OPTIONAL INVESTMENT CHOICES

For Traditional or Roth IRAs & Coverdell Education Savings Accounts (ESA)

PORTFOLIO OPTION 1: Quick Access Money Market Fund
PORTFOLIO OPTION 2: Index Mutual Funds
PORTFOLIO OPTION 3: Guaranteed Payment Contract
PORTFOLIO OPTION 4: Hi-Yield Money Market Fund
PORTFOLIO OPTION 5: For The 72(T) Early IRA Withdrawal, Guaranteed Payment Contract

PORTFOLIO MIX & MATCH FLEXIBILITY

Your investment options with AE-Trust's portfolios are not limited to one portfolio. You may sub-divide your funds according to any percentage you wish to allocate among these portfolio options. Further, you may sub-divide a portion of your IRA, Health Savings (HSA), Educational Savings (ESA), or private trust account into one or more of the AE-Trust portfolio options, then invest the rest of your funds in any other investment choices which either you or your investment advisor may pick.

To do this sub-divide allocation, pick the investment options you wish on your AE-Trust IRA, Health Savings (HSA), Educational Savings (ESA), or private trust account enrollment form, and list by each choice the percentage of your total funds that you want to place in that choice.

PORTFOLIO OPTION 1: QUICK ACCESS MONEY MARKET FUND ⁽¹⁾

FOR IDLE AND/OR UNINVESTED CASH NEEDING QUICK AVAILABILITY

By default, all client account money received at AE-Trust is automatically placed in this Fund until the account owner directs that some or all the account's funds be invested, paid or moved elsewhere. Money which account owner's have in this Fund is generally available on a same day basis for other activities requested by the account owner (2), and generally there are no fees for moving money out of this Fund on demand (normally limited to six free transactions over the life of your AE-Trust account). The Quick Access Money Market Fund can be used for all types of AE-Trust accounts: IRA, Health Savings (HSA), Educational Savings (ESA) or private trust account where AE-Trust acts as custodian or trustee.

There are no annual account fees charged by AE-Trust for accounts which maintain an average Portfolio Option 1 balance of $25,000 or more for the entire preceding year. In other words, your IRA, HSA, ESA or private trust account is free as long as the $25,000 average account balance is maintained over a full twelve months. You still pay the initial set up and first year's account fee when you open an AE-Trust account, but thereafter on each one year anniversary of your account creation date, the annual account fee is waived if your account maintained the $25,000 minimum average balance for the past year.

Funds in the Portfolio Option 1 Fund are held in an AE-Trust correspondent bank (name available on request). Maximum safety of and immediate access to the principal and earned income are the primary objectives of the Fund, with maximization of the rate of income or interest earned being a secondary objective.

To earn higher rates of return from a money market fund, see the AE-Trust Portfolio Option 4 Hi-Yield Money Market Fund.

AE-Trust will handle all the paperwork and transactions which are necessary to fully implement the Portfolio Option 1 in your behalf, in any type account opened. Your money will automatically go into this investment option when you enroll in any of: IRA, Health Savings (HSA), Educational Savings (ESA), or private trust account.

(1) AE-Trust charges a fiduciary management fee of 2.0% of the annualized net value of your account in this Fund, or AE-Trust retains the total earnings of the Fund when on an annualized basis it returns 2.0% or less in a given month. For example, in a month where the Portfolio Option 1 Fund earns an annualized rate of return of 2.0% or less, AE-Trust will retain the total return earned in the Fund. If the annualized rate of return was 4.5% in a given month, then AE-Trust would retain 2.0% and your account would earn 2.5% to equal the 4.5% total return. The income your account earns is accrued monthly, and the AE-Trust management fee is charged monthly. There are no other fees or commissions charged to your account by AE-Trust for investments in the Portfolio Option 1 Money Market Fund.

(2) To obtain funds from this Portfolio on a same day basis requires that your request for funds be given to American Estate & Trust on non-bank holiday week days, and by this time of day: 1:00 PM EST, 12:00 PM CST, 11:00 AM MST, 10:00 AM PST. Funds may be either wire transferred out, or a check can be written, then sent by U.S. mail or over-night courier, as you specify. Wire transfers out and sending checks via U.S. mail incur no extra charges, but overnight courier services are charged to your IRA account. Click on the IRA Fees link (upper left side of this page) for full details on IRA fees.

PORTFOLIO OPTION 2: INDEX MUTUAL FUNDS

Note: This portfolio option uses no-load or no-commission mutual funds, and no commissions or management fees are paid to or collected by AE-Trust from this investment choice or from your account. Further, the annual management fees charged by Vanguard are among the very lowest charged by any mutual fund.

The Portfolio Option 2 is an investment choice which you can make initially and then forget about it for long term. This Portfolio allows you to participate in the U.S. and international stock markets, plus the bond market, with an allocation among the three funds which tends to reduce market risk and volatility. This investment is best suited for a long term, buy and hold strategy of five years or more. The Portfolio Option 2 consists of three specific Vanguard index mutual funds, with a percentage of your IRA or ESA funds allocated to each mutual fund according to the percentages shown below:

• 50% of funds invested in - Vanguard Total Stock Market Index Fund (Investor Shares, VTSMX)


• 20% of funds invested in - Vanguard Total International Stock Index Fund (VGTSX) (This fund charges a 2% fee on shares redeemed within two months of purchase.)


• 30% of funds invested in - Vanguard Total Bond Market Index Fund (Investor Shares, VBMFX)

Portfolio Option 2, using this allocation percentage in each mutual fund, would have yielded the following results over the past time periods. (However, note that past performance is no guarantee of future results.) This analysis is based on data taken from the Vanguard web site on each of these funds, then analyzed as a combined portfolio with the allocations shown.

AE-Trust will handle all the paperwork and transactions which are necessary to fully implement the Portfolio Option 2 in your behalf, in either your IRA (Traditional or Roth) or ESA. Simply pick this investment option when you enroll in an AE-Trust IRA or ESA account.

For more info on these funds, Go to Vanguard and search with the symbols: VTSMX, VGTSX and VBMFX.

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More Details About The Portfolio Option 2, Index Mutual Funds

An index mutual fund is one which mirrors the performance of some (usually) broad stock market index. For example, the Vanguard Total Stock Market fund mirrors the MSCI U.S. Broad Market Index. This Vanguard fund will, then, closely track the overall performance of this broad index of U.S. stocks.

According to some investing experts, a lot of investors would be better off in creating a "set-it and forget-it" investment mix of three types of index mutual funds. The three fund types are: A broad U.S. stock index fund, a bond index fund, and an international stock index fund. The set-it and forget-it investment concept particularly fits investors who want a simple approach which doesn't require either frequent tweaking or wholesale revamping. These may be either investors who aren't particularly knowledgeable about investing in the markets, or knowledgeable investors who don't have the time for investment planning or to make frequent adjustments.

Another big advantage of almost all index funds is that they do not require expensive fund managers, therefore the funds' management fees are a mere fraction of other types of mutual funds. (Index mutual funds are also among the most tax efficient or least taxed of all mutual funds, due to low portfolio turnover. But that isn't an advantage to an IRA or ESA account.)

According to the Wall Street Journal *, an investment strategy similar to the Portfolio Option 2 "has rivaled U.S. stock returns over one-, three- and five-year spans, and with more stable returns year-to-year than the broad market"...."Almost two-thirds of U.S. stock-fund managers have failed to beat a total market benchmark index over the past five years"...."A $10,000 investment in this allocation in October 2001 would have been worth $15,828 five years later, while the same amount in the Standard & Poor's 500-stock Index...would have grown to only $12,096, according to investment researcher Morningstar, Inc."

With such a broad exposure to stocks of the whole world, tempered by the bond mix in the portfolio, both volatility and risk is reduced, significantly in many cases. The risk from the failure of one company in this broad mix will have little negative effect on the overall performance since so many individual issues are in each fund. And since these indexes represent a very broad diversification of companies and investments, the individual issues tend to not rise and fall altogether, and this can significantly smooth out volatility.

* WSJ Article of 12/2/06, entitled, Limited Menu: Choose Only 3

PORTFOLIO OPTION 3: GUARANTEED PAYMENT CONTRACT

Note: No commissions or management fees are paid to or collected by AE-Trust from this investment choice or your account. The investment (insurance) company which issues the contract earns money, but their earnings are above, and not charged against, the stated rates of returns which you receive from the investment contract. That is, the net amount the contract pays is the same amount that your IRA or ESA will receive, with no commissions or fees withheld.

Also note, that this type contract limits how much can be withdrawn in the early years of the contract's life. The limit is in the form of a penalty charge for withdrawing amounts in excess of that which the contract allows. Typically after the first year, withdrawals of up to 10% of the contract's remaining value may be taken penalty free each year. For more details, click on the brochure link below.

If you select Portfolio Option 3, your Traditional or Roth IRA or ESA funds will be invested in a guaranteed payment contract known as an equity indexed annuity. This type annuity is issued by large, wealthy and heavily regulated life insurance companies. Investing with companies of this size, stability and with their large capital reserves assures that your money has outstanding safety. In addition, a good equity index annuity will guarantee to return to the IRA or ESA account 100% of your principal, plus a guaranteed minimum interest return. No amount of market downturns or volatility can cause a loss of your principal. Typically, a good annuity will guarantee a minimum rate of return of approximately 1% to 3%. But in addition, the annuity rate of return is indexed to positive stock market results. So when the stock market has a good year (7 years out of 10 are "up" *), your rate of return will be much higher. When the stock market has a losing year, which it inevitably will, the annuity is guaranteed to maintain 100% of your current account balance, plus earn the minimum interest rate during that year. You get to benefit from good years in the stock market without being penalized for the bad. Using the guaranteed equity indexed annuity as the investment, a rate of return of 6% to 7.5% averaged over the life of your IRA would not be unusual.

The guaranteed payment contract in the Portfolio Option 3 is the "Income Select Plus" equity index annuity from American Investors Life**, offered through their licensee and agent Accuplan Insurance and Financial Services (or whatever other annuity which Accuplan currently is providing for the Portfolio Option 2). Accuplan is the licensed agent which AE-Trust places annuity orders through, American Investors Life is the carrier which issues and backs the annuity.

Five Percent Bonus. According to the "Income Select Plus" brochure, this annuity will credit your account with a 5% bonus. That is, the American Investors Life will increase the value of your investment by 5% on inception. So a $100,000 investment would start its life on day one with a value of $105,000, and all future growth in the annuity would be based on that $105,000. The company's brochure contains a projection of the worst case and best case scenarios for a hypothetical investor who owned the Income Select Plus for the twenty year period ending in 2005.

AE-Trust will handle all the paperwork and transactions which are necessary to fully implement the Portfolio Option 3 in your behalf, in either your IRA (Traditional or Roth) or ESA. Simply pick this investment option when you enroll in an AE-Trust IRA or ESA account.

Brochure, Click Here for a pdf copy of the Income Select Plus brochure.

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Footnotes:
* The statistic of 7 up years out of every 10 in the stock market is according to AIM Investments, based on their tabular review of annual returns of the S&P 500 for the years 1926 thru 2006, including reinvestment of dividends and price changes, resulting in 58 up years vs. 23 down.

** American Investors Life, the issuer of the Income Select Plus annuity, is owned by Aviva plc. Based in London, England, Aviva is the world's fifth-largest insurance group and the biggest in the UK. Worldwide, the Aviva group has 58,000 employees serving 35 million customers, and has more than $600 billion in assets under management. As a combined company in the U.S., Aviva has over 1,115,000 customers and 32,850 agents and distributors.

PORTFOLIO OPTION 4: HI-YIELD MONEY MARKET FUND ⁽¹⁾

The objective of this money market Fund is to earn the highest income yields which are prudent and reasonable, considering the equal importance of preserving principal. The goal for Fund yield is to earn 1% to 2% greater annual returns for your IRA, ESA, HSA or trust account than the rate of return which typical bank money market accounts and certificate of deposits (CDs) are paying. The minimum initial investment and on-going account balance required in this fund is $5,000.

The Portfolio Option 4 Fund is an AE-Trust professionally managed income fund, with a focus on very low or no volatility and low risk. The funds may be invested in any combination of: Bank money market accounts or CDs, mutual fund company money market or low risk bond funds, U.S. Treasury Bonds or T-Bills, low risk-high grade corporate bonds or notes, muni bonds, high dividend-low risk stocks or mutual funds, low risk exchange traded funds (ETF) paying income and/or dividends, and trust deeds backed by low risk real estate (trust deed investments will be limited to 10% or less of the total Portfolio Option 4 Fund). The Hi-Yield Fund can be used for all types of AE-Trust accounts: IRA, Health Savings (HSA), Educational Savings (ESA), or private trust account where AE-Trust acts as custodian or trustee.

There are no annual account fees charged by AE-Trust for accounts which maintain an average Portfolio Option 4 balance of $50,000 or more for the entire preceding year. In other words, your IRA, HSA, ESA or private trust account is free as long as the $50,000 average account balance is maintained over a full twelve months. You still pay the initial set up and first year's account fee when you open an AE-Trust account, but thereafter on each one year anniversary of your account creation date, the annual account fee is waived if your account maintained the $50,000 minimum average balance for the past year.

Note: While this Fund is carefully managed to minimize risk and preserve principal, there is some risk of loss of principal in the Portfolio Option 4 Money Market Fund. And, past performance of an investment is no guarantee of future results. Any investments made by the Portfolio 4 Fund in non-banking investments will not have bank, FDIC or federal government backing (except for U.S. Treasury Bonds or T-Bills which the Fund may invest in).

Since this Fund seeks higher than average yields, funds must be invested for longer terms than the Portfolio Option 1 Quick Access Money Market Fund. This means that any withdrawal you may request can be held up for as much as 30 to 60 days before sufficient investment liquidations can be made to meet your requirements, though all reasonable efforts will be made by AE-Trust to accommodate withdrawals in much shorter time periods. But if you are likely to need a withdrawal in less than 30 to 60 days, you should not put all or any of your account's funds in this Portfolio. You may wish to leave some of your funds in the Portfolio Option 1 Quick Access Money Market Fund where you may make frequent withdrawals and on a same day basis.

AE-Trust will handle all the paperwork and transactions which are necessary to fully implement the Portfolio Option 4 in your behalf, in any type account opened.

(1) AE-Trust charges a fiduciary management fee of 1.0 percent of the annualized net value of your account in this Fund, or AE-Trust retains the total earnings of the Fund when on an annualized basis it returns 1.0% or less in a given month. The fiduciary fee charged by AE-Trust increases to 1.5% for all annualized rates of return above 5% in a given month. For example, in a given month where the Fund earns an annualized rate of return of 1%, AE-Trust will retain the total return earned in the Fund. If the annualized rate of return was 4.5% in a given month, then AE-Trust would retain 1.0% and your account would earn 3.5% to equal the 4.5% total return. If the annualized rate of return was 6.0% in a given month, then AE-Trust would retain 1.5% and your account would earn 4.5% to equal the 6.0% total return. The income your account earns is accrued monthly, and the AE-Trust management fee is charged monthly. There are no other fees or commissions charged to your account by AE-Trust for investments in the Portfolio Option 4 Hi-Yield Money Market Fund.

PORTFOLIO OPTION 5: FOR THE 72(t) EARLY IRA WITHDRAWAL, GUARANTEED PAYMENT CONTRACT

Note: No commissions or management fees are paid to or collected by AE-Trust from this investment choice or your account. The investment (insurance) company which issues the contract earns money, but their earnings are above, and not charged against, the stated rates of returns which you receive from the investment contract. That is, the net amount the contract pays is the same amount that your IRA or ESA will receive, with no commissions or fees withheld.

This selection is the default investment which AE-Trust uses for 72(t) early withdrawal IRAs.

Your 72(t) early withdrawal IRA, either Traditional or Roth, will be invested in a guaranteed payment contract known as an equity indexed annuity. This type annuity is issued by large, wealthy and heavily regulated life insurance companies. Investing with companies of this size, stability and with their large capital reserves assures that your money has outstanding safety. In addition, a good equity index annuity will guarantee to return to the IRA or ESA account 100% of your principal, plus a guaranteed minimum interest return. No amount of market downturns or volatility can cause a loss of your principal. Typically, a good annuity will guarantee a minimum rate of return of approximately 1% to 3%. But in addition, the annuity rate of return is indexed to positive stock market results. So when the stock market has a good year (7 years out of 10 are "up" *), your rate of return will be much higher. When the stock market has a losing year, which it inevitably will, the annuity is guaranteed to maintain 100% of your current account balance, plus earn the minimum interest rate during that year. You get to benefit from good years in the stock market without being penalized for the bad. Using the guaranteed equity indexed annuity as the investment, a rate of return of 6% to 7.5% averaged over the life of your IRA would not be unusual.

While this is the type investment inside your 72(t) IRA with AE-Trust, the 72(t) payments are limited by law to a fixed interest rate of return which the IRS issues each month (called the AFMR rate). The rate which is in effect on the date you establish the 72(t) IRA will be fixed for the whole 72(t) period. Typically this rate is less than that which is earned by the indexed annuity. When that happens your IRA actually gains money, even after making the 72(t) payments to you. Many 72(t) IRAs using the indexed annuity investment will have that result, more money left at the end than the account started with. And, whatever the amount left over, it is your money to use under all the regular IRA contribution and withdrawal rules.

The guaranteed payment contract in the Portfolio Option 5 is the "Income Select Plus" equity index annuity from American Investors Life**, offered through their licensee and agent Accuplan Insurance and Financial Services (or whatever other annuity which Accuplan currently is providing for the Portfolio Option 2). Accuplan is the licensed agent which AE-Trust places annuity orders through, American Investors Life is the carrier which issues and backs the annuity.

Five Percent Bonus. According to the "Income Select Plus" brochure, this annuity will credit your account with a 5% bonus. That is, the American Investors Life will increase the value of your investment by 5% on inception. So a $100,000 investment would start its life on day one with a value of $105,000, and all future growth in the annuity would be based on that $105,000. The company's brochure contains a projection of the worst case and best case scenarios for a hypothetical investor who owned the Income Select Plus for the twenty year period ending in 2005.

AE-Trust will handle all the paperwork and transactions which are necessary to fully implement the Portfolio Option 5 in your behalf, for a 72(t) IRA (Traditional or Roth). Simply pick this investment option when you enroll in the AE-Trust IRA 72(t) SOSEP account.

Brochure, Click Here for a pdf copy of the Income Select Plus brochure.

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Footnotes:

* The statistic of 7 up years out of every 10 in the stock market is according to AIM Investments, based on their tabular review of annual returns of the S&P 500 for the years 1926 thru 2006, including reinvestment of dividends and price changes, resulting in 58 up years vs. 23 down.

** American Investors Life, the issuer of the Income Select Plus annuity, is owned by Aviva plc. Based in London, England, Aviva is the world's fifth-largest insurance group and the biggest in the UK. Worldwide, the Aviva group has 58,000 employees serving 35 million customers, and has more than $600 billion in assets under management. As a combined company in the U.S., Aviva has over 1,115,000 customers and 32,850 agents and distributors.

NOTICE:
American Estate & Trust, LC may in some cases receive compensation from third party suppliers, brokers, banks or other organizations, based on the volume of business placed with those organizations by AE-Trust or due to other factors.