500 Lake Cook Road | Suite 210 | Deerfield, IL 60015 TEL 847.282.4225 FAX 312.962.3899 hightoweradvisors.

com

Securities offered through HighTower Securities, LLC | Member FINRA/SIPC/MSRB | HighTower Advisors, LLC is a SEC registered investment advisor



September 2, 2014


Dear Friends,

In 2008 the economy was in a recession. Gross National Product (GNP) was falling; the rate of
unemployment was rising; and total corporate profits were half of what they were only a few years
earlier. Vigorous policy changes were called for. In an effort to stimulate growth and turn the
economy around, the Federal Reserve began to increase the money supply and lower interest rates.

In January 2008, the short term US Treasury bill rate was over 4 percent; by December 2008 the Feds
aggressive interest rate policy drove the short term Treasury bill rate down to 0.1 percent. Since then,
the Federal Reserve continued its easy-money policy and has kept the short term interest rate at a near
zero rate.

A widespread consensus is forming today that that the economy has largely recovered from the 2008
slowdown. GNP reached a new all-time high in the second quarter of this year. The rate of
unemployment fell from 9.6 percent to 6.2 percent. Total corporate profits are now over 2.5 times as
high as they were at the end of 2008.

Investors responded to the rise in profits and the drop in short term interest rates by driving up stock
prices. In 2009, the Dow Jones average was 8,876; today it is over 17,000, a gain of over 90 percent.
The S&P Index and the NASDAQ reported comparable gains. We believe these large stock price
increases in the major indices over the past few years had a strong impact upon the thinking and
behavior of many investors, and we believe this is the right time to review your portfolio.

In preparing for such a review, we must keep in mind that different individuals have their own
unique needs and that these needs change over time. During the beginning years of a business career
most investors want to build and accumulate wealth. Later in life, as people age, many want to avoid
losses and preserve what they accumulated. Then, when they reach their senior years, most begin to
plan how they should distribute their wealth to their heirs.

Looking backward, all of us can see that the past five years were a relatively easy period for investors
to increase their wealth, even though it may not have been so apparent at the time. The economy and
corporate profits were steadily improving. The near zero short term interest rates dampened volatility
and increased the correlation of security returns in different industries, investment styles, and market
size. Looking forward, the next five years may be a more difficult period.






500 Lake Cook Road | Suite 210 | Deerfield, IL 60015 TEL 847.282.4225 FAX 312.962.3899 hightoweradvisors.com

Securities offered through HighTower Securities, LLC | Member FINRA/SIPC/MSRB | HighTower Advisors, LLC is a SEC registered investment advisor




As the economy continues to improve, interest rates could rise and the volatility of stock prices could
increase. In such an environment, the stock prices of companies with different attributes may not be
correlated to the same extent as they were in the past. Investors who want their portfolios to continue
to meet their changing needs as their personal circumstances change may want to change their
portfolio mix to one that is more appropriate.

Let me cite an example of the challenges that volatility can impose. Over the last two years, between
August 2012 and August 2014, the Russell Index of 1000 large companies increased by 22.5 percent.
Over this same period, the Russell Index of 2000 smaller companies increased at 21.9 percent,
approximately the same rate. However, between January of this year and today, the Russell large cap
1000 index rose 9.9 percent while the Russell 2000 smaller cap index rose by only 1.75 percent. We
believe, and think that you will agree, that this is a large difference.

The question now arises, Is the gap in the returns of these two series now so wide that smaller
companies are likely to recover faster in the near future -- and thereby earn higher returns for their
investors -- than larger companies? Should the weight assigned to smaller companies be increased
and the weight to larger companies reduced? (You may be interested to know that six different
investment strategies constitute the All Equity section of our managed portfolios. Last month our
Small Cap strategy generated the highest return of the six).

Selecting the right mix of equities between small and large, or value and growth, or international and
domestic is not the only challenge investors must face. We expect that as time passes most of our
investors are also likely to become more sensitive to the possibility of a loss. Many of these may
therefore prefer their portfolio to generate a steady stream of cash on a regular basis rather than
relying upon uncertain capital gains and liquidating one or more positions whenever they want to
spend some of their money.

We believe it is always appropriate to take the time to review the proportion of growth stocks, high
dividend paying stocks, and fixed income holdings in your portfolio. This is particularly true now
that the economy is moving out of the recession of the past five years and into a period where interest
rates are likely to rise and both stock and bond prices could become more volatile.

Please call if you would like to make an appointment so we can review your specific financial position
together.


Sincerely,




Eugene Lerner
Managing Director, Partner



500 Lake Cook Road | Suite 210 | Deerfield, IL 60015 TEL 847.282.4225 FAX 312.962.3899 hightoweradvisors.com

Securities offered through HighTower Securities, LLC | Member FINRA/SIPC/MSRB | HighTower Advisors, LLC is a SEC registered investment advisor
















The Lerner Group is a group of investment professionals registered with HighTower Securities, LLC, member FINRA, MSRB and SIPC, and with HighTower Advisors, LLC, a
registered investment advisor with the SEC. Securities are offered through HighTower Securities, LLC; advisory services are offered through HighTower Advisors, LLC.

This is not an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities
referenced herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced
herein may not be suitable for all investors.

All data and information reference herein are from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other information contained in this
research is provided as general market commentary, it does not constitute investment advice. The Lerner Group and HighTower shall not in any way be liable for claims, and
make no expressed or implied representations or warranties as to the accuracy or completeness of the data and other information, or for statements or errors contained in
or omissions from the obtained data and information referenced herein. The data and information are provided as of the date referenced. Such data and information are
subject to change without notice.

This document was created for informational purposes only; the opinions expressed are solely those of The Lerner Group and do not represent those of HighTower Advisors,
LLC, or any of its affiliates.