Tax-Planning Information For Financial Professional Use Only. Not for Public Distribution. Morningstar Investment Management LLC Morningstar Vision2020 Wealth Management Strategies Year-End Capital Gain Distribution Estimates Affected Portfolios Global Growth Growth & Income Moderate Balanced Income Tax-Sensitive Moderate Tax-Sensitive Balanced Tax-Sensitive Income It is about that time of year when mutual funds make their year-end distributions. To briefly review, mutual funds pass all income and net realized capital gains to shareholders each year through income and capital-gains distributions. Income and short-term capital gains are taxed at the ordinary income tax rate, while taxes on long term capital gains and qualified dividends are capped at 20% for most tax payers. These distributions are made to whoever owns shares on the specified record date (usually in December), regardless of how long they ve been held. The underlying funds owned in the Morningstar Vision2020 Wealth Management Strategy portfolios have published estimates of their anticipated year-end capital-gains distributions. This enables us to prepare an aggregate estimate of capital-gains distributions for each of the Morningstar Vision2020 portfolios. Investors can take action to offset some of these estimated capital gains by realizing losses (before year-end) in other investments they own that may be in loss territory. Therefore, to assist investors in tax-planning, we are providing estimates of the anticipated capital-gains distributions for each Vision2020 portfolio in the tables below. The tables summarize the percentage of each portfolio s assets that is estimated to be distributed as realized capital gains, as well as an estimated dollar amount based on a hypothetical $100,000 portfolio. To estimate a portfolio s distribution, we start by assuming a portfolio size of $100,000. From there, we calculate each underlying fund holding s value and share count based on the assumed $100,000 portfolio value. To help investors gauge the tax impact more precisely, we break out the percentage of distributions represented by long-term capital gains (taxed at 20%) and the percentage represented by short-term capital gains (taxed as income, for which the top rate is 39.6%). For example, if a portfolio were slated to receive a $2,500 distribution made up of 85% in long-term gains and 15% in short-term gains, one could ballpark the potential tax bill for a client in the 39.6% income-tax bracket as follows: ($2,500 x 0.85 x.20) + ($2,500 x 0.15 x 0.396) = $573.50.
Page 2 of 11 Please note that many of the underlying funds will also make year-end distributions of dividend and interest income. Income distributions are NOT included in the table figures. One reason is that only a subset of the underlying funds provides estimates for income distributions. Perhaps more importantly, investors cannot offset income distributions as they can with capital gains, so it is not actionable information in that regard. In any event, please be aware that the combined capital-gains/income distributions will be larger than the gains-only figures we provide in the tables. And of course these estimates are merely estimates, based on preliminary estimates from the fund companies themselves. The final distributions will almost certainly differ, but we believe the estimates represent reasonable expectations for portfolio tax-management purposes.
Page 3 of 11 Global Growth Portfolio AllianzGI NFJ International Value Instl ANJIX 12/14/2016 0.00 BlackRock Global Allocation Instl MALOX 12/16/2016 45.00 JPMorgan Mid Cap Value Instl FLMVX 12/13/2016 468.04 MFS International New Discovery I MWNIX 12/13/2016 40.00 MFS Research International I MRSIX 12/13/2016 0.00 MFS Value I MEIIX 12/13/2016 120.00 Oakmark Select I OAKLX 11/25/2016 292.37 Parnassus Core Equity Institutional PRILX 11/21/2016 140.40 PRIMECAP Odyssey Growth POGRX 12/15/2016 118.44 T. Rowe Price Blue Chip Growth I TBCIX 12/13/2016 18.67 T. Rowe Price Equity Income I REIPX 12/12/2016 318.68 T. Rowe Price Small-Cap Value I PRVIX 1/0/1900 140.64 Total Based on $100,000 Portfolio $1,702.24 Estimated Percentage of Principal Subject to Capital Gains 1.70% Estimated Portion of Total Represented by Short-Term Capital Gains 6.31% Estimated Portion of Total Represented by Long-Term Capital Gains 93.69%
Page 4 of 11 Growth & Income Portfolio AllianzGI NFJ International Value Instl ANJIX 12/14/2016 0.00 JPMorgan Mid Cap Value Instl FLMVX 12/13/2016 409.54 Metropolitan West Total Return Bd I MWTIX 12/9/2016 50.11 MFS International New Discovery I MWNIX 12/13/2016 30.00 MFS Research International I MRSIX 12/13/2016 0.00 MFS Value I MEIIX 12/13/2016 120.00 Oakmark Select I OAKLX 11/25/2016 250.60 Parnassus Core Equity Institutional PRILX 11/21/2016 224.64 PRIMECAP Odyssey Growth POGRX 12/15/2016 177.66 T. Rowe Price Blue Chip Growth I TBCIX 12/13/2016 24.89 T. Rowe Price Equity Income I REIPX 12/12/2016 424.91 T. Rowe Price Instl Floating Rate RPIFX 12/6/2016 0.00 T. Rowe Price New Income I PRXEX 12/6/2016 0.00 T. Rowe Price Small-Cap Value I PRVIX 12/13/2016 140.64 TCW Emerging Markets Income I TGEIX -- 0.00 Templeton Global Bond Adv TGBAX -- 0.00 Total Based on $100,000 Portfolio $1,852.99 Estimated Percentage of Principal Subject to Capital Gains 1.85% Estimated Portion of Total Represented by Short-Term Capital Gains 8.94% Estimated Portion of Total Represented by Long-Term Capital Gains 91.06%
Page 5 of 11 Moderate Portfolio AllianzGI NFJ International Value Instl ANJIX 12/14/2016 0.00 JPMorgan Mid Cap Value Instl FLMVX 12/13/2016 409.54 Metropolitan West Total Return Bd I MWTIX 12/9/2016 150.34 MFS International New Discovery I MWNIX 12/13/2016 20.00 MFS Research International I MRSIX 12/13/2016 0.00 MFS Value I MEIIX 12/13/2016 140.00 Oakmark Select I OAKLX 11/25/2016 208.83 Parnassus Core Equity Institutional PRILX 11/21/2016 140.40 PRIMECAP Odyssey Growth POGRX 12/15/2016 118.44 T. Rowe Price Blue Chip Growth I TBCIX 12/13/2016 18.67 T. Rowe Price Equity Income I REIPX 12/12/2016 371.79 T. Rowe Price Instl Floating Rate RPIFX 12/6/2016 0.00 T. Rowe Price New Income I PRXEX 12/6/2016 0.00 T. Rowe Price Small-Cap Value I PRVIX 12/13/2016 84.39 TCW Emerging Markets Income I TGEIX -- 0.00 Templeton Global Bond Adv TGBAX -- 0.00 Total Based on $100,000 Portfolio $1,662.40 Estimated Percentage of Principal Subject to Capital Gains 1.66% Estimated Portion of Total Represented by Short-Term Capital Gains 14.30% Estimated Portion of Total Represented by Long-Term Capital Gains 85.70%
Page 6 of 11 Balanced Portfolio AllianzGI NFJ International Value Instl ANJIX 12/14/2016 0.00 JPMorgan Mid Cap Value Instl FLMVX 12/13/2016 292.53 Loomis Sayles Bond Instl LSBDX 12/15/2016 29.25 Metropolitan West Total Return Bd I MWTIX 12/9/2016 238.03 MFS International New Discovery I MWNIX 12/13/2016 20.00 MFS Research International I MRSIX 12/13/2016 0.00 MFS Value I MEIIX 12/13/2016 120.00 Oakmark Global I OAKGX 11/25/2016 0.00 Parnassus Core Equity Institutional PRILX 11/21/2016 56.16 PRIMECAP Odyssey Growth POGRX 12/15/2016 118.44 T. Rowe Price Blue Chip Growth I TBCIX 12/13/2016 18.67 T. Rowe Price Equity Income I REIPX 12/12/2016 318.68 T. Rowe Price Instl Floating Rate RPIFX 12/6/2016 0.00 T. Rowe Price New Income I PRXEX 12/6/2016 0.00 T. Rowe Price Small-Cap Value I PRVIX 12/13/2016 84.39 TCW Emerging Markets Income I TGEIX -- 0.00 Templeton Global Bond Adv TGBAX -- 0.00 Total Based on $100,000 Portfolio $1,296.15 Estimated Percentage of Principal Subject to Capital Gains 1.30% Estimated Portion of Total Represented by Short-Term Capital Gains 23.49% Estimated Portion of Total Represented by Long-Term Capital Gains 76.51%
Page 7 of 11 Income Portfolio AllianzGI NFJ International Value Instl ANJIX 12/14/2016 0.00 JPMorgan Mid Cap Value Instl FLMVX 12/13/2016 292.53 Loomis Sayles Bond Instl LSBDX 12/15/2016 39.01 Metropolitan West Total Return Bd I MWTIX 12/9/2016 300.67 MFS Value I MEIIX 12/13/2016 60.00 Oakmark Global I OAKGX 11/25/2016 0.00 T. Rowe Price Blue Chip Growth I TBCIX 12/13/2016 18.67 T. Rowe Price Equity Income I REIPX 12/12/2016 212.45 T. Rowe Price Instl Floating Rate RPIFX 12/6/2016 0.00 T. Rowe Price New Income I PRXEX 12/6/2016 0.00 T. Rowe Price Small-Cap Value I PRVIX 12/13/2016 56.26 TCW Emerging Markets Income I TGEIX -- 0.00 Templeton Global Bond Adv TGBAX -- 0.00 Total Based on $100,000 Portfolio $979.58 Estimated Percentage of Principal Subject to Capital Gains 0.98% Estimated Portion of Total Represented by Short-Term Capital Gains 30.76% Estimated Portion of Total Represented by Long-Term Capital Gains 69.24%
Page 8 of 11 Tax-Sensitive Moderate Portfolio Diamond Hill Large Cap I DHLRX 12/14/2016 509.50 Eaton Vance Tx-Mgd Value I EITVX 12/7/2016 0.00 Franklin Federal Tax-Free Income Adv FAFTX 11/30/2016 0.00 Franklin High Yield Tax-Free Inc Adv FHYVX 12/29/2016 0.00 JPMorgan Mid Cap Value Instl FLMVX 12/13/2016 409.54 JPMorgan Tax Aware Equity Instl JPDEX 12/13/2016 114.39 MFS International New Discovery I MWNIX 12/13/2016 40.00 PRIMECAP Odyssey Growth POGRX 12/15/2016 118.44 T. Rowe Price Small-Cap Value I PRVIX 12/13/2016 84.39 T. Rowe Price Tax-Efficient Equity PREFX 12/12/2016 0.00 Wells Fargo Municipal Bond Inst WMBIX 12/8/2016 73.96 Nuveen Limited Term Municipal Bond I FLTRX 12/5/2016 0.00 Total Based on $100,000 Portfolio $1,350.21 Estimated Percentage of Principal Subject to Capital Gains 1.35% Estimated Portion of Total Represented by Short-Term Capital Gains 5.24% Estimated Portion of Total Represented by Long-Term Capital Gains 94.76%
Page 9 of 11 Tax-Sensitive Balanced Portfolio Diamond Hill Large Cap I DHLRX 12/14/2016 356.65 Eaton Vance Tx-Mgd Value I EITVX 12/7/2016 0.00 Fidelity Limited Term Municipal Income FSTFX -- 0.00 Franklin Federal Tax-Free Income Adv FAFTX 11/30/2016 0.00 Franklin High Yield Tax-Free Inc Adv FHYVX 12/29/2016 0.00 JPMorgan Mid Cap Value Instl FLMVX 12/13/2016 292.53 JPMorgan Tax Aware Equity Instl JPDEX 12/13/2016 76.26 MFS International New Discovery I MWNIX 12/13/2016 30.00 Nuveen Limited Term Municipal Bond I FLTRX 12/5/2016 0.00 PRIMECAP Odyssey Growth POGRX 12/15/2016 118.44 T. Rowe Price Small-Cap Value I PRVIX 12/13/2016 56.26 T. Rowe Price Tax-Efficient Equity PREFX 12/12/2016 0.00 Wells Fargo Municipal Bond Inst WMBIX 12/8/2016 81.36 Total Based on $100,000 Portfolio $1,011.49 Estimated Percentage of Principal Subject to Capital Gains 1.01% Estimated Portion of Total Represented by Short-Term Capital Gains 5.81% Estimated Portion of Total Represented by Long-Term Capital Gains 94.19%
Page 10 of 11 Tax-Sensitive Income Portfolio Diamond Hill Large Cap I DHLRX 12/14/2016 254.75 Eaton Vance Tx-Mgd Value I EITVX 12/7/2016 0.00 Fidelity Limited Term Municipal Income FSTFX -- 0.00 Franklin Federal Tax-Free Income Adv FAFTX 11/30/2016 0.00 Franklin High Yield Tax-Free Inc Adv FHYVX 12/29/2016 0.00 JPMorgan Mid Cap Value Instl FLMVX 12/13/2016 351.03 JPMorgan Tax Aware Equity Instl JPDEX 12/13/2016 152.52 Nuveen Limited Term Municipal Bond I FLTRX 12/5/2016 0.00 T. Rowe Price Small-Cap Value I PRVIX 12/13/2016 56.26 T. Rowe Price Tax-Free High Yield PRFHX 12/6/2016 0.86 MFS International New Discovery I MWNIX 12/13/2016 20.00 Wells Fargo Municipal Bond Inst WMBIX 12/8/2016 103.55 Total Based on $100,000 Portfolio $938.96 Estimated Percentage of Principal Subject to Capital Gains 0.94% Estimated Portion of Total Represented by Short-Term Capital Gains 2.77% Estimated Portion of Total Represented by Long-Term Capital Gains 97.23%
Page 11 of 11 For Financial Professional Use Only. Not for Public Distribution. Morningstar Investment Management LLC, a registered investment adviser and subsidiary of Morningstar, Inc., serves as portfolio manager to the Morningstar VISION 2020 Wealth Management Strategies, a series of model portfolios which consist of mutual funds selected from Vision2020 Wealth Management Corp. s platform. Morningstar Investment Management does not serve as an investment adviser to individual investors. The Morningstar name and logo are registered marks of Morningstar, Inc. Neither Morningstar Investment Management nor Morningstar, Inc. is affiliated with Advisor Group or their affiliates. Opinions expressed are as of the current date; such opinions are subject to change without notice. Morningstar Investment Management shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, the information, data, analyses or opinions or their use. This report is provided for informational purposes only. The information, data, analyses, and opinions presented herein do not constitute investment advice, are provided solely for informational purposes and therefore are not an offer to buy or sell a security. Please note that references to specific securities or other investment options within this piece should not be considered an offer (as defined by the Securities and Exchange Act) to purchase or sell that specific investment. Past performance is not indicative and not a guarantee of future results. This commentary contains certain forward-looking statements. We use words such as expects, anticipates, believes, estimates, forecasts, and similar expressions to identify forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially and/or substantially from any future results, performance or achievements expressed or implied by those projected in the forward-looking statements for any reason. Investments in the underlying securities or strategies offered by the VISION 2020 Wealth Management Program involve risk, including the potential loss of principal invested. Professional money management and strategies such as asset allocation cannot assure a profit or guarantee against loss. This investment program may not be suitable for all investors. Investing in mutual funds involves risk. When redeemed, an investor s shares may be worth more or less than the original amount paid. Mutual funds all have different investment objectives, risks and fees and charges which may have an adverse impact upon the overall performance of the account. In general, frequent trading of the underlying portfolio investments could create additional expenses due to commissions generated paid by such trades, which can impact overall portfolio performance. Additionally, frequent trading may cause a taxable event for investors where the portfolio is not held as a part of a qualified plan. This information within this report includes certain forwardlooking statements and data, including, but not limited to, fund distribution estimates. These forward-looking statements and data involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially and/or substantially from any future results, performance or achievements expressed or implied by those projected in the forward-looking statements or data for any reason. The information contained within this report was collected from estimated distribution information provided on each fund's website as of the date listed and may or may not be an accurate reflection of current data for securities shown. The data contained herein is not warranted to be correct, complete or accurate. Advisory services offered through VISION 2020 Wealth Management Corporation, a SEC Registered Investment Advisor. VISION 2020 Wealth Management Corporation is an affiliate of FSC Securities Corporation, SagePoint Financial, Inc. and Royal Alliance Associates, Inc. members FINRA/SIPC. For more information on these portfolios or the VISION2020 Wealth Management platform, contact Advisor Group's Investment Advisory Services department at +1 877-773-8130 or at IA@advisorgroup.com.