Exchange-Traded Fund Portfolios Asset Allocation

Morningstar® Managed PortfoliosSM

Lower-cost, tax-efficient exchange-traded fund (ETF) model Exchange-Traded portfolios in five core choices that span the risk spectrum. Fund Portfolios Asset Allocation A range of core ETF choices for every stage of your lifetime The ETF portfolios we offer are actively managed by a team of professionals using a research-driven process to help create diversified, low-cost, and tax-efficient portfolios.

We Find Value Morningstar, Inc. Research Our investment professionals around the world study We use a bottom-up, fundamental approach to global markets to find what others may be missing. evaluate each ETF. We begin with trusted data from our We begin with a blank sheet of paper, not a benchmark, parent company, Morningstar, Inc., where analysts pushing ourselves to find value, which we define cover the stocks inside dozens of ETFs, examining profit- as getting more than what you pay for. Our disciplined ability, growth characteristics, and business risk. and principled approach to finding value builds risk We roll up the analyst rating for each stock to help assess management into every purchase. the attractiveness of an ETF as a whole. From there, we use a proprietary methodology—including reviews ETFs vs. Mutual Funds: What’s the Difference? of costs and risk—to select an ETF. Only our highest- Exchange-traded funds track a market index, such conviction picks make it into your portfolio. as the S&P 500. Like mutual funds, they’re pooled investment fund vehicles. However, unlike mutual funds Tax- and Cost-Effective Management that price and trade once a day, ETFs trade on the Because markets are in constant motion, we constantly major exchanges like stocks, and their prices track the monitor our portfolios, to help ensure each portfolio sticks underlying value of the securities in the indexes they to its risk and return objectives. We rebalance or replace are designed to match. This flexibility, combined with the holdings when necessary. We also seek to minimize cost and tax savings they offer, has made ETFs popular the costs that you pay, trading infrequently to help keep with investors. costs and taxes in check.

Building Holistic Portfolios Each portfolio is created using our investment process.

In-Depth Valuation Analysis Develop Asset Class Views Investment Selection Portfolio Construction Ongoing Monitoring We analyze capital markets Our asset allocation best Assessing ETFs must go When building portfolios, As markets change, so do with a valuation lens to thinking stems from valuation- beyond cost. Starting with we look at the whole picture. our portfolios. Our investment find ways we can get more based opportunities in stock data and analysis from Considering risk and return team monitors them each than we’ll pay for, and gauge and bond markets, as we Morningstar, Inc., we characteristics of investments day to stay well-positioned market sentiment to help seek to maximize return for examine each ETF’s risk may adjust our asset class and risk-aware through ensure we're taking a a given level of risk. characteristics and thinking as we bring pieces the market’s ups and downs. contrarian look at markets. assess how it will fit into together into a portfolio. our portfolios. Asset Allocation Our model portfolios are carefully designed to put your across asset classes, managers, and investment styles. needs front and center—where they belong. We To select a portfolio, talk to your financial advisor, Portfolios think your portfolio should be working for you no matter who can help you build a wealth strategy focused on what investment approach or style is in favor at any your long-term goals. given time. That’s why we keep them broadly diversified Active/Passive Active/Passive Active/Passive Active/Passive Active/Passive 20 / 80 40 / 60 60 / 40 80 / 20 95 / 5

Portfolios % Asset Allocation Goal

Aggressive Growth 67 U.S. Stocks Long-term capital appreciation. Designed to help investors

28 International Stocks to participate fully in the growth the stock market can

3 U.S. Bonds Active/Passiveoffer, the portfolio investsActive/Passive primarily in domestic andActive/Passive foreign Active/Passive Active/Passive – International Bonds 20 / 80equities, while seeking40 to / cushion60 equity market downturns60 / 40 80 / 20 95 / 5 2 Short Term Reserves with modest exposure to fixed-income securities.

Growth 56 U.S. Stocks Long-term capital appreciation. Designed to help investors

24 International Stocks to take advantage of the potential for stock market growth by Conservative Income & Moderate Growth Aggressive Momentum Momentum Momentum Momentum Momentum 15 U.S. Bonds investing primarily inActive/Passive domestic and foreign equities.Active/Passive Active/Passive Active/Passive Active/Passive Growth Growth Growth 20/80 3 International Bonds40/60 60/40 80/20 95/5 20 / 80 40 / 60 60 / 40 80 / 20 95 / 5 2 Short Term Reserves

Moderate Growth 42 U.S. Stocks Long-term growth with moderate volatility. Built with a

Conservative Income & Moderate Growth Aggressive 18 International StocksMomentumfocus on providingMomentum balanced and varied exposureMomentum by investing Momentum Momentum Growth Growth Growth 32 U.S. Bonds 20/80 in both equity and40/60 fixed-income securities. 60/40Active/Passive 80/20Active/Passive 95/5Active/Passive Active/Passive Active/Passive 6 International Bonds 20 / 80 40 / 60 60 / 40 80 / 20 95 / 5 2 Short Term Reserves

Income & Growth 28 U.S. Stocks Moderate capital appreciation combined with current income.

12 International Stocks Combines the growth potential of equities with the balance Ultra Short-Range Short-Range Mid-RangeConservative Long-RangeIncome & Moderate Growth ContrarianAggressive & Income Contrarian MomentumContrarian & Growth Momentum Momentum Momentum Momentum Growth Growth Growth 46 U.S. Bonds that fixed-income20/80 securities can provide. 40/60 60/40Active/Passive 80/20Active/Passive 95/5Active/Passive Active/Passive Active/Passive 9 International Bonds 20 / 80 40 / 60 60 / 40 80 / 20 95 / 5 5 Short Term Reserves

Conservative 14 U.S. Stocks Protection from capital loss and a safeguard against

6 International Stocks inflation. Invested in fixed-income and equity securities, it’s Conservative Income & Moderate Growth Aggressive Momentum Momentum Momentum Momentum Momentum Ultra Short-Range Short-Range Mid-Range Long-Range 58 U.S. Bonds Contrarian & Income Contrarian Contrarian & Growth Growth Growth Growth designed to be best-suited for investors who value20/80 current 40/60 60/40 80/20 95/5 12 International Bonds income and stability over all else. 10 Short Term Reserves

U.S. Stocks International Stocks U.S. Bonds International Bonds Short Term Reserves Conservative Income & Moderate Growth Aggressive Momentum Momentum Momentum Momentum Momentum Tax Advantaged Absolute UltraReal Short-Range Short-RangeGlobal Mid-RangeGlobal Long-Range Conservative Income & ContrarianModerate & Income ContrarianGrowth ContrarianAggressive & Growth Growth Growth Growth 20/80 40/60 60/40 80/20 95/5 Income Return Return Allocation Opportunities Growth Growth Growth

Percentages shown are that of the portfolio’s benchmark and are subject to change. Asset classes shown are Morningstar, Inc. Category groups. Allocation of portfolios at the individual account level may vary.

Tax Advantaged Absolute UltraReal Short-Range Short-RangeGlobal Mid-RangeGlobal Long-Range Conservative Income & ContrarianModerate & Income ContrarianGrowth ContrarianAggressive & Growth Income Return Return Allocation Opportunities Growth Growth Growth

Absolute TaxReturn Advantaged Absolute UltraReal Short-Range Short-RangeGlobal Mid-RangeGlobal Long-Range Conservative Income & ContrarianModerate & Income ContrarianGrowth ContrarianAggressive & Growth Income Return Return Allocation Opportunities Growth Growth Growth

Absolute TaxReturn Advantaged Absolute Real Global Global Conservative Income & Moderate Growth Aggressive Income Return Return Allocation Opportunities Growth Growth Growth

Absolute Conservative Income & Moderate Growth Aggressive TaxReturn Advantaged Absolute Real Global Global Growth Growth Growth Income Return Return Allocation Opportunities

Absolute Return

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About Morningstar® Managed PortfoliosSM The Morningstar Investment Management group is committed to helping financial advisors create better outcomes for investors like you.

Through Morningstar Managed Portfolios, investment advisers can offer the professional guidance and access to strategies that can help you achieve your goals. The model portfolios are designed to be part of a long-term investing plan that helps meet your needs at each stage of your lifetime.

Important Information Morningstar® Managed PortfoliosSM are offered by It is important to note that investments in the entities within Morningstar’s Investment securities (e.g., mutual funds, exchange-traded Management group, which includes subsidiaries of funds, common stocks) involve risk and will Morningstar, Inc. that are authorized in the not always be profitable.E TFs, like all investments, appropriate jurisdiction to provide consulting or carry certain risks that may adversely affect their advisory services in North America, Europe, Asia, net asset value, market price, and/or performance. Australia, and Africa. In the United States, An ETF’s net asset value (NAV) will fluctuate in Morningstar Managed Portfolios are offered by response to market activity. Because ETFs are traded Morningstar Investment Services LLC or Morningstar throughout the day and the price is determined Investment Management LLC, both registered by market forces, the market price you pay for an ETF investment advisers, as part of a discretionary may be more or less than the net asset value. investment advisory service or as model portfolios to Because ETFs are not actively managed, their value third-party advisory programs on a discretionary or may be affected by a general decline in the U.S. non-discretionary basis. market segments relating to their underlying indexes. Similarly, an imperfect match between an ETF’s Morningstar Managed Portfolios offered by holdings and those of its underlying index may cause Morningstar Investment Services LLC or Morningstar its performance to not match the performance of Investment Management LLC are intended for its underlying index. Like other concentrated invest- citizens or legal residents of the United States or its ments, an ETF with concentrated holdings may territories and can only be offered by a registered be more vulnerable to specific economic, political, or investment adviser or investment adviser regulatory events than an ETF that mirrors the representative. general U.S. market. Portfolio construction and ongoing monitoring and Neither diversification nor asset allocation ensure maintenance of the portfolios within the Program a profit or guarantee against a loss. is provided on Morningstar Investment Services’ behalf by Morningstar Investment Management LLC, a registered investment adviser and subsidiary of Morningstar, Inc.