Where do we go from here?

1. Where do we go from here? Ken Karr, CFP MBA Adam Drake, CFA HIGHLANDINVESTMENT ADVISORS, LLC

2. Market Worries • Global Recession • Financial System Dysfunction • Corporate & Consumer Credit Contraction • Diminished Confidence • Uncertain Global Response • Political, Fiscal, and Monetary HIGHLANDINVESTMENT ADVISORS, LLC

3. Where Are We Now? • Markets still work - for every seller there is a buyer. • Highest expected returns occur when perceived risks are the greatest. • Paranoia running rampant. • Valuations are depressed… but this is good news forinvestors. HIGHLANDINVESTMENT ADVISORS, LLC

4. Fear still elevated, but moderating • The Chicago Board Options Exchange (CBOE) Volatility Index, a popular measure of the volatility of S&P 500, is often referred to as the fear index. • Index hit all-time high in late October, but has since moderated slightly. HIGHLANDINVESTMENT ADVISORS, LLC

5. Volatility… a paradigm revisited HIGHLANDINVESTMENT ADVISORS, LLC

6. Are Valuations Low or Just “Fair”? HIGHLANDINVESTMENT ADVISORS, LLC

7. LONG Term, Valuations Look Attractive HIGHLANDINVESTMENT ADVISORS, LLC

8. Credit Market Dysfunction HIGHLANDINVESTMENT ADVISORS, LLC

9. Economy Has Stalled HIGHLANDINVESTMENT ADVISORS, LLC

10. Annualized Return: After One Year After Three Years After Five Years The Market’s Response To Crisis September 2001: Terrorist Attack October 1973: OPEC Oil Embargo August 1989: US Savings and Loan Crisis October 1987: Stock Market Crash September 1998: Asian Contagion Russian Crisis Long-Term Capital Management Collapse March 2000: Dot-Com Crash Performance of a Normal Balanced Strategy: 60% Stocks, 40% Bonds HIGHLANDINVESTMENT ADVISORS, LLC

11. S1370.5 Bull And Bear Markets S&P 500 Index (USD) Monthly Returns: January 1926-December 2008 116 months 491% Average Duration: Bull Market: 32 Months Bear Market: 11 Months 92 months 355% Months = Duration of Bull/Bear Mkt. % = Total Return for the Bull/Bear Mkt. 61 months 282% 2 months 92% 6 months 100% 3 months 26% 4 months 12% 23 months 133% 49 months 210% 44 months 193% 5 mos. 12% 48 mos. 105% 61 months 108% 43 months 90% 9 months 61% 5 months 22% 9 mos. 55% 15 mos. 35% 33 mos. 86% 30 mos. 76% 30 mos. 71% 24 mos. 63% 26 mos. 52% 3 mos. -11% 14 mos. -14% 20 mos. -17% 5 mos. -15% 8 mos. -16% 2 mos. -15% 7 months -10% 5 months -15% 6 mos. -22% 6 months -22% 19 mos. -29% 3 mos. -30% 6 mos. -30% 2 mos. -19% 6 mos. -21% 4 mos. -10% 4 mos. -16% 31 mos. -30% 14 months -40% 21 months -43% 25 months -45% 13 mos. -50% 34 mos. -83% 1925 1930 1935 1940 1945 1950 1960 1965 1970 1975 1980 1985 1990 2000 2005

12. Long-Term Returns vs. Short-Term Volatility S1388.2 April 1999 Daily Returns Total Month of April Return: 3.9% -2.24% S&P 500$2,048 1 15 30 During this month, the S&P 500 had 10 days of negative returns out of 21 trading days. 1999 Monthly Returns Total Annual Return: 21% 21.04% -0.49% -2.36% -2.74% -3.12% -3.11% J F M A M J J A S O N D During this year, the S&P 500 had 5 out of 12 months with negative returns. • Even during periods of positive stock returns, investors may experience substantial volatility. • Short-term volatility is a typical characteristic of stock market investing. • Long-term returns are the sum of short-term volatility.

13. “You already paid for the risk, you might as well stick around for the return.” David Booth, CEODimensional Fund Advisors HIGHLANDINVESTMENT ADVISORS, LLC

14. Highland Investment Advisors Portfolio Management Solutions • Diversification is the antidote to risk • Structure is the strategy • Risk and return are related • Low costs mean you keep more of what you make • Ignore market noise! HIGHLANDINVESTMENT ADVISORS, LLC