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S T R A T E G I C A S S E T M A N A G E M E N T (SAM)

A TIME-TESTED INVESTMENT STRATEGY

The LPL Financial family of affiliated companies includes LPL Financial, UVEST Financial Services Group, Inc., IFMG Securities, Inc., Mutual Service Corporation, Waterstone Financial Group, Inc., and Associated Securities Corp., each of which is a member of FINRA/SIPC.

Strategic Asset Management

• Asset Allocation and Diversification

• My Role as an Advisor The Consulting Process

• My Advisory Platform Strategic Asset Management

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not ensure against market risk.

Charting the Course for your Financial Future

Strategic Asset Allocation

Divide your portions between

seven or eight for you do not

know what misfortune will

come to this world.

Asset Allocation Drives Performance

Market Timing 1.8%Other Factors 2.1%

Security Selection 4.6%

Asset Allocation Decision

91.5%

Source: “Determinants of Portfolio Performance II: An Update” - Brinson, Singer, & Beebower,Financial Analysts Journal, May / June 1991

How Many Baskets Do You Have?

BestPerforming

WorstPerforming

Indices are unmanaged and cannot be invested into directly. See attached page for disclosures.

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

S Growth51.2%

S Value29.1%

Intl 33.0%

Intl 8.1%

L Value38.3%

L Growth23.1%

L Value35.2%

L Growth38.7%

HFRI44.2%

S Value22.8%

S Value14.0%

Bonds 10.26%

S Growth48.5%

S Value22.25%

Intl 14.02%

Intl 26.86%

L Growth11.81%

S Value41.7%

HFRI21.3%

HFRI27.9%

L Growth2.7%

S&P 50037.6%

S&P 500

22.9%

S&P 500

33.4%

S&P 500

28.8%

S Growth43.1%

Bonds11.6%

Bonds8.4%

HFRI-4.7%

S Value46.0%

Intl 20.7%

HFRI10.6%

S Value23.48%

Intl 11.58%

L Growth41.2%

L Value13.8%

S Value23.9%

HFRI2.6%

L Growth37.2%

HFRI21.7%

S Value31.8%

Intl 20.3%

L Growth33.1%

HFRI9.1%

HFRI0.4%

S Value-11.4%

Intl 39.2%

L Value16.49%

L Value7.05%

L Value22.25%

HFRI10.65%

HFRI40.1%

S Growth7.8%

L Value18.1%

S&P 5001.3%

S Growth31.0%

L Value21.6%

L Growth30.5%

HFRI16.0%

Intl 27.3%

L Value7.0%

L Value-5.6%

L Value-15.5%

L Value30.0%

S Growth14.31%

L Growth5.26%

S&P 500

15.79%

S Growth7.05%

S&P 50030.5%

S&P 5007.6%

S Growth13.4%

S Value-1.5%

HFRI31.0%

S Value21.4%

HFRI23.4%

L Value15.6%

S&P 500

21.0%

S&P 500

-9.1%

S Growth-9.2%

Intl -15.7%

L Growth29.8%

S&P 500

10.9%

S&P 500

4.91%

S Growth13.35%

Bonds 6.97%

L Value24.6%

Bonds7.4%

S&P 50010.1%

L Value-2.0%

S Value25.8%

S Growth11.3%

S Growth13.0%

Bonds8.7%

L Value7.3%

Intl -14.0%

S&P 500

-11.9%

S&P 500

-22.1%

S&P 500

28.7%

L Growth6.30%

S Value4.71%

HFRI11.71%

S&P 500

5.49%

Bonds16.0%

L Growth5.0%

Bonds9.8%

S Growth-2.4%

Bonds18.5%

Intl 6.4%

Bonds9.7%

S Growth1.2%

Bonds-0.8%

S Growth-22.4%

L Growth-20.4%

L Growth-27.9%

HFRI20.9%

Bonds 4.34%

S Growth4.15%

L Growth9.07%

L Value-0.17%

Intl 12.5%

Intl -11.8%

L Growth2.9%

Bonds-2.9%

Intl 11.6%

Bonds3.6%

Intl 2.1%

S Value-6.4%

S Value-1.5%

L Growth-22.4%

Intl -21.2%

S Growth-30.4%

Bonds 4.1%

HFRI2.2%

Bonds 2.43%

Bonds 4.33%

S Value-9.78%

SourcesBonds: LB Aggregate Bond IndexL Growth: Russell 1000 Growth IndexL Value: Russell 1000 Value IndexS Growth: Russell 2000 Growth Index

S Value: Russell 2000 Value IndexIntl: MSCI EAFE IndexHFRI: HFRI Equity Hedge Index

How Many Baskets Do You Have?

Disclosure: Treasury bills are backed by the full faith and credit of the United States Government. Please note that the value of bonds generally have an inverse relationship to interest rates. Stocks will experience market fluctuations which can include loss of principal value while bonds offer a fixed-rate of return. Small-cap stocks may be subject to a higher degree of market risk than large-cap stocks, and the illiquidity of the small-cap market may adversely affect the value of these investments so that when redeemed, shares may be worth more or less than their original cost. High-yield securities inherently have a higher degree of market risk and there are credit risks associated with the underlying issuers. In addition, lack of liquidity associated with high-yield securities may impair their value. International and emerging market securities are also subject to additional risks such as currency fluctuations and political instability. Prior to investing in any security, consult with your financial professional.

Our first investor, Peter, employs

an investing strategy known as

“chasing performance.” He invests

a hypothetical $10,000 at the end of

each year into the best-performing

market segment of that year and

continues this process for twenty

years.

A Tale of Three Investors

$496,731

$0

$200,000

$400,000

$600,000

$800,000

Peter

For purposes of this comparison, the overall market has been divided into six separate indices – Lehman Agg. Bond Index, M.S. Capital International, Russell 1000, Russell 1000 Growth, Russell 1000 Value and Russell 2500. It is not possible to invest directly in an index.

Beginning 12/31/82 and ending 12/31/02, “Peter” invests $10,000 on January 1 of each year for twenty years into the best-performing market segment of the previous year. The money is left in the specific sector for the duration.

This is a hypothetical illustration and not representative of any specific investment. Your situation will vary. Past performance is no guarantee of future results.

Our second investor, Rhoda,

is always hoping for the

“rebound.” She invests at the

end of each year in the worst

performing segment of that

year and continues this

process for twenty years.

A Tale of Three Investors

$545,404

$0

$200,000

$400,000

$600,000

$800,000

Rhoda

For purposes of this comparison, the overall market has been divided into six separate indices – Lehman Agg. Bond Index, M.S. Capital International, Russell 1000, Russell 1000 Growth, Russell 1000 Value and Russell 2500. It is not possible to invest directly in an index.

Beginning 12/31/82 and ending 12/31/02, “Rhoda” invests $10,000 on January 1 of each year for twenty years into the worst-performing market segment of the previous year. The money is left in the specific sector for the duration.

This is a hypothetical illustration and not representative of any specific investment. Your situation will vary. Past performance is no guarantee of future results

Irvin is the insightful investor. He

allocates and diversifies his $10,000

by investing equally in six different

market segments each year for 20

years. And not only does Irvin

allocate and diversify, but at the end

of every quarter, his portfolio’s assets

are rebalanced so that they are equally

distributed among six segments.

A Tale of Three Investors

$642,339

$0

$200,000

$400,000

$600,000

$800,000

Irvin

For purposes of this comparison, the overall market has been divided into six separate indices – Lehman Agg. Bond Index, M.S. Capital International, Russell 1000, Russell 1000 Growth, Russell 1000 Value and Russell 2500. It is not possible to invest directly in an index. “Irvin” follows this process from 12/31/82 – 12/31/02, investing an addiional $10,000 every January 1. This is a hypothetical illustration and not representative of any specific investment. Your situation will vary. Past performance is no guarantee of future results.

$496,731$545,404

$642,339

$0

$200,000

$400,000

$600,000

$800,000

Irvin may be onto something.

His strategy combining asset

allocation and rebalancing

significantly outperformed the

other two approaches.

A Tale of Three Investors

Peter Rhoda Irvin

Maintaining a well-diversified portfolio worked

This is a hypothetical illustration designed to demonstrate the effects of diversification and rebalancing and is not intended to project performance. No strategy assures success or protects against loss. Past performance is no guarantee of future results.

The Lehman Brothers Agg. Bond Index is a measure of the U.S. bond market. The MSCI EAFE Index is a measure of the international stock market. The Russell 1000 Index measures the performance of large-cap U.S. stocks. The Russell 1000 Growth Index measures the performance of large-cap U. S. growth stocks. The Russell 1000 Value Index measures the performance of large-cap U.S. value stocks. The Russell 2500 Index measures the performance of U.S. small-cap stocks

Consistency, Consistency, Consistency

Investor A: Invests $100,000

Chases Returns

Goes up 30% one year, down 10% the next. Continues this pattern for 20 years.

Investor B: Invests $100,000

Disciplined, Diversified Portfolio

Goes up 10% one year, up 10% the next. Continues this pattern for 20 years.

Average Annual Return, Investor A: 10%

Average Annual Return, Investor B: 10%

Account Value after 20 years:

$480,674

Account Value after 20 years:

$672,735

This is a hypothetical illustration. Your results will vary. Diversification is an investment strategy that seeks to reduce risk an provide competitive returns. No investment strategy guarantees against a loss.

The hypothetical rates of return do not reflect the cost inherent in investing.

How Diversified Are You?

Many Assets, Little Diversification

Large Company Growth Stocks

Appreciation Fund

Stock investing involves risk, including loss of principal.

A World of Noise

                                      

           

Don’t Be That Guy!

Stuart and Mr. P

“Catch the wave of the future, m’man!”

Source: Ameritrade

My Role as Advisor:Quiet the Noise and Remain Disciplined

Determine Objectives

Asset Allocation

Security Selection

On-Going Review You

Step 1: Determine Your Objectives

Step 2: Build Asset Allocation Framework

Large Cap U.S. Growth - 23%Large Cap U.S. Value - 23%Small Cap U.S. Growth - 4%Small Cap U.S. Value - 3%Large Cap Foreign - 7%Int/LT Hi-Quality Bond - 21%Int/LT High Yield Bond - 3%Int/LT Foreign Bond - 3%Short Int Hi-Quality Bond- - 8%Cash- 5%

Growth with Income

Step 3: Select Underlying InvestmentsSmall Cap U.S. Growth

Small Cap U.S. Value

Small Cap/Emerging Market

Large Cap U.S. Growth

Large Cap U.S. Value

Large Cap Foreign

Int/LT Hi-Quality Bond

Int/LT High Yield Bond

Int/LT Foreign Bond

Cash

Large Cap U.S.Growth Growth Fund of AmericaColumbia Marsico GrowthHarbor Capital AppreciationIXIS Advisor FundsT Rowe Price Growth Stock Fund

Investors should consider the investment objectives, risks, charges and expenses of the investment company carefully before investing. The prospectus contains this and other information about the investment company. You can obtain a prospectus from your financial representative. Read carefully before investing.

The Fund Selection Process

• Management Team

• Investment Philosophy

• Risk

• Expenses

• Adherence to Style

Investing in mutual finds involves risk, including loss of principal. Investments in specialized industry sectors have additional risks, which are outlined in the prospectus.

Step 4: Ongoing Portfolio Review

• Discuss Account Performance

• Revisit Client Objectives

• Review Asset Allocation

• Explain Rebalancing

• Implement Decisions

Staying in Balance

•Source: LPL Financial. Values represent the total return of unmanaged indices assuming full reinvestment of capital gains and dividends. Equity allocation represented by the Russell 3000 Index; Bonds represented by the Lehman Brothers Aggregate Bond Index; Cash represented by the Lehman Brothers 3-month T-Bill. Past performance is no guarantee of future results. Indices may not be invested into directly. No strategy assures success or protects against loss. This hypothetical example is intended to demonstrate the effects of rebalancing and is not intended to project performance.

My Advisory Process:

By building a relationship based on advice,

rather than transactions, my success is

directly linked to that of my client.

Benefits of Strategic Asset Management

• Multiple Investment Choices

• Flexibility

• World Class, Unbiased Research

• One Account, One Statement, One Fee

Multiple Investment Choices

• 6,250+ No-load /Load Waived Mutual Funds*

• Individual Stocks & Bonds**

• No-Load Variable Annuity

• Previously Purchased Investments

• Certain funds in SAM pay 12b-1 fees. Nominal transaction charges apply.

** Stock investing involves risk, including loss of principal. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and are subject to availability and change in price.

Sample Fund Families• AIM

• Allianz

• American Funds

• Dreyfus

• Fidelity

• Franklin/Templeton

• Janus

• MFS

• Neuberger/Berman

• Oppenheimer

• PIMCO

• Putnam

• RS Funds

• Scudder

• TCW

• Transamerica

• T Rowe Price

• Vanguard

Investors should consider the investment objectives, risks, charges and expenses of the investment company carefully before investing. The prospectus contains this and other information about the investment company. You can obtain a prospectus from your financial representative. Read carefully before investing.

Flexibility

• Change Asset Allocation as Your Objectives Change

• Aligned Interest

• Trade Without Paying Commissions*

* Certain funds in SAM pay 12-b1 fees. Nominal transaction charges occur.

LPL Financial World Class Research• One of the Largest Independent

Investment Research Organizations

• Analysts Covering Individual Securities and Mutual Funds

• No Investment Banking, No Proprietary Products

LPL Financial Resources

LPL Financial Research

One Account, One Statement, One Fee

• Consolidated, Quarterly Report

• Consolidated Tax Statement

• Predictable Expenses Linked to Portfolio Performance

The End Result

• Consistent, Risk-Adjusted Investment Returns

Determine Objectives

OngoingReview

Security Selection

Asset Allocation

Strategic Asset ManagementA Time-Tested Investment Strategy

“The only thing new in this world is the history you don’t know.”

-Harry S. Truman

Your Next Step

Schedule a meeting for a more in depth look at my practice and receive a complimentary investment analysis.