversification may be typified by a mix of technology, financial services, health services, retail sales, consumer products, utilities, manufacturing, transportation, and a number of other industry categories. Examples of geographic diversification include Europe, Far East, Latin America, in addition to emerging countries and diversified global sectors. Appropriate diversification is a hallmark of SELECTOR® asset allocation.