Brownstone Diversified Balanced Portfolios Overview The Brownstone Diversified Balanced Portfolio offers investors a separately managed account consisting of high quality equities and fixed income securities combined, through a process of skilled asset allocation. Brownstone’s Diversified Balanced Portfolio was created for the investor who seeks capital growth over time with limited volatility, combined with some current income. From a neutral point of 60% equities, the investment professionals at Brownstone assess current macroeconomic factors and market valuation levels to determine the proper allocation between stocks and bonds. The primary determinant is the current position in the business cycle combined with our outlook for monetary and fiscal policy. In general, the equity portion of our portfolio range from a low of 50% to a high of 65%. Controlling Risk Preservation of capital is of paramount importance to our clients and is an explicit objective of the investment philosophy of Brownstone. Financial theory suggests that 90% of the long term investment performance of a portfolio is achieved through the asset allocation, that is, what percentage of an investment portfolio is invested in stocks versus bonds. The Brownstone Investment Committee of Brownstone meets weekly to decide on the current asset allocation of the Balanced Portfolio. The result is a portfolio we believe will perform well in up markets, while protecting capital in down markets. The equity portion provides the opportunity for growth through carefully selected equities that tend to favor larger-cap, dividend paying stocks. To offset equity risk and provide income, the fixed income portion, which can range from 35% at a minimum and 60% as a maximum, is executed utilizing our low risk investment style. Investment Style Asset Allocation Process - We review economic, monetary and fiscal conditions as an important guidepost to determining the broad decisions related to asset allocation. The Brownstone Investment Committee meets weekly to review the portfolio's balance between equities and bonds. Equity Holdings - The equity component of our balanced portfolio consists of a diversified selection of high quality equities screened extensively through our group of research professionals. The portfolio is well diversified from an equity aspect and contains multi-levels of equity capitalization. Fixed Income Holdings - Consistent with our fixed income style, the bond component of our balanced portfolio contains a laddered set of securities combined to provide a risk averse, moderate average term. This strategy helps offset risk incurred through the inclusion of equities in the portfolio. Proactive Portfolio Management - Our hands on approach to portfolio management ensures the portfolio is subject to continuous monitoring and updating. Fundamentals Growth with Moderate Volatility - The combination of equities and fixed income securities is an excellent vehicle for maintaining capital, while achieving growth. The chart below indicates our current asset allocation strategy.