PDF Quarterly Market Review

[Pages:19]Quarterly Market Review

Second Quarter 2019

This report features world capital market performance and a timeline of events for the past quarter. It begins with a global overview, then features the returns of stock and bond asset classes in the US and international markets.

The report also illustrates the impact of globally diversified portfolios and features a quarterly topic.

Overview:

Market Summary World Stock Market Performance World Asset Classes US Stocks International Developed Stocks Emerging Markets Stocks Select Country Performance Select Currency Performance vs. US Dollar Real Estate Investment Trusts (REITs) Commodities Fixed Income Global Fixed Income Impact of Diversification Quarterly Topic: The Uncommon Average

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Quarterly Market Summary

Index Returns

Q2 2019

US Stock Market

4.10%

International Developed Stocks

Emerging Markets Stocks

STOCKS

3.79%

0.61%

Global Real Estate

1.29%

US Bond Market

Global Bond Market ex US

BONDS

3.08%

2.75%

Since Jan. 2001

Avg. Quarterly Return

Best Quarter

Worst Quarter

2.0%

16.8% 2009 Q2 -22.8% 2008 Q4

1.5%

25.9% 2009 Q2 -21.2% 2008 Q4

2.9%

34.7% 2009 Q2 -27.6% 2008 Q4

2.6%

32.3% 2009 Q3 -36.1% 2008 Q4

1.2%

4.6% 2001 Q3

-3.0% 2016 Q4

1.1%

4.6% 2008 Q4

-2.7% 2015 Q2

Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio.

Market segment (index representation) as follows: US Stock Market (Russell 3000 Index), International Developed Stocks (MSCI World ex USA Index [net div.]), Emerging Markets (MSCI Emerging Markets Index [net div.]),

Global Real Estate (S&P Global REIT Index [net div.]), US Bond Market (Bloomberg Barclays US Aggregate Bond Index), and Global Bond Market ex US (Bloomberg Barclays Global Aggregate ex-USD Bond Index [hedged to

USD]). S&P data ? 2019 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell

Indexes. MSCI data ? MSCI 2019, all rights reserved. Bloomberg Barclays data provided by Bloomberg.

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Long-Term Market Summary

Index Returns

1 Year

US Stock Market

8.98%

International Developed Stocks

Emerging Markets Stocks

STOCKS

1.29%

1.21%

Global Real Estate

8.81%

US Bond Market

Global Bond Market ex US

BONDS

7.87%

7.61%

5 Years

10.19%

2.04%

2.49%

5.29%

2.95%

4.43%

10 Years

14.67%

6.75%

5.81%

12.19%

3.90%

4.44%

Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio.

Market segment (index representation) as follows: US Stock Market (Russell 3000 Index), International Developed Stocks (MSCI World ex USA Index [net div.]), Emerging Markets (MSCI Emerging Markets Index [net div.]),

Global Real Estate (S&P Global REIT Index [net div.]), US Bond Market (Bloomberg Barclays US Aggregate Bond Index), and Global Bond Market ex US (Bloomberg Barclays Global Aggregate ex-USD Bond Index [hedged to

USD]). S&P data ? 2019 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell

Indexes. MSCI data ? MSCI 2019, all rights reserved. Bloomberg Barclays data provided by Bloomberg.

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World Stock Market Performance

MSCI All Country World Index with selected headlines from Q2 2019

270

260

250

240

230

220

210 Mar 31

Apr 30

May 31

Jun 30

"Global Stock Rally

"Home-Price

"US Consumer "Eurozone

Defies Dimming

Growth

Sentiment Hits Economy Slows

Economic Outlook"

Slows to

Highest Level as Demand for

"IMF Cuts 2019

Lowest

in 15 Years"

Exports Stalls"

Global Growth Outlook"

Level Since 2012"

"US-China Trade

Talks End

"US Budget

"US Stocks Rally to

Without a Deal"

Deficit Grew 15% in First Half of Fiscal 2019"

Put S&P 500, Nasdaq at New Records"

"US Worker Productivity Advances at Best

"Japan Surprises with

2.1% Growth, but It's Not All Roses"

Rate Since 2010"

"US Job Openings

Outnumber Unemployed by Widest Gap Ever"

"US Economy

Grew at Unrevised 3.1% Rate in First Quarter"

"S&P 500 Hits Record

Close After Fed Hints at Interest-Rate Cut"

S&P 500 Posts Best First Half in 22 Years"

These headlines are not offered to explain market returns. Instead, they serve as a reminder that investors should view daily events from a long-term perspective and avoid making investment decisions based solely on the news.

Graph Source: MSCI ACWI Index [net div.]. MSCI data ? MSCI 2019, all rights reserved.

It is not possible to invest directly in an index. Performance does not reflect the expenses associated with management of an actual portfolio. Past performance is not a guarantee of future results.

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World Stock Market Performance

MSCI All Country World Index with selected headlines from past 12 months

SHORT TERM (Q3 2018?Q2 2019) 270 260

LONG TERM (2000?Q2 2019)

300

200

Last 12

100

months

0 2000

2005

2010

2015

250

240

230

220

210 Jun 30

Sep 30

Dec 31

Mar 31

Jun 30

"Nasdaq Crosses

"US Jobless Claims "Existing-Home "US Indexes Close

"Oil Rises Sharply on

"Home-Price Growth "US Job Openings

8000 Threshold

Hit Lowest Level Sales Suffer with Worst Yearly

OPEC Production Cuts,

Slows to Lowest

Outnumber

for First Time"

since 1969"

Largest

Losses Since

Falling US Stockpiles"

Level Since 2012" Unemployed by

Annual Drop 2008"

Widest Gap Ever"

"US Jobless Claims

Hit Lowest Level since 1969"

"Fed Raises Interest Rates, in Four Years"

Signals One More Increase This Year"

"China's Trade

"Midterm Elections Produce a Divided

"OECD Sees Further

Slowdown in Global Economy"

"May's Brexit

Deal Is Rejected for a Third Time by Lawmakers"

"US Consumer

Sentiment Hits Highest Level in 15 Years"

"S&P 500 Posts

Surplus with US

Congress" "Oil Prices Drop Sharply as OPEC

Best First Half

Hits New Record"

Struggles to Agree on Cuts"

in 22 Years"

These headlines are not offered to explain market returns. Instead, they serve as a reminder that investors should view daily events from a long-term perspective and avoid making investment decisions based solely on the news.

Graph Source: MSCI ACWI Index [net div.]. MSCI data ? MSCI 2019, all rights reserved.

It is not possible to invest directly in an index. Performance does not reflect the expenses associated with management of an actual portfolio. Past performance is not a guarantee of future results.

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World Asset Classes

Second Quarter 2019 Index Returns (%)

Equity markets around the globe posted positive returns for the quarter. Looking at broad market indices, US equities outperformed non-US developed and emerging markets during the quarter.

Value stocks outperformed growth stocks in emerging markets but underperformed in developed markets, including the US. Small caps underperformed large caps in all regions.

REIT indices underperformed equity market indices in both the US and non-US developed markets.

S&P 500 Index Russell 1000 Index Russell 3000 Index Russell 1000 Value Index MSCI World ex USA Index (net div.) Bloomberg Barclays US Aggregate Bond Index MSCI All Country World ex USA Index (net div.) S&P Global ex US REIT Index (net div.) Russell 2000 Index MSCI World ex USA Small Cap Index (net div.) MSCI World ex USA Value Index (net div.) Russell 2000 Value Index MSCI Emerging Markets Value Index (net div.) Dow Jones U.S. Select REIT Index MSCI Emerging Markets Index (net div.) One-Month US Treasury Bills MSCI Emerging Markets Small Cap Index (net div.)

-0.98

2.10 1.76 1.74 1.38 0.97 0.82 0.61 0.60

3.08 2.98 2.64

4.30 4.25 4.10 3.84 3.79

Past performance is not a guarantee of future results. Indices are not available for direct investment. Index 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. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. MSCI data ? MSCI 2019, all

rights reserved. Dow Jones data ? 2019 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. S&P data ? 2019 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. Bloomberg

Barclays data provided by Bloomberg. Treasury bills ? Stocks, Bonds, Bills, and Inflation YearbookTM, Ibbotson Associates, Chicago (annually updated work by Roger G. Ibbotson and Rex A. Sinquefield).

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US Stocks

Second Quarter 2019 Index Returns

US equities outperformed both non-US developed and emerging markets equities. Small caps underperformed large caps in the US. Value underperformed growth in the US across large and small cap stocks.

Ranked Returns for the Quarter (%)

Large Growth Large Cap Marketwide

Large Value Small Growth

Small Cap Small Value

2.75 2.10 1.38

4.64 4.25 4.10 3.84

World Market Capitalization--US

55%

US Market $29.3 trillion

Period Returns (%)

Asset Class Large Growth Small Growth Large Cap Marketwide Small Cap Large Value Small Value

YTD

21.49 20.36 18.84 18.71 16.98 16.24 13.47

1 Year

11.56 -0.49 10.02 8.98 -3.31 8.46 -6.24

3 Years**

18.07 14.69 14.15 14.02 12.30 10.19

9.81

* Annualized

5 Years** 10 Years**

13.39

16.28

8.63

14.41

10.45 10.19

14.77 14.67

7.06

13.45

7.46

13.19

5.39

12.40

Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio.

Market segment (index representation) as follows: Marketwide (Russell 3000 Index), Large Cap (Russell 1000 Index), Large Cap Value (Russell 1000 Value Index), Large Cap Growth (Russell 1000 Growth Index), Small Cap

(Russell 2000 Index), Small Cap Value (Russell 2000 Value Index), and Small Cap Growth (Russell 2000 Growth Index). World Market Cap represented by Russell 3000 Index, MSCI World ex USA IMI Index, and MSCI

Emerging Markets IMI Index. Russell 3000 Index is used as the proxy for the US market. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. MSCI

data ? MSCI 2019, all rights reserved.

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