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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



July 7, 2014


Dear Friends,

We are now six months into the year, and this is an appropriate time to discuss the rapid changes
that are underway in the economy as well as what their effect could be on your personal portfolio.
Please keep in mind that we construct every clients individual portfolio by selecting securities from
three different categories. Our building blocks are (1) Equity Income (high yielding equity and
preferred stocks), (2) Fixed Income (both municipal and corporate bonds), and (3) Growth Equities
(six different equity investment strategies).

The low interest rate and slow growth environment that characterized our economy over the past
six months made the high dividend stocks we hold in our Equity Income category attractive
investments. Between the first of January and the end of June the S&P Index returned 6.05 percent;
the consolidated return of our Equity Income category was 6.57 percent.

The low interest rate and slow growth environment also enabled us to buy investment grade bonds
maturing in four to seven years, collect a reasonable interest rate while we held them, and realize a
gain if we sold as the bond approached maturity. The consolidated returns of the Municipal bonds
and Corporate we hold also dominated the S&P return generating six month returns of 6.41 and
6.25 percent (after fees) respectively.

The Growth Equities presented a more varied picture. Two equity strategies generated higher
returns than the S&P. The first strategy buys and holds stocks that report rising earnings, rising
sales and rising prices; the second investment strategy lies at the opposite end of the security
spectrum. It buys and holds stocks that fell in price by more than 25 percent during the past year
and continues to sell at a low, but positive, price to book ratio. These two strategies generated
returns of 7.8 and 6.82 percent (after fees) respectively over the last six months.

A third strategy which concentrates on Large-Cap companies rose marginally more than the S&P
Index while the returns of Mid-Cap and Small-Cap stocks lagged. Given the economic uncertainty
in Europe, the Mid East and Central and South America, it is no surprise that International stocks,
the sixth strategy in our All Equity category, rose only 1.16 percent during this period.

Looking forward to the next six months and beyond, we anticipate the return performance of our
portfolio categories will change. The economy is becoming more and more vigorous with virtually
every passing day. The level of employment is increasing, housing prices are increasing, gross
national product and industrial production are expanding, corporate profits are increasing and the
S&P index is now at a record high level.





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



Under these circumstances, we anticipate two unfolding developments are likely to impact your
portfolios return in the months that lie ahead and some adjustments should be made to take
advantage of them. These developments are (1) the number of mergers and acquisitions that place
should increase and (2) interest rates should begin to rise. Consider each in turn.

Rising profits and higher stock prices make it easier for larger firms to think seriously about
merging with or acquiring another firm. Most large firms want to continue to grow and expand,
and it is usually both faster and less expensive to acquire an existing firm than it is start a brand
new activity. High current profits tend to make managements optimistic about both their ability
and the future; and the current high share price enables larger firms to grow by issuing new shares
for the acquisition with a minimum impact on their current cash flow.

Smaller and mid-sized firms are willing to merge or be acquired for many different reasons. Some
of them may be personal, but all of them include the fact that the price the smaller cap firms
shareholders will receive from the transaction is higher than the current value of their holdings. If
the merger trend continues, and we believe it shall, the returns of small and mid-cap companies
which lagged those of the S&P index could see their rankings begin to increase.

The increase in commodity prices, industrial production, and economic growth now underway
should also lead to a rise in interest rates. Janet Yellen, Chairman of the Federal Reserve System,
has assured investors that she wont cut back on the supply of credit and abruptly raise rates
simply because some markets may look bubbly. However as the demand for credit continues to
be strong and as inflationary forces pick up, interest rates could begin to increase because of the
increase in the demand for credit. The impact of such a rise in rates would be to increase the risk of
holding fixed income securities, and contribute to the flow of funds out of bonds and into equities.

We believe plans should be put in place to take advantage of both developments. Specifically, the
proportion of your portfolio held in Small and Mid-Companies should be increased, and the
commitment to the Fixed Income category of your holdings should be reduced.

We always welcome your comments on our remarks and proposed actions whether they are face to
face, on the telephone, or via e-mail. I assure you that both our and your goals are identical: we
both want to see you preserve and enhance your wealth. Thank you for your continued confidence.

Sincerely,




Eugene Lerner
Managing Director, Partner

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.

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




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.