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Principled Portfolio Solutions sm

Managing to Your Goals using Time Tested Principles

Exchange Traded Funds & Notes

Exchange Traded Funds & Notes with

Dynamic Strategic Allocation

Mutual Funds

Implemented Using

Multi-Strategy Account

SightLine Investments, a Division of Wealthcare Capital Management

Contents

Overview

The Power of Principle 3

A Disciplined Investment Program 4

Why Utilize a Disciplined, Principles-Based Program 5

The Principles

Diversification 6

Asset Allocation 7

Portfolio Construction 8

Monitoring and Risk Management 9

Rebalancing 10

Tax-Aware Implementation 11

The PPS Investment Team 12

Appendices

The PPS ETF-Based Global Based Real Assets Strategy 13

Core or Value Focus – An Investor Choice 14

Investment Selections -Global Based Real Assets Strategy 15

Investment Selections–Global Based Real Assets w/ Value 17

Disclosures 21


The Power of Principle

Key Investment Principles

Diversification

Goal-Based Asset Allocation

Efficient Portfolio Construction

ETF1 Monitoring & Risk Management

Disciplined Rebalancing

Tax Aware Implementation

The importance of investing according to time-tested principles should not

be underestimated.

After investing for a while, people begin to recognize that certain investment approaches tend to

work better over time, while others actually can hurt their chances of reaching their investment

and financial goals.

Before selecting an investment strategy, step back and take the time to examine its underlying

investment principles and understand its fit with your needs:

Is the strategy a good match with my tolerance for risk?

Is the strategy an effective way to help me reach my goals?

Are the sources of return and risk well-diversified?

Your advisor can help you answer your key questions and put you on track to achieve your

goals. Knowledgeable, professional advice can help you devise an effective investment

strategy based on time-tested principles.

1This investment program invests primarily in Exchange Traded Funds (ETFs) but also uses Exchange Traded Notes (ETNs) when the characteristics of the ETN

are a better match with the goals of the investment program. Both ETFs and ETNs trade throughout the day on U.S. exchanges like stocks and offer tax

advantages over other pooled vehicles such as mutual funds as capital gains are generally not realized until the ETP is sold. Both ETFs and ETNs are designed

to track an assigned index or strategy. ETFs are structured so that the shareholder owns an portfolio of securities designed to track the target index. ETNs are

structured as a debt instrument where the issuer/guarantor promises the return of the index less fees. In this document, “ETF” may be used to refer to both

Exchanged Traded Funds and Exchange Traded Notes. “ETN” is used to specifically reference Exchange Trade Notes when appropriate.

3


Principled Portfolio Solutions Summary

a Diversification

PPS utilizes multiple asset classes, investment styles and managers.

a Goal-Based Asset Allocation

PPS offers twenty different portfolios from which to choose depending on your

investment objective, tolerance for risk, investment style preference, and tax situation.

a Efficient Portfolio Construction

PPS portfolios are designed to manage costs and efficiently achieve your target asset

allocation to help you capture more of the returns offered by the markets over time.

a Monitoring & Risk Management

The evolving risk characteristics of your exchange traded investments are monitored

on an ongoing basis and your portfolio is adjusted as necessary to maintain alignment

with selection criteria and investment objectives.

a Disciplined Rebalancing

PPS accounts are monitored versus allocation targets on a systematic basis and

periodically rebalanced as conditions warrant to maintain your intended allocations and

to keep your portfolio on target with your investment objectives.

a Tax-Aware Implementation

Each PPS asset allocation offers two implementations, one for taxable accounts and

one for tax-deferred/exempt accounts. Investment selections and rebalancing strategy

are tailored to the tax treatment of your accounts.

The Principled Portfolio Solutions (PPS) program provides a comprehensive framework for investors. PPS provides you a professionally managed, multi-strategy ETF-based investment program.

PPS brings together in a single portfolio, multiple asset classes, investment styles and

professional investment managers. The PPS ETF-based portfolios offer multiple sources of

potential return and improve your risk-reward profile relative to less diversified approaches. In

addition, the portfolio is monitored on an ongoing basis and adjusted to stay on track with your

goals as the markets evolve.

A Disciplined Investment Program

4


Net Flows Into Mutual Funds91

6

0

10

20

30

40

50

60

70

80

90

100

After Best Quarter After Worst Quarter

Bil

lio

ns

Investors as a group tend to chase past returns…

…resulting in sub-par long-term performance.

It is well documented that

investors often let their

emotions and biases get

the best of them. This

leads all too often to a

pattern of “investors

behaving badly.” 1,2

A disciplined investment

process based on time-

tested principles can help

investors avoid common

mistakes and produce

better long-term returns

consistent with achieving

their goals.

Why Utilize a Disciplined, Principle-Based Investment

Program?

1Gavin Quill. November 2001. “Investors Behaving Badly” Journal of Financial Planning. 2001Data Period: 1990 – 1999. Flows calculated by Morningstar category 2. DALBAR. “Quantitative Analysis of Investors Behaving Badly 2013” Update. Data Period: 1994 – 2013. 3. See Disclosure page regarding index information.

5


It is important to recognize that a portfolio concentrated in just a few investments may

experience wide performance swings as investment leaders and laggards change. Help

smooth the progress to your goals by diversifying your portfolio.

For details of the Balanced portfolio, please see the disclosures.

TIPS are Treasury Inflation Protected Securities. TIPS became available for investment in 1997.

Asset Class Returns Over Time – Winners Rotate.

A Key to Long-Term Success

Markets move, sentiment changes, valuations evolve. The investment with top performance

one year may be at the bottom in the next and vice versa. Trying to guess the top performer

year after year can jeopardize progress to your goals. Instead, improve your chances of long-

term financial success through a well-diversified investment strategy.

Having your investments allocated among several asset classes, investment styles and

managers, diversifies your sources of return and helps you benefit more consistently as

market leaders change. Being diversified may also help reduce your risk of loss.

Diversification

6


The PPS program provides a range of asset allocations differentiated by investment

objective, asset class preference and tax treatment. Five different risk/reward levels are

offered across four asset models and two tax types (taxable or tax-deferred/exempt), for a

total of forty portfolios from which you can choose. Allocations are shown in the appendix.

The PPS program is designed to help you and your advisor develop an

investment strategy appropriate for you.

Your advisor works with you to understand your individual situation – your feelings about risk,

your financial and tax situation, and your goals. Your advisor can also help you better

understand the risk-reward relationship between stocks and bonds to help you choose a target

asset allocation most appropriate for you.

The PPS program provides a range of allocation choices. Each allocation is designed to

manage risk and gain exposure to evolving opportunities through a diversified mix of asset

classes, investment styles, and managers. Exposure to domestic and international equities

increases with your risk tolerance. Fixed income strategies utilize municipal bonds for your

taxable accounts. Your advisor can help you select an allocation specific to your needs and

objectives.

Goal-Based Asset Allocation

Stock and Bond Experience - 30 Years Ending 12/31/2014

The balanced portfolio consists of 50% S&P 500 and 50% Lehman Aggregate Index.

7


1) Brinson, Gary P, L. Randolph Hood, and Gilbert L. Beebower. 1986. “Determinants of Portfolio Performance.” Financial Analysts

Journal, vol. 42. No. 4 (July/ August):39-48.

Hensel, Chris R., D. Don Ezra, and John H. Ilkiw. 1991. “The Importance of the Asset Allocation Decision.” Financial Analysts

Journal, vol. 47, no. 4 (July/August):65–72.

Ibbotson, Roger. 2010. “The Importance of Asset Allocation.” Financial Analysts Journal, vol. 66, no. 2. (March/April):18-20

Note: Your selected target risk level reflects your decision to invest in risky assets to seek a target return to achieve your goals.

2) The ETF fee is the weighted average expense ratio the PPS Balanced portfolio. The fee shown for “Active MF” is the weighted

average median expense ratios for a 50% equity, 50% fixed income portfolio using Morningstar data. Equities includes U.S. large,

mid and small cap funds, and international and emerging market funds. Fixed income includes investment grade bond and high

yield bond funds.

Low cost, well-diversified, multi-asset class portfolios help you capture more of the long-

term returns offered by your chosen asset allocation. The PPS program utilizes cost-

efficient exchange-traded funds & notes to help keep you on track to your goals.

Implement Your Asset Allocation With Confidence

Your decision to invest – to select a target risk level and asset allocation appropriate to your

risk tolerance and goals – is a key driver of your success. So is how you choose to implement

your decision. It is easy to get side-tracked by chasing short-term performance or paying high

fees based on the perceived pedigree of the manager. An efficient implementation, with a

focus on capturing the long-term returns offered by your chosen asset allocation, can help you

avoid these common mistakes and stay on track.

Efficiently constructed portfolios that are designed to achieve your asset allocation target and

manage costs can help you be more confident of achieving your goals by positioning your

portfolio to capture more of the return offered by the markets over time.

Efficient Portfolio Construction

Asset Allocation Fees (%)

Research has shown that 90% or more of a

portfolio’s risk and return is explained by the goal-

based asset allocation and target risk level1

A fee saving of 90 basis points on a $100,000

portfolio results in a dollar savings of $60,000

over twenty years time assuming 6% returns.2

Key Drivers of Long-term Investment Results

1.24

0.25

0.0

0.5

1.0

1.5

Active MF ETF

8


ETF Selection Monitoring: Your ETF selections are monitored relative to the growing universe to

ensure they remain the most appropriate for your portfolio based on key selection criteria including

fees, tracking risk, liquidity, and the strength of the ETF sponsor. Changing ETF characteristics and

new entrants may lead to changes in your portfolio to enhance its efficiency and keep it on track with

your objectives.

Implementation Risk Management: Liquidity risk characteristics – bid/offer spreads, deviations

from NAV, trading volumes, etc. – are tracked for the ETFs used in your portfolio. This information is

used to determine the most effective approach to minimize the costs of the ongoing management of

your portfolio.

The charts above shows, over a twelve month period, the changing percentage deviation between the share price and net asset value (NAV) of two

commodity exchange traded products. A fund is trading at a premium when the share price is above its NAV. The left chart shows large and volatile

premiums that can expose an investor to avoidable losses. Buyers of a fund trading at a premium are subject to losses, or returns forgone, if the shares

are sold at a time when the premium is no longer present or when the shares are trading at a discount. The PPS program seeks to avoid these liquidity

related losses by tracking and analyzing the universe of more than 1000 ETFs and utilizing those that offer better characteristics in your portfolio, as

demonstrated in the chart at the right that shows smaller and more stable deviations from NAV.

Data Source: Bloomberg

The PPS Approach

Tracking and Responding to Evolving Conditions

Once your ETF portfolio is established, it is important to your long-term success that the

holdings are monitored and managed to ensure the ETF selections remain

appropriate and the portfolio remains aligned with its intended design and goals. ETF

characteristics that can impact success relative to objectives include liquidity, deviations

from net asset value, and tracking error relative to the target asset class.

Monitoring & Risk Management

(1)

-

1

2

3

4

5

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Example: Deviations from Net Asset Value

“Brand Name” Commodity ETF Not Included in the

PPS Program

Commodity ETN Included in the PPS Program

% P

rem

ium

(D

isc

ou

nt)

9


The portfolio is checked against drift limits that have been selected by analyzing the trade-off

between the desire to minimize the distance away from targets and the desire to minimize cost of

trading, including tax costs. Rebalancing occurs only when an allocation weight to an asset class is

outside its allowable range.

The chart above shows how the allocation of a balanced portfolio changes with market movement, if not rebalanced. The S&P 500 closed near 900 on

both September 1997 and December 2008. Beginning at 50% stocks and 50% bonds in 1997, the equity allocation peaked with equity market highs in

2000 and 2007 and bottomed with equity market lows in 2002, possibly 2008.

The PPS Approach

A Systematic Approach to Staying on Track

Market movements can alter your allocations over time, causing your portfolio to drift from its

intended targets. Unattended, this drift may leave you underinvested in growth oriented assets

or may expose your portfolio to greater risk than originally intended.

A disciplined process for realigning your portfolio can help keep your portfolio on target with

your intended risk level and investment objectives.

Disciplined Rebalancing

Evolution of a Balanced Portfolio

No Rebalancing

50

41

60

47

62

50

59

40

53

38

0

10

20

30

40

50

60

70

Aug 1997 Aug 2000 Sept 2002 Oct 2007 Dec 2008

All

oc

ati

on

%

Bonds Equity

Not rebalancing can lead

to the wrong equity

allocation at the wrong

time: large equity

allocations at market

highs and small equity

allocations at market lows.

Rebalancing helps you to

buy low and sell high, and

avoid the dangers of

performance chasing.

10


The PPS approach seeks to maximize not only what your portfolio earns for a given

level of risk, but also what you get to keep.

The chart above shows the long-term wealth benefit for an investor in a 33% tax bracket using municipal bonds. The yields and tax rates were arbitrarily

selected for illustrative purposes only and do not represent a recommendation for any specific investment. The breakeven tax rate that would produce the

same after tax wealth for the corporate bond and the municipal bond is 18.2%. Break-even tax rates are specific to each investor and the yields on the

actual bonds chosen for comparison. Generally, client’s with marginal tax rates above the breakeven tax rate may benefit from using municipal bonds for

their fixed income holdings in taxable accounts. Other factors such as expectations of future marginal tax rates, future yields in municipal and corporate

bond markets, investment horizon and transaction costs need to be considered before investing. Consult your financial advisor.

After you have selected an asset allocation appropriate for your risk preferences and goals,

your specific implementation depends on your personal income tax rate and the tax-type of

your investment account(s).

The PPS program offers two implementations of each asset allocation strategy: one intended

for use in taxable accounts and one intended for tax-deferred/exempt accounts.

The implementation for taxable accounts applies turnover reduction strategies to reduce the

potential for capital gains, and utilizes municipal bonds for the fixed income allocation to help

reduce the drag of income taxes on wealth, particularly for the higher tax bracket investor.

Tax-Aware Implementation

The Value of $100K in 20 Years

$292K

$241K

$206K

$-

$50

$100

$150

$200

$250

$300

$350

Corporate Bond Municipal Bond Corporate Bond

5.5% Before 33% Tax 4.5% Tax free 5.5% After 33% Tax

Th

ou

sa

nd

s

11


Background

Kovack Advisors has engaged outside specialists as sub-advisors to make the PPS program

available to you. SightLine Investments, a unit of WealthCare Capital Management LLC,

specializes in principles-based, risk-managed investment solutions, and is responsible for

managing the portfolio models, including manager selection, portfolio construction and

ongoing model changes. Kovack Advisors is responsible for trading and execution services.

A Message From Kovack Advisors Inc

Kovack Advisors’ business is providing extraordinary service to our advisors so they can focus

wholly on the individual and institutional investor. We are independent, strong and supportive.

Established in March 2004, Kovack Advisors is an SEC Registered Investment Advisor,

headquartered in Fort Lauderdale, FL, with independent advisors located across the country.

We have strategic alliances with the most recognized and respected advisory clearing firms in

the industry and we offer an RIA Platform that is second to none in providing comprehensive

investment solutions and accessible technology. Our independent nature is what sets us apart.

Our strength, stability and innovation are why we’ll not only endure, but thrive!

Our advisors have access to best-of-breed programs, services and technology. Kovack

Advisors does not offer proprietary programs. We will always sit on same side of the table with

our clients; striving to always be an example of un-biased guidance and trusted advice.

Principled Portfolio Solutions (PPS)

The PPS Investment Team believes that investing based on time-tested principles is a

foundation for long term investment success. Based on the key principles articulated herein

SightLine builds and manages investment programs for institutions serving the individual

investor using mutual funds, exchanged traded funds and third-party managers.

Ron Madey, CFA

Chief Investment Officer

Wealthcare Capital Management / SightLine Investments

Experience: 28 years

Ken Kideckel, CFA

Portfolio Manager

Wealthcare Capital Management / SightLine Investments

Experience: 20 years

The PPS Investment Team

12

Appendix -Global Based Real Assets Strategy

Lower RiskLower Reward Potential

More RiskMore Reward Potential

Conservative BalancedModerate

Growth GrowthAggressive

Growth

Asset Class

Cash 5 2 2 2 2

Cash Equivalents 5 2 2 2 2

Fixed Income 65 48 33 18 0

Investment Grade Bonds 55 40 28 18 0

High Income Bonds 10 8 5 0 0

Equity 30 50 65 80 98

Real Estate 3 5 7 9 10

Large Cap Equity 11 19 24 30 37

Small-Mid Cap Equity 3 5 7 8 10

International Equity 7 12 15 19 23

Emerging Market Equity 4 7 9 11 13

Commodities 1 2 3 3 4

Diversification: All PPS portfolios are built upon the important principle of diversification to manage your risk-return experience over time. All PPS portfolios are diversified by asset, style and investment manager.

Goal-Based Asset Allocation: PPS offers asset allocations portfolios differentiated by asset class preferences, investment objective, tolerance for risk and tax situations. You select the portfolio that meets your needs.

Efficient Portfolio Construction: With PPS ETF-based portfolios, investors benefit from an efficient portfolio design. Each investment selection is based on key diversification, expense, and liquidity criteria to manage costs and achieve the target profile of your chosen asset allocation.

Monitoring and Risk Management: Key drivers that underpinthe results of your asset allocation strategy, your investment selections and portfolio construction, are monitored and adjusted as necessary to maintain alignment with selection criteria and investment objectives.

Disciplined Rebalancing: Systematic, disciplined rebalancing serves to help manage risk, maintain your intended allocations and keep your portfolio on target with your objectives.

Tax-Aware Implementation: Each PPS asset allocation offers two implementations, one for taxable accounts and one for tax-deferred accounts. Product selections and rebalancing strategy are tailored to the tax treatment of your accounts.

Key Investment Principles

$50,000 Minimum Portfolio

Managed by SightLine Investments , a Division of Wealthcare Capital Management 13

Taxable Accounts

Equity Models Portfolio ManagerManager

Tenure#

HoldingsTurnover

% % Top 10Wgt Avg Mkt Cap Price to Book

Real Estate

Vanguard REIT ETF (VNQ) A,B,C,D,E Gerard C. O'Reilly 18.7 145 11 38 9,411 2.4

Large Cap Equity

SPDR S&P 500 ETF (SPY) A,B,C,D,E Management Team 22.0 503 3 17 72,125 2.7

Small-Mid Cap Equity

iShares Russell 2000 (IWM) A,B,C,D,E Diane Hsiung 7.0 2,021 18 3 1,523 2.2

SPDR S&P MidCap 400 ETF (MDY) A,B,C,D,E Management Team 19.7 400 14 7 4,788 2.4

International Equity

Deutsche X-trackers MSCI EAFE Hedged Eq (DBEF) A,B,C,D,E Vishal Bhatia 3.6 914 10 13 36,915 1.6

iShares MSCI EAFE Small-Cap (SCZ) A,B,C,D,E Diane Hsiung 7.0 1,509 17 3 1,753 1.4

Vanguard FTSE Developed Markets ETF (VEA) A,B,C,D,E Christine D. Franquin 1.9 1,414 13 12 31,338 1.5

Emerging Market Equity

SPDR S&P Emerging Markets Small Cap ETF (EWX)

A,B,C,D,E John A. Tucker 6.6 812 23 4 832 1.2

Vanguard FTSE Emerging Markets ETF (VWO) A,B,C,D,E Michael Perre 6.3 979 9 15 18,852 1.6

Commodities

United States Commodity ETF (USCI) A,B,C,D,E John T. Hyland 4.4 36 34

Fixed Income Models Portfolio ManagerManager

Tenure#

HoldingsTurnover

% % Top 10Average Duration

Avg Credit Quality

Investment Grade Municipal Bonds

SPDR Nuveen Barclays ST Muni Bd ETF (SHM) A,B,C,D Timothy T. Ryan 7.2 554 17 11 3.0 AA

SPDR Nuveen Barclays Municipal Bond ETF (TFI) A,B,C,D Timothy T. Ryan 7.3 506 28 12 7.7 AA

High Yield Municipal Bonds

Market Vectors High-Yield Municipal ETF (HYD) A,B,C James T. Colby III 5.9 793 21 9 10.5 BB

Qualitative data provided by Morningstar as of 4th Quarter 2014.Fund selections may change at any time subject to SightLine's discretion.Model Abbreviations: A-Conservative:B-Balanced:C-Moderate Growth:D-Growth:E-Aggressive Growth


Managed by SightLine Investments / Wealthcare Capital Management


Investment Selections as of 4th Quarter 2014

14

Tax Deferred / Tax Exempt Accounts


Tenure#

HoldingsTurnover


Real Estate


Large Cap Equity

SPDR S&P 500 ETF (SPY) A,B,C,D,E Management Team 22.0 503 3 17 72,125 2.7









SPDR S&P Emerging Markets Small Cap ETF (EWX)

A,B,C,D,E John A. Tucker 6.6 812 23 4 832 1.2


Commodities



Tenure#

HoldingsTurnover


Avg Credit Quality

Investment Grade Bonds

iShares Core US Aggregate Bond (AGG) A,B,C,D Scott Radell 4.5 3,335 180 13 5.3 A

iShares 7-10 Year Treasury Bond (IEF) A,B,C,D Scott Radell 4.5 19 116 98 7.6 AA

Vanguard Intermediate-Term Corp Bd ETF (VCIT) A,B,C,D Joshua C. Barrickman 5.1 1,522 65 4 6.5 BBB

High Income Bonds

PowerShares Senior Loan ETF (BKLN) A,B,C Scott Baskind 3.8 208 14 B






15


Value outperformed growth

as rationality returns.

Dot. Com Bubble—Value

underperformed by 20%.

Did you buy tech here?`

On average, value outperformed growth

by 1.5% over this period.

The chart above shows the long-term performance of value vs growth as represented by the Russelll 3000 Value Index and the Russell 3000 Growth Index.

The value effect is based on the seminal research by Eugene Fama and Kenneth French1. Over the time period from 1926 to 2002, this value premium has

averaged approximately 5.1% annually2. In the PPS ETF Value product, portfolio are constructed in domestic equities and international large-cap equities to

include equal allocations to a core ETF and a value ETF. Due to this equal weighting of value and core, the potential outperformance from the value

premium as well as deviation away from a core benchmark will be reduced. In the PPS portfolio there is no value tilt for International Small-Cap nor

Emerging Markets currently.

1. "The Cross-Section of Expected Stock Returns," (with Kenneth R. French), Journal of Finance, 47 (June 1992), 427-465.

2. Lecture note "The cross-section of expected returns", Investments Course Fall 2003, Ken French

The PPS ETF-based program offers two style implementations of its asset allocation models – Core and

Value. The Core implementation invests in broad equity market strategies and indices. The Value

implementation is tilted toward value stocks - those characterized as cheap on ratios such as price-earnings

and price-book value.

Research1 has shown that value stocks have tended to outperform the broad market and growth stocks over

long periods of time. However, value stocks can go through periods of significant underperformance. Either

a Core or Value strategy, implemented with discipline, can help investors effectively reach their goals. The

key is maintaining discipline over time.

Investors who can tolerate periods of underperformance of a value-tilted strategy and resist the temptation to

sell value during these periods of underperformance, may benefit from utilizing a value-tilted strategy over

the long-term. Your advisor can help you determine which approach is more suitable for you.

Appendix

Core or Value Focus – An Investor Choice

Historical Performance of Value vs Growth

36 Month Rolling Annualized Returns of

Russell 3000 Value – Russell 3000 Growth

January 1979-December 2014

Value underperforms

In financial crises.

16

Taxable Accounts


Tenure#

HoldingsTurnover


Real Estate


Large Cap Equity

iShares Russell 1000 Value (IWD) A,B,C,D,E Diane Hsiung 7.0 707 12 24 53,408 1.8

Vanguard S&P 500 ETF (VOO) A,B,C,D,E Michael H. Buek 23.0 511 3 18 73,127 2.7


iShares S&P Mid-Cap 400 Value (IJJ) A,B,C,D,E Diane Hsiung 7.0 306 34 9 3,916 1.8


iShares Russell 2000 Value (IWN) A,B,C,D,E Diane Hsiung 7.0 1,383 30 4 1,365 1.5




iShares MSCI EAFE Value (EFV) A,B,C,D,E Diane Hsiung 7.0 504 29 18 36,509 1.2





Commodities



Tenure#

HoldingsTurnover


Avg Credit Quality

Investment Grade Municipal Bonds

SPDR Nuveen Barclays ST Muni Bd ETF (SHM) A,B,C,D Timothy T. Ryan 7.2 554 17 11 3.0 AA

SPDR Nuveen Barclays Municipal Bond ETF (TFI) A,B,C,D Timothy T. Ryan 7.3 506 28 12 7.7 AA

High Yield Municipal Bonds

Market Vectors High-Yield Municipal ETF (HYD) A,B,C James T. Colby III 5.9 793 21 9 10.5 BB




Appendix -Global Based Real Assets with Value-Tilted Strategy


17

Tax Deferred / Tax Exempt Accounts


Tenure#

HoldingsTurnover


Real Estate


Large Cap Equity

iShares Russell 1000 Value (IWD) A,B,C,D,E Diane Hsiung 7.0 707 12 24 53,408 1.8

Vanguard S&P 500 ETF (VOO) A,B,C,D,E Michael H. Buek 23.0 511 3 18 73,127 2.7


iShares S&P Mid-Cap 400 Value (IJJ) A,B,C,D,E Diane Hsiung 7.0 306 34 9 3,916 1.8


iShares Russell 2000 Value (IWN) A,B,C,D,E Diane Hsiung 7.0 1,383 30 4 1,365 1.5




iShares MSCI EAFE Value (EFV) A,B,C,D,E Diane Hsiung 7.0 504 29 18 36,509 1.2





Commodities



Tenure#

HoldingsTurnover


Avg Credit Quality

Investment Grade Bonds

iShares Core US Aggregate Bond (AGG) A,B,C,D Scott Radell 4.5 3,335 180 13 5.3 A

iShares 7-10 Year Treasury Bond (IEF) A,B,C,D Scott Radell 4.5 19 116 98 7.6 AA

Vanguard Intermediate-Term Corp Bd ETF (VCIT) A,B,C,D Joshua C. Barrickman 5.1 1,522 65 4 6.5 BBB

High Income Bonds

PowerShares Senior Loan ETF (BKLN) A,B,C Scott Baskind 3.8 208 14 B




Appendix -Global Based Real Assets with Value-Tilted Strategy


18

Ticker for Each SolutionAny Exchange Traded Products

Core Plus All Grade : $50,000 Minimum

Core Plus All Grade:Holds all grades of stocks and bonds. This includes high grade stocks which are globally developed market equities, and investment grade fixed income, along with speculative grades of stocks and bonds. The speculative grade consists of emerging markets and high yield fixed income. In addition, this model holds Real Assets which are commodities and REITs.

Custodian Taxable Accounts AllocationTax Deferred / Tax Exempt Accounts

Any SLICAT A : Conservative : 30E / 70F SLICAD

Any SLICBT B : Balanced : 50E / 50F SLICBD

Any SLICCT C : Moderate Growth : 65E / 35F SLICCD

Any SLICDT D : Growth : 80E / 20F SLICDD

Any SLICET E : Aggressive Growth : 100E SLICED

Core Plus All Grade :Value Equity Style : $50,000 Minimum

Core Plus All Grade:Holds all grades of stocks and bonds. This includes high grade stocks which are globally developed market equities, and investment grade fixed income, along with speculative grades of stocks and bonds. The speculative grade consists of emerging markets and high yield fixed income. In addition, this model holds Real Assets which are commodities and REITs.

Custodian Taxable Accounts AllocationTax Deferred / Tax Exempt Accounts

Any SLIVAT A : Conservative : 30E / 70F SLIVAD

Any SLIVBT B : Balanced : 50E / 50F SLIVBD

Any SLIVCT C : Moderate Growth : 65E / 35F SLIVCD

Any SLIVDT D : Growth : 80E / 20F SLIVDD

Any SLIVET E : Aggressive Growth : 100E SLIVED

19


All investments carry a degree of risk of loss of principal and there is no assurance that an investment

will provide positive performance over any period of time.

Investors should consider the investment objectives, risk, charges and expenses of an investment

carefully before investing. A rise/fall in the interest rates can have a significant impact on bond prices

and the NAV (net asset value) of a fund. Funds that invest in bonds can lose their value as interest

rates rise and an investor can lose principal. High yield bonds (lower rated or junk bonds) experience

higher volatility and increased credit risk when compared to other fixed income investments.

This document is not a solicitation. Before investing in any specific product, the prospectus, if

available, should be reviewed carefully. The information herein is received from third parties which are

believed to be accurate, but no representation is made that the information provided is accurate and

complete. The charts and tables presented herein are for illustrative purposes only and should not be

considered as the sole basis for your investment decision.

Historical index performance is provided exclusively for comparison purposes, and investors cannot

invest directly in an index.

The balanced portfolio shown in the Diversification slide represents a blended 50% equity and 50%

fixed income benchmark. The equity component consists of 7% REITs, 16% EAFE, 6% Emerging

Markets, 14% S&P500, 7% Russell 2500. For the fixed income sleeve, the allocation is 2% Cash, 8%

High Yield, 26% LB Aggregate, and 14% Tips.

Small-Mid Cap stocks may be subject to a higher degree of risk than more established companies’

securities. The liquidity of the small-cap market may adversely affect the value of these investments so

that shares, when redeemed, may be worth more or less than their original cost.

International stocks may be subject to a higher degree of risk than stocks of established domestic

companies because of currency fluctuations, political instability and other uncertainties. Shares when

redeemed may be worth more or less than their original cost.

Please note that programs providing tax aware investment management should not replace your

consultation with a professional advisor regarding your tax situation. Municipal bond income may be

subject to state income tax if issued by a state other than your domicile state, and may be subject to

the Alternative Minimum Tax. This information should not be construed as specific tax or investment

advice. A prospective client should review their investment objectives, risk tolerance, tax situation and

liquidity needs before choosing an investment.

.

Disclosures

©Copyright 2015. SightLine Investments

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