We will keep all client information confidential in accordance with our Notice of Privacy Policy. We manage assets with a high ethical standard that is best summarized by the CFA Institute Code of Ethics and Standards of Professional Conduct, which places the investor's interests first. CFA Institue, Our measure of success is the length of our client and employee relationships.

Understanding our clients
We pride ourselves in our integrity and professionalism and before accepting any accounts for management, we must be confident our clients have reasonable expectations of what our company can provide and have a good understanding of our process. It is our goal to build prudent portfolios where clients can invest the majority of their wealth and to establish long-term relationships.

Assessing risk tolerance
For both individuals or institutions, we start by assessing our clients' risk tolerance. We define risk as both the possibility of real dollar loss of assets, as well as short-term price change of assets.

In our opinion, differences in risk tolerance are most appropriately addressed through asset allocation based on our opinion of each client's risk tolerance. We review and manage this asset allocation on an ongoing basis. Clients may also direct an asset allocation different from our recommendation.

(For reference, see the following charts: Asset Allocation For Taxable Investors, Asset Allocation Risk and Reward: One-Year Returns, Three-Year Returns, Five-Year Returns.)

Fixed-income investments
If fixed income investments are appropriate, we will use a variety of investment grade or insured issuers with an emphasis on diversification. Maturity management will be based on the current shape of the yield curve, as well as the past 12-month trends in the yield curve. High-grade intermediate benchmarks are most appropriate for performance comparisons.

Equity investments are broadly diversified
In building our equity portfolios, we offer what is called a "core" equity style. The objective is to outperform the S&P 500 Index or the Wilshire 5000 Index by 100-200 basis points (1% to 2%) net of fees on an annualized basis over a three- to five-year period with 20% less volatility than such indexes during the period.

The equity portfolio includes two distinct styles: value and growth, and this diversified style enables us to participate in market trends, whether set by value or growth, and tends to smooth returns.

The target equity mix is as follows:
60% value - Low price/earnings, low price/book value, low price/cash flow or low price/sales, relative to market or historical trading ranges and/or industry averages. Improving fundamentals is a requirement.

30% quality growth - Portfolio usually contains larger, higher quality companies. Emphasis on companies with acceleration of revenue and earnings.

10% pure growth - Heavy focus on long-term projected growth rates over the next 3 to 5 years. Fundamental research plays a role in identifying companies that have a "catalyst" for growth and predicting future growth in EPS.

The overall equity portfolio will be highly diversified in terms of names at initial positions. Concentrations due to price increases will be allowed. Hedging will be implemented on those names if they become significant holdings or on those names where volatility is a concern.

We do independent research
We do independent research on each of our stock names. Most of the stocks will be large- to mid-capitalization. However, more emphasis will be placed on a company ranking in terms of total revenue generation rather than capitalization. Our equity portfolios are expected to have an annual turnover of less than 50 percent, and will be managed in a tax-aware manner where appropriate. Generally, portfolios may hold between 50 and 80 names.

Allowable investments include stocks, bonds, convertibles, short-term income investments, money market funds, derivatives, options, private placements, initial public offerings, publicly traded limited partnerships, mutual or common funds, ETFs, ADRs or non-dollar denominated securities. No leverage will be utilized in portfolios managed by South Texas Money Management, nor will there be any commingling of clients' assets.

At South Texas Money Management, we offer investment management with account transparency and style diversification for our clients. Our fees are competitive and based on overall client relationships. Above all, we strive for excellent communication, accessibility and the highest level of integrity as we build a diversified portfolio with the goal of maximizing returns with reduced risk.