1) U.S. Investment Policy Committee Notes January 06, 2016 Economic and Stock Market Outlooks Overall Outlook Recommended Moderate Allocation The frantic question most frequently asked after the close of business on January 4 was whether the sharp decline was an ominous omen for the rest of the year. To offset emotion, one frequently turns to data. There have been nine times since WWII in which the S&P 500 fell by 1% or more on the opening day of trading. In six of those years, the market was higher on the month, and up for the full year. For all observations, the 500 recorded a calendar-year advance of 6.2%. Separately, the S&P 500 posted a YTD decline in 87% of all calendar years since 1945. Also, one-third of all YTD lows were set in January, nearly three times as much as October, which saw the second-highest number of YTD lows. Therefore history suggests, but does not guarantee, that investors should not expect full-year results to be a reflection of opening day activity. 15% Fo re ig n Eq u itie s 4 5 % U.S. Eq u itie s 2 5 % Bo n d s Economic Update Monday's U.S. economic reports provided an ugly start to 2016, as the ISM-Mfg. report undershot already-lean estimates. In addition, we saw a weak November construction spending performance, after downward revisions in the important component figures for the prior two months. The ISM fell to a 48.2, which is a new expansion-low from an already-weak 48.6, with a drop in the employment component to 48.1 from 51.3 in November and a six-year low of 47.6 in October. The recent dollar-levels for construction were raised, even though this reflected big revisions in the home improvement residual back to 2005 that won't impact Action Economics' other GDP or construction forecasts. Their 2.0% Q4 GDP growth estimate faces downside risk, and they lowered their Q4 forecasts for residential and nonresidential construction. Fundamental Update Capital IQ recently reported that aggregate fourth-quarter 2015 S&P 500 earnings are estimated to be $28.89, representing a decline of 5.4% on a year-over-year basis. Only four of the 10 S&P sectors are expected to post positive earnings growth for Q4, with telecommunications (17.9%), consumer discretionary (7.7%) and health care (5.6%) once again leading. The energy sector (-68.3%) continues to heavily weigh on the Index. Other sectors projected to show earnings declines include materials (-23.8%), information technology (-4.5%), consumer staples (-3.9%), utilities (-1.9%) and industrials (-0.1%). Excluding the energy drag, S&P 500 EPS growth would be up 0.6% in Q4. From a valuation perspective, the S&P 500 is trading at a 16.6 P/E ratio on forward 12-month operating EPS, just above the 16.0 average over the past 15 years. 1 5 % Ca s h S&P 500 EPS changes as of 01/06/16 EPS Growth % S&P 500 Sector Q4 2015 Q1 2016e Technical Update Targets The S&P 500 index was met with selling once again as it tested the zone of resistance at 2077-2092. The move below 2044 was the indication that the rally had failed and targeted a return to recent lows at 1990. At this point, any breach of 1990 would be a bearish near-term development and target next target lower support at 1937-63 and possibly lower. The Nasdaq 100 and Russell 2000 were also hit with selling from their respective zones of resistance. The Russell 2000 remains in a bearish position with support at the prior low at 1078. Any breach of 1078 would be a negative for stocks as a whole and target 1040. Separately, the US Dollar Index remains rotational with resistance at 100.785 and support at 96.650-97.570. A move above 100.785 would shift the bias to bullish, while a decline below 96.65 would be bearish. 12-Month S&P 500:2250 S&P 500 EPS 2015E:$116.93, 16E:$125.64 S&P 500 Revenues 2015E:-2.4%, 16E:+4.8% S&P Euro 350 EPS 2015E:+6.8%, 16E:+6.0% Real GDP Growth Avg. 2016E:2.7%, 17E:2.6% Core CPI Avg. 2016E:1.9%, 17E:2.0% Fed Funds Rate Avg. 2016E:0.8%, 17E:2.1% 10-Year T-Note Avg. 2016E:2.7%, 17E:3.6% WTI/bbl. Avg. 2016E:$46, 17E:$52 S&P 500 GICS Sector Performance and Recommended Sector Weightings 1/05/2016 Jan YTD 2015 P/E on '16e EPS '16e P/E to Proj. 5-Yr. EPS Grth. (2.0) (0.6) 0.4 (1.7) (1.4) (1.2) (2.0) (1.7) 0.5 0.5 (2.0) (0.6) 0.4 (1.7) (1.4) (1.2) (2.0) (1.7) 0.5 0.5 8.4 3.8 (23.6) (3.5) 5.2 (4.7) 4.3 (10.4) (1.7) (8.4) 17.8 19.7 26.9 13.2 15.8 15.3 15.7 15.0 12.4 15.5 0.9 2.4 (15.9) 1.4 1.3 1.4 1.1 1.4 2.1 3.0 % Change S&P 500 Sector Consumer Discretionary Consumer Staples Energy Financials Health Care Industrials Information Technology Materials Telecommunication Services Utilities S&P Composite 1500 S&P 500 S&P MidCap 400 S&P SmallCap 600 2015e 2016e Consumer Disc. 7.7 15.7 12.2 11.8 Consumer Staples (3.9) 2.0 (0.1) 6.5 Energy (68.3) (42.7) (59.8) (5.0) Financials 0.6 2.2 8.5 8.7 Health Care 5.6 6.2 13.3 9.4 Industrials (0.1) (0.1) 3.6 5.0 Info. Technology (4.5) 1.7 3.5 7.7 Materials (23.8) 3.1 (5.5) 12.7 Telecom. Services 17.9 5.6 11.8 1.5 Utilities (1.9) 2.5 2.4 3.2 S&P 500 (5.4) 1.2 (0.6) 7.4 Source: S&P Capital IQ (1.4) (1.3) (1.3) (2.1) (1.4) (1.3) (1.3) (2.1) (1.0) (0.7) (3.7) (3.4) 16.2 16.1 17.4 18.0 1.4 1.4 1.5 1.2 Sector % Weightings 12.8 10.1 6.6 16.5 15.1 10.1 20.5 2.8 2.5 3.0 S&P Sector Emphasis Overweight Marketweight Underweight Marketweight Overweight Marketweight Marketweight Underweight Overweight Underweight Over/Under Weight 0.4 0.0 -0.8 0.0 0.4 0.0 0.0 -0.3 0.5 -0.2 Sector recommendations are market-cap weighted, influenced by economic,fundamental and technical considerations Technical commentary contributed by i10 Research. Please read the Required Disclosures from page 2 onwards of this report. 1 

2) Glossary STARS Ranking system and definition: ★★★★★ 5-STARS (Strong Buy): Total return is expected to outperform the total return of a relevant benchmark, by a wide margin over the coming 12 months, with shares rising in price on an absolute basis. ★★★★☆ 4-STARS (Buy): Total return is expected to outperform the total return of a relevant benchmark over the coming 12 months, with shares rising in price on an absolute basis. ★★★☆☆ 3-STARS (Hold): Total return is expected to closely approximate the total return of a relevant benchmark over the coming 12 months, with shares generally rising in price on an absolute basis. ★★☆☆☆ 2-STARS (Sell): Total return is expected to underperform the total return of a relevant benchmark over the coming 12 months, and the share price not anticipated to show a gain. ★☆☆☆☆ 1-STAR (Strong Sell): Total return is expected to underperform the total return of a relevant benchmark by a wide margin over the coming 12 months, with shares falling in price on an absolute basis. S&P Capital Ranking Definitions: Overweight rankings are assigned to approximately the top quartile of the asset class. Marketweight rankings are assigned to approximately the second and third quartiles of the asset class. Underweight rankings are assigned to approximately the bottom quartile of the asset class. S&P Capital IQ Quality Ranking Growth and stability of earnings and dividends are deemed key elements in establishing S&P Capital IQ's earnings and dividend rankings for common stocks, which are designed to capsulize the nature of this record in a single symbol. It should be noted, however, that the process also takes into consideration certain adjustments and modifications deemed desirable in establishing such rankings. The final score for each stock is measured against a scoring matrix determined by analysis of the scores of a large and representative sample of stocks. The range of scores in the array of this sample has been aligned with the following ladder of ranking. 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