1. Peer and Style Analysis
Capital Group U.S. Income and
Growth (m)
March 2019
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Manager Style
20-Quarter Moving Windows, Computed Quarterly January 1979 - March 2019
Russell 1000 Value Russell 1000 Growth
Russell 2000 Value Russell 2000 Growth
Small
-1
0
1
Large
Value -1 0 1 Growth
Capital Group U.S. Income and Growth (m)
Russell Generic Corners
Asset Allocation
20-Quarter Moving Windows, Computed Quarterly
Capital Group U.S. Income and Growth (m)
0%
20%
40%
60%
80%
100%
Q4 1983 Q4 1989 Q4 1994 Q4 1999 Q4 2004 Q4 2009 Q1 2019
Citigroup 3-month T-bill
Russell 1000 Value
Russell 1000 Growth
Russell 2000 Value
Russell 2000 Growth
Performance Attribution
Capital Group U.S. Income and Growth (m)
20-Quarter Moving Windows, Computed Quarterly January 1979 - March 2019
Russell 1000 Value
93.8%
6.2%
Residual R-Squared to Benchmark
Manager Performance
20-Quarter Moving Windows, Computed Quarterly January 1979 - March 2019
0
2000
4000
6000
8000
10000
12000
14000
Q4 1978 Q4 1984 Q4 1989 Q4 1994 Q4 1999 Q4 2004 Q4 2009 Q1 2019
Capital Group U.S. Income and Growth (m)
Russell 1000 Value
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Manager vs Universe: Return Rank through March 2019
(not annualized if less than 1 year)
Morningstar Large Value (Gross)
ReturnRank
100%
75%
Median
25%
0%
40 years 30 years 20 years 10 years
Capital Group U.S. Income and Growth (m)
Russell 1000 Value
5th to 25th Percentile
25th Percentile to Median
Median to 75th Percentile
75th to 95th Percentile
Manager vs Universe: Return through March 2019
(not annualized if less than 1 year)
Morningstar Large Value (Gross)
5th Percentile
25th Percentile
Median
75th Percentile
95th Percentile
Capital Group U.S. Income and Growth (m)
Russell 1000 Value
Median
Rank
Volatility
of
Rank
YTD
440 mng
1 year
440 mng
2 years
439 mng
3 years
433 mng
4 years
425 mng
5 years
415 mng
10 years
340 mng
15 years
246 mng
20 years
121 mng
25 years
69 mng
30 years
24 mng
5.00% 0.00 14.91% 12.81% 12.30% 13.77% 10.67 10.73 16.76 10.03 10.58 11.31 11.77
25.00% 0.00 12.40% 7.97% 9.16% 11.83% 8.79 9.23 15.44 9.11 8.69 10.76 11.02
50.00% 0.00 11.55% 4.85% 7.33% 10.85% 7.67 8.02 14.55 8.41 7.90 10.28 10.62
75.00% 0.00 10.45% 2.20% 5.85% 9.65% 6.52 7.04 13.52 7.63 6.84 9.48 9.76
95.00% 0.00 8.92% -2.07% 3.27% 7.64% 4.65 5.20 12.18 6.35 5.99 8.48 9.35
31.25% 13.92 9.85% 9.42% 11.90% 13.81% 10.74% 10.61% 15.70% 8.78% 7.74% 10.85% 10.98%
75.42% 5.46 11.93% 5.67% 6.31% 10.45% 7.32% 7.72% 14.52% 7.63% 6.68% 9.59% 9.93%
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Manager Risk/Return
Single Computation
January 1979 - March 2019
Return
0%
2%
4%
6%
8%
10%
12%
14%
Standard Deviation
0% 2% 4% 6% 8% 10% 12% 14% 16%
Capital Group U.S. Income and Growth (m)
Market Benchmark:
Russell 1000 Value
Cash Alternative:
Citigroup 3-month T-bill
Risk-Return Table
January 1979 - March 2019: Annualized Summary Statistics
Capital Group U.S. Income and Growth (m)
Russell 1000 Value
Return
(%)
Std Dev
(%)
Downside
Risk
(%)
Beta
vs.
Market
Alpha
vs. Market
(%)
R-Squared
vs. Market
(%)
Sharpe
Ratio
Tracking
Error
vs. Market
(%)
Observs.
13.08 13.69 10.50 0.8742 2.45 93.83 0.6222 3.8998 161
11.90 15.17 11.73 1.0000 0.00 100.00 0.4841 0.0000 161
5. Report Definitions and Sector Disclosures
Residual Deviation - A statistical term used to describe the standard deviation of points formed around a linear function, and is an
estimate of the accuracy of the dependent variable being measured. The residual standard deviation can be calculated when a
regression analysis has been performed, as well as an analysis of variance (ANOVA). When determining a limit of quantitation, the use
of a residual standard deviation is permissible instead of the standard deviation.
R-Squared to Benchmark - A statistical measure that represents the percentage of a security's movements that can be explained by
movements in a benchmark index.
The Manager vs. Universe graph and table allow you to present the data as a percentile series. Every manager is ranked according to
the return. The universe is then separated into quartiles according to those ranks. The rank series plots the rank (0% to 100%)
on the vertical axis of the Manager vs. Universe Graph. Each of the universe quartiles are represented by equally sized bands. The
Manager Risk/Return Graph displays the risk/return characteristics of a manager and compares them to a benchmark. It plots
Return on the vertical axis and a Risk Statistic on the horizontal axis. The chart has crosshairs that provide a basis for comparison by
dividing the graph into four quadrants. The crosshairs are centered at the Market Benchmark. A relatively aggressive manager, for
example, is likely to fall in the Northeast corner relative to the crosshairs centered at the universe median, with both more risk and
more return.
Volatility of Rank is obtained by taking the median of the returns, then taking the absolute value of the distance of each individual
return to that median, then taking the median of those distances.
Standard deviation of return measures the average deviations of a return series from its mean, and is often used as a measure of risk.
A large standard deviation implies that there have been large swings in the return series of the manager.
The downside risk shows the average size of the deviations from the mean when the return is negative.
Beta represents the systematic risk of a portfolio and measures its sensitivity to a benchmark. A portfolio with a beta of one is
considered as risky as the benchmark and would therefore provide expected returns equal to those of the market during both up and
down periods. A portfolio with a beta of two would move approximately twice as much as the benchmark.
Alpha is a risk (beta adjusted) measurement. Officially, alpha measures the difference between a portfolio's actual returns and what it
might be expected to deliver based on its level of risk. A positive alpha means the product has beaten expectations. A negative alpha
means that the manager failed to match performance with risk.
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6. Report Definitions and Sector Disclosures
Residual Deviation - A statistical term used to describe the standard deviation of points formed around a linear function, and is an
estimate of the accuracy of the dependent variable being measured. The residual standard deviation can be calculated when a
regression analysis has been performed, as well as an analysis of variance (ANOVA). When determining a limit of quantitation, the use
of a residual standard deviation is permissible instead of the standard deviation.
R-Squared to Benchmark - A statistical measure that represents the percentage of a security's movements that can be explained by
movements in a benchmark index.
The Manager vs. Universe graph and table allow you to present the data as a percentile series. Every manager is ranked against the
applicable universe according to return. The universe is defined as all portfolios that have the same Morningstar category (i.e.
Morningstar Large-Value). The universe is then separated into quartiles according to those ranks. The rank series plots the rank (0%
to 100%) on the vertical axis of the Manager vs. Universe Graph. Each of the universe quartiles are represented by equally sized
bands. The Manager Risk/Return Graph displays the risk/return characteristics of a manager and compares them to a benchmark. It
plots Return on the vertical axis and a Risk Statistic on the horizontal axis. The chart has crosshairs that provide a basis for
comparison by dividing the graph into four quadrants. The crosshairs are centered at the Market Benchmark. A relatively aggressive
manager, for example, is likely to fall in the Northeast corner relative to the crosshairs centered at the universe median, with both
more risk and more return.
Volatility of Rank is obtained by taking the median of the returns, then taking the absolute value of the distance of each individual
return to that median, then taking the median of those distances.
Standard deviation of return measures the average deviations of a return series from its mean, and is often used as a measure of risk.
A large standard deviation implies that there have been large swings in the return series of the manager.
The downside risk shows the average size of the deviations from the mean when the return is negative.
Beta represents the systematic risk of a portfolio and measures its sensitivity to a benchmark. A portfolio with a beta of one is
considered as risky as the benchmark and would therefore provide expected returns equal to those of the market during both up and
down periods. A portfolio with a beta of two would move approximately twice as much as the benchmark.
Alpha is a risk (beta adjusted) measurement. Officially, alpha measures the difference between a portfolio's actual returns and what it
might be expected to deliver based on its level of risk. A positive alpha means the product has beaten expectations. A negative alpha
means that the manager failed to match performance with risk.
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7. R-Squared (Correlation Squared) is a measure of how well two portfolios track each other. R-squared ranges between zero and
100%. An R-squared of 100% indicates perfect tracking, while an R-squared of zero indicates no tracking at all.
The Sharpe Ratio is a measure of reward per unit of risk. It is a portfolio's excess return over the risk-free rate divided by the
portfolio's standard deviation. The portfolio's excess return is its geometric mean return minus the geometric mean return of the
risk free instrument.
The Tracking Error is the standard deviation of the difference of two return series.
The prices of small company stocks are generally more volatile than large company stocks. They often involve higher risks because
smaller companies may lack the management expertise, financial resources, product diversification and competitive strengths
to endure adverse economic conditions.
The prices of mid-cap company stocks are generally more volatile than large company stocks. They often involve higher risks
because mid-cap companies may lack the management expertise, financial resources, product diversification and competitive
strengths to endure adverse economic conditions.
Investing in foreign securities presents certain risks not associated with domestic investments, such as currency fluctuation,
political and economic instability, and different accounting standards. This may result in greater share price volatility.
There are special risks associated with an investment in real estate, including credit risk, interest rate fluctuations and the impact
of varied economic conditions.
Investing in fixed income securities involves certain risks such as market risk if sold prior to maturity and credit risk. All fixed
income investments may be worth less than original cost upon redemption or maturity.
High-yield bonds, also known as junk bonds, are subject to greater risk of loss of principal and interest, including default risk, than
higher-rated bonds. Bond prices fluctuate inversely to changes in interest rates. Therefore, a general rise in interest rates can
result in the decline of the value of your investment.
Report Definitions and Sector Disclosures
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8. Index Definitions
The indices below are presented to provide you with an understanding of their historic long-term performance and are not presented
to illustrate the performance of any security. Investors cannot directly purchase any index.
Citigroup U.S. Domestic 3 Month T-Bill Index is constructed by purchasing equal dollar amounts of three-month Treasury bills at the
beginning of three consecutive months. As each bill matures, all proceeds are rolled over or reinvested in a new three-month bill. The
income used to calculate the monthly return is derived by subtracting the original amount invested from the maturity value.
Barclays Capital Intermediate U.S. Government/Credit Index measures the performance of United States dollar-denominated United
States Treasuries, government-related and investment-grade United States credit securities that have a remaining maturity of greater
than or equal to 1 year and less than 10 years. Securities have $250 million or more of outstanding face value, and must be fixed-rate
and non-convertible securities. It is not possible to invest directly in the index.
Barclays Capital Government Index is composed of all publicly issued, nonconvertible, domestic debt of the US government or any
agency thereof, quasi-federal corporations, or corporate debt guaranteed by the US government. Flower bonds and pass-through
issues are excluded. Total return comprises price appreciation/depreciation and income as a percentage of the original investment.
Indexes are rebalanced monthly by market capitalization.
Barclays Capital Municipal Bond: 3 Year Index includes state and local general obligation, revenue, insured and pre-refunded bonds.
The bonds are tax-exempt, fixed-rate securities with a minimum credit rating of at least Baa and maturities between two and four
years. It is not possible to invest directly in the index.
Barclays Capital Municipal Bond: 5 Year Index includes state and local general obligation, revenue, insured and pre-refunded bonds.
The bonds are tax-exempt, fixed-rate securities with a minimum credit rating of at least Baa and maturities between four and six
years. It is not possible to invest directly in the index.
Barclays Capital Municipal Bond: 7 Year Index includes state and local general obligation, revenue, insured and pre-refunded bonds.
The bonds are tax-exempt, fixed-rate securities with a minimum credit rating of at least Baa and maturities between six and eight
years. It is not possible to invest directly in the index.
Barclays Capital Municipal Bond: 15 Year Index includes state and local general obligation, revenue, insured and pre-refunded bonds.
The bonds are tax-exempt, fixed-rate securities with a minimum credit rating of at least Baa and maturities between 12 and 17 years.
It is not possible to invest directly in the index.
Barclays Capital Municipal Bond: 20 Year Index includes state and local general obligation, revenue, insured and pre-refunded bonds.
The bonds are tax-exempt, fixed-rate securities with a minimum credit rating of at least Baa and maturities between 17 and 22 years.
It is not possible to invest directly in the index.
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9. Index Definitions
Barclays Capital U.S. Municipal Bond Index attempts to measure the U.S. tax-exempt bond market by including four main sectors: state
and local general obligation, revenue, insured and pre-refunded bonds. The bonds are tax-exempt, fixed-rate securities with a minimum
credit rating of at least Baa and maturities greater than one year. It is not possible to invest directly in the index.
Barclays Capital U.S. Aggregate Bond Index covers the USD-denominated, investment-grade, fixed-rate, taxable bond market of SEC-
registered securities. The index is composed of government and corporate securities, mortgage pass-through securities, and asset-backed
securities. All securities are rated investment grade (Baa3/BBB-/BBB- or above) using the middle rating of Moodys, S&P, and Fitch,
respectively and have a maturity greater than one year. It is not possible to invest directly in the index.
Barclays Capital U.S. Govt/Credit 1-3 Year Index composed of publicly-issued non-convertible, domestic debt of the U.S. Treasury and
U.S. government agencies with greater than one-year, but less than three-year maturity. Flower bonds, foreign-targeted and mortgage-
backed issues are excluded. It is not possible to invest directly in the index.
Barclays Capital U.S. Government/Credit Bond Index is composed of all treasuries, government-related issues and corporate bonds that
are investment grade (rated Baa or higher by Moodys or BBB or higher by S&P, if unrated by Moodys) with one year or more left until
maturity. Total return comprises price appreciation/depreciation and income as a percentage of the original investment. The index is
rebalanced monthly by market capitalization. It is not possible to invest directly in the index.
The Dow Jones Wilshire Real Estate Investment Trust (REIT) Index measures U.S. publicly-traded Real Estate Investment Trusts.
Companies must be equity owners and operators of commercial or residential real estate and at least 75% of the company’s total revenue
must be derived from the ownership and operation of real estate assets. The index does not include mortgage REITs, health care REITs,
real estate finance companies, home builders, large land owners and sub-dividers, and hybrid REITs (those with more than 25% of assets
in direct mortgage investments). It is not possible to invest directly in the index.
Merrill Lynch All U.S. Convertibles Index is based upon approximately 500 publicly-traded, investment-grade convertible bonds of all
qualities from all corporate sectors. Issues include those with coupons equal to or greater than zero with a minimum original par value or
market value of $50 that are convertible to common stock only. It is not possible to invest directly in the index.
Merrill Lynch Fixed Rate Preferred Stock Index tracks the performance of fixed rate U.S. dollar Preferred securities issued in the U.S.
domestic market. It is not possible to invest directly in the index.
Merrill Lynch High Yield Master Index is abroad-based measure of the performance of the non-investment-grade U.S. domestic bond
market. It is not possible to invest directly in the index.
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10. Index Definitions
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Morgan Stanley Capital International (MSCI) EAFE Index is a widely used measurement of international equity performance. It comprises
21 MSCI country indices that represent the developed markets outside of North America: Europe, Australia and the Far East. MSCI aims to
include in its international indices 85% of the free float-adjusted market capitalization in each industry group, within each country. It is
not possible to invest directly in the index.
Morgan Stanley Capital International (MSCI) World Index (Gross) is designed to measure the equity market performance of developed
markets. It consists of the 23 country indices each of which aims for 60% coverage of the total market capitalization for each market and
includes companies from each local market to mirror industry and size diversification. Performance is market-capitalization weighted and
includes reinvestment of dividends. This index is tracked as a gross index so dividends are reinvested without foreign tax withheld. It is
not possible to invest directly in the index.
Morgan Stanley Capital International (MSCI) Emerging Markets Index is a free float-adjusted market capitalization index that is designed
to measure equity market performance of emerging markets. As of June 2009 the MSCI Emerging Markets index consisted of 22 emerging
market country indices. The index aims for 60% coverage of the total market capitalization for each market and selects companies from
each local market to mirror industry and size diversification. This index is weighted by capitalization and dividends are reinvested with no
foreign tax withheld. It is not possible to invest directly in the index.
The NAREIT Index includes all REITs (Real Estate Investment Trusts) currently trading on the New York Stock Exchange, the NASDAQ
National Market System and the American Stock Exchange.
The Russell 1000 Value Index contains those U.S.-based companies in the Russell 1000 Index with lower price-to-book ratios, higher
dividend yields and lower forecast growth values. It reflects reinvestment of all dividends and capital gains. It is not possible to invest
directly in the index.
Russell 1000 Growth Index contains those U.S.-based companies in the Russell 1000 Index with higher price-to-book ratios and higher
forecast growth values. It reflects reinvestment of all dividends and capital gains. It is not possible to invest directly in the index.
Russell 2000 Index consists of the smallest 2,000 securities in the Frank Russell 3000 Index. This is the Russell Company’s small-
capitalization index that is widely regarded in the industry as the premier measure of small-capitalization stocks. It is not possible to
invest directly in the index.
Russell 2000 Value Index contains those U.S.-based companies in the Russell 2000 Index with lower price-to-book ratios, higher dividend
yields and lower forecast growth values. It reflects reinvestment of all dividends and capital gains. It is not possible to invest directly in
the index.
Russell 2000 Growth Index contains those U.S.-based companies in the Russell 2000 Index with higher price-to-book ratios and higher
forecast growth values. It reflects reinvestment of all dividends and capital gains. It is not possible to invest directly in the index.
11. Index Definitions
Russell 2500 Index is a small- to medium-/small-cap index that measures the performance of the 2,500 smallest companies in the Russell
3000 Index, which represents approximately 16% of the total market capitalization of that index. It is not possible to invest directly in the
index.
Russell 2500 Value Index contains those U.S.-based companies in the Russell 2500 Index with lower price-to-book ratios, higher dividend
yields and lower forecast growth values. It reflects reinvestment of all dividends and capital gains. It is not possible to invest directly in
the index.
Russell 2500 Index is a small- to medium-/small-cap index that measures the performance of the 2,500 smallest companies in the Russell
3000 Index, which represents approximately 16% of the total market capitalization of that index. It is not possible to invest directly in the
index.
Russell 3000 Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents
approximately 99% of the investable U.S. equity market. The index is reconstituted annually and performance includes reinvested
dividends. It is not possible to invest directly in the index.
Russell 3000 Growth Index contains those U.S.-based companies in the Russell 3000 Index with higher price-to-book ratios and higher
forecast growth values. It reflects reinvestment of all dividends and capital gains. It is not possible to invest directly in the index.
Russell 3000 Value Index measures the performance of the broad value segment of the U.S. equity universe. It includes those Russell
3000 companies with lower price-to-book ratios and lower forecasted growth values.
Russell Midcap Index measures the performance of the 800 smallest companies by market capitalization in the Russell 1000 Index. This
mid-cap index represents approximately 31% of the Russell 1000 index total market capitalization. It reflects reinvestment of all
dividends and capital gains. It is not possible to invest directly in the index.
Russell Midcap Value Index contains those U.S.-based companies in the Russell Midcap Index with lower price-to-book ratios, higher
dividend yields and lower forecast growth values. It reflects reinvestment of all dividends and capital gains. It is not possible to invest
directly in the index.
Russell Midcap Growth Index contains those U.S.-based companies in the Russell Midcap Index with higher price-to-book ratios and higher
forecast growth values. It reflects reinvestment of all dividends and capital gains. It is not possible to invest directly in the index.
S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market-value weighted
index (stock price times number of shares outstanding) with each stocks weight in the Index proportionate to its market value. The S&P
500 is one of the most widely-used benchmarks of U.S. equity performance. Performance includes reinvestment of dividends.
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12. Important Disclosures
(m) Allocation of Responsibilities
Investment managers available through this program are defined as either Discretionary Managers or Model Managers. Model
Managers are noted by an (m) at the end of the strategy name. Unless otherwise indentified by the (m) indicator, the manager
will operate as a Discretionary Manager. Discretionary Managers are responsible for the day-to-day investment management of
client assets. Conversely, Model Managers provide their investment strategy to Wells Fargo Advisors, who will implement the
strategy and handle the day-to-day investment management of client assets.
Performance Disclosure
The performance information shown is based on performance data provided by Zephyr to Wells Fargo Advisors. The performance
data is taken from its composite of similarly managed accounts. Past performance is not indicative of future performance.
The investment return and principal value of an investment will fluctuate; thus an investor's shares, when redeemed, may be worth
more or less than their original cost. All investing involves risk, including the possible loss of principal.
The investment results depicted herein represent historical gross performance with no deduction for investment management fees
and assume reinvestment of dividends and income plus capital appreciation. Expenses that may include management fees will
reduce individual returns. As fees are deducted quarterly, the compounding effect will be to increase the impact of fees by an
amount directly related to the gross account performance. For example, a 2.75% annual fee deducted quarterly (.69%) from an
account with a ten year annualized growth rate of 10% will produce a net result of 7.07%. Actual performance results will of
course vary from this example. The client is referred to Wells Fargo Advisors’ disclosure document for a full disclosure of the fee
schedule. This presentation is intended for use in a one-on-one presentation. Please refer to the manager’s disclosure
document/Form ADV Part II for more details about the manager. While Wells Fargo Advisors believes the data to be reliable, Wells
Fargo Advisors makes no representation as to its accuracy.
Investors should make their own decisions based on their specific investment objectives, risk tolerance and financial
circumstances. There is no assurance that the portfolio’s objectives will be attained.
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