SFS Portfolios

The opinions and forecasts expressed herein are informational in nature and may or may not come to pass. The information provided should not be considered specific recommendations or investment advice. Member FINRA/SIPC. Smedley Financial Services is not affiliated with Envestnet Asset Management, Securities America, or any other registered investment advisor or broker dealer.

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SFS Proactive Portfolios:

Performance data is provided by Smedley Financial Services, Inc® (SFS), a registered investment advisory firm since 1982. As of December 31, 2010, SFS managed and/or sub-advised $315 million. The SFS Proactive Portfolios are available on the Envestnet and Managed Opportunities platforms. SFS is responsible for the accuracy and completeness of the information provided.

Portfolio Inception and Minimum:

SFS Proactive Portfolios:

Inception

Minimum

Income Strategies

11/7/2003

$50,000

Conservative Growth

2/9/1995

$50,000

Protected Growth

9/30/1994

$50,000

Strategic Growth

10/31/1994

$50,000

Global Growth

11/7/2003

$50,000

Tactical Opportunities

2/18/2000

$50,000

SFS Tax Efficient Portfolios:

Inception

Minimum

Tax Efficient Growth & Income

11/24/2004

$50,000

Tax Efficient Growth

11/26/2004

$50,000

SFS Quant Phase Portfolios

Inception

Minimum

Quant Phase 2 Intermediate

6/30/2009

$25,000

Quant Phase 2 Standard

6/30/2009

$25,000

Quant Phase 3 Intermediate

6/30/2009

$25,000

Quant Phase 3 Standard

6/30/2009

$25,000

Quant Phase 4 Intermediate

6/30/2009

$25,000

Quant Phase 4 Standard

6/30/2009

$25,000

Quant Phase 5 Standard

6/30/2009

$25,000

SFS Power Portfolios

Inception

Minimum

Power Yield Portfolio

12/31/2008

$50,000

Portfolio Strategy and Risk:

Performance is affected by market and economic conditions. Each portfolio is subject to risks inherent to the underlying investments. An investment in any of these portfolios has the potential for profit as well as the possibility of loss, including loss of principle. The portfolios are managed using an approach that may include both strategic and tactical decisions. The portfolios are not fully invested at all times. The portfolios may use leverage. Risk reduction techniques may include investments that have negative or low correlation to the portfolio. There is no guarantee that the SFS Portfolio investment objectives will be achieved.

Performance Methodology:

Performance results are based on time-weighted, model performance that is independent of actual dollars invested. The portfolios reflect transactions that have been placed in fee-based, brokerage accounts, but do not represent actual trading. Results of model portfolios have inherent limitations. It is possible for client results to be materially different from the model due to client differences in cash flow, reinvestment policy, taxes, client imposed exceptions, restrictions placed on SFS, substitute investments, and other factors. Returns are calculated in U.S. dollars. Portfolios do not correspond directly to any comparative indices or benchmarks.

Distributions and Fees:

Results include the reinvestment of all dividends and other distributions. Performance is adjusted to reflect the effect of internal expenses of the underlying holdings. The results do not include advisory fees, commissions, and other trading expenses that a client would have paid or actually paid. Because these expenses are deducted monthly, the compounded effect will increase the impact on performance results. The advisory fee consists of the advisor fee, and SAA fee (SAA fee shared between SFS, SAA, and Envestnet). Marginal breakpoints on fees are available. For a description on fees, refer to the ADV Part II of SAA and Envestnet Asset Management.

Other Notes:

The information provided in this brochure should not be considered a recommendation of any one portfolio. Investment decisions must be made based on each individual's risk tolerance, investment objectives, and time horizon. Please consult a financial advisor prior to implementing an investment plan. An investor should consider the investment objectives, risks, charges, and expenses carefully before investing. Historical performance does not guarantee future results. This information is not a recommendation, but is intended for informational purposes only. The information regarding a portfolio cannot be construed as to the appropriateness of an investment for an individual entity. Further information is available upon request.

Investing involves risks. Stock and bond values fluctuate in price so that the value of an investment can go up or down depending on market conditions. Stock prices may fluctuate due to stock market volatility and market cycles, as well as circumstances specific to a company. Fixed income investing is subject to interest rate risk and credit risk. Typically, when interest rates rise, there is a corresponding decline in the market value of bonds. Credit risk refers to the possibility that the issuer of the bond will not be able to make principal and interest payments. Investments in high-yield bonds carry increased credit risk due to the low credit rating of the issuing company. Investments in foreign markets entail special risks such as currency fluctuations, political developments, economic and market instability. Investing in emerging markets involve heightened risks related to the same factors, in addition to those associated with these markets' smaller size and lesser liquidity. Long/short investment strategies utilize short selling, which involves selling a security not owned in anticipation that the security's price will decline. This strategy could result in losses if the value of the securities held long decrease and the value of the securities sold short increase.

The principal value of inflation-adjusted bonds are linked to the Consumer Price Index (CPI) and adjusted every six months to reflect the effects of inflation. If the CPI inches up 2.5% over the course of the year, the principal value of a the bond is adjusted upward by 2.5% and the fixed rate of interest is applied to the inflation-adjusted principal. However, if deflation should occur, your principal would go down the same percentage. At maturity the owner is paid at least the original face value. This protects you from deflation from issuance through maturity, though not from price fluctuations prior to maturity. Investments in Real Estate Investment Trusts (REITs) and REIT funds are subject to the inherent risks of direct investment in real estate such as price fluctuation, liquidity, and concentration risks. Special risks associated with investing in real estate also include the possibility of declining real estate values, the possible lack of availability of mortgage funds, and changes in interest rates. Precious metals are subject to unique risks and costs, such as cost associated with the storage of the physical commodity. As many precious metals are designed as a counter to inflation, they may perform poorly in advancing markets. Precious metals are also subject to illiquidity risks as there may be no secondary markets to buy and sell the commodities. Additionally, the commodities/precious metals markets have historically been very volatile as precious metals are subject to greater fluctuations in price and as such are not suitable for all investors. Municipal bonds are federally tax-exempt, and may be exempt from state and local taxes. Municipal bonds may subject to Alternative Minimum Tax (AMT). Municipal bonds purchased at a discount may be subject to capital gains tax. Municipal bonds depend on the financial health of the particular issuer (such as state and local governments) and its ability to raise revenue.

Mutual funds and Exchange Traded Funds (ETFs) are sold by prospectus. An investor should carefully consider the investment objectives, risks, charges and expenses of a mutual fund before investing. The fund prospectus contains this and other information about the fund. Contact your advisor or the fund company for a copy of the prospectus, which should be read carefully before investing. An investment in a money market fund is not FDIC insured or guaranteed by any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund. An exchange-traded fund (ETF) is an investment company that typically has an investment objective of striving to achieve a similar return as a particular market index. ETFs carry a certain level of risk for investors including: market risk, supply and demand, tracking error and excessive trading. Since share price is determined by market supply and demand forces Investors may purchase shares at a premium or discount to their net asset value. Due to investment timing, allocation and holding periods for cash and other fund assets; performance may not completely replicate the performance of the funds stated benchmark. The ease and frequency of inter-day trading could lead to increased trading or management fees which could reduce or eliminate any tax efficiency.