THE LYNDE AND HARRY BRADLEY FOUNDATION

PROPOSED EQUITY PORTFOLIO REBALANCING GUIDELINES

The Bradley Foundation is now fortunate to have reached the 75% portfolio target allocation for equities. As you know, this was a combination of spending the fixed income portfolio and growing the equity portfolio over the last five years. A need now exists to develop some general guidelines for the rebalancing of the equity portfolio.

The current target portfolio asset allocation is as follows:

Proforma

Target	Allocations

Allocations	10/26/97

Cash and cash equivalents	1.5%	.7%

Fixed income	13.5%	19.6%

Equities	75.0%	75.7%

Non-liquid Alternative Investments	10.0%	4.0%

100.0%	100.0%

The target allocations provide for a +5% or -5% range from the target percent.

The "spending and growing" approach has been an effective way to achieve the target allocation providing a form of "dollar cost averaging" to grow the equity portfolio. The proposed rebalancing guidelines utilizes this fundamental approach when the actual portfolio allocations are within the +5% or-5% range.

The Foundation now has on-line access to the Firstar investment manager records maintained by Firstar Trust Company. This provides the financial staff with daily cash and investment balances by manager. In addition, cash forecasting procedures are now in place to project the monthly cash demands for the Foundation expenditures. This information will provide a fairly accurate dollar amount for the monthly rebalancing of the portfolio using the "spending approach" as outlined below.

THE LYNDE AND HARRY BRADLEY FOUNDATION, INC.

EQUITY PORTFOLIO REBALANCING GUIDELINES

APPROVED NOVEMBER 17, 1997

Portfolio	Actual

Classification	Allocation	Action

Total equity	Below 70%	Consider purchase of

portfolio	additional equities with fixed

income funds

70%-76%	Fund cash needs from fixed

income portfolio

+76%-80%	Fund cash needs from equity

portfolio until allocation is

reduced to 76%

Above 80%	Sell equity securities to

rebalance portfolio

Individual Equity

Classifications:

(Large Cap	+2% or	No action

Small Cap	-2% target

Foreign)	allocation range

Above +2% or	Rebalance within the equity

-2% target	portfolio using equity funds

allocation

range

The actual versus target allocations will be calculated monthly in connection with preparation of the monthly Flashreport. Rebalancing actions based on these calculations will be implemented on or about the 15th day of the following month.

Withdrawal of funds from equity managers will be based on the following guidelines:

1.	Overall performance of manager

2.	Maintaining equity allocations for large cap, small cap and foreign stocks within a +2% or -2% range of the target allocation. Achieving style neutrality within an asset class would also be a consideration.

3.	Maintaining a base level of index funds of at least 15% of the total equity portfolio

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Unusual market fluctuations, trends or Foundation needs could supersede the proposed rebalancing guidelines. Deviations from the proposed rebalancing guidelines would be reported to the Investment Committee.

The portfolio rebalancing guidelines are designed to provide a disciplined approach to rebalancing the portfolio that authorizes the Investment Committee Chairman and Treasurer to implement appropriate rebalancing actions within the established guidelines. The monthly rebalancing of the portfolio in smaller increments will avoid "portfolio drift" and minimize the need for major portfolio adjustments.

RNB/ye

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