Detailed ProposalPrepared For Dr. Jeffrey Edwards Prepared by David Ristau October 6, 2016
About Us Our ServicesOur Philosophy Win more clients. Take a nebulous risk tolerance conversation and give it life withHiddenLevers is the premier portfolio stress economic “what-ifs” that the public cantesting platform for financial advisors every- relate to. Use our comparison report towhere. Advisors use the correlations engine compare a client or prospect portfolio withand easy user interface to help clients under- your recommendation.stand risk in portfolios, showcase hedgingstrategies, and compare portfolios in context Showcase hedges. Use real-time stress testof several macro-economic outcomes. The results to show how different investmentsstress testing toolkit also includes macro perform in economic environments. Forthemes for those interested in using scenarios example, show how your separately man-to effect tactical asset allocation. aged account or put option moves up in an S&P drawdown.Advisors are able to use HiddenLevers forportfolio management needs like risk monitor-ing and stress testing, as well as fiduciaryneeds like client-friendly explanation andpresentation of risk.HiddenLevers 120 N. Candler St. Decatur, GA 800.277.4830
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Risk ProfileThe Risk Profile questionnaire is designed to help evaluate your tolerance for risk. Your answershave been tallied to determine your risk score and category. Your advisor can use this information todesign an appropriate investment portfolio. If you do not agree with this analysis, you may adjust therisk category on the Investment Policy Statement with your advisor. Your advisor will then developan appropriate investment portfolio based on the revised information.1 50 15%This risk score puts you in the Moderately Conservative category. Conservative: 1-10% Accepting of lower returns for a higher degree of stability Seeks principal preservation and minimizing risk Moderately Conservative: 11-20% Comfortable accepting a small degree of risk volatility Accepting of lower returns in exchange for minimal losses Moderate: 21-30% Accepting of moderate risk to seek higher long-term returns Accepting of short-term losses of principal in exchange for long-term appreciation Moderately Aggressive: 31-40% Willing to accept significant risk May endure large losses in favor of potentially higher long-term returns Aggressive: 41-50% Willing to accept substantial risk Maximizing long-term returns is more important than protecting principal
SurveyThe survey below was taken on October 6, 2016.Goals Steadily grow my assets 5-10 years1. What is the main goal for your investments?2. I expect to pull money from my investments in:Financials 1M-3M1. Select your current net worth (excluding primaryresidence):2. Please indicate your current annual household Under 75,000income:3. Please select the most complex investment you Hard Assets (gold, art, etc)have owned, or would be comfortable owning:Risk Tolerance I pursue modest increases in my investments, with low risk of loss1. Which best describes your tolerance to risk?2. This chart shows the potential 1-year risk / returntradeoff of a $100K investment. Which would youchoose?3. Imagine that an individual stock you own lost Buy more shares30% of its value in 3 days. What would you do?4. You make an investment, planning to hold it for 5 I would wait to see how it continues to performyears. It then loses 20% in its first year. How do youreact?
5. The following charts show the potential performance of an investment over 10 years. Which would you choose? S&P 500 Investment Optimistic Sentiment 1. How do you feel about the stock market today? 2. How do you feel about the Federal Reserve's I don't know / no opinion policy of low interest rates? 3. Does the ongoing weakness of oil prices concern No, I am optimistic you? 4. How do you feel about the current state of tech I don't know / no opinion investments?
Portfolio Allocations Active Balanced Model - Optimized Dr. Jeffrey Edwards Current Holdings 82% 23% Equities Equities 82% Equities <1% Fixed Income 23% Equities 34% Fixed Income 8% Alternative 10% Cash 38% Alternative 5% Cash Holdings Holdings AAPL 16.93% APPLE INC MWTIX 20.00% Metropolitan West Total Return Bond I Personal Computers Fund - Intermediate-Term Bond JPM 14.99% JP MORGAN CHASE CO MY:LOTIX 20.00% LoCorr Market Trend Money Center Banks Fund - Managed Futures GOOG 14.80% GOOGLE INC MY:HFXIX 12.01% Catalyst Hedged Futures Internet Information Providers Fund - Managed Futures MALRX 14.51% BlackRock Large Cap Core I GSZIX 12.00% Goldman Sachs Strategic Income Instl Fund - Large Blend Fund - World Bond USO 13.53% United States Oil ETF BPLSX 10.00% Robeco Long/Short Eq I Oil Fund - Long-Short WFC 12.64% WELLS FARGO & CO NEW VTI 9.00% Vanguard Total Stock Market ETF Money Center Banks Fund - Large Blend DNASX 12.60% Dunham Alternative Strategy N DBLTX 6.99% DoubleLine Total Return Bond I Fund - Managed Futures Fund - Intermediate-Term Bond MY:AQRSP 4.00% AQR Style Premia Fund - Managed Futures VYM 4.00% Vanguard High Dividend Yield Indx ETF Fund - Large Value HWDYX 2.00% Hartford World Bond Y Fund - World Bond
Stress Test Calculations Active Balanced Model - Optimized Dr. Jeffrey Edwards Current Holdings-38% -11%Potential Downside Potential DownsideThe above \"potential downside\" number is the hypothetical loss the portfolio might experience,based on the economic environments below. The red and green bars show how the portfoliosmight perform in various economic scenarios. These scenarios are \"what-if\" questions, and theresults are possible answers to those \"what-if\" questions.Past Crashes Dr. Jeffrey Active Balanced Edwards Current Model - OptimizedThis scenario covers historical market crashes,including the October 1987 crash, the 2000 Nasdaq Holdings -15%bubble pop, and the 2008 financial crisis. -15% -11% -10%Financial Crisis - Max Draw Down -38%Financial Crisis 9/1/08 - 3/9/09 -35% -4%2000 Nasdaq Cut in Half -30%Baseline Dr. Jeffrey Active BalancedCovers simple S&P projections, ranging from S&P Edwards Current Model - Optimizeddown 20% to up 20%, and 10 year treasury rateshocks of 100 and 200 basis points. HoldingsS&P Down 20% -20% -4%S&P Down 10% -9% -2%Treasury rates up 100bp -1%Treasury rates up 200bp +5% -1%S&P Up 10% +11%S&P Up 20% +13% +2% +4% +25%
Rising Interest Rates Dr. Jeffrey Active Balanced Edwards Current Model - OptimizedWhat if interest rates rise back to historical levels,with 10-year treasury rates near 5%? Holdings -7% -3%Driven By Inflation -18% -1%1994 Bond Crash -9%Driven By Growth +13% Benchmark: HL 60/40 Benchmark Financial Crisis - Max Draw Down: -29%; Financial Crisis 9/1/08 - 3/9/09: -30%; 2000 Nasdaq Cut in Half: -14%; S&P Down 20%: -10%; S&P Down 10%: -4%; Treasury rates up 100bp: 1%; Treasury rates up 200bp: 1%; S&P Up 10% : 8%; S&P Up 20% : 13%; Driven By Inflation: -16%; 1994 Bond Crash: -5%; Driven By Growth: 2%;
Fee Analysis Dr. Jeffrey Edwards Current Holdings Active Balanced Model - Optimized 0.45 1.95 Total Fee 0.45 0.45 Expense Ratio 0.00 1.50 AUM Fee Dr. Jeffrey Edwards Current Holdings Symbol Name / Category Expense 0.75 Category Fee Range 3.52 DNASX Ratio 1.80 3.12 MALRX Dunham Alternative Strategy N 0.93 USO 1.80 AAPL Fund - Managed Futures GOOG 0.87 0.00 0.87 WFC BlackRock Large Cap Core I JPM 0.72 0.72 0.72 Fund - Large Blend N/A United States Oil ETF N/A Oil N/A APPLE INC N/A Personal Computers GOOGLE INC Internet Information Providers WELLS FARGO & CO NEW Money Center Banks JP MORGAN CHASE CO Money Center Banks Active Balanced Model - Optimized Symbol Name / Category Expense Category Fee Range Ratio 2.47 BPLSX Robeco Long/Short Eq I 0.32 3.90 2.47 2.52 Fund - Long-Short 2.52 2.59 HWDYX Hartford World Bond Y 0.67 0.09 0.67 2.59 2.84 Fund - World Bond 3.12 GSZIX Goldman Sachs Strategic Income Instl 0.56 0.09 0.56 Fund - World Bond DBLTX DoubleLine Total Return Bond I 0.47 0.00 0.47 Fund - Intermediate-Term Bond MWTIX Metropolitan West Total Return Bond I 0.43 0.00 0.43 Fund - Intermediate-Term Bond VYM Vanguard High Dividend Yield Indx ETF 0.09 0.00 0.09 Fund - Large Value VTI Vanguard Total Stock Market ETF 0.05 0.00 0.05 N/A Fund - Large Blend MY:AQRSP AQR Style Premia Fund - Managed Futures MY:LOTIX LoCorr Market Trend N/A Fund - Managed Futures MY:HFXIX Catalyst Hedged Futures N/A Fund - Managed Futures
Risk StatisticsThe information here explores other measures of risk. The portfolio with a better risk measure willbe circled in green. A full glossary is available at the end of this report.Timeframe: May 31, 2011 to October 6, 2016 Dr. Jeffrey Edwards Current Holdings Active Balanced Model - OptimizedRisk Stats -11% 0.31Stress Test Risk -38% 0.20Correlation Risk 0.52 41.18% 2.86%S&P 500 Beta 1.01 3.20%Performance Stats 1.47% 1.88Total Return 0.89% 3.00Max Drawdown 29.26% 0.45% 1.50%Volatility 14.07%Portfolio StatsYield 1.26%Sharpe Ratio -0.03Sortino Ratio -0.05ExpensesExpense Ratio 0.45%Fee % 0.00% HL 60/40 Benchmark Benchmark Stats: S&P 500 Beta: 0.62; Total Return: 52.87%; Max Drawdown: 9.07%; Volatility: 7.74%; Yield: 2.07%; Sharpe Ratio: 0.98
Hypothetical Performance HistoryPerformance history measures the return of each portfolio including dividends, and subtracting anyfees. It assumes the portfolio's allocation today has remained constant over the time periodselected. The returns are backtested and not reflective of any actual traded account. Please referto the disclosure page for more information.Timeframe: May 31, 2011 to October 6, 2016 60%50%40%30%20%10%0%-10%-20% Jan 2012 Jul 2012 Jan 2013 Jul 2013 Jan 2014 Jul 2014 Jan 2015 Jul 2015 Jan 2016 Jul 2016 Jul 2011 Dr. Jeffrey Edwards Current Holdings Active Balanced Model - Optimized HL 60/40 Benchmark Dr. Jeffrey Edwards Current Active Balanced Model - Optimized HL 60/40 Benchmark Holdings +41.18% +52.87% +0.89%
Hypothetical Drawdown ComparisonThe chart below shows the past hypothetical downside performance (in percentage terms) for yourportfolio, the proposed portfolio, and a benchmark. The lowest point on the chart shows themaximum loss incurred by each portfolio over the depicted timeframe.Timeframe: May 31, 2011 to October 6, 2016 0%-5%-10%-15%-20%-25%-30% Jan 2012 Jul 2012 Jan 2013 Jul 2013 Jan 2014 Jul 2014 Jan 2015 Jul 2015 Jan 2016 Jul 2016 Jul 2011 Dr. Jeffrey Edwards Current Holdings Active Balanced Model - Optimized HL 60/40 Benchmark Dr. Jeffrey Edwards Current Active Balanced Model - Optimized HL 60/40 Benchmark Holdings Peak: Apr-22-2013 Peak: Jul-18-2011 Peak: Jun-30-2014 Trough: Sep-03-2013 Trough: Aug-15-2011 Trough: Feb-08-2016 -2.86% -9.07% -29.26%
Compare Positions Ticker Name / Industry Dr. Jeffrey Edwards Current Active Balanced Model - Holdings Optimized AAPL APPLE INC 16.93% Personal Computers 2.00% 14.80% 6.99% GOOG GOOGLE INC 9.00% Internet Information Providers 14.51% 12.00% 20.00% MALRX BlackRock Large Cap Core I 12.64% 4.00% Fund - Large Blend 20.00% 14.99% 4.00% WFC WELLS FARGO & CO NEW 10.00% Money Center Banks 13.53% 12.01% JPM JP MORGAN CHASE CO 12.60% Money Center Banks USO United States Oil ETF Oil DNASX Dunham Alternative Strategy N Fund - Managed Futures HWDYX Hartford World Bond Y Fund - World Bond DBLTX DoubleLine Total Return Bond I Fund - Intermediate-Term Bond VTI Vanguard Total Stock Market ETF Fund - Large Blend GSZIX Goldman Sachs Strategic Income Instl Fund - World Bond MWTIX Metropolitan West Total Return Bond I Fund - Intermediate-Term Bond MY:AQRSP AQR Style Premia Fund - Managed Futures MY:LOTIX LoCorr Market Trend Fund - Managed Futures VYM Vanguard High Dividend Yield Indx ETF Fund - Large Value BPLSX Robeco Long/Short Eq I Fund - Long-Short MY:HFXIX Catalyst Hedged Futures Fund - Managed Futures
Investment Growth Annualized Returns for Dr. Jeffrey Edwards Current Holdings Symbol Name Expense Ratio YTD 1 Year 3 Years 5 Years 10 Years Inception AAPL APPLE INC N/A 6.01% 2.76% 19.76% 18.20% 27.66% 16.79% GOOG GOOGLE INC N/A 1.03% 20.66% 21.17% 24.68% 13.95% 24.46% MALRX BlackRock Large Cap Core 0.87 1.89% 5.58% 8.57% 14.18% 5.21% 5.56% I WFC WELLS FARGO & CO N/A -18.74% -14.21% 4.66% 15.26% 4.54% 13.92% NEW JPM JP MORGAN CHASE CO N/A 1.30% 8.59% 10.50% 19.64% 5.99% 10.34% USO United States Oil ETF 0.72 1.36% -28.64% -33.08% -18.99% -14.63% -15.89% DNASX Dunham Alternative 1.80 -14.76% -16.94% -5.01% -2.28% -0.57% Strategy N Annualized Returns for Active Balanced Model - Optimized Symbol Name Expense Ratio YTD 1 Year 3 Years 5 Years 10 Years Inception HWDYX 0.67 3.14% 1.91% 2.41% DBLTX Hartford World Bond Y 0.47 1.48% 0.88% 3.40% 3.24% 3.47% VTI DoubleLine Total Return 4.04% 5.50% Bond I 0.05 5.34% 8.31% 9.49% 15.38% 7.20% 6.45% Vanguard Total Stock Market ETF GSZIX Goldman Sachs Strategic 0.56 1.10% -1.02% -0.02% 3.58% 2.62% Income Instl MWTIX 0.43 3.90% 3.09% 3.54% 4.72% 6.33% 4.30% Metropolitan West Total MY:AQRSP Return Bond I N/A -3.17% 1.86% 6.84% 10.16% 6.52% 6.72% MY:LOTIX N/A -1.97% -1.59% 7.28% 6.24% 8.02% VYM AQR Style Premia 0.09 6.59% 10.56% 10.13% 6.57% 14.79% LoCorr Market Trend Vanguard High Dividend Yield Indx ETF BPLSX Robeco Long/Short Eq I 2.47 12.27% 11.64% 6.59% 8.94% 10.68% 10.86% MY:HFXIX Catalyst Hedged Futures N/A 11.64% 11.77% 8.76% 7.35% 12.47%
Risk Profile The Risk Profile questionnaire is designed to help evaluate your tolerance for risk. Your answers have been tallied to determine your risk score and category. Your advisor can use this information to design an appropriate investment portfolio. If you do not agree with this analysis, you may adjust the risk category on the Investment Policy Statement with your advisor. Your advisor will then develop an appropriate investment portfolio based on the revised information. Moderately Moderately Conservative Conservative Moderate Aggressive Aggressive 21% This risk score puts you in the Moderate category. Conservative: 1-10% Accepting of lower returns for a higher degree of stability Seeks principal preservation and minimizing risk Moderately Conservative: 11-20% Comfortable accepting a small degree of risk volatility Accepting of lower returns in exchange for minimal losses Moderate: 21-30% Accepting of moderate risk to seek higher long-term returns Accepting of short-term losses of principal in exchange for long-term appreciation Moderately Aggressive: 31-40% Willing to accept significant risk May endure large losses in favor of potentially higher long-term returns Aggressive: 41-50% Willing to accept substantial risk Maximizing long-term returns is more important than protecting principal 3
Survey The survey below was taken on June 7, 2018. Goals Steadily grow my assets 1. What is the main goal for your investments? 2. I expect to pull money from my investments in: 11-20 years 500K-1M Financials 1. Select your current net worth (excluding primary residence): 2. Please indicate your current annual household income: 125,001-200,000 Mutual Funds/ETFs 3. Please select the most complex investment you have owned, or would be comfortable owning: I aim for investment growth, accepting moderate risk of loss Risk Tolerance 1. Which best describes your tolerance to risk? 2. This chart shows the potential 1-year risk / return +2,000 tradeoff of a $100,000 investment. Which would you choose? 3. Imagine that an investment you own lost 30% of its -0 value in 3 days. What would you do? Sell all of my shares 4. You make an investment, planning to hold it for 5 I would wait to see how it continues to perform years. It then loses 20% in its first year. How do you react? 5. The following charts show the potential performance of an investment over 10 years. Which would you choose? S&P 500 Investment 4
Accounts Summary % Allocation Dollar Value 100.00% 400,000.00 400,000.00 % Allocation Holdings 14.00% Dollar Value Current IRA 86.00% 56,000.00 Total 344,000.00 400,000.00 Recommendation The Three Little Pigs HL 20/80 Benchmark The Three Little Pigs Moderate Model Total 5
Portfolio Allocations Recommendation ($400,000) Holdings ($400,000) 62% 54% Equities Equities 62% Equities 36% Fixed Income 54% Equities 44% Fixed Income <1% Alternative 2% Cash <1% Alternative 2% Cash Holdings Holdings EEM 12.50% iShares MSCI Emerging Markets ETF SPY 15.70% SPDR SP 500 ETF Fund - Diversified Emerging Mkts VTSMX 12.90% Fund - US Index FCNTX 12.50% Fidelity Contrafund Fund Vanguard Total Stock Market Index Fund Investor Fund - Large Growth Shares Fund - Large Blend MWHYX 12.50% Metropolitan West High Yield Bond Fund Class M MDBAX 12.90% BlackRock Basic Value Fund Investor A Shares Fund - High Yield Bond Fund - Large Value VOO 12.50% Vanguard S&P 500 Consumer Staples Select Sector SPDR Fund Fund - US Index Fund - Large Blend XLP 12.90% Vanguard Total Bond Market Index Fund ETF Shares AGG 12.50% iShares Core U.S. Aggregate Bond ETF Fund - Intermediate-Term Bond Fund - Intermediate-Term Bond BND 12.90% Vanguard Tax-Exempt Bond Index Fund ETF Shares Fund - Municipal Bond FOX 12.50% Twenty-First Century Fox, Inc. VTEB 12.90% Diversified Communication Services iShares Core U.S. Aggregate Bond ETF Fund - Intermediate-Term Bond AAPL 12.50% APPLE INC Tech Giants BlackRock Total Return Fund Class K Shares AGG 11.20% Fund - Intermediate-Term Bond 84247PGB1 12.50% So Cal Pub Wtr MPHQX 8.60% Fixed Income 6
Stress Test Summary Recommendation Holdings -23% -$91,077 -38% -$152K The above \"potential downside\" number is the hypothetical loss the portfolio could experience based on the potential downside scenario defined below. These scenarios are \"what-if\" economic simulations done on the portfolio. Past Crashes Holdings Recommendation This scenario looks at historical market crashes, and -21%* -21%* asks \"What if this historical crash happened today?\" -38% -23% Financial Crisis 9/1/08 - 3/9/09 S&P Valuation Holdings Recommendation What impact would a shift in the S&P 500 cyclically- -35% -19% adjusted PE ratio have on the economy? -26% -14% 17 CAPE - Long Term Average +26% +13% 21 CAPE - Typical Recession 44 CAPE - All-time Highs7
Tech Bubble Holdings Recommendation Are tech companies in the early stages of transforming -18% -7% the whole economy, or are they setting up for a 2000- -9% -2% style correction in valuations? +11% +5% Tech Crash Bull Market Correction Holdings Recommendation Tech Hits Y2K Valuations -18% -10% Oil Prices -3% -1% What is the future impact of changing Oil prices on the Holdings Recommendation global economy? -13% -7% Commodities Perfect Storm +0% $90 - Iran Sanctions Reinstated +1% +6% +10% Baseline This scenario examines the impact of straightforward moves in economic indicators. S&P 500 Down 20% Treasury rates up 100bp S&P 500 Up 10% * The dashed line represents your risk tolerance. 8
Risk Statistics The information here explores other measures of risk. Please see disclosures for a glossary and explanation of calculations. Forward-Looking Holdings Recommendation Risk/Return Potential Downside: -$152K Potential Downside: -$91,077 -38% -23% +57% +34% Expected Return (5Yr): +$227K Expected Return (5Yr): +$138K Historical Calcs Timeframe: June 7, 2013 to June 7, 2018 Risk Stats Stress Test Risk -38% -23% Correlation Risk 0.38 0.44 S&P 500 Beta 0.74 0.50 Performance Stats 43.96% 37.98% Total Return* Max Drawdown -12.82% -6.53% Volatility 6.29% 5.25% Portfolio Stats Yield 1.91% 2.19% Sharpe Ratio 0.83 0.82 Sortino Ratio 1.14 0.93 Expenses Expense Ratio 0.30% 0.21% Fee % N/A N/A * The hypothetical total return may not include all deducted fees (e.g. AUM fee) and charges inherent to investing. 9
Hypothetical Performance History Performance history measures the return of each portfolio including dividends, and subtracting any fees. It assumes the portfolio's allocation today has remained constant over the time period selected. The returns are backtested and not reflective of any actual traded account. Please refer to the disclosure page for more information. Timeframe: June 7, 2013 to June 7, 2018 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% -5% Jan 2014 Jul 2014 Jan 2015 Jul 2015 Jan 2016 Jul 2016 Jan 2017 Jul 2017 Jan 2018 Jul 2013 The Three Little Pigs Holdings The Three Little Pigs Recommendation Holdings Recommendation +43.96% +37.98% 10
Hypothetical Drawdown Analysis The chart below shows the historical downside performance (in percentage terms) for each portfolio. The lowest point on the chart shows the maximum loss incurred by each portfolio over the depicted timeframe. Please refer to the disclosures for more information. Timeframe: June 7, 2013 to June 7, 2018 0% -2% -4% -6% -8% -10% -12% -14% Jan 2014 Jul 2014 Jan 2015 Jul 2015 Jan 2016 Jul 2016 Jan 2017 Jul 2017 Jan 2018 Jul 2013 The Three Little Pigs Holdings The Three Little Pigs Recommendation Holdings Recommendation Peak: May-18-2015 Peak: Jan-22-2018 Trough: Feb-08-2016 Trough: Apr-30-2018 -12.82% -6.53% 11
Fee Attribution Holdings Recommendation $ % %$ 0.30% $1,190.00 Expense Ratio N/A $0.00 0.21% $850.59 AUM Fee 0.30% Total Fees $1,190.00 N/A $0.00 0.21% $850.59 The Three Little Pigs Holdings ($400,000) The Three Little Pigs Recommendation ($400,000*) $1,190.00 $850.59 Total Fees Total Fees *For comparison purposes, both portfolios are depicted as having the same total value. Expense Analysis Holdings Name / Category Expense Ratio Cost Category Fee Range Symbol MWHYX Metropolitan West High Yield Bond Fund 0.86 $430.00 0.10 0.86 1.93 Class M FCNTX Fund - High Yield Bond 0.74 $370.00 0.01 0.74 2.54 EEM 0.69 2.39 AGG Fidelity Contrafund Fund 0.05 $345.00 0.18 0.69 1.65 VOO Fund - Large Growth 0.04 1.96 $25.00 0.01 0.05 iShares MSCI Emerging Markets ETF Fund - Diversified Emerging Mkts $20.00 0.02 0.04 iShares Core U.S. Aggregate Bond ETF Fund - Intermediate-Term Bond Vanguard S&P 500 Fund - US Index The following positions do not charge any fees: FOX, AAPL, 84247PGB112
Recommendation Expense Ratio Cost Category Fee Range Symbol Name / Category MDBAX BlackRock Basic Value Fund Investor A 0.82 $423.12 0.01 0.82 2.06 Shares 0.39 1.65 MPHQX Fund - Large Value 0.14 2.12 VTSMX BlackRock Total Return Fund Class K Shares 0.13 $134.16 0.01 0.39 2.12 XLP Fund - Intermediate-Term Bond 0.09 1.96 SPY 0.09 1.76 VTEB Vanguard Total Stock Market Index Fund $72.24 0.00 0.14 Investor Shares 0.05 1.65 BND Fund - Large Blend 0.05 1.65 AGG Consumer Staples Select Sector SPDR Fund $67.08 0.00 0.13 Fund - Large Blend $59.35 0.02 0.09 $46.44 0.01 0.09 SPDR SP 500 ETF Fund - US Index Vanguard Tax-Exempt Bond Index Fund ETF Shares Fund - Municipal Bond Vanguard Total Bond Market Index Fund $25.80 0.01 0.05 ETF Shares Fund - Intermediate-Term Bond iShares Core U.S. Aggregate Bond ETF $22.40 0.01 0.05 Fund - Intermediate-Term Bond 13
Style Analysis Value Blend Growth Value Blend Growth Large 8 30 58 44Large 23 21 1Mid 1 2 6Mid 4 2 0 0 0Small 0 1 0Small Holdings Recommendation Market Cap Analysis Market Cap Past 90 Past 30 Past 10 Years Years 96.1% Returns Years 86.8% 7.1% 4.6% Large-Cap Stocks 9.7% 8.7% 5.7% S&P 500 Index 7.4% 6.8% Mid-Cap Stocks 10.2% Russell Midcap Index Small-Cap Stocks 11.9% S&P 600 Small Cap Index 11.3% 0.2% 1.9% 3.7% Small Mid Large Holdings Recommendation Style Analysis 59.8% Past 30 Past 20 Past 10 49.6% Style Returns Years Years Years Large Value Index 6.5% 4.7% 3.3% Russell 1000 Value Index 5.2% 5.1% 30.8% Large Blend Index 7.1% 4.9% 7.5% 27.2% Russell 1000 Index 23.2% Large Growth Index 7.3% Russell 1000 Growth Index 9.4% Blend Growth Recommendation Value Holdings 14
Sector Analysis Holdings Recommendation Consumer 6.9 as % of equity Consumer Discretionary 7.2 allocation Consumer 2.3 29.2 ConsuStmaeprle Sstaples 26.4 EnergyEnergy 2.6 6.1 Financials 11.7 Financials 15.1 HeHaeltahlctharceare 3 11.8 Industrials 2.7 6.6 Industrials RealM Easttaetreials 2.6 2 MRateearli aElsstate 0.8 1.5 Information 40.5 TeTcehcnhonloolgoygy 14.4 TelecomTmeleucnoicmations 2.8 Utilities 0.6 Utilities 3.3 15
Geographic Analysis 79% vs 1.6% vs 98.1% 1.9% 15.7% vs 0% 1.5% vs 0% 2.1% vs 0% Development Type Holdings By Holdings Recommendation 97.7% Region 79% 98.1% 78.7% North America 6.6% 2.3% 14.6% 2.1% 0% 0% Latin America 1.6% 1.9% Developed 15.7% 0% Emerging Markets Europe 1.5% 0% Recommendation Asia Pacific Middle East + Africa Domestic Holdings 16
Fixed Income Analysis Term Analysis Type Analysis 50.7% 48.8% 62.6% 37.6% 43.6% 32.7% 37.4% 30.8% 25.6% 13.6% 16.6% Long Intermediate Short 0% Corporate Government Holdings Municipal Recommendation Recommendation Holdings Interest Rate Risk Holdings Recommendation Average Yield 2.62% 2.71% Average Duration 2.94 5.82 Credit Quality Holdings Recommendation AAA 40.77% 54.29% AA 1.41% 17.41% A 5.65% 12.51% BBB 9.65% 12.7% BB 19.36% 0.68% B 18.29% 0.63% Below B / Unrated 4.86% 1.79% 17
Compare Positions Ticker Name / Industry Holdings Recommendation MWHYX 12.50% FCNTX Metropolitan West High Yield Bond Fund Class M 12.50% 11.20% (-1.30%) EEM Fund - High Yield Bond 12.50% AGG 12.50% 12.90% VOO Fidelity Contrafund Fund 12.50% 8.60% FOX Fund - Large Growth 12.50% 12.90% AAPL 12.50% 12.90% 84247PGB1 iShares MSCI Emerging Markets ETF 12.50% 15.70% MDBAX Fund - Diversified Emerging Mkts 12.90% MPHQX 12.90% VTSMX iShares Core U.S. Aggregate Bond ETF XLP Fund - Intermediate-Term Bond SPY VTEB Vanguard S&P 500 BND Fund - US Index Twenty-First Century Fox, Inc. Diversified Communication Services APPLE INC Tech Giants So Cal Pub Wtr Fixed Income BlackRock Basic Value Fund Investor A Shares Fund - Large Value BlackRock Total Return Fund Class K Shares Fund - Intermediate-Term Bond Vanguard Total Stock Market Index Fund Investor Shares Fund - Large Blend Consumer Staples Select Sector SPDR Fund Fund - Large Blend SPDR SP 500 ETF Fund - US Index Vanguard Tax-Exempt Bond Index Fund ETF Shares Fund - Municipal Bond Vanguard Total Bond Market Index Fund ETF Shares Fund - Intermediate-Term Bond18
Historical Returns Annualized Returns for Holdings Expense Since Inception Ratio Symbol Name 0.86 YTD 1 Year 3 Years 5 Years 10 Years Ann. Return Volatility Drawdown MWHYX Metropolitan West High -1.59% 0.24% 2.61% 2.57% 0.74 9.81% 21.75% 14.54% 15.66% 6.38% 7.21% 6.92% -28.32% Yield Bond Fund Class M 1.97% 14.35% 6.93% 4.84% FCNTX Fidelity Contrafund Fund -3.05% -2.34% 0.98% 1.50% Sep-30-2002 5.40% 14.97% 11.45% 13.13% 25.75% 42.72% 6.09% 7.31% 10.38% 11.77% 17.88% -47.98% 12.29% 26.67% 15.90% 27.06% 5.17% 12.62% 6.86% 7.55% Jan-01-1980 EEM iShares MSCI Emerging 0.69 1.53% 11.53% 21.72% -61.46% AGG Markets ETF VOO Apr-14-2003 iShares Core U.S. Aggregate 0.05 3.30% 3.57% 3.37% -7.34% Bond ETF Sep-29-2003 Vanguard S&P 500 0.04 14.71% 10.63% -15.10% Sep-09-2010 FOX Twenty-First Century Fox, N/A 10.12% 9.80% 34.88% -80.76% AAPL Inc. N/A May-19-1986 APPLE INC 23.22% 17.75% 102.90% -86.51% Dec-08-1980 Total (Since Sep-09-2010) 8.26% 6.29% -12.82% Annualized Returns for Recommendation Expense Since Inception Ratio Symbol Name YTD 1 Year 3 Years 5 Years 10 Years Ann. Return Volatility Drawdown MDBAX 3.37% 11.11% 4.99% MPHQX BlackRock Basic Value Fund 0.82 8.93% 6.98% 8.54% 16.50% -54.96% VTSMX Investor A Shares -2.86% -2.00% 1.36% Oct-17-1994 XLP 5.89% 15.52% 11.09% SPY BlackRock Total Return 0.39 2.43% 2.93% 2.65% 5.96% -20.91% Fund Class K Shares Dec-03-2001 Vanguard Total Stock 0.14 13.07% 9.47% 9.65% 15.07% -54.03% Market Index Fund Investor Shares Apr-27-1992 Consumer Staples Select 0.13 -9.46% -10.53% 3.47% 6.94% 8.66% 5.43% 12.70% -34.60% Sector SPDR Fund 14.87% -53.89% Dec-21-1998 2.41% -5.27% SPDR SP 500 ETF 0.09 5.38% 14.91% 11.38% 13.18% 9.34% 9.52% 3.37% -7.34% 3.13% -4.84% Jan-25-1993 5.25% -6.53% VTEB Vanguard Tax-Exempt Bond 0.09 -0.89% -0.37% 2.05% Index Fund ETF Shares Aug-25-2015 AGG iShares Core U.S. Aggregate 0.05 -3.05% -2.34% 0.98% 1.50% 3.30% 3.57% Bond ETF Sep-29-2003 BND Vanguard Total Bond Market 0.05 -2.99% -1.88% 1.07% 1.45% 3.23% 3.55% Index Fund ETF Shares Apr-09-2007 Total (Since Aug-25-2015) -0.54% 2.86% 6.28% The values here are calculated from each investment's reported data and price history. Past19
performance is not indicative of future results. Investing always involves risk and you may incur a profit or loss. No investment strategy can guarantee success. Please refer to the disclosure page for more information on these calculations. 20
Stress Test Details Past Crashes: Financial Crisis 9/1/08 - 3/9/09 Levers Current Projected Change 1438.85 -48.1% Description: S&P 500 2772.35 2.13% -0.84% 1.48% -0.84% This scenario covers the timeframe from September 1, 2008 10Y UST Yield 2.97% through March 9th, 2009, and measures the historical change -0.51% -2.94% of each lever over those dates. 12M T-Bill 2.32% 1.05$ -11.02% Yield 24.12$/barrel -63.19% Outcome: -1.26% -5.94% This scenario outcome reflects the economic movements CPI 2.43% 5.9% 2.1% between Sept. 1, 2008 and March 9th, 2009. -0.36% -3.22% For monthly and other less granular levers, the nearest time EUR 1.18$ period is used 108.3(Index 15.34% Oil 65.52$/barrel Value) Timeframe: Retail Sales 4.68% 6 Months Scenario Progress: Unemployment 3.8% 0% Complete US GDP 2.86% Growth USD 93.9(Index Value) Holdings Scenario Total = $248,415 -21%* Equities - Stocks -56.7% Fixed Income - Bonds Alternative - Alt -7.2% Cash - Money Market -46.9% Current Total = $400,000.00 -0.0% Total % = -37.9 (+/- 2.90%) Recommendation Scenario Total = $308,914 -21%* Equities - Stocks -43.3% Fixed Income - Bonds Alternative - Alt +1.6% Cash - Money Market +1.1% -0.0% Current Total = $400,000.00 Total % = -22.8 (+/- 2.85%) * The dashed line represents your risk tolerance. 21
S&P Valuation: 17 CAPE - Long Term Average Levers Current Projected Change 1524.79 -45.0% Description: S&P 500 2772.35 1.77% -1.2% 0.78% -1.54% What if the S&P 500 suffers a correction in valuation down to 10Y UST Yield 2.97% long term average levels (down to 17 CAPE)? 0.47% -1.96% 12M T-Bill 2.32% 0.98$ -16.95% Outcome: Yield 33.12$/barrel -49.45% The long term average CAPE multiple for the S&P 500 is -3.6% -8.28% around 17, compared to 33 at the start of 2018 CPI 2.43% 8.2% 4.4% A decline of roughly 45% from those highs would be -1.48% -4.34% required to normalize the S&P 500 CAPE multiple EUR 1.18$ This assumes only a modest rise in earnings, as the 105.1(Index 11.93% scenario would be accompanied by a broader economic Oil 65.52$/barrel Value) slowdown Retail Sales 4.68% Timeframe: Unemployment 3.8% 1 Year Scenario Progress: US GDP 2.86% Growth 0% Complete USD 93.9(Index Value) Holdings Scenario Total = $258,548 -21%* Equities - Stocks -53.6% Fixed Income - Bonds Alternative - Alt -5.5% Cash - Money Market -44.2% Current Total = $400,000.00 -0.0% Total % = -35.4 (+/- 2.74%) Recommendation Scenario Total = $323,459 -21%* Equities - Stocks -39.6% Fixed Income - Bonds Alternative - Alt +5.3% Cash - Money Market +7.7% -0.0% Current Total = $400,000.00 Total % = -19.1 (+/- 2.47%) * The dashed line represents your risk tolerance. 22
S&P Valuation: 21 CAPE - Typical Recession Levers Current Projected Change -34.38% Description: S&P 500 2772.35 1819.16 -0.48% -0.9% What if the S&P 500 experiences a typical recessionary 10Y UST Yield 2.97% 2.49% correction, bringing the CAPE multiple down to the average of -0.72% the 1990 and 2003 recessions? 12M T-Bill 2.32% 1.42% -9.32% Yield -32.69% Outcome: -3.82% The S&P 500 CAPE multiple dropped by 17% during the CPI 2.43% 1.71% 1.92% 1990 recession, and by 23% in 2003 -1.87% Dropping to a CAPE around 21 would require a market EUR 1.18$ 1.07$ decline of nearly 35% from S&P 500 at 2500 7.75% Valuations are much further extended today, with earnings Oil 65.52$/barrel 44.1$/barrel growth providing only a partial cushion for a potential recessionary correction Retail Sales 4.68% 0.86% Timeframe: Unemployment 3.8% 5.72% 1 Year US GDP 2.86% 0.99% Scenario Progress: Growth 0% Complete USD 93.9(Index 101.18(Index Value) Value) Holdings Scenario Total = $294,782 -21%* Equities - Stocks -41.4% Fixed Income - Bonds Alternative - Alt -1.4% Cash - Money Market -33.7% Current Total = $400,000.00 -0.0% Total % = -26.3 (+/- 2.64%) Recommendation Scenario Total = $345,008 -21%* Equities - Stocks -29.8% Fixed Income - Bonds Alternative - Alt +5.6% Cash - Money Market +5.0% -0.0% Current Total = $400,000.00 Total % = -13.7 (+/- 2.16%) * The dashed line represents your risk tolerance. 23
S&P Valuation: 44 CAPE - All-time Highs Levers Current Projected Change 3614.88 30.39% Description: S&P 500 2772.35 4.52% 1.55% 3.48% 1.16% Can low interest rates and a growing economy enable the S&P 10Y UST Yield 2.97% 500 to sustain levels of valuation far above long-term 2.69% 0.26% averages? 12M T-Bill 2.32% 1.2$ 1.69% Yield 75.47$/barrel 15.19% Outcome: 4.85% 0.17% The S&P 500 reached an all-time high CAPE (cyclically- CPI 2.43% 3.62% -0.18% adjusted PE ratio) of 44.19 in December 1999, at the peak 3.37% 0.51% of the dot-com bubble EUR 1.18$ Reaching those levels would imply an S&P 500 rise to 3600 91.69(Index -2.35% from around 2700 at the start of 2018 Oil 65.52$/barrel Value) The last time this level of valuation was reached, the ensuing crash halved the S&P 500 over the following 2.5 Retail Sales 4.68% years Unemployment 3.8% Timeframe: US GDP 2.86% 1 Year Growth Scenario Progress: USD 93.9(Index 8% Complete Value) Holdings -21%* Equities - Stocks Fixed Income - Bonds +42.7% Alternative - Alt Cash - Money Market -0.5% Current Total = $400,000.00 +31.0% -0.0% Scenario Total = $505,664 Total % = 26.4 (+/- 2.01%) Recommendation -21%* Equities - Stocks Fixed Income - Bonds +29.7% Alternative - Alt Cash - Money Market -7.1% -5.5% Current Total = $400,000.00 -0.0% Scenario Total = $452,179 Total % = 13.0 (+/- 1.72%) * The dashed line represents your risk tolerance. 24
Tech Bubble: Tech Crash Levers Current Projected Change 5059.52 -34.2% Description: Nasdaq 7689.24 2245.6 -19.0% 2.37% -0.6% What if frothy tech sector valuations come crashing down, but S&P 500 2772.35 2.18% -0.14% doesn't completely destroy the market as a whole? 10Y UST Yield 2.97% 2.29% -0.14% Outcome: 0.99$ -16.1% Tech companies and the Nasdaq would feel the most pain 12M T-Bill 2.32% 47.52$/barrel -27.47% in this scenario Yield 1.8% -2.88% Tech is not the sole market driver today, so a downturn 4.4% 0.6% would be more muted than in 2000 CPI 2.43% 1.88% -0.98% The Fed might attempt to combat a crash with QE and low rates, propping up other sectors like housing EUR 1.18$ 95.5(Index 1.7% Value) Timeframe: Oil 65.52$/barrel 1 Year Retail Sales 4.68% Scenario Progress: Unemployment 3.8% 0% Complete US GDP 2.86% Growth USD 93.9(Index Value) Holdings Scenario Total = $326,664 -21%* Equities - Stocks -29.3% Fixed Income - Bonds Alternative - Alt -0.2% Cash - Money Market -26.5% Current Total = $400,000.00 -0.0% Total % = -18.3 (+/- 2.13%) Recommendation Scenario Total = $372,910 -21%* Equities - Stocks -15.7% Fixed Income - Bonds Alternative - Alt +4.0% Cash - Money Market +4.9% -0.0% Current Total = $400,000.00 Total % = -6.8 (+/- 1.78%) * The dashed line represents your risk tolerance. 25
Tech Bubble: Bull Market Correction Levers Current Projected Change 6089.88 -20.8% Description: Nasdaq 7689.24 2495.12 -10.0% 2.73% -0.24% What if tech company valuations normalize, erasing the recent S&P 500 2772.35 2.32% 0.0% outperformance by the Nasdaq? 10Y UST Yield 2.97% 2.43% 0.0% Outcome: 1.15$ -2.54% The Nasdaq has outperformed the S&P 500 by roughly 12M T-Bill 2.32% 61.92$/barrel -5.49% 10% over the last year Yield 4.5% -0.18% Drop in tech valuations might start in private funding (VCs) 3.8% 0.0% and spread to public markets CPI 2.43% 2.72% -0.14% A mild correction in the Nasdaq might ensue, with lesser impacts on other major equity indices EUR 1.18$ 96.3(Index 2.56% Value) Timeframe: Oil 65.52$/barrel 1 Year Retail Sales 4.68% Scenario Progress: Unemployment 3.8% 0% Complete US GDP 2.86% Growth USD 93.9(Index Value) Holdings Scenario Total = $362,687 -21%* Equities - Stocks -16.3% Fixed Income - Bonds Alternative - Alt +2.4% Cash - Money Market -15.6% Current Total = $400,000.00 -0.0% Total % = -9.3 (+/- 1.65%) Recommendation Scenario Total = $391,272 -21%* Equities - Stocks -7.4% Fixed Income - Bonds Alternative - Alt +4.2% Cash - Money Market +4.0% -0.0% Current Total = $400,000.00 Total % = -2.2 (+/- 1.21%) * The dashed line represents your risk tolerance. 26
Tech Bubble: Tech Hits Y2K Valuations Levers Current Projected Change 9014.34 17.23% Description: Nasdaq 7689.24 3011.23 8.62% 3.46% 0.49% What if tech giants continue rising so that their valuations on a S&P 500 2772.35 2.82% 0.5% P/E basis are similar to that of the 2000 peak? 10Y UST Yield 2.97% 2.64% 0.21% Outcome: 1.16$ -1.69% Nasdaq will continue to rally faster than the overall market 12M T-Bill 2.32% 62.78$/barrel -4.18% as tech companies dominate more markets Yield 4.68% 0.0% GDP growth and inflation will be muted as technology- 3.95% 0.15% based deflation spreads to more sectors CPI 2.43% 3.0% 0.14% Technology will enable new capabilities, but will also continue to displace middle class jobs, so that EUR 1.18$ 95.52(Index 1.73% unemployment stays flat Value) Oil 65.52$/barrel Timeframe: Retail Sales 4.68% 1 Year Scenario Progress: Unemployment 3.8% 49% Complete US GDP 2.86% Growth USD 93.9(Index Value) Holdings Scenario Total = $443,137 -21%* Equities - Stocks +16.3% Fixed Income - Bonds Alternative - Alt +1.7% Cash - Money Market +13.5% Current Total = $400,000.00 -0.0% Total % = 10.8 (+/- 1.53%) Recommendation Scenario Total = $420,392 -21%* Equities - Stocks +9.7% Fixed Income - Bonds Alternative - Alt -0.3% Cash - Money Market +0.6% Current Total = $400,000.00 -0.0% Total % = 5.1 (+/- 1.18%) * The dashed line represents your risk tolerance. 27
Baseline: S&P 500 Down 20% Levers Current Projected Change 2217.88 -20.0% Description: S&P 500 2772.35 2.49% -0.48% 1.9% -0.42% What if the S&P 500 has a strong correction and falls 20% over 10Y UST Yield 2.97% a short timeframe? 2.01% -0.42% 12M T-Bill 2.32% 1.05$ -11.02% Outcome: Yield 52.92$/barrel -19.23% A 20% correction is usually associated with a slowdown in 4.14% -0.54% GDP growth and a rise in unemployment CPI 2.43% 4.2% 0.4% Interest rates would fall significantly as investors brace for 2.02% -0.84% a recession EUR 1.18$ Most investable assets including real estate, commodities, 97.1(Index 3.41% and precious metals would see some decline Oil 65.52$/barrel Value) Timeframe: Retail Sales 4.68% 1 Year Unemployment 3.8% Scenario Progress: US GDP 2.86% 0% Complete Growth USD 93.9(Index Value) Holdings Scenario Total = $346,335 -21%* Equities - Stocks -22.4% Fixed Income - Bonds Alternative - Alt +1.6% Cash - Money Market -19.2% Current Total = $400,000.00 -0.0% Total % = -13.4 (+/- 1.97%) Recommendation Scenario Total = $373,274 -21%* Equities - Stocks -16.6% Fixed Income - Bonds Alternative - Alt +5.3% Cash - Money Market +4.4% -0.0% Current Total = $400,000.00 Total % = -6.7 (+/- 1.42%) * The dashed line represents your risk tolerance. 28
Baseline: Treasury rates up 100bp Levers Current Projected Change 2800.07 1.0% Description: S&P 500 2772.35 3.97% 1.0% 2.82% 0.5% What if 10 year treasury rates rise 100 basis points as interest 10Y UST Yield 2.97% rates normalize? 2.43% 0.0% 12M T-Bill 2.32% 1.17$ -0.85% Outcome: Yield 65.52$/barrel 0.0% A 100bp rise in rates might occur independent of other 4.68% 0.0% large market moves CPI 2.43% 3.8% 0.0% 30 year mortgage rates would be most impacted, rising to 2.86% 0.0% the 5% range EUR 1.18$ If interest rate spreads widen, could be positive for 93.9(Index 0.0% financial firms and lenders Oil 65.52$/barrel Value) Timeframe: Retail Sales 4.68% 1 Year Unemployment 3.8% Scenario Progress: US GDP 2.86% 0% Complete Growth USD 93.9(Index Value) Holdings Scenario Total = $405,986 -21%* Equities - Stocks +2.8% Fixed Income - Bonds Alternative - Alt -0.6% Cash - Money Market +1.2% Current Total = $400,000.00 -0.0% Total % = 1.5 (+/- 1.11%) Recommendation Scenario Total = $400,244 -21%* Equities - Stocks +2.7% Fixed Income - Bonds Alternative - Alt -3.2% Cash - Money Market -2.4% -0.0% Current Total = $400,000.00 Total % = 0.1 (+/- 1.14%) * The dashed line represents your risk tolerance. 29
Baseline: S&P 500 Up 10% Levers Current Projected Change 3049.58 10.0% Description: S&P 500 2772.35 3.21% 0.24% 2.6% 0.28% What if the S&P 500 rises 10%, in line with its long term 10Y UST Yield 2.97% average since 1950? 2.57% 0.14% 12M T-Bill 2.32% 1.21$ 2.54% Outcome: Yield 67.32$/barrel 2.75% Since 1950 the S&P 500 has risen roughly 10% per year 4.68% 0.0% including dividends (7.7% without) CPI 2.43% 3.7% -0.1% A small rise in rates might accompany this kind of average 3.28% 0.42% performance EUR 1.18$ Inflation and commodities prices would likely be held in 93.9(Index 0.0% check Oil 65.52$/barrel Value) Timeframe: Retail Sales 4.68% 1 Year Unemployment 3.8% Scenario Progress: US GDP 2.86% 0% Complete Growth USD 93.9(Index Value) Holdings Scenario Total = $439,089 -21%* Equities - Stocks +14.3% Fixed Income - Bonds Alternative - Alt +2.4% Cash - Money Market +9.8% -0.0% Current Total = $400,000.00 Total % = 9.8 (+/- 1.56%) Recommendation Scenario Total = $425,285 -21%* Equities - Stocks +11.0% Fixed Income - Bonds +0.9% Alternative - Alt +2.0% Cash - Money Market -0.0% Current Total = $400,000.00 Total % = 6.3 (+/- 1.21%) * The dashed line represents your risk tolerance. 30
Oil Prices: Commodities Perfect Storm Levers Current Projected Change 45.0$/barrel -31.32% Description: Oil 65.52$/barrel 2070.95 -25.3% 2.37% -0.6% What if the commodities drop and subdued inflation are a S&P 500 2772.35 1.76% -0.56% prelude to a market correction? 10Y UST Yield 2.97% 1.59% -0.84% Outcome: 1.09$ -7.63% Equities markets generally underperform in deflationary 12M T-Bill 2.32% 2.88% -1.8% periods Yield 4.0% 0.2% If commodities and CPI are indeed predicting falling prices, 1.6% -1.26% the stock market and economic growth might both not be CPI 2.43% far behind 97.1(Index 3.41% This scenario would likely exacerbate the trend which EUR 1.18$ Value) started with the oil drop - weakness in energy and materials, and relative strength in tech and consumer- Retail Sales 4.68% oriented sectors Unemployment 3.8% Timeframe: US GDP 2.86% 1 Year Growth Scenario Progress: USD 93.9(Index 0% Complete Value) Holdings Scenario Total = $328,951 -21%* Equities - Stocks -27.8% Fixed Income - Bonds Alternative - Alt -1.3% Cash - Money Market -24.1% Current Total = $400,000.00 -0.0% Total % = -17.8 (+/- 2.49%) Recommendation Scenario Total = $360,066 -21%* Equities - Stocks -21.5% Fixed Income - Bonds Alternative - Alt +3.8% Cash - Money Market +4.3% -0.0% Current Total = $400,000.00 Total % = -10.0 (+/- 1.94%) * The dashed line represents your risk tolerance. 31
Oil Prices: $90 - Iran Sanctions Reinstated Levers Current Projected Change 83.94$/barrel 28.11% Description: Oil 65.52$/barrel 2575.46 -7.1% 2.79% -0.18% What if Iran's access to world oil markets is cut off by a restart S&P 500 2772.35 2.43% 0.11% of US and European sanctions? 10Y UST Yield 2.97% 2.9% 0.47% Outcome: 1.17$ -0.85% The US already reinstated Iran sanctions, but Europe 12M T-Bill 2.32% 4.82% 0.14% continues to negotiate over Iran's nuclear program Yield 4.0% 0.2% Oil prices might spike upward if Iranian oil production is 2.67% -0.19% curtailed CPI 2.43% A mild price shock might slow growth a bit in the US and 95.25(Index 1.44% other major energy consumers EUR 1.18$ Value) Timeframe: Retail Sales 4.68% 1 Year Unemployment 3.8% Scenario Progress: US GDP 2.86% 23% Complete Growth USD 93.9(Index Value) Holdings Scenario Total = $388,150 -21%* Equities - Stocks -5.8% Fixed Income - Bonds Alternative - Alt +1.8% Cash - Money Market -6.4% -0.0% Current Total = $400,000.00 Total % = -3.0 (+/- 1.37%) Recommendation Scenario Total = $394,778 -21%* Equities - Stocks -4.8% Fixed Income - Bonds Alternative - Alt +2.9% Cash - Money Market +3.2% -0.0% Current Total = $400,000.00 Total % = -1.3 (+/- 1.16%) * The dashed line represents your risk tolerance. 32
Client AcknowledgementI understand that this report is only a guide to building an overall financial solution, and recognize that there are other factors toconsider when making portfolio decisions. The purpose of this report is to establish a clear understanding between the client(s) andthe advisor as to the investment guidelines and goals for the investor's assets. Please review the underlying assumptions carefully.Past performance is no guarantee of future results and principal values fluctuate with changing market conditions.The information presented in this report is for illustrative purposes only and does not constitute investment advice. The resultspresented here are hypothetical and may not reflect the actual growth of investments. The data presented may exclude commissions,sales charges or fees which, if included, would have had a negative effect on the annual returns. Investing in securities involves riskof loss that clients should be prepared to bear. It should be assumed that investments listed in this report are not FDIC insured.Investors should consider an investment's objective, risks, charges, and expenses carefully before investing. In the case of ETFs(Exchange Traded Funds) and mutual funds, the associated prospectus contains this and other important information which shouldbe considered before investing. The advisor will assist the client(s) in making investment decisions based in individual needs,objectives, and risk tolerance. The client(s) is/are responsible for providing valid information on their financial status, risk tolerance,goals, and must notify the advisor of any changes.I hereby affirm that I have reviewed the information presented in this report. I acknowledge that the information accurately reflects myinvestment objectives and goals. On a timely basis, I will inform the advisor(s), in writing, of any material changes in our financialsituation and/or my investment objectives, which might affect the investment of my assets. Client Signature Date Client Signature Date Date Wealth Advisor Signature Date Wealth Advisor Signature
Proposal DisclosuresIMPORTANT:The projections generated by HiddenLevers regarding the likelihood of various investment outcomes are hypothetical innature, do not reflect actual investment results, and are not guarantees of future results. Assumptions on rates of returnand standard deviation used in this analysis are based on historical return data for each security and asset class. Pastperformance is no guarantee of future results. Results may vary with each use and over time. You cannot invest directlyin a benchmark or index. Index results do not reflect fees, expenses, or sales charges incurred when makinginvestments.Methodology Used to Generate this Report:Definitions:Cross Correlations - HiddenLevers measures the correlation between every pair of investments in the portfolio. The correlationresults can vary between 1 and -1, where a correlation of 1 means that two investments move together perfectly over time, and acorrelation of -1 means that two investments move in opposite directions over time.Lever - HiddenLevers tracks different levers (economic indicators) like CPI, US GDP Growth, and oil prices, and uses movements inthese levers to define economic scenarios.Lever Impact - The lever impacts section describes the impact of different economic levers on the portfolio as a whole. An S&P leverimpact of 1.0, for example, means that a 1% rise in the S&P 500 is projected to lead to a 1% rise in the portfolio. HiddenLeverssimilarly measures the impact of a range of economic levers on the portfolio.Maximum Drawdown (MDD) - this is measured as the largest percentage drop in a position during the timeframe of measurement.Click the + sign on the Risk Measures box to see the timeframe of measurement for Max Drawdown in the top right hand corner ofthe box.Scenario - A scenario is a representation of a major macro-economic or geopolitical event which has the potential to impactinvestment returns. HiddenLevers models scenarios as a set of up-or-down movements in any of the economic indicators (levers) inthe system.Scenario Impacts - Using HiddenLevers' stress testing model, an upside and downside impact are projected for the portfolio in eachscenario. Most scenarios are modeled with multiple potential outcomes, with both positive, neutral, and negative outcomesconsidered. The best and worst projections are derived from running the different scenario outcomes against the portfolio inHiddenLevers model. The scenario-based stress testing model is discussed in detail in the Method section below.Sharpe Ratio - The Sharpe Ratio is the a measure for calculating risk-adjusted return, and this ratio has become the industrystandard for such calculations. It was developed by Nobel laureate William F. Sharpe. The Sharpe ratio is the average return earnedin excess of the risk-free rate per unit of volatility or total risk. HiddenLevers calculates the Sharpe ratio by subtracting short term(1M) T-bill rates from the portfolio's annualized total return, and then dividing by the portfolio's volatility (annualized standarddeviation).Volatility - HiddenLevers measures volatility as the annualized standard deviation of an investment or portfolio, expressed inpercentage terms. The standard deviation is calculated using weekly data points, and is then annualized by multiplying by the
square-root of 52 (number of periods in one year).Method:This report describes one or more potential scenarios, and shows the HiddenLevers-model based performance for theportfolio in each scenario. The steps below are performed to generate the projections:Scenario -> Levers -> Assets (Stocks etc) -> Portfolio ReturnA scenario pushes levers up or down, which in turn push assets up or down, which in turn impact a portfolio's modeled return in thescenario. As defined above, a scenario is modeled as a set of movements in the levers. Regression analysis is used to determine thehistorical (prior 10 year) relationship between each lever and each asset in the portfolio. The model is then run 2500 times for eachscenario/portfolio combination. In each iteration, the model projects the returns for each asset using the historical regressioncoefficients for each lever, and using the scenario assumptions on how each lever will change. The model varies the regressioncoefficients for each iteration using a normal distribution around their mean (similar to a Monte Carlo model's varying of expectedreturns across iterations), and aggregates the results of the 2500 iterations to find a mean portfolio return with a 95% confidenceinterval. The confidence interval is displayed on the report as \"margin of error\" for each scenario.Limitations and Assumptions:This report describes one or more potential scenarios that may or may not occur. Each scenario discussed in this report is defined bythe economic assumptions listed in the Macro Impact section of each scenario page. HiddenLevers does not guarantee that anyparticular scenario will occur as modeled in this report. HiddenLevers uses historical analysis in the creation of this report, and pastperformance is not a guarantee of future results. The information contained in this report is not to be construed as advice and shouldnot be confused as any sort of advice. Investors should consider this report as only a single factor in making their investmentdecision.Disclosures:IMPORTANT: The projections or other information generated by Hidden Levers regarding the likelihood of various investmentoutcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. The returnassumptions in HiddenLevers are not reflective of any specific product, and do not include any fees or expenses that may be incurredby investing in specific products. The actual returns of a specific product may be more or less than the returns used in HiddenLevers.It is not possible to directly invest in an index. Financial forecasts, rates of return, risk, inflation, and other assumptions may be usedas the basis for illustrations. They should not be considered a guarantee of future performance or a guarantee of achieving overallfinancial objectives. Past performance is not a guarantee or a predictor of future results of either the indices or any particularinvestment. HiddenLevers offers several methods of calculating results, each of which provides one outcome from a wide range ofpossible outcomes. All results in this Report are hypothetical in nature, do not reflect actual investment results, and are notguarantees of future results. All results use simplifying assumptions that may not completely or accurately reflect the specificcircumstances. No Plan or Report has the ability to accurately predict the future. As investment returns, inflation, taxes, and othereconomic conditions vary from the Hidden Levers assumptions, your actual results will vary (perhaps significantly) from thosepresented in this Report. The results are calculated over many years, small changes can create large differences in future results.You should use this Report to help you focus on the factors that are most important to you. This Report does not provide legal, tax, oraccounting advice. Before making decisions with legal, tax, or accounting ramifications, you should consult appropriate professionalsfor advice that is specific to your situation. This information is provided for your convenience, but should not be used as a substitutefor your account's monthly statements and trade confirmations. It has been gathered from information provided by you and othersources believed to be reliable. Investors in Mutual Funds and ETFs should consider the investment objectives, risks,charges and expenses of the investment company carefully before investing. The prospectus and, if available, the summaryprospectus contain this and other important information about the investment company. You can obtain a prospectus and summaryprospectus from your financial representative. Read carefully before investing. The opinions voiced in this material are for generalinformation only and are not intended to provide specific advice or recommendations for any individual. To determine whichinvestment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historicaland is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Assumed rates of return and
standard deviation assumptions used in the HiddenLevers analysis are based on historical return data for the benchmark index forthe asset class. Indices are unmanaged and cannot be invested into directly. Past performance is no guarantee of future results.HiddenLevers is not affiliated with Raymond James & Associates or Raymond James Financial Services. Raymond James &Associates, Inc., member New York Stock Exchange/SIPC Raymond James Financial Services, Inc., member FINRA/SIPC.Investment products are: not deposits, not FDIC/NCUA insured, not insured by any government agency, not bank guaranteed,subject to risk and may lose value.HiddenLevers, maker of software used to create this report, makes the following disclosures:HiddenLevers' mission is to educate and provide useful macro risk analytical tools to help provide data to assist with the investmentdecision process. We rely on financial data, including stock prices, provided by third parties. The data is believed to be accurate, butHiddenLevers does not guarantee or warranty this data. This report is intended only as an informational tool for you and yourinvestment advisor, and should not in any way be construed as investment advice by HiddenLevers. If you make investmentdecisions based on information you receive in connection with this report, you do so at your own risk and neither HiddenLevers norits employees will be liable for any losses that you may incur. GxWorks LLC (dba HiddenLevers), its employees, officers or affiliates,in some instances, may have long or short positions or holdings in the securities or other related investments of companiesmentioned herein. Users of this should conduct their own independent research and due diligence and consult with their investmentadvisor before making any investment decisions or recommendations.
Appendix: Fund Fact Sheets
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