Destinations

StrategyOverall Risk Positioning*

Previous Reallocation

Conservative (30/70) -0.57% -1.00%

Moderately Conservative (40/60) -0.02% -0.50%

Moderate (60/40) +1.49% +0.50%

Moderately Aggressive (70/30) +2.59% +1.50%

Aggressive (80/20) +2.75% +2.00%

Our key investment themes remain largely un-changed. The Road to Interest Rate Normalization and Inefficient and/or Undiscovered Markets themes remain intact. Our Focus on Income theme is still in place but has declined in prominence with the begin-ning of the Fed rate hike cycle and the recent robust performance of equity income strategies. Our Con-trarian Opportunities theme, where we look to take advantage of valuation opportunities in established asset classes created by excessively negative investor sentiment, remains in place, but the areas in which we are expressing the theme have shifted somewhat.

We will make a manager change in small cap value, replacing Undiscovered Managers Behavioral Value with Touchstone Small Cap Value.Changes were implemented in client portfolios beginning March 10.

Aston/River Road Independent Value was removed from all Destinations portfolios as the fund is liqui-dating at the end of July.

Changes will be implemented in client portfolios July 19-25.

JULY 2016

Executive Summary

As we move through the second half of the business cycle we still find a number of factors supportive of the economy and the markets, but recognize that risks remain.

Tailwinds Headwinds

Global monetary policy accommodation Risk of policy mistake

Stable U.S. growth with tame inflation

Slower growth outside the U.S.

Fiscal policy more accommodative

Presidential election uncertainty

U.S. consumer benefits from lower energy prices and stronger labor market

Credit market weakness

Since our March reallocation in which we moved closer to a neutral positioning, portfolios have drifted to a slightly more aggressive posture as we have recently reached new all-time highs in the U.S. equity market. We feel that after the latest strong upward move in equities, and given where we are in the busi-ness cycle, it is sensible to again incrementally reduce risk. We will reduce equity risk across all portfolios, leaving Conservative and Moderately Conservative portfolios with with a slight underweight to overall risk, and Moderate, Moderately Aggressive and Ag-gressive with a reduced overweight.

*Over/underweight to equity oriented strategies versus neutral weighting

NEWS FLASH

Mutual Fund Program

For use in a one-on-one presentation with Brinker Capital Destinations advisors and clients. BrinkerCapital.com 800.333.4573

For use in a one-on-one presentation with Brinker Capital Destinations advisors and clients. BrinkerCapital.com 800.333.4573

Second Half of the Business Cycle, But Still Positive on Risk Assets

We remain positive on risk assets over the intermediate-term; however, we acknowledge that we are in the later innings of the bull market that began in 2009 and the second half of the business cycle. The worst equity market declines are typically associated with recessions, which are typically preceded by aggressive central bank tightening or accelerating inflation, factors which are not present today. While our macro outlook is biased in fa-vor of the positives and a near-term end to the business cycle is not our base case, the risks must not be ignored.

We find a number of factors supportive of the economy and markets over the near term, including accommoda-tive monetary policy globally, stable U.S. growth, tame inflation, more accommodative U.S. fiscal policy, and a constructive backdrop for the U.S. consumer due to low oil prices, a stronger labor market, and new lows in mortgage rates. However, risks remain, including the potential for a policy mistake by central banks and the longer term implications of negative interest rates, slower growth outside of the U.S. which has been exac-erbated in Europe by the Brexit decision, and uncertain-ty surrounding the presidential election in the fall.

We have maintained an overweight to risk in our portfolios since mid-2013. A more sizeable overweight has been ex-pressed in moderate to aggressive strategies as we place a greater emphasis on the risks for more conservative port-folios. Because of our place in the business cycle, in our March reallocation we felt it was prudent to move closer to a neutral overall risk positioning across all portfolios.

Since our March reallocation, portfolios have drifted to a slightly more aggressive posture as we have recently reached new all-time highs in the U.S. equity market. We feel that after the latest strong upward move in

equities, and given where we are in the business cycle, it is sensible to again incrementally reduce risk. While investment opportunities are still prevalent as we wind through the second half of the cycle, these opportuni-ties will be less broad-based and more targeted on specific areas within the market. We will reduce eq-uity risk across all portfolios by between 43 and 109 basis points. As a result Conservative and Moderately Conservative portfolios will be positioned with a slight underweight to overall risk, while Moderate, Moderately Aggressive and Aggressive have a slight overweight.

StrategyOverall Risk Positioning*

Previous Reallocation

Conservative (30/70) -0.57% -1.00%

Moderately Conservative (40/60) -0.02% -0.50%

Moderate (60/40) +1.49% +0.50%

Moderately Aggressive (70/30) +2.59% +1.50%

Aggressive (80/20) +2.75% +2.00%

Portfolio Changes

Global Equity From a global equity perspective, we will continue to emphasize domestic equity over international equity. Although international developed economic data has improved, European Central Bank and Bank of Japan monetary easing policies have yet to translate into sus-tainable positive economic growth, and structural issues in their economies have not yet been addressed. The Brexit decision and consideration of alternative quanti-tative easing programs such as “helicopter money” have further heightened the uncertainty within developed international markets.

While we maintain a 2-3 percentage point underweight to the international equity asset class, we will increase our allocation to emerging markets, moving further underweight developed international markets. Emerg-ing markets will now represent approximately 35% of our international equity allocation, well above the 24% weight in the MSCI All Country World ex USA Index. Emerging markets have been out of favor over the last five years and valuations look more attractive. While absolute growth prospects have come down, emerging markets still offer attractive relative growth. In addi-tion, the stabilization in emerging market currencies and commodity prices are positives for the asset class. We will increase our pure emerging markets equity

1800

1850

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2150

2200

6/30

7/31

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10/3

1

11/3

0

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1/31

2/29

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S&P 500 Index vs. Destinations Reallocations

Trimmed risk

exposureMaintain risk

exposure

Trim risk in C, MC Maintain

risk in Mod-Agg

Move closer to neutral across

portfolios

*Over/underweight to equity oriented strategies versus neutral weighting

For use in a one-on-one presentation with Brinker Capital Destinations advisors and clients. BrinkerCapital.com 800.333.4573

exposure by adding to Baron Emerging Markets across moderate to aggressive strategies. In Conservative and Moderately Conservative strategies we will eliminate Wasatch Frontier Emerging Small Countries in order to initiate a position in Baron Emerging Markets of 1.0% and 1.5% respectively.

Within our domestic equity allocation we will trim expo-sure from Columbia Dividend Opportunity in Moderate to Aggressive Equity portfolios, where allocations are maintained, and add to Touchstone Focused, an oppor-tunistic all cap strategy. Although Columbia Dividend Opportunity has had strong performance year to date, the anticipation of additional interest rate hikes by the Federal Reserve will likely create a headwind for high dividend paying equities and other “bond market prox-ies” in the near to intermediate term.

In Moderate to Aggressive Equity portfolios, where we have a designated small cap allocation, we will liquidate our position to Undiscovered Managers Behavioral Value and initiate a position to Touchstone Small Cap Value. Undiscovered Managers Behavioral Value has had very good performance since being added to Des-tinations portfolios; however, as strategy assets have grown to upwards of $6 billion, we have concerns about the team’s ability to effectively execute their strategy going forward with a bloated asset base.

Touchstone Small Cap Value is sub-advised by LMCG Investments, a Boston-based investment firm. LMCG took over the management of the strategy in early July. The five person team led by portfolio manager Todd Vingers, employs a classic value approach, look-ing to purchase high quality companies at a discount. They screen on five valuation factors and pursue their fundamental due diligence process on companies in the cheapest one-third of the universe. When investing in companies they look for modest upside with limited downside. While LMCG is new to the Touchstone fund, they have managed the small cap value strategy in a separate account format with Vingers at the helm since 2002. In performing our due diligence, we were able to analyze the data from the separate account track record in order to gain comfort with the skill of the manage-ment team and how the strategy would work with the other managers in the Destinations portfolios.

Private Equity We will trim our exposure to Red Rocks Listed Private Equity in Aggressive and Aggressive Equity portfolios to bring exposure to 1.0% across all moderate to aggres-sive portfolios. We believe we are later in the cycle for this asset class and a bias to Europe in the fund will likely create headwinds for the strategy.

Real Assets We will add approximately 30 basis points of exposure to RS Global Natural Resources across all portfolios, bring-ing our total weight to between 2.0% (Conservative) and 2.6% (Aggressive Equity). RS Global Natural Resources is a concentrated portfolio that emphasizes low cost commodity producers with high quality assets. Although valuation discounts within the asset class have recently narrowed from extremely wide levels following the sharp decline in commodity prices, fundamentals remain solid and companies are still trading at discounts to historical net asset value. RS Global Natural Resources has had ex-ceptional performance since the Feb. 11 market bottom, returning 39.9% year to date through June 30, 2016.

Absolute Return Aston/River Road Independent Value was removed from all Destinations portfolios in late July. Despite recent strong performance, the portfolio manager decided to shut down the strategy due to a perceived lack of future opportunities that met the strategy’s stringent valuation requirements. The fund was held at a weight of 1.2-1.5% in portfolios and proceeds will be spread across other managers in the portfolios.

In Moderate and Moderately Aggressive taxable port-folios we will swap out our position in Legg Mason Brandywine Absolute Return Opportunities in favor of JPMorgan Strategic Income Opportunities due to its more attractive volatility profile. Given the risk profile and tax sensitivity of these portfolios, our exposure to lower volatility absolute return is small.

Fixed Income Our fixed income allocation continues to be positioned with less interest rate risk and a yield premium versus the broad fixed income market (Barclays Aggregate Index). While there is the possibility that interest rates will rise in the intermedi-ate term, factors such as macro risks, geopolitical noise, and the relative attractiveness of U.S. sovereign debt given the amount of debt globally trading at negative interest rates, could keep a ceiling on interest rates over the near-term.

We will maintain a bias to high yield credit across all portfolios with a fixed income allocation but will take the opportunity to slightly reduce our credit exposure through trimming 25 basis points of exposure from each Avenue Credit Strategies and RiverPark Strategic In-come. A shift in investor sentiment and the bottom in oil prices caused high yield spreads to significantly narrow since they peaked on February 11, generating attractive returns for the asset class. While we still find high yield credit attractive over the near term given the economic and fundamental backdrop, we will trim exposure and redeploy into other areas of the fixed income market.

In qualified Conservative, Moderately Conservative and Moderate portfolios we will add 60-80 basis points to our position in DoubleLine Low Duration Emerging Markets. In qualified Moderately Aggressive nd Aggressive portfo-lios, as well as in all taxable portfolios with a fixed income allocation we will initiate a 1% position in DoubleLine Low Duration Emerging Markets. The strategy, which invests in US dollar denominated emerging market corporate and sovereign debt, offers an attractive yield profile, less sensitivity to interest rates due to its low duration bias, and a higher credit quality profile than U.S. high yield.

As a result of our decision to reduce overall risk, we will add to Dreyfus Bond Market Index in qualified portfo-lios. Likewise, in taxable portfolios we will add to Fidelity Intermediate Municipal Income.

Key Investment Themes

Our key investment themes remain largely unchanged. The Road to Interest Rate Normalization and Inefficient and/or Undiscovered Markets themes remain intact. Our Focus on

Income theme is still in place but has declined in promi-nence with the beginning of the Fed rate hike cycle and the recent robust performance of equity income strategies.

With our Contrarian Opportunities theme we look to take advantage of valuation opportunities in established asset classes created by excessively negative investor sentiment and increased market volatility. While the theme remains in place, the areas in which we are ex-pressing the theme have shifted somewhat.

We will remove closed-end funds, as discounts have nar-rowed into more average levels, and high yield, as credit spreads have already tightened meaningfully since the February 11 peak. In addition to global natural resourc-es, which have rebounded with the recovery in oil prices but we feel still have room to run, we will add emerging markets to this theme. Despite stronger performance to start 2016, emerging markets have considerably under-performed developed markets over the last five years and overall sentiment is negative. Valuations look attrac-tive, and the stabilization in both the US dollar and com-modity prices should be a positive for the asset class.

Theme Primary Implementation Rationale

The Road to Interest Rate Normalization

Fixed income with total return potential and yield cushion

Short duration

Low volatility absolute return

Long-term bias is rate to move higher; short-term will be range bound

Road to rate normalization will be choppy and protracted

Favor credit risk over interest rate risk

Focus on Income High yield credit

High dividend equityInvestors will place a premium on yield producing assets in a low nominal yield environment

Inefficient and/or Undiscovered Markets

International microcap

Frontier markets

Event driven

U.S. micro cap

Strategies where active management can add significant value due to the inefficiency of the asset class

Nascent asset classes or those without a dedicated investor base

Contrarian Opportunities

Natural resources

Emerging marketsValuation opportunities in established asset classes created by excessively negative investor sentiment

Allocation Decision Current Bias

Overall Risk Slight overweight to risk in more conservative portfoliso; neutral to sight overweight in moderate to aggressive portfolios

Global Equity Underweight international equity

U.S. Equity Neutral growth/value; slight overweight at the expense of mid cap

Int’l Equity Overweight emerging and frontier markets, small cap bias

Fixed Income Shorter duration with a yield advantage, emphasize MBS, U.S. high yield credit, EMD

Absolute Return Favor relative value fixed income, close-end funds

Real Assets Global natural resource equities

Private Equity Small allocation in moderate to aggressive strategies

For use in a one-on-one presentation with Brinker Capital Destinations advisors and clients. BrinkerCapital.com 800.333.4573

Destinations Portfolio Managers

For use in a one-on-one presentation with Brinker Capital Destinations advisors and clients. BrinkerCapital.com 800.333.4573

Destinations Defensive Changes

We will reduce equity risk exposure by 50 basis points to a level of 10% in Defensive portfolios. We will trim 100 basis points from Legg Mason Brandywine Absolute Return Opportunities in favor of Driehaus Active Income and JPMorgan Strategic Income Opportunities, due to their lower volatility profiles. Like traditional portfolios, we increased our allocation to DoubleLine Low Duration Emerging Markets in fixed income due to its attractive yield, lower interest rate sensitivity, and higher credit quality profile. Aston/River Road Independent Value, which was a 4% weight in the portfolios, was removed due to the closure of the strategy and proceeds will be al-located to both domestic equity large cap value manager, Delaware Value, and our core fixed income allocation.

Destinations Balanced Income Changes

In Balanced Income we will reduce overall risk by 20 basis points, resulting in a 1.5% overweight to risk based on our 55/45 neutral equity/fixed income mix. Within international equity we will trim our exposure to Wasatch Frontier Emerging Small Countries in favor of Baron Emerging Markets Fund, which focuses on traditional larger cap emerging market securities. We will maintain a high yield credit bias in fixed income but will slightly re-duce our credit exposure by trimming our allocations to RiverPark Strategic Income and Avenue Credit Strategies. We will add to DoubleLine Low Duration Emerging Mar-kets due to its attractive yield, lower interest rate sensitiv-ity and higher credit quality profile. We will also initiate a 1.5% position in the Nuveen Preferred Securities fund. This strategy focuses on the preferred securities universe and has a high income generating potential and lower correlation to traditional fixed income and equity, both of which are attractive in the current market environment.

These portfolio changes will be implemented in Destinations accounts beginning July 19 and will be reflected in new ac-counts immediately. If you have any questions regarding changes in our mutual fund program, please call a member of your Brinker Capital Client Service Team at 800-333-4573. Thank you for your continued confidence in Brinker Capital.

Jeff Raupp, CFA Senior Vice President 20 years industry experience B.S. University of Delaware M.B.A. Villanova

Amy Magnotta, CFA Senior Investment Manager 16 years industry experience B.S. Lehigh University

For use by clients and Financial Advisors with clients currently invested in the Destinations program. Not for redistribution. Holdings are subject to change. Not all asset classes or funds are held in all strategies within the Destinations program. Past performance does not guarantee future results. Brinker Capital Inc., a Registered Invest-ment Advisor and designated investment manager for client accounts. Private Equity. A source of investment capital from high net worth individuals and institutions for the purpose of investing and acquiring equity ownership in companies. Listed Private Equity Companies are subject to various risks depending on their underlying investments, which could include, but are not limited to, additional liquidity risk, industry risk, non-U.S. security risk, currency risk, credit risk, managed portfolio risk and derivatives risk (derivatives risk is the risk that the value of the Listed Private Equity Companies’ derivative investments will fall because of pricing difficulties or lack of correlation with the underlying investment). There are inherent risks in investing in private equity companies, which encompass financial institutions or vehicles whose principal business is to invest in and lend capital to privately-held companies. Generally, little public information exists for private and thinly traded companies, and there is a risk that investors may not be able to make a fully informed investment decision. DEST_NEWSFLASH

At Brinker Capital we implement great ideas with a disciplined investment approach to consistently offer financial advisors forward-thinking solutions with the goal to achieve better outcomes based on their clients’ personal goals.

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