Investment Advisor

Fletcher Wealth

Financial Planner,Fletcher Wealth Management

Education East Tenessee State University
Qualifications MBA

Oil and Gas MLPs

Exceptions
Sell Discipline
Allocation Discipline
Research
Approach
Summary

This strategy aims to capitalize on tax efficiencies and income generated by oil and gas master limited partnerships selling at a discount to fair value.

Instead of directly paying taxes on its income, a limited partnership (LP) passes its gains and losses directly to its individual limited partners. This “flow-through” allows investors to avoid the double taxation that normally occurs with the corporation structure. The LP market is illiquid, so this strategy will focus on purchasing master limited partnerships (MLP), which are simply LPs that are publicly traded. Since, according to the tax code, MLPs may participate only in certain businesses, this strategy’s focus will be on MLPs that compete in the extraction, production, process and/or transportation of oil and gas.

A Morningstar screen identifies oil and gas master limited partnerships traded on an United States stock exchange that are selling at a discount to fair value. Additional research is performed using publicly available information (e.g. financial statements, prospectuses) to determine company strength and stability. Other factors, such as the macroeconomic environment and government regulation, are also considered before a purchase is made.

The portfolio will have up to 10 holdings with each having a weighting of no more than 15% of the model. This model may hold cash as it waits for opportunities.

Selling occurs when a holding hits a predetermined target price, develops problems with its operations, or can be replaced by a more attractively valued holding.

None.

Approach Fundamental , Sector Focus , Yield Focus
Asset class Equity
Geography US
Sectors Energy

Replicability

100.0%

Replicable

Top 5 Holdings View all

11.8%

9.4%

9.2%

9.1%

8.9%

Model commentary

Hedging the dollar with these core holdings

16 November 2011

The overall market appears to have somewhat stabilized, so we will consider making some purchases over the next few months.
Oil and Gas MLPs remain a safe haven 14 November 2011
Maintaining stability in my Dividends and Yield … 11 November 2011
Staying patient on Oil & Gas MLPs 19 October 2011
Three defensive stocks I like (and own) here 20 September 2011

Performance detail

Manager
Alerian MLP
S&P 500

30D 90D 365D SI

Performance

Inception July 27, 2011

as of May 15, 2012	Manager	Alerian MLP	S&P 500	Average Subscriber
Past 30 days	-2.1%	-2.4%	-2.9%	-
Past 90 days	-4.7%	-6.2%	-0.9%	-
Since Inception	1.0%	4.9%	2.0%	-
2012 (YTD)	-3.1%	-3.0%	5.8%	-

Risk Metrics

Since Inception

as of May 15, 2012	Manager	Alerian MLP	S&P 500
Best 30 days	9.0%	11.1%	13.6%
Worst 30 days	-4.0%	-5.8%	-9.8%
Volatility	15.4%	19.7%	24.7%
Sharpe Ratio	0.07	0.30	0.09
Sortino Ratio	0.09	0.38	0.12
Maximum Drawdown	-9.3%	-13.1%	-15.8%
Value-at-risk (95%, 1 week)	-3.6%	-4.6%	-5.7%

	vs. Alerian MLP	vs. S&P 500
Information Ratio	-0.76	-0.07
Alpha	-3.5%	0.2%
Beta	0.75	0.40
R-Squared	0.93	0.42

Latest transactions view all

Average trades per month 0.8

Executed	Symbol	Security	Replicable	Type	Price
08/05/11	EPD	Enterprise Products Partners L.P.		Buy	$40.09
08/05/11	BPL	BUCKEYE PARTNERS LP		Buy	$60.77
08/03/11	SPH	Suburban Propane Partners LP		Buy	$43.78
08/02/11	EPB	EL PASO PIPELINE PARTNERS LP		Buy	$34.95
07/28/11	ETE	ENERGY TRANSFER EQUITY LP		Buy	$40.66
07/28/11	ETP	Energy Transfer Partners LP		Buy	$46.00
07/28/11	TCLP	TC Pipelines LP		Buy	$45.44
07/28/11	BWP	BOARDWALK PIPELINE PARTNERS		Buy	$28.29

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1.5% fee

Important Information

1. Past performance is no guarantee of future results.

2. Performance of the model manager's account is calculated by Covestor on a daily time-weighted basis, including cash, dividends and earnings distributions, and broker commissions. Manager returns include trades that fail Covestor's trading rules, do not reflect any Covestor suitability or risk score restrictions and are exclusive of Covestor fees. More

3. Average subscription returns ("Avg Sub" or "Avg Client") are calculated by Covestor and are composed of the average, daily, time weighted returns of all active subscriptions to the underlying model. These daily average returns are then linked together for the timeframe requested. In addition, these returns include cash, dividends and earnings distributions, brokerage commissions, Covestor advisory fees, and reflect individual client suitability and risk score restrictions. More

4. All graph data is as of the end of day for the referenced period, unless otherwise specified. The subscription minimum is the minimum subscription required to follow a particular model. The minimum amount is determined by Covestor, based on the characteristics of the underlying model. It should not be considered as specific investment advice for your investment situation.

5. Benchmark returns have been calculated by Covestor using a time-weighted calculation of daily index valuations and do not include cash, dividends and earnings distributions, or transaction costs. More

6. Leverage indicates the level of margin utilized and is calculated by dividing gross exposure by portfolio net liquidation value.

7. All Model Manager information including personal data, profiles, strategies, monthly investment reports, and historical results outside of Covestor has been provided by the Model Manager. Covestor makes no representation or warranty of its accuracy, completeness or relevance and it does not represent the opinions of Covestor. Transaction history is available upon request. Model classifications (Approach, Asset Class) are provided by Covestor, and are intended to serve as a general guide.

8. Top Replicable Holdings: These securities are currently held in the model manager's brokerage account. Those marked as "Replicable Holdings" currently pass Covestor's trading rules, subject to individual client constraints. Eligibility for replication may change over time. Actual client subscription holdings may vary.

9. Latest Transactions: These transactions were executed in the model manager's brokerage account. Those marked as "Replicable" () passed Covestor's trading rules and were eligible for replication at the time of execution, subject to individual client constraints. Eligibility for replication may change over time. Actual client subscription trade activity may vary.

10. S&P 500 Index is an unmanaged index compiled by Standard & Poor´s Corp. Index returns do not reflect any management fees, transaction costs or expenses. Individuals cannot invest directly in an Index. S&P 500 index data: S&P 500 Copyright © 2012.

11. Dow Jones index data: CME Group Index Services, LLC 2012

Background provided by the manager
Fletcher Wealth Form ADV II A

Fletcher Wealth