Smart Beta Portfolios for Investors

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1 Smart Beta Portfolios for Investors

2 John Dahlstrom Covestor Client Relations

3 Smart Beta Portfolios for Investors

4 What is beta?

5 What is smart beta exposure? Exposure to equity markets by holding a diversified basket of stocks that assign higher weights to stocks that have desirable characteristics.

6 Why choose smart beta over beta? Smart beta vs beta

7 Source: Morningstar Why are smart beta assets soaring?

8 Covestor smart beta Passive Investing Covestor Smart Beta Active Management

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10 Benefits of Covestor Smart Beta

11 Benefits of Covestor Smart Beta

12 See performance - anytime DIVCOV : Dividend Portfolio Data from: 11/1/16-5/25/17

13 Benefits of Covestor Smart Beta

14 Carefully constructed Created by Sanjoy Ghosh Portfolio construction expert Veteran of Putnam Investments Former Director of Investments for PanAgora PhD - U. Penn s Wharton School of Business

15 Covestor Smart Beta Construction

16 Covestor Smart Beta

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18 Covestor Smart Beta

19 Look inside Click on Investment portfolios

20 Look inside Click any portfolio name for more information

21 Look inside

22 Look inside

23 Benefits of Covestor Smart Beta

24 Covestor Smart Beta

25 Covestor Smart Beta

26 DISCLOSURES Covestor s Smart Beta Portfolios mainly invest in stocks, bear the risks of the general stock market, and may not be suitable for all investors. You may lose all or part of your investment in these portfolios, and their past performance is no guarantee of their future results. To manage these portfolios, Covestor trades its own capital and then mirrors this trading in the accounts of clients investing in each portfolio. Covestor rebalances the portfolios on a randomly selected date each quarter. Given the high number of stocks composing each portfolio, investors will have a lot of trades in their accounts, some or all of which may need to be reported in tax filings. Covestor cannot provide tax advice or prepare tax documents for investors in these portfolios. Investors will also incur transaction costs, such as commissions payable to Interactive Brokers LLC ( IB ) (Covestor s affiliated broker-dealer) whenever Covestor buys and sells securities in any of these portfolios, which is a conflict of interest. Three trading days prior to any rebalance, new, additional, or recurring client investments in one of the Smart Beta portfolios will be placed on hold and sent for execution one trading day after the rebalance is complete. Brokerage services are provided to Covestor clients by IB, an SEC-registered broker-dealer and member NYSE/FINRA/SIPC and a Covestor affiliate. IB requires certain types of brokerage accounts to generate a minimum level of commissions each month. As a result, whenever the overall monthly commissions paid by all Covestor client accounts do not amount to at least $10 in commissions per account per month, IB will collectively charge Covestor clients the difference between the actual commissions charged and the overall $10 minimum due for all Covestor clients, determined on a pro rata basis. Options and Futures: Options and Futures are not suitable for all investors. The amount you may lose may be greater than your initial investment. Before trading options read the Characteristics and Risks of Standardized Options. Before trading futures, please read the CFTC Risk Disclosure. Copies of these disclosures are available at Interactivebrokers.com You may find additional information on the risks, conflicts of interest, applicable brokerage commissions, fractional shares, and limitations on investments and divestments associated with these portfolios (along with Covestor s full disclosures) on the Forms and Agreements page at covestor.com, including but not limited to the Risk Disclosures for Covestor Smart Beta Portfolios document.

27 Questions & Answers

28 Investing, simplified