December 31, 2013

Dear Friends, We classify the securities we buy for your portfolio as being in one of three major categories: growth, value, and fixed income. The financial characteristics of each group, as well as their past performance, differ from one to the other. What is even more important is that since economic conditions have changed over the past few months, the future performance of each category is likely to be different than it was. We therefore want to discuss the issue What changes should we make in your portfolio today so that we can continue to preserve and enhance your wealth in the future? Over the past year, Ben Bernanke emphasized that he would begin to cut back, or taper, the purchase of government bonds once it became clear that the unemployment rate would fall to 6.5 percent and consumer prices remain stable. Many financial advisors were quick to point out that if the Fed reduced its bond purchases, interest rates would rise and stock prices could fall. However the positive aspects of Bernankes remarks were largely ignored; the economy would likely be in the midst of prosperity if the rate of unemployment fell to 6.5 percent and consumer prices were stable. The rising economy by itself could contribute to increasing stock prices and tapering would be the Feds harbinger of the good things to come. By September of last year, a consensus was beginning to form that tapering would soon begin. In anticipation, long term interest rates began rising and stock prices began to drop. Then in mid-December immediately after the Open Markets Committee meeting, Bernanke announced that the Fed would lower its bond buying from $85 billion per month to $75 billion. Some people commented that the economy could be strong enough so that tapering could end altogether by the end of 2014. The market interpreted Bernankes remarks as being a very positive policy development. Stock prices started to increase immediately at a very rapid pace and closed the year at a record high. The rough outlines of the portfolio changes we should make seem to be reasonably clear: First, we should continue the program we began over a year ago of reducing our holdings of bonds that have appreciated in price since we bought them. These bonds typically have a high coupon, but because of their price appreciation since we bought them for you, the current yield they offer today is low. If suitable replacement bonds are not available, we should consider moving the funds we realize from the sale of these bonds into either the value or growth strategies. Second, to continue to generate a reasonable level of current income as bond income falls, and still enable you to make withdrawals without invading principal, we can increase the holdings of high dividend paying, or value-oriented, common stocks. Since we expect long term interest rates to rise, we plan to concentrate on buying companies that not only pay a reasonable current dividend today but also have the potential to increase their dividends over time because their earnings are likely to rise.

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

Third, we plan to increase our holdings of growth stocks to take advantage of the rising prosperity. Our intentions are to buy large companies that report rising earnings and rising prices. In addition we plan to add to our holdings of smaller companies that have low price earnings ratios and rising sales. Finally, we expect to examine carefully several European, Mexican, and South American companies that have been excessively depressed. In our opinion, these companies are prime candidates for a turnaround and should be considered as viable candidates for your growth strategy. We welcome your thoughts on these proposed actions and urge that you call so we can discuss directly this program with you. All of us at Hightower wish you and your family a healthy, happy and prosperous new year. Thank you for your past trust and confidence and we look forward to the opportunity of working with you in the upcoming year. Sincerely,

Eugene Lerner Managing Director, Partner P.S. Starting next month, we would like to save a few trees and send this monthly letter to you at your e-mail address. If you would like to continue to receive a hard copy, please call and we will continue sending our letters to you.

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.

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