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1 Kevin W. Byrne, CTFA, CIMA Senior Vice President, Investments October 20 th, 2016 BCM Q Market and Economic Review Economic Review: GDP: Real GDP increased at an annual rate of 1.40% in the 2 nd quarter of 2016, up from.80% in the 1 st quarter Contributions to Change in GDP: The increase in real GDP reflected positive contributions from personal consumption expenditures (PCE) and exports that were partly offset by negative contributions from private inventory investment, nonresidential fixed investment, residential fixed investment, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, decreased Employment: Total nonfarm payroll employment rose by 151,000 in August, compared to an average monthly gain of 204,000 over the prior 12 months and the unemployment rate remained at 4.9% Industry Employment Changes: Employment continued to trend up in August in service-providing industries such as education and health services, trade, transport, utilities, and leisure and hospitality among others. Manufacturing saw the largest declines. Construction, mining and logging also lost jobs Inflation: An increase in personal income in August (reflective of increases in compensation, personal income receipts on assets, and government social benefits) resulted in a slight uptick in the PCE Inflation indices. PCE inflation was 1.00%, while PCE Core Inflation (ex food and energy) was at a 1.70% annual rate Key Interest Rates: Long-term interest rates remain suppressed due, in part, to record-breaking demand from foreign investors seeking safe and positive yield. The fed funds rate is.40%, 10 year treasury rate is 1.59%, 30 year mortgage is 3.42% Housing Market: US home prices continue to recover from post-financial crisis lows, driven by low mortgage rates and lean inventory levels. The average home price in the US is about 10% below the peak reached in Building permits have yet to pick up (about 50% below the level reached at the peak) due, in part, to limited access to credit and increased building costs Consumer Confidence: Consumer confidence increased in September for a second consecutive month and is now at its highest level since the recession. Consumers assessment of present-day conditions improved, primarily the result of a more positive view of the labor market. Overall, consumers continue to rate current conditions favorably and foresee moderate economic expansion in the months ahead. - Lynn Franco, Director of Economic Indicators at the Conference Board Raymond James & Associates, Inc., member New York Stock Exchange/SIPC 550 W Washington Blvd., Ste 1050 // Chicago, IL // // (toll-free) //

2 Capital Markets Review: Asset Class Returns: Top market performers in the 3 rd quarter were US small cap equity and emerging market equity. Small caps exhibit attractive relative valuations and near-term momentum, while beaten down emerging market equities received a boost from stabilizing growth year-to-date Asset Class Index 3 mth YTD 1 yr US All Cap Equity Russell US Large Cap Equity Russell US Small Cap Equity Russell US All Cap Growth Russell 3000 Growth US All Cap Value Russell 3000 Value US All Cap Dividend DJ US Select Dividend Developed Int l Div DJ EPAC Select Dividend Developed Int l Equity MSCI EAFE Emerging Mkt Equity MSCI EM US Real Estate MSCI US REIT Non-US Real Estate FTSE EPRA NAREIT DEV EX US Commodities S&P GSCI Commodities MSCI ACWI Select Gold Miners IMI Gov / Credit Barclays Capital 1-5 Yr Gov/Credit Gov / Credit Barclays Capital US Aggregate Gov / Credit Barclays Capital US Long Gov/Credit Gov Barclays Capital US Treasury 20+ Yr Intl Gov S&P/Citigroup Int'l Treasury Bond High Yield Corporate Markit iboxx USD Liquid High Yield Inv Grade Corporate Markit iboxx USD Liquid Inv Grade

3 Capital Markets Review: S&P Sector Returns: Sector performance was dominated by information technology in the 3 rd quarter, due in part to upside surprises on Q2 earning releases. Utilities and telecom were the biggest laggards Equity Styles: Growth oriented equities outperformed value and blend strategies by a slim margin in the 3 rd quarter. While value dominated over the last year, there hasn t been a significant style bias in recent months US Treasury Yield Curve: The curve has flattened over the past year as short rates increased and long rates declined. I don t think long-term rates are going to go meaningfully higher, and I don t think it s for the reasons that we want or expect them to. You ve got money flowing in from overseas at recordbreaking numbers. This isn t stopping anytime soon. It s going to take a global recalibration, not just in the US, for long-term rates to move. Benjamin Streed, CFA Strategist, RJ Fixed Income Fixed Income Yields: Certain corporate credit metrics have weakened due to share buybacks and/or dividends. Select corporations in the high yield space have increased leverage and deteriorated interest coverage. However, the median non-financial investment-grade bond has maintained leverage ratios and actually improved interest coverage. Yields at the end of Q3: 10 yr US Treasury = 1.59%, Barclays 10 yr Muni = 1.52%, Barclays US Aggregate Credit = 2.74%, and Barclays High Yield = 6.17% Global Sovereign Debt Yields: An estimated 30% of the global government bond market is now trading at negative yields. Institutional investors, traders and risk-averse investors are the primary buyers of these negative interest-rate issues Equity yields versus long-term treasuries: S&P 500 dividend yield is at 2.13%, 10 year treasury at 1.59%. Bonds have offered substantially higher yields than equities up until the last seven years. This surprising phenomenon has now become the norm, at least for the near term Stock valuations: With the S&P trading at elevated valuation levels, investor optimism over earnings expectations is vital for the current market to move appreciably higher. - Managing Director J. Michael Gibbs and Senior Portfolio Analyst - Joey Madere, Equity Portfolio & Technical Strategy S&P500 trailing 12 month P/E = (average since 1999 is 19.07), S&P500 P/B = 2.86 (average since 1999 is 2.86) Foreign Exchange Rates: The dollar is likely to remain range-bound, with gradual Fed tightening already priced in. However, the presidential election will be a factor Commodity Prices: After hitting a nearly seven-year low in December of last year, global economic uncertainty has kept gold prices afloat. Oil prices continue to stabilize and many expect this upward trend to endure into 2017 as the market continues to rebalance. Oil closed the quarter at $48.24 a barrel and gold finished at $1, per ounce.

4 Investment Themes: Earnings: The Lifeblood of the Market: RJ has a S&P500 earnings estimate of $128. This assumes a 5% increase in sales and a 3.5% expansion of margins versus This represents 7.6% earnings growth and would put S&P500 earnings slightly above the 6% compounded annual growth rate since The more optimistic consensus street bottom-up S&P500 earnings estimate is $133. RJ expects earnings growth to be the next driver of stock market appreciation. The markets are transitioning from an interest rate-driven bull market to an earnings-driven bull market. - Jeff Saut, Chief Investment Strategist, Equity Research Who s Buying Negative Interest Rate Bonds and Why? Institutional Investors: - Institutions: required to buy bonds regardless of yield - Central Banks and Insurance Co.: reserve requirements - Pension Funds: match liabilities - Index funds: must replicate their benchmark - Traditional Banks: liquidity and collateral requirements Traders: - Hope to sell to another trader at an even lower yield / higher price - Make a currency play on a foreign currency-denominated bonds Risk Averse Investors: - Looking for return of principal rather than return on principal - Some institutions have large holding which make trading difficult, require liquidity and safety, or are unable to take on credit risk - Any investor who believes inflation is going to turn negative Valuations from Riverfront Investment Group s Price Matters Analysis: Rate of Return Distance from Asset Class Trend Line Trend Low Volatility Mid Cap Small Cap Micro Cap High Volatility REIT s Large Cap Dividend Payout Emerging International (Currency Hedged) International The sources for the information contained in this summary report were obtained from the Raymond James Capital Markets Review published in July of 2016, the Riverfront Investment Group Q Quarterly Chart Pack, and the Blackrock Benchmark Returns Comparison June These reports are enclosed in your Raymond James Account Review Binder for Q

5 There is no assurance that any investment strategy will be successful. Investing involves risk and investors may incur a profit or a loss. Asset allocation and diversification do not ensure a profit or protect against a loss. The information provided is as of the date above and subject to change, and it should not be deemed a recommendation to buy or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. Persons within the Raymond James family of companies may have information that is not available to the contributors of the information contained in this publication. Raymond James, including affiliates and employees, may execute transactions in the securities listed in this publication that may not be consistent with the ratings appearing in this publication. Investors should consider this report as only a single factor in making their investment decision. Gross Domestic Product (GDP) is the annual market value of all goods and services produced domestically by the US. Past performance may not be indicative of future results. It is not possible to invest directly in an index. The Russell 2000 index is an unmanaged index of small cap securities which generally involve greater risks. The Russell 3000 index is an unmanaged index that measures the performance of the 3000 largest US companies based on total market capitalization. The Russell 1000 Index measures the large-cap segment of the U.S. equity universe representing approximately 92% of the U.S. market. The index is constructed to provide a comprehensive and unbiased barometer for the large-cap segment and is completely reconstituted annually to ensure new and growing equities are reflected. The index includes the largest 1000 securities in the Russell The Dow Jones U.S. Select Dividend Index tracks the performance of the 100 stocks with the highest dividend yields on the Dow Jones U.S. Total Market Index. The MSCI EAFE (Europe, Australia, and Far East) index is an unmanaged index that is generally considered representative of the international stock market. These international securities involve additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability. Barclays Capital U.S. Aggregate Bond Index is made up of the Barclays Capital U.S. Government / Corporate Bond Index, Mortgage- Backed Securities Index, and Asset-Based Securities Index, including securities that are of investment grade quality or better, have at least one year to maturity, and have an outstanding par value of at least $100 million. The Russell 3000 Growth Index measures the performance of the broad growth segment of the U.S. equity universe. It includes those Russell 3000 companies with higher price-to-book ratios and higher forecasted growth values. The Russell 3000 Value Index measures the performance of the broad value segment of U.S. equity value universe. It includes those Russell 3000 companies with lower price-to-book ratios and lower forecasted growth values. The DJ EPAC select dividend represents the performance of high dividend paying companies in the EPAC (Europe, Pacific, Asia and Canada) region, which covers developed markets excluding the United States. The MSCI Emerging Markets Index captures large and mid-cap representation across 23 Emerging Markets (EM) countries*. With 836 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country. The FTSE EPRA/NAREIT Developed ex US Index is a subset of the FTSE EPRA/NAREIT Developed Index and is designed to track the performance of listed real estate companies and REITS. The S&P GSCI (formerly the Goldman Sachs Commodity Index) serves as a benchmark for investment in the commodity markets and as a measure of commodity performance over time. The MSCI ACWI Select Gold Miners Investable Market Index (IMI) is derived from the ACWI IMI equity universe which includes large, mid and small cap securities across 23 Developed Markets (DM) and 23 Emerging Markets (EM) countries*. Barclays Capital 1-5 Yr Gov/Credit includes all medium and larger issues of U.S. government, investment-grade corporate, and investment-grade international dollar-denominated bonds that have maturities of between 1 and 5 years and are publicly issued. Barclays Capital U.S. Government/Credit Bond Index measures the performance of U.S. Dollar denominated U.S. Treasuries, government-related and investment grade U.S. corporate securities that have a remaining maturity of greater than one year. The Markit iboxx USD Liquid High Yield Capped Index consists of liquid USD high yield bonds, selected to provide a balanced representation of the broad USD high yield corporate bond universe. Barclays Capital Gbl Agg Ex-US measures the performance of the global bond market, excluding U.S. securities.