A Quantitative Approach to the

Equity Markets

February 10, 2005

Shakeel Dewji Vice President and Portfolio Manager

Agenda

I. IntroductionII.MethodologyIII. Portfolio ReviewIV. Overview

Partners in Managing Client Assets

Our Objective:

“To provide independent, unbiased investment

management and above-benchmark risk-adjusted returns for

clients.”

Assets Under Management: $4.2 billion

Client Type: Private Advisory, Institutional, Sub-Advisory

Resources: 16 Portfolio Managers4 Research Analysts10 CFAs2 CFPs12 Graduate Degrees

Ownership: The Advest/MONY Group, Inc.

Lebenthal Asset Mgmt

10%

Money Market Funds40%

I nstitutional 18%

Private Advisory

31%

Private Advisory: $ 1,300mInstitutional: 800mLebenthal Asset Mgmt.: 400mMoney Funds: 1,700m

Total Assets = $ 4,200m

Assets Under Management

As of Dec 31, 2003

Types of Clients

• Private Advisory–Individual–Trust–IRA–Pension/Profit Sharing

• Institutional–Public Retirement Plans–Endowments–Corporations–Mutual Funds

Investment Disciplines

• Large/Mid-Cap Core Equity

• Small Cap Core Equity

• Equity Income

• LAM Municipal Bond

• LAM Taxable Municipal Bond

• Core Fixed Income

Partial Client List (Institutional):• Adviser to Boston Advisors Trust• City of Attleboro, MA Public Employee Retirement System

(P.E.R.S.)• State of Florida• South Shore Mental Health Center• Enterprise Group of Funds • Town of Maynard, MA P.E.R.S.• Adviser to Lebenthal Family of Funds• Buehler Memorial Endowment• Boston Medical Library Endowment• Macau Catholic Mission Endowment• Town of Milford, MA P.E.R.S.• YMCA of Greater Buffalo• Passavant Memorial Homes

Fundamental Research:

1) Analyst Bias - Natural Result of Human Research and Hard Work

2) SEC Regulation “Fair Disclosure” - New Playing Field

3) Research Scale and Effort

Quantitative Research:

1) Increase the “Batting Average” of Research Efforts

2) Objective Buy/Sell Process - Discipline & Risk Management

3) Incorporate Sum Total of Industry’s Fundamental Research

Comparing Research Styles: A Case for Quantitative

Equity Management

BAI Equity Process

• Multi-Factor Models as Inputs...

1) Define Primary Universe - i.e.: “S&P 500”

2) Absolute Value Model

3) Relative Earnings & Revenue Growth Model

4) Relative Price Strength Model

...Leads to Decile Rankings of Stocks: Tier 1 --> Tier 10

...Yields Sector Weightings ( Average T1, T2 and Index)

…Create Portfolio Customized to Client Objectives

BAI Model Descriptions

< Absolute Value Model - Use traditional valuation metrics

- P/Earnings, P/Sales, P/Book, ROE, P/Cash Flow

- EPS Growth & Revenue Growth

< Relative Earnings & Revenue Growth Model - Relative Strength in Earnings (current Q. vs. year ago Q.)

- Relative Strength in Stock Price (relative to broad universe)

- EPS Surprise Factor (relative to estimates)

- Analyst Estimate Dispersion & Revision Direction

- Value Component (relative to historical average)

< Relative Price Strength Model

- Price Strength Relative to Universe

- Previous 12 months, 6 months and 3 months

- More Heavily Weighted to most recent 13 weeks

Good

Momentum

1

2

3

4

5

High Valuation

Low Valuation

10 9 8 7 6 5 4 3 2 1

6

7

8

9

10

MomentumPoor

Tier 1

Tier 10

Business Momentum Factors• Estimate Revision• Earnings Change• Earnings Growth• Earnings Surprise• Price Momentum

Valuation Factors• Book Value• Reported Earnings Yield• Estimated Earnings Yield• Cash Flow• Dividend Yield

0%

10%

20%

30%

40%

50%

60%

70%

Buy Rated Neutral Rated Sell Rated

Distribution of Stock Ratings

Most stocks are neutral rated. The distribution follows a bell-shaped curve.

Fund AHypothetical $1,000,000 invested on 12/31/98 in Fund A

$650,000

$750,000

$850,000

$950,000

$1,050,000

$1,150,000

$1,250,000

$1,350,000

Fund A- $913,272

Fund B

Hypothetical $1,000,000 invested on 12/31/98 in Fund B

$650,000

$750,000

$850,000

$950,000

$1,050,000

$1,150,000

$1,250,000

$1,350,000

Fund B- $1,024,986

Fund CHypothetical $1,000,000 invested on 12/31/98 in Fund C

$550,000

$650,000

$750,000

$850,000

$950,000

$1,050,000

$1,150,000

$1,250,000

Fund C- $859,047

And the Funds Are...

• Fund A- Value Line Large Growth Fund

• Fund B- Vanguard 500 Index Fund

• Fund C- Fidelity Magellan

Large-Cap Composite Performance

Hypothetical $1,000,000 invested on 12/31/98Large-Cap Composite vs. S&P 500

$650,000

$750,000

$850,000

$950,000

$1,050,000

$1,150,000

$1,250,000

$1,350,000

$1,450,000

$1,550,000

Dec

-98

Mar

-99

Jun-

99

Sep

-99

Dec

-99

Mar

-00

Jun-

00

Sep

-00

Dec

-00

Mar

-01

Jun-

01

Sep

-01

Dec

-01

Mar

-02

Jun-

02

Sep

-02

Dec

-02

Mar

-03

Jun-

03

Sep

-03

Dec

-03

Mar

-04

Jun-

04

Sep

-04

Dec

-04

Large-Cap Composite Monthly Return S&P 500

$1,452,024

$1,073,208

Large-Cap Composite

S&P 500

Small-Cap Composite Performance

Hypothetical $1,000,000 invested on 10/31/99Small-Cap Composite vs. Russell 2000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

$1,800,000

$2,000,000

$2,200,000

$2,400,000O

ct-9

9

Jan-

00

Apr

-00

Jul-0

0

Oct

-00

Jan-

01

Apr

-01

Jul-0

1

Oct

-01

Jan-

02

Apr

-02

Jul-0

2

Oct

-02

Jan-

02

Apr

-03

Jul-0

3

Oct

-03

Jan-

04

Apr

-04

Jul-0

4

Oct

-04

Small-Cap Composite Monthly Return Russell 2000

$2,176,836

$1,620,884

Small-Cap Composite

Russell 2000

Large-Cap Sector Weighting

Large-Cap Relative Sector Weighting

Large-Cap 1 Month Attribution

Small-Cap Sector Weighting

Small-Cap Relative Sector Weighting

Small-Cap 1 Month Attribution

UC Portfolio Sector Weighting

UC Portfolio Relative Sector Weighting

UC Portfolio 1 Month Attribution

UC PortfolioPRICE PRICE PORTFOLIO % OF EARNINGS EARNINGS PRICE MRKT CAP P/E PRICE EARNINGS

TICKER # OF PER SHR % CHG VALUE PORTFOLIO ESTIMATE P/E MOMENTUM MOMENTUM (MILS) BETA LATEST TO 3 YR HIST DIVIDEND

COMPANY NAMESYMBO

L SHARES 1/31/05 YTD 1/31/05 VALUE 2005 2005 VALUE VALUE 1/31/05 SPX 4 QTRS BOOK GR RATE YIELDCONSUMER DISCRETION

COMCAST 'A' CMCSA 375 32.19 -3.3% 12071 3.7% 0.64 50.3 92 18 71,458 0.84 76.6 1.7 NM 0.0%STARWOOD HOTEL & RES HOT 350 57.89 -0.9% 20262 6.2% 1.92 30.2 81 95 11,999 1.22 39.1 2.5 21.0% 1.5%VIACOM 'B' VIAB 500 37.34 2.6% 18670 5.7% 1.76 21.2 46 11 63,666 1.42 24.2 1.0 16.0% 0.7%

SECTOR AVER($ WT) 41.63 -0.2% 51003 15.7% 1.46 28.5 71 46 44,985 1.20 35.3 1.5 19.0% 0.9%

CONSUMER STAPLESCOCA-COLA KO 300 41.49 -0.4% 12447 3.8% 2.03 20.4 40 10 100,382 0.37 20.0 6.7 12.0% 2.4%WALGREEN WAG 400 42.61 11.1% 17044 5.2% 1.53 27.8 47 62 43,547 0.65 31.1 5.0 14.0% 0.5%

SECTOR AVER($ WT) 42.13 5.9% 29491 9.1% 1.74 24.2 44 40 67,535 0.53 25.2 5.6 13.0% 1.3%

ENERGYVALERO ENERGY VLO 500 52.03 14.6% 26015 8.0% 4.81 10.8 94 99 13,353 0.71 9.9 1.9 31.0% 0.6%

SECTOR AVER($ WT) 52.03 14.6% 26015 8.0% 4.81 10.8 94 99 13,353 0.71 9.9 1.9 31.0% 0.6%

FINANCIALSCITIGROUP C 500 49.05 1.8% 24525 7.5% 4.25 11.5 59 28 254,557 1.30 11.9 2.5 18.0% 3.6%COMMERCE BANCORP NJ CBH 300 57.54 -10.7% 17262 5.3% 3.81 15.1 66 48 4,565 0.74 17.7 2.9 26.0% 1.5%HARTFORD FIN'L SVCS HIG 350 67.29 -2.9% 23552 7.2% 7.41 9.1 98 54 19,764 1.08 10.7 1.4 43.0% 1.7%ING GROEP NV ASD ADR ING 300 28.86 -4.6% 8658 2.7% 3.26 8.9 60 67 57,509 1.27 9.0 2.3 16.0% 4.2%

SECTOR AVER($ WT) 51.03 -3.6% 73996 22.7% 4.72 10.8 73 46 98,453 1.10 11.9 2.1 28.0% 2.6%

HEALTH CAREAETNA AET 200 127.05 1.8% 25410 7.8% 8.51 14.9 95 98 18,759 0.75 19.5 2.1 118.0% 0.0%

SECTOR AVER($ WT) 127.05 1.8% 25410 7.8% 8.51 14.9 95 98 18,759 0.75 19.5 2.1 118.0% 0.0%

UC Portfolio Cont’d.PRICE PRICE PORTFOLIO % OF EARNINGS EARNINGS PRICE MRKT CAP P/E PRICE EARNINGS

TICKER # OF PER SHR % CHG VALUE PORTFOLIO ESTIMATE P/E MOMENTUM MOMENTUM (MILS) BETA LATEST TO 3 YR HIST DIVIDEND

COMPANY NAMESYMBO

L SHARES 1/31/05 YTD 1/31/05 VALUE 2005 2005 VALUE VALUE 1/31/05 SPX 4 QTRS BOOK GR RATE YIELDINDUSTRIALSFEDEX FDX 260 95.65 -2.9% 24869 7.6% 4.78 20.0 72 84 28,750 0.88 22.1 3.0 24.0% 0.3%MASCO MAS 500 36.80 0.7% 18400 5.7% 2.57 14.3 65 84 16,486 0.84 16.7 3.2 20.0% 2.0%3M COMPANY MMM 200 84.36 2.8% 16872 5.2% 4.22 20.0 55 34 65,677 0.75 22.5 7.6 19.0% 1.7%

SECTOR AVER($ WT) 62.65 -0.2% 60141 18.5% 3.51 17.8 65 70 35,357 0.83 20.2 3.7 21.0% 1.2%

INFORMATION TECHCACI INT'L CAI 325 52.15 -23.5% 16949 5.2% 2.74 19.0 76 71 1,524 0.50 20.5 2.7 31.0% 0.0%CISCO SYSTEMS CSCO 1000 18.04 -6.6% 18040 5.5% 0.89 20.3 77 8 118,789 1.80 22.8 4.6 40.0% 0.0%FLEXTRONICS INT'L FLEX 1000 14.15 2.4% 14150 4.4% 0.67 21.1 80 19 7,916 2.59 22.1 1.5 11.0% 0.0%

SECTOR AVER($ WT) 21.13 -11.1% 49139 15.1% 1.05 20.1 78 33 46,415 1.58 21.8 2.5 29.0% 0.0%

UTILITIESDOMINION RESOURCES D 150 69.38 2.4% 10407 3.2% 5.07 13.7 15 42 22,995 0.25 15.0 2.2 -1.0% 3.8%

SECTOR AVER($ WT) 69.38 2.4% 10407 3.2% 5.07 13.7 15 42 22,995 0.25 15.0 2.2 -1.0% 3.8%

TOTAL PORTFOLIO VALUE 325602 100.0%

UNIVERSE AVER($ WT) 43.36 -1.1% 2.74 15.9 71 56 52,339 1.00 17.4 2.3 31.0% 1.2%

MARKET INDICESS&P 500 SPX - 1181.27 -2.5% - - 70.11 16.8 48 39 90,997 1.00 18.4 2.9 15.0% 1.6%S&P MIDCAP MID - 645.97 -2.6% - - 38.05 17.0 52 53 3,530 1.01 20.4 2.5 15.0% 1.1%S&P SMALLCAP 600 SPSCI - 321.11 -2.3% - - 18.54 17.3 53 63 1,260 0.99 22.0 2.3 18.0% 0.8%RUSSELL 2000 RUTZ - 624.02 -4.2% - - 27.97 22.3 81 53 1,034 1.05 27.7 1.3 43.0% 1.1%