INNOVATIVE PORTFOLIOS for the intelligent advisor FPA Ventura| November 2019 Jim Murphy, CFP®,CAIA Using Director of Investments Strategies for Financial Planning Solutions

Innovative Portfolios Disclaimers

• Options are unique securities and can involve significant risks. Please review the previously provided copy of Characteristics and Risks of Standardized Options prior to trading options. • Spreads, , and other multiple-leg option strategies are advanced option strategies and can present a greater and more complex risk, than basic options trades. • A covered call strategy can limit the upside potential of the underlying stock position, as the stock would likely be called away in the event of substantial stock price increase. Additionally, any downside protection provided to the related stock position is limited to the premium received. • The collared strategy risk is limited for the term of the hedge. The long put position could possibly result in a loss, if the stock price falls below the strike of the put, the put is exercised at . The call position may force the sale of appreciated shares due to assignment risk. • The vertical put strategy maximum loss is the difference between the strike prices on the two options, minus the amount you were credited when the position was established. Disclosures continued…

• Attendees should consult with their tax advisors regarding the tax implications of any investment strategy. • Any trade ideas discussed during this presentation should not be construed as a recommendation to buy or sell. • Any performance discussed is no guarantee of future results. This presentation does not take into consideration investors personal financial situation. The information provided is only for general purposes and is not to be considered a recommendation or investment advice. • Any and all opinions expressed are our own and may change at any time without notice as market conditions change constantly. • This presentation is the exclusive property of Innovative Portfolios, LLC . Any distribution of this presentation requires the express written consent of Innovative Portfolios, LLC and, Disclosures continued…

• This presentation is for general informational and educational purposes, and where appropriate, to assist in explaining the nuances of portfolio characteristics or composites. It is not investment advice for any person. There may be a sub-advisor or third-party nonaffiliated presenter, and if so those presenters will be clearly listed at the beginning of the presentation.. All investors who desire to participate in option transactions should obtain the option disclosure document, titled Characteristics and Risks of Standardized Options, which outlines the purposes and risks of option transactions. Despite their many benefits, options are not suitable for all investors. Individuals should not enter into option transactions until they have read and understood the risk disclosure document which can be obtained from their advisor, any of the options exchanges, or OCC. Information is obtained from sources Innovative Portfolios believes are reliable, however, Innovative Portfolios does not audit, verify, or guarantee the accuracy or completeness of any material contained therein. The statements and opinions reflect the judgment of the firm, and along with the information from third-party sources and calculations, are made on the date hereof and are subject to change without notice. Innovative Portfolios does not assume liability for any loss that may result from reliance by any person upon any material from this presentation. Clients or prospective clients are directed to Innovative Portfolios Form ADV Part 2A and to one of Innovative Portfolios representatives for individualized information prior to deciding to participate in any portfolio or making any investment decision. Innovative Portfolios does not provide tax advice. Clients are strongly urged to consult their tax advisors regarding any potential investment. Innovative Portfolios is a federally registered investment adviser with the SEC. For ease of explanation, examples in the presentation we do not deduct commissions or fees . Investments in financial instruments, and options in particular, carry significant risks, including the possible loss of the principal amount invested. Past performance does not guarantee future results; there is always a possibility of loss. Who we are…

Sheaff Brock Investment Advisors*+ 2001

SB Auer Funds*# 2007

Salzinger Sheaff Brock*+ 2009

Sheaff Brock Institutional Group^ 2015

Innovative Portfolios*+ 2018

* SEC-registered investment advisor. Additional information available at adviserinfo.sec.gov. + Under common control and ownership by Sheaff Brock Capital Management, LLC # Sheaff Brock Capital Management, LLC, is a minority owner of SBAuer Funds, LLC ^ Sheaff Brock Institutional Group is a subdivision of Sheaff Brock Investment Advisors, LLC Education is key…

“An investment in knowledge pays the best interest.”

—Benjamin Franklin Practice Management…

Financial Planning

Financial Planning Financial Planning Process Standards Areas

1. Defining client- • Financial statement planner relationship prep & analysis 2. Gathering client data • Insurance planning / & goals risk management 3. Evaluating client’s • Employee benefits current status planning 4. Recommendations / • Investment planning alternatives • Income tax planning 5. Implementing • Retirement planning recommendations • Estate planning 6. Monitoring recommendations Today’s Learning Objectives…

• Identifying financial planning issues within the Investment Portfolio

• Understanding Options…the Basics

• How to utilize option strategies to create desired outcomes for “investment” planning Agenda…

• Identify and discuss common “investment” planning issues

• Understanding Options • Usage • • Terminology • Pricing •

• Utilizing Options Strategies • Concentrated Position • Idle Portfolio (Low Cost Basis Stock Portfolio) • Portfolio Rebalancing

• Summary Common “Investment” Planning Issues…

• Maintaining a Balanced Allocation

• Idle Portfolio (Low Cost Basis)

• Concentrated Position Portfolio Rebalancing…

• Portfolio rebalancing is the process of realigning the weightings of a portfolio of assets. Rebalancing involves periodically buying or selling assets in a portfolio to maintain an original desired level of asset allocation

Source: Investopedia Idle Portfolio…Low Cost Basis Stocks

• Cost basis is the original value of an asset for tax purposes, usually the purchase price, adjusted for stock splits, dividends and return of capital distributions. This value is used to determine the capital gain, which is equal to the difference between the asset's cost basis and the current market value. The term can also be used to describe the difference between the cash price and the futures price of a given commodity.

Source: Investopedia Concentrated Position…

US Small Cap Equities International Equities US Large Cap Equities • A concentrated position occurs Em ergi ng Markets High Yield Bonds Individual Security US Mid Cap Equities US Treasury Bonds Corporate Bonds when an investor owns shares Cash

of a security that represent a Cash US Small Cap Equities Corporate Bonds large percentage of his or her International Equities overall portfolio. The portfolio US Treasury Bonds US Large becomes "concentrated” in the Cap Equities single position. Generally, a US Mid position is often considered to Cap Emerging be concentrated when it Equities Markets represents 20% or more of one’s portfolio. High Yield Bonds • Emotional attachment Individual Security • Performance bias • Not understanding the risks Concentrated Position • Not wanting to pay capital gains

Definition Source: Investopedia Perspective on “Risk”…

For an investor: Risk = Permanent Loss of Capital Starting in 1950’s after Harry Markowitz’s Modern Portfolio Theory (MPT) was introduced, and especially after 1990 when he won Nobel Prize and computer programs could plot the efficient frontier, many people equate: Risk = Volatility But is it? Perspective on “Risk”…

• The Wall Street Journal, April 30, 2018: “The real risk is believing that volatility is risk.” • Warren Buffett, 2014: “Risk is not the same as volatility, but that lesson has not customarily been taught in business schools, where volatility is almost universally used as a proxy for risk. Though this assumption makes for easy teaching, it is dead wrong: Volatility is far from synonymous with risk.” • Goldman Sachs Research, (November 15, 2007): We believe equity index volatility meets the definition of an asset class: (1) selling index volatility offers significant, passively generated returns for investors; (2) returns are large enough to justify a nontrivial allocation; and (3) volatility selling offers an appealing diversification benefit. Perspective on “Risk”… Annual Options Growth…

OCC Daily Option Contract Volume (1996–2016)

Source: OCC Why Options…

Source: Options Industry Council Bellamy Advisor Study 2012 Options as part of portfolio construct…

• Advisors from large teams agree that options offer utility in order to incorporate volatility as Expected Option Usage 2017-2020 an asset allocation • Advisors (particularly mega (AUM>$500mm) team advisors) exhibit an openness to considering other options strategies, methods of using options, and underlying instruments beyond the plain vanilla variety • Advisors not currently using options would prefer educational content related to implementation and position management. • The vast majority of Advisors that use options, agree that they are useful in managing client needs and meeting client objectives • Teams with more resources (e.g. CIO) agree Current Expected that options can lead to better investment outcomes for clients than teams that do not have these resources

Source: Cerulli Report/OIC Report, “How Financial Advisors Use and Think About Exchange-Listed Options” Option Basics: Option Pricing Option Basics: Volatility

From 1990 to 2017, the average , as measured by the CBOE Volatility Index® (VIX® Index) is 19.7%, while the average realized volatility is 15.4%, an average positive spread of 4.3%. High volatility premium indicates that the index options are richly priced.

Chart Source: Swan Global Investments and the Chicago Board Options Exchange® (CBOE ®) Option Basics: Two Types of Volatility Option Basics: Option Price Determinant- Implied Volatility (Vol)

• It is important to remember that implied volatility is theoretical probability. • It is an estimate of future prices. Implied Volatility Implied

Option Price Option Basics: Implied Volatility

VS.

Call Option Implied Company Stock Price Strike Price Price, 32 day Actual Yield Volatility

Twitter 34 34 $2.33 6.9% 52%

Cisco Systems 56.50 56.50 $1.68 3% 24%

Source: TD Ameritrade Thinkpipes, 4/22/2019, 4PM Option Basics: The Greeks

• Delta (Δ): Direction • Indicates the movement of the option price in relation to the movement of the underlying • Gamma (Γ): • Estimate how much the Delta will change when the stock price changes • Theta (Θ): Time • An indication of how much value your option price decays as it approaches expiration • Vega (ν): Volatility • Sensitivity of the option might be to large price swings in the underlying stock • Rho (ρ): Rates • Shows and indication of the effect of interest rate changes on an option Option Price Determinant: Time Decay (Theta)

Time Decay From Day 120 to Day 90 (Least Decline) Time Decay From Day 90 to Day 60 (Slightly Greater) Option Time Decay From Day 60 to Value Day 30 (Greater Still)

Time Decay Under 30 Days Prior to Expiry (Most Rapid)

120 90 60 30 0 Days Days Days Days Days Time Remaining Until Expiration Date Example: Time Decay

SPDR S&P 500 (SPY) Price $290, 4-22-2019 3PM, Source TD Ameritrade Thinkpipes

Time Strike Call Put Remaining Price Price Price Slow time decay

1 Day 290 0.20 0.20 Fast time decay time 30 Days 290 3.74 3.10 premium in option price 60 Days 290 5.80 5.15 -20% -30% -50%

88 Days 290 7.00 6.53 90 days 60 days 30 days 0 (expired)

days remaining until expiration Rebalancing a Portfolio: Covered Call Strategy

• Covered calls are an where an investor holds a long position in an asset and writes (sells) call options on that same asset to generate an income stream. This is often employed when an investor has a short-term neutral view on the asset and for this reason holds the asset long and simultaneously has a short position via the option to generate income from the option premium. A covered call is also known as a "buy-write".

Definition Source: Investopedia | Chart Source: Chicago Board Options Exchange® (CBOE ®) Rebalancing a Portfolio: Covered Call Strategy

Client has a $500,000 equity account and has a position of 1000 shares of XYZ Corp., which now makes up about 25% of the account value. XYZ’s all-time high is $123 and client is willing to diversify and sell half the shares at $125 in the next 3 months. Client sells 5 calls at a strike price of $125 with a 90 day expiration.

Client sells a covered call on 500 Call price, 90 Credit What XYZ shares day expiration received happens If called XYZ $125 strike price 90-day call sold. Credit for $3.57 per sells for and 90 days later XYZ has gone received contract equivalent of up above $125, call is exercised. $1785 $128.57 $125 strike price 90-day call sold. Credit Client keeps and 90 days later XYZ has stayed for $3.57 per received $1785 = 2.8% below $125, call expires. contract $1785 in 90 days Benefits & Risks of Covered Call Strategy…

Benefits Risks • Income generating strategy, call premium • Worst Case: Risk mainly comes from received and kept, opportunity to Long Position (i.e. Long Positon goes to increase income beyond dividends and zero) the option strategy risk is limited, interest still have downside equity risk • Regarded conservative strategy, reduces • Trade off scenario; the upside on shares downside risk by premium amount is limited by Short Call position • Neutral to moderately Bullish on the • Maximum Profit Potential: position, and expecting small price • Limited range/minimum volatility over the short • Maximum Loss Potential: term • Entire underlying position less • Reduces breakeven of underlying call premium received position • Receive premium income “Get Paid” to set a sell price Option Overlay Concept… Idle Portfolio: Vertical Put Credit Spread…

A bull put spread is an options strategy that is used when the investor expects a moderate rise in the price of the underlying asset. This strategy is constructed by purchasing one while simultaneously writing another put option with a higher strike price. The combination results in receiving a credit or income from the premium received. The goal of this strategy is realized when the price of the underlying moves or stays above the higher strike price. This causes the written option to expire worthless, resulting in keeping the premium. The risk of the strategy is limited by the bought put option.

Definition Source: Investopedia | Chart Source: Chicago Board Options Exchange® (CBOE ®) Vertical Put Credit Spread…

SPDR S&P 500 (SPY) trading at $290 Price $290, 2-19-2019 4PM, Source TD Ameritrade Thinkpipes

Put price, 87 Credit per Risk per Strike price and action day expiration contract contract 280 - Put sold 3% out-of-the- Sell for $4.80 money to bring in premium Net credit 280 – 255 = 255 - Put bought 9% below the received 25 points option sold. This acts as Buy for ($1.40) $3.40 maximum risk insurance against sharp drawdown • $280 – 3.40 = $276.60 gross exposure. • Return on gross exposure is 1.2% in 87 days or 5.0% annualized (if repeatable). • Bottom line: Monetizing implied volatility

Examples are for illustration only and do not include commission costs or fees which if includes would reduce returns Vertical Put Credit Spread…Overlay

SPDR S&P 500 (SPY) trading at $278 Price $290, 4-22-2019 4PM, Source TD Ameritrade Thinkpipes Client has $1,000,000 in a low basis position or a diversified account and would like additional income. An S&P 500 index credit spread overlay is used. The client is OK with some additional market volatility in exchange for additional income. Quarterly Credit per Strike price and action Exposure Premium contract 280 Put: 33 contracts sold 3% below Collect $15,840 the current market at $4.80 Net credit $913,000 gross 255 Put: - 33 contracts bought 9% received -or- below the option sold at $1.40 as Buy for ($4620) $11,220 $82,500 net insurance against sharp drawdown

• $924,000 – $11,220 = $913,000 or 91% gross market exposure. • Return on gross exposure is 1.2% in 87 days or 5.0% annualized (if repeatable). • Bottom line: Monetizing implied volatility

Examples are for illustration only and do not include commission costs or fees which if includes would reduce returns Concentrated Position: / Hedge Wrapper

Collar option strategies are a protective strategy that is implemented on a long stock position. An investor can create a collar position by buying an out-of-the- money put option and simultaneously selling an out-of-the-money . A collar is also known as hedge wrapper. The put protects value in case the price of the stock drops. Writing the call produces income (or offsets the cost of buying the put) and allows the trader to profit on the stock up to the strike price of the call, but not higher.

Definition Source: Investopedia | Chart Source: Chicago Board Options Exchange® (CBOE ®) Traditional Collar Example

Client has a position of 10,000 shares of XYZ, now at $122, and would like to protect the downside of 5000 shares. XYZ’s all-time high is $123 and client wants to protect the shares at a price of $115. The client is also willing to sell shares above $125. Client sells 50 calls at a strike price of $125 and buys 50 puts with a $115 strike price. Client has created a 125/115 collar with a 90 day expiration. Client sells 50 calls at $125 What Call premium Put cost Net credit and buys 50 puts at $115 happens

$3.57 per contract ($2.05) per XYZ sells for XYZ goes up through the collar. $1.52 or (2.9%) or $17,850 contract (1.7%) equivalent of $125, roll or call is exercised. $7600 total total or ($10,250) total $126.52

$3.57 per contract ($2.05) per Client keeps XYZ XYZ stays between $115 and $125. $1.52 or (2.9%) or $17,850 contract (1.7%) and keeps $7600 Collar expires. $7600 total total or ($10,250) total in premium

XYZ drops below $115. $3.57 per contract ($2.05) per Client sells XYZ $1.52 or Roll or Put is exercised and 5000 (2.9%) or $17,850 contract (1.7%) for equivalent of $7600 total shares are sold total or ($10,250) total $116.52

Examples are for illustration only and do not include commission costs or fees which if includes would reduce returns Benefits & Risks of Traditional Collar

Benefits Risks • Considered two strategies in one: • Worst Case is limited for the term of the • & Covered Call hedge: • PUT position; stock price falls below • Establishes fixed amount of price the strike of the put, the put is exposure for the term of the strategy exercised at strike price…could • Hedge Long Stock Position against possibly result in a loss possible near term decline • Call position; call position expires • Objective of strategy is met regardless of worthless share price volatility • Have some downside equity risk • Strategy insure downside hedge • May need to sell appreciated shares • Pay for insurance with call premium • Assignment Risk: • Often a no-cost transaction • Early assignment is possible for the short call position Index Funded Hedge - Hypothetical Example

Client has a position of 10,000 shares of XYZ, now at $122, and would like to protect the downside of 5000 shares at a price of $115. The client does not want to sell shares due to a very low basis. Client deposits XYZ shares to collateralize selling Index Spreads which fund the purchase of $115 insurance puts on XYZ with 90 day expiration.

#1 – 10,000 shares XYZ worth $1.2 million are deposited into account and used as collateral to fund index spread income strategy Like previous example, spreads generate 5% annualized $15,000 premium/qtr In exchange for cash flow each quarter accepting additional Beta is added to the volatility client earns Additional market risk is 9% of the collateral, or $108,000 portfolio 5% annualized

With these funds the client buys a 90 day put to protect the downside of 5000 XYZ shares #2 Client buys 50 XYZ puts at Net credit from Index Put cost $115 Spread/XYZ Put ($2.05) per XYZ drops below $115. $15,000 credit from spread contract (1.7%) Put can be exercised and 5000 shares ($10,250) cost of XYZ put or ($10,250) $4750 total credit to client sold, or put can be sold total

Examples are for illustration only and do not include commission costs or fees which if includes would reduce returns Benefits & Risks of Index Spread Funded Hedge

Benefits Risks • Insure downside • Have additional downside equity risk on the S&P 500 • Pay for insurance with index spread premiums • May need to have a long-term commitment to the index spread • Often a no-cost transaction strategy • No limit to the upside of the • Risk of being assigned (put the concentrated stock index) • Neutral to Bullish bias on the underlying • Positive theta = Time is on your side (Yes it is!) Summary

• Identified Investment Planning issues • Difference between risk and volatility • Discussed volatility as an asset class • Implied vs. historical volatility • Illustrated three financial planning uses for options, diversification, income and position protection • Reviewed the Covered Calls, Credit Spreads and Collars • Discussed benefits and risks Ben Widders Vice President, Southwest Region

[email protected] 317.689.6450

Innovative Portfolios Q&A Questions & Answers

Innovative Portfolios THANK YOU!

Innovative Portfolios Appendix

Innovative Portfolios PUT Index: Return

PUT Index Monthly Premiums Gross* amount of premiums received as a percentage of the underlying Avg. amount received was 1.7%

(June 1988 – January 2018) * Please note that the amounts shown are for the gross premiums received, and the net returns for the strategy can be less or negative.

Source: CBOE® www.cboe.com/benchmarks Spreads on an Index—PATIENCE may be required

Wide Spread = High Deductible Insurance

This is intended to illustrate the history of using the S&P 500 ETF (SPY) for an option overlay strategy. Results assume that an investor would be able to roll down one-point in strike price each month an option is rolled forward, but there is no guarantee or assurance this could be done in actual practice. Results do not show any return because the intent is to show how long a period may have been required to experience capital gains. Any gains and/or cash-flow would have been reduced by trading commissions and the deduction of a annual management fee. The illustration is designed to show price movement from an option overlay ONLY, and does not include any income or appreciation from the underlying collateral or the option spread credits. This is a hypothetical based on actual closing prices obtained from State Street Global Advisors and Yahoo Finance. Past performance does not guarantee or indicate future performance. Index option credit spread

XYZ Index Price $250

Credit Spread: Sell put at $240 strike $35 credit Buy put at $205 strike spread

One contract example, 90 day expiration = $24,000 gross notional exposure $3,500 net spread exposure

Sell put 4% out-of-the-money at $240 strike price for $5 premium = $500 Buy put 15% below at $205 as catastrophic insurance for $1 premium =($100) Credit received = $400

$400 credit / $24,000 exposure = 1.67% cash-flow in 90 days, or 6.7% annualized if repeatable

The above is a hypothetical example. For ease of example, commissions and management fees are not considered. If they were included, risk of capital would be higher by the amount of commissions and fees attributed to the transaction. Index Income Overlay Composite

Net Monthly Yield of Cash-flow, Gain/Loss, and MTM Total Return 8.00% Cash Flow Yield Realized G/L Yield Net MTM TR

6.00%

4.00%

2.00%

0.00%

Jul-16 Jul-17 Jul-18 Jun-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 -2.00%

-4.00%

Annual Returns and Performance (as of month-end 4-2019) Ye ar Cash Flow Total Return Trailing Cash Flow Total Return S&P 500 Gross Net Gross Net Gross Net Gross Net 2016* 4.10% 3.35% 3.23% 2.49% 1 Year 3.34% 2.06% 3.42% 2.15% 13.49% 2017 3.77% 2.48% 3.75% 2.46% 3 Year N/A N/A N/A N/A N/A 2018 2.95% 1.67% -2.38% -3.59% Inception* 4.42% 3.05% 3.75% 2.40% 14.63% YTD 2.00% 1.37% 6.50% 5.86% Inception 13.43% 9.16% 11.35% 7.17% 48.93% Cumulative Inception Cash Flow = Cash received from the sale of index option premium. Inception Total Return = Cash premiums minus the month-end short option value (positions closed as of month-end.

*Inception 6/1/2016, annualized if more than 12 months. All return data is net of trading costs and 1.25% management fee. Total return is calculated using the simple Dietz method. Index Income Overlay Composite

$1,700,000.00

Net Total Return of Overlay on $1,000,000 Cash or S&P 500 $1,601,085.51 $1,600,000.00 $1MM S&P 500 Total Return $1MM S&P 500 TR with Overlay (Net) $1,000,000 Cash with Overlay TR (Net)

$1,500,000.00

$1,400,000.00 $1,489,301.39

$1,300,000.00

$1,200,000.00

$1,076,661.88 $1,100,000.00

$1,000,000.00

$900,000.00

DISCLOSURES: The results shown reflect the results of the composite accounts following the Index Income Strategy. The results illustrate Index Income overlay only and do not include income or appreciation from the underlying collateral and include all accounts with only all three forward monthly spreads. The account values reflect the reinvestment of cash-flow income from the options. The numbers shown in MTM account Values are net of management fees and transaction costs. Although short option credit spreads are sold against the S&P 500, the intent is not to earn returns similar to the S&P 500, but instead attempt to profit from the implied volatility of the index options. Although there is no applicable benchmark because the Index Income overlay seeks absolute return based only upon the volatility of the S&P 500 ETF, we are comparing the returns to the S&P 500 Index. Returns from this relatively short period are less reliable than long-term results. The S & P 500 is an American stock market index based upon the market capitalizations of 500 large companies having common stock listed on the NYSE or NASDAQ.

Results are shown using actual trades, are net of trading commissions and the deduction of a 1.25% annual management fee, applied quarterly in advance. Results do not reflect the reinvestment of income and dividends from the underlying collateral. The composite starting month was June of 2016. Results include all deposits and withdrawals to the composite accounts. The material differences between an index benchmark and the above strategy performance are as follows: the total return from an index is derived from price appreciation (depreciation) plus the reinvestment of dividends. The total return from selling credit spreads on an index is derived from the option premium credit received only, but there is no participation in index appreciation or dividends. Past performance does not guarantee or indicate future results. Individuals should not enter into option transactions until they have read and understood the risk disclosure document titled, Characteristics and Risks of Standardized Options which can be obtained from their broker. Clients or prospective clients directed to Sheaff Brock Investment Advisor, LLC’s Form ADV Part 2A and to one of SBIA’s representatives for individualized information prior to deciding to participate in any portfolio or making any investment decisions.

No current or prospective client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance levels. All investment strategies have the potential for profit or loss. Changes in investment strategies, contributions or withdrawals, and economic conditions may materially alter the performance of your portfolio. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client's portfolio. Historical performance results for investment indexes and/or categories, generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment-management fee, the incurrence of which would have the effect of decreasing historical performance results. There can be no assurances that a strategy will match or outperform any particular benchmark.