Chapter Four: Investment Strategy

The ACME PROJECT: Growth Strategy

INVESTMENT PHILOSPHY

Emphasizing long-term capital appreciation via a long-only portfolio of publicly traded securities, The Acme Growth Strategy may invest across market capitalizations and from a global opportunity set. The strategy cannot be defined as strategically growth or value biased. Emphasis is assigned to security selection at attractive relative price points, with a macro-risk overlay determining how much capital should be allocated to equity markets as risk levels change over time. Cash, cash equivalents, and high-quality short-term debt will regularly be employed as active risk management tools. Possible exposure to gold also serves as a hedge against unknown unknowns. The portfolio will typically hold 30 to 40 investments and should therefore be considered concentrated in nature.

As tactical and substantial commitments to liquidity may play a role in portfolio management, the strategy is benchmark agnostic in the short term; returns are not likely to closely track any one traditional equity benchmark month to month, or even year to year. Longer-term, the strategy strives to deliver an attractive risk-adjusted return to the MSCI ACWI Index. ‘Longer-term’, for purposes of this endeavor, should be defined as a full economic or market cycle, generally five years or longer. The strategy is best suited, therefore, to the patient investor, comfortable with the wide latitude give the portfolio manager.

Ideal Client

The ideal client understands and embraces:

1. That success is earned over time. No client should consider the Strategy without a conscious commitment of capital for at least five years or a full market cycle, whichever is longer.
2. Owning a portfolio of securities that will likely look quite different than the composition of any one index.
3. A significant degree of tracking error; that is, short-term return deviations from any standard benchmark.
4. A relatively concentrated strategy aka "less diversified", is an important contributor to long-term success.
5. That cash and gold can be effective risk management tools and are part and parcel of disciplined portfolio management.
6. That the Strategy should be scaled appropriately to each clients' overall risk tolerance and objectives.

The ACME PROJECT: Income Strategy

INVESTMENT PHILOSOPHY:

The Acme Income Strategy seeks to invest where opportunities to generate reasonable and sustainable income may be found. It may be appropriate for investors seeking income, or total return from income reinvestment. The Strategy acknowledges and embraces the idea that attractive investments may not always be found where history and tradition have long directed investors to look. Beyond traditional fixed income, therefore, the Strategy may hold dividend paying common stocks, preferred stocks, convertible debt, floating rate debt, closed-end funds, and exchange-traded funds. The opportunity set is global. Yield objectives are two-fold: at least 2x the current yield of the S&P 500, and at least 100 basis points higher than the 10-year U.S. Treasury Bond yield.

Risk is managed by diversifying within asset classes, but not necessarily across asset classes. Investors in the Strategy should anticipate substantial assignments to equities or fixed income, as market conditions dictate where attractive candidates may be found. Other than cash, cash equivalents, and high-quality short-term debt, no individual security will be initiated at greater than a 3% portfolio weight. Specific to dividend paying common stocks, an investment will be sold if the current yield falls below the minimum strategic threshold – this could be triggered by significant appreciation of the underlying security or a change in dividend payment policy. Strategy turnover should be relatively low.

Measuring performance against any one traditional benchmark is not practical given the latitude afforded to invest across asset classes. The Strategy will therefore utilize the Dow Jones U.S. Select Dividend Index, and the Bloomberg U.S. Aggregate Bond Index, in equal measure, to evaluate results. While believed to be especially suitable for long-term comparison, investors should be aware, as mentioned above, that the Strategy will likely tilt strongly to equities or fixed income at different points in time. Objectively, this may favor one benchmark over the other, when one asset class plays a predominant role.

IDEAL CLIENT:

The ideal client understands and embraces:

1. That success is earned over time. No client should consider the Strategy without a conscious commitment of capital for at least five years or a full market cycle, whichever is longer.
2. Owning a portfolio of securities that will likely look quite different than the composition of any one index.
3. A significant degree of tracking error; that is, short-term return deviations from any standard benchmark.
4. A relatively concentrated strategy aka "less diversified", is an important contributor to long-term success.
5. That at times the Strategy will be significantly skewed towards equities, high yield debt, and "non-traditional" income investments - investors should be comfortable with the risks therein.
6. That the Strategy should be scaled appropriately to each clients' overall risk tolerance and objectives.

Investment Manager or Management Team

Richard “Rick” Sane brings over three decades of advisory experience to the Acme Growth Strategy. Degrees of higher learning include a B.B.A. from St. Bonaventure University and an M.B.A. from the University of Notre Dame.

Rick holds the following professional designations: Chartered Financial Analyst (CFA^®), Chartered Alternative Investment Analyst (CAIA^®), Certified Investment Management Analyst (CIMA^®) and Certified Portfolio Manager (CPM^®).

Investments & Wealth Institute^™ (The Institute) is the owner of the certification marks “CIMA” and “Certified Investment Management Analyst.” Use of CIMA and/or Certified Investment Management Analyst signifies that the user has successfully completed The Institute’s initial and ongoing credentialing requirements for investment management professionals.

IMPORTANT DISCLOSURES
Any opinions are those of the Investment Manager(s) and their team and not necessarily those of Raymond James. Opinions are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security outside of a managed account. This should not be considered forward looking, and does not guarantee the future performance of any investment.

All investments are subject to risk, including loss. There is no assurance that any investment strategy will be successful. Asset allocation and diversification does not ensure a profit or protect against a loss. It is important to review the investment objectives, risk tolerance, tax objectives and liquidity needs before choosing an investment style or manager.

This Fact Sheet is not intended to be a client-specific suitability analysis or recommendation. Do not use this as the sole basis for investment decisions. Do not select an investment strategy based on performance alone.

The individual(s) mentioned as the Investment Manager(s) are Financial Advisors with Raymond James participating in a Raymond James fee-based advisory program. This is an investment advisory program in which the client's Financial Advisor invests the client's assets on a discretionary basis in a range of securities. Raymond James investment advisory programs may require a minimum asset level and, depending on your specific investment objectives and financial position, may not be suitable for you.

In a fee-based account, clients pay a quarterly fee, based on the level of assets in the account, for the services of a financial advisor as part of an advisory relationship. In deciding to pay a fee rather than commissions, clients should understand that the fee may be higher than a commission alternative during periods of lower trading. Advisory fees are in addition to the internal expenses charged by mutual funds and other investment company securities. To the extent that clients intend to hold these securities, the internal expenses should be included when evaluating the costs of a fee-based account. Clients should periodically re-evaluate whether the use of an asset-based fee continues to be appropriate in servicing their needs. A list of additional considerations, as well as the fee schedule, is available in the firm's Form ADV Part 2 as well as the client agreement.

ASSET CLASS RISK CONSIDERATIONS
Every type of investment, including mutual funds, involves risk. Risk refers to the possibility that you will lose money (both principal and any earnings) or fail to make money on an investment. Changing market conditions can create fluctuations in the value of a mutual fund investment. In addition, there are fees and expenses associated with investing in mutual funds that do not usually occur when purchasing individual securities directly.

This strategy may contain Exchange Traded Funds (ETF) and/or Mutual Funds. Investors should carefully consider the ETF and mutual fund investment objectives, risks, charges, and expenses before investing. The prospectus contains this and other information and can be obtained from the ETF or Mutual Fund sponsor as well as from your financial advisor. The prospectus should be read carefully before investing.

ETF shareholders should be aware that the general level of stock or bond prices may decline, thus affecting the value of an exchange-traded fund. Although exchange-traded funds are designed to provide investment results that generally correspond to the price and yield performance of their respective underlying indexes, the funds may not be able to exactly replicate the performance of the indexes because of fund expenses and other factors.

Equities: Investors should be willing and able to assume the risks of equity investing. The value of a client's portfolio changes daily and can be affected by changes in interest rates, general market conditions and other political, social and economic developments, as well as specific matters relating to the companies in which the strategy has invested. Companies paying dividends can reduce or cut payouts at any time.

Fixed Income: All fixed income securities are subject to market risk and interest rate risk. If fixed income securities are sold in the secondary market before maturity, an investor may experience a gain or loss depending on the level of interest rates, market conditions and the credit quality of the issuer. There is an inverse relationship between interest rate movements and bond prices. Generally, when interest rates rise, bond prices fall and when interest rates fall, bond prices generally rise. Please note these strategies may be subject to state, local, and/or alternative minimum taxes. You should discuss any tax or legal matters with the appropriate professional.

International investing involves special risks, including currency fluctuations, differing financial accounting standards, and possible political and economic volatility.

The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market.

The Bloomberg U.S. Aggregate Bond Index is a measure of the investment grade, fixed-rate, taxable bond market of roughly 6,000 SEC-registered securities with intermediate maturities averaging approximately 10 years. The index includes bonds from the Treasury, Government-Related, Corporate, MBS, ABS, and CMBS sectors.

The Dow Jones U.S. Select Dividend (TR) Index measures the performance of leading dividend-yielding stocks in the U.S.. Stocks are screened for dividend quality.

Gold is subject to the special risks associated with investing in precious metals, including but not limited to: price may be subject to wide fluctuation; the market is relatively limited; the sources are concentrated in countries that have the potential for instability; and the market is unregulated.

The MSCI ACWI (All Country World Index) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. As of June 2007 the MSCI ACWI consisted of 48 country indices comprising 23 developed and 25 emerging market country indices. The developed market country indices included are: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom and the United States. The emerging market country indices included are: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.