Trying to make investment decisions based upon the outcome of presidential elections is unlikely to result in reliable excess returns for investors. There is a strong case for investors to rely on patience and portfolio structure, rather than trying to outguess the market, in order to pursue investment returns.

1. Returns During and After Election Years
2
S&P 500 Index: 1928–2013
Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results. Index returns are not
representative of actual portfolios and do not reflect costs and fees associated with an actual investment. Actual returns may be lower. Source: The S&P data is provided by Standard & Poor's Index Services Group.
-60% -40% -20% 0% 20% 40% 60% 80%
1928: Hoover vs. Smith
1932: Roosevelt vs. Hoover
1936: Roosevelt vs. Landon
1940: Roosevelt vs. Willkie
1944: Roosevelt vs. Dewey
1948: Truman vs. Dewey
1952: Eisenhower vs. Stevenson
1956: Eisenhower vs. Stevenson
1960: Kennedy vs. Nixon
1964: Johnson vs. Goldwater
1968: Nixon vs. Humphrey
1972: Nixon vs. McGovern
1976: Carter vs. Ford
1980: Reagan vs. Carter
1984: Reagan vs. Mondale
1988: Bush vs. Dukakis
1992: Clinton vs. Bush
1996: Clinton vs. Dole
2000: Bush vs. Gore
2004: Bush vs. Kerry
2008: Obama vs. McCain
2012: Obama vs. Romney
 Average Return Year Subsequent to Election = 9.3%
 Average Return During Election Year = 11.2%
#50085-0116

2. Efficient Markets Hypothesis
2
Eugene F. Fama
The Hypothesis States:
• Current prices incorporate all available information and expectations.
• Current prices are the best approximation of intrinsic value.
• Price changes are due to unforeseen events.
• “Mispricings” can occur but not in predictable patterns that can lead to consistent outperformance.
The Hypothesis Does not State:
• All investors are rational.
• Prices are always right.
• Prices should be stable.
• Professional money managers can’t earn higher than market returns.
Eugene F. Fama, “Efficient Capital Markets: A Review of Theory and Empirical Work,” Journal of Finance 25, no. 2 (May 1970): 383-417.
Eugene F. Fama, “Foundations of Finance,” Journal of Finance 32, no. 3 (June 1977): 961-64.

3. Market Returns and Election Years
3
It is difficult to identify systematic return patterns
in elections years.
On average, market returns have been positive
both in election years and the subsequent year.
Market expectations associated with election
outcomes are embedded in security prices.
Past performance is not a guarantee of future results.
Sources: The S&P data is provided by Standard & Poor's Index Services Group; MSCI data copyright MSCI 2016, all rights reserved; Bloomberg Barclays Capital data provided by Bloomberg.

4. The Capital Markets Have Rewarded
Long-Term Investors
4
Monthly growth of wealth ($1), 1926–2015
In US dollars. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is no guarantee of future results. US Small Cap Index is the CRSP 6–10 Index; US Large Cap Index is
the S&P 500 Index; Long-Term Government Bonds Index is 20-year US government bonds; Treasury Bills are One-Month US Treasury bills; Inflation is the Consumer Price Index. CRSP data provided by the Center for Research in Security Prices, The S&P data is provided by Standard &
Poor’s Index Services Group. Bonds, T-bills, and inflation data provided by Morningstar.
$16,743 US Small Cap Index
$5,386 US Large Cap Index
$132 Long-Term
Government Bonds Index
$21 Treasury Bills
$13 Inflation (CPI)
$0
$1
$10
$100
$1,000
$10,000
$100,000
1926 1936 1946 1956 1966 1976 1986 1996 2006 2015

5. Markets Have Rewarded Long-Term Investors
under a Variety of Presidents
5
Growth of a Dollar Invested in the S&P 500: January 1926–June 2016
Past performance is not a guarantee of future results. Indices are not available for direct investment; therefore, their performance does not reflect the expenses associated with the management of an actual portfolio. The S&P data is provided
by Standard & Poor’s Index Services Group.

6. Reacting Can Hurt Performance
6
Performance of the S&P 500 Index, 1970-2015
In US dollars. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results. Performance data for January 1970–August 2008 provided by
CRSP; performance data for September 2008–December 2015 provided by Bloomberg. S&P data provided by Standard & Poor’s Index Services Group. Bonds, T-bills, and inflation data provided by Morningstar. The information shown here is derived from such indices, bonds, T-bills, and
inflation data.
Missing only a few days
of strong returns can
drastically impact overall
performance.
Total
Period
Missed
1 Best
Day
Missed
5 Best
Single
Days
Missed
15 Best
Single
Days
Missed
25 Best
Single
Days
One-
Month
US T-Bills
Annualized
Compound Return 10.27% 10.01% 9.24% 7.95% 6.87% 4.94%
$89,678
$80,370
$58,214
$33,710
$21,224
$9,195
Growthof$1,000