Anchor Managed Accounts Balanced Value Strategy: Stability with a Focus on Downside Risk

Publication Data Source: Zephyr, StyleAdvisor

ⁱThe results prior to 12/31/05 presented herein represent those of the Anchor Capital Institutional and Private Client Investment Management Division and were published in the product presentations. The data set is as of 1992 with the graph starting at 2002, representing the first data point after the initial 120 month rolling time period.

Anchor Balanced Value: Upside / Downside Capture 120-Month Moving Windows was used to represent the long term, full market cycle of the strategy as it pertains to the upside/downside capture. The up-market capture ratio is the statistical measure of an investment manager’s overall performance in up-markets. The up-market capture ratio is used to evaluate how well an investment manager performed relative to an index during periods when that index has risen. The down-market capture ratio is a statistical measure of an investment manager’s overall performance in down-markets. It is used to evaluate how well an investment manager performed relative to an index during periods when that index has dropped.

ⁱⁱBenchmark Description: Information about indices is provided to allow for comparison of the performance of the Adviser to that of certain well-known and widely recognized indices. There is no representation that such index is an appropriate benchmark for such comparison. You cannot invest directly in an index, which also does not take into account trading commissions and costs. The volatility of indices may be materially different from the performance of the Adviser. In addition, the Adviser’s recommendations may differ significantly from the securities that comprise the indices. The benchmark is a static blend of 60% Russell 1000 Value Index; 30% Barclays Capital U.S. Government/Credit Intermediate Bond Index; 10% Citigroup 90-Day Treasury Bill Index. The Russell 1000 Value Index measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 Index companies with lower price-to-book ratios and lower expected growth values. The Russell 1000 Value Index is constructed to provide a comprehensive and unbiased barometer for the large-cap value segment. The Index is completely reconstituted annually to ensure new and growing equities are included and that the represented companies continue to reflect value characteristics. The Barclays Capital U.S. Intermediate 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 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. The Citigroup 90-Day Treasury Bill Index measures the average return of the last three-month U.S. Treasury Bill issues. U.S. Treasury Bills are short-term securities issued by the U.S. government with maturities of up to one year. They are backed by the faith and credit of the U.S. government who guarantees full payment of principal and interest at maturity. Total return comprises price appreciation/depreciation and income as a percentage of the original investment. All benchmark returns include the reinvestment of income.

ⁱⁱⁱBeta 120-Month Moving Windows was used to represent the long term, full market cycle of the strategy as it pertains to beta. The data set is as of 1992 with the graph starting at 2002, representing the first data point after the initial 120 month rolling time period. The first data point is as of 1992 but shown as of 2002 because of the 120 month rolling window. A beta coefficient is a measure of the volatility, or systematic risk, of an individual stock in comparison to the unsystematic risk of the entire market. In statistical terms, beta represents the slope of the line through a regression of data points from an individual stock’s returns against those of the market.

^ivAlpha 120-Month Moving Windows was used to represent the long term, full market cycle of the strategy as it pertains to alpha. The data set is as of 1992 with the graph starting at 2002, representing the first data point after the initial 120 month rolling time period. Alpha is a strategy’s ability to beat the market, or it’s “edge”. Alpha is thus also often referred to as “excess return” or “abnormal rate of return” which refers to the idea that markets are efficient, and so there is no way to systematically earn returns that exceed the broad market as a whole. Alpha is often used in conjunction with beta (the Greek letter β), which measures the broad market’s overall volatility or risk, known as systematic market risk.

^vGrowth of $100,000 Chart: The information used in this chart is based on a hypothetical model created by Anchor Capital Advisors and may have inherent limitations. The underlying historical data is provided by Zephyr, StyleAdvisor. Hypothetical performance does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risks associated with actual market conditions. There are numerous other factors related to the markets in general, or to the implementation of any specific trading strategy, which cannot be fully accounted for, and all of which can adversely affect actual trading results. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. The hypothetical results do not represent actual recommendations or trading by Anchor and should not be considered as indicative of the skills of the investment adviser. During the period shown, the Adviser was not managing client accounts according to the strategy depicted. The information contained herein is based on sources we deem reliable, but is not guaranteed by Anchor. Past performance is not indicative of future results. Inherent in any investment is the possibility of loss. The returns presented are not directly representative of Anchor accounts. The information is for informational purposes only and should not be considered investment advice or a recommendation of any particular strategy or investment product. Anchor shall have no obligation to update this information, nor have liability for decisions based on this information.

Balanced Value Strategy Model Description: The Anchor Managed Accounts Balanced (Bal) model was created on 12/31/05. Anchor Capital’s Managed Accounts Division created this model for purposes of presenting performance results which approximate those of the Managed Accounts Balanced sponsor program portfolios in aggregate. The investment objective for the model is to achieve a high rate of return through the purchase of equity and fixed income securities. The results prior to 12/31/05 presented herein represent those of the Anchor Capital Institutional and Private Client Investment Management Division. The results from 12/31/92 through 12/31/05 for the Institutional and Private Client Investment Management Balanced strategy were published in the product presentation.

Balanced Value Model Disclosure: The model transaction history does not reflect all portfolio transaction activity for accounts in the sponsor program. Model transactions correspond with trading activity generated in the course of investment for substantially all accounts in the sponsor balanced program. Model transactions and holdings do not reflect individual portfolio activity for new account investments, or account activity and holdings in various individual portfolios subject to tax considerations or individual client discretion. Model performance may differ materially from individual client portfolio results.

Calculations of Rates of Return: All securities in the model are valued at last sale price, as provided by independent pricing services. The portfolio valuation is reflected on a trade date basis. Model investment returns include the reinvestment of dividends and other earnings. Effective 1/1/2010, dividends (excluding income on money market securities) are credited on an accrual basis. Time-weighted portfolio returns are calculated for each monthly period in the prior quarter. Monthly model results are linked to determine annual returns. Individual client portfolio results may vary from the results presented for the model because of different investment objectives, tax status and other considerations. Returns of individual client accounts will be reduced by advisor fees and other expenses which might be incurred to provide investment management, custody, administrative, actuarial, accounting or other services to the client. The benchmark indices exclude fees. The Managed Accounts Balanced model returns are calculated on a pure gross of fee basis, before the deduction of Anchor Capital management and sponsor wrap fees. For all periods presented, the net of fee returns are presented after debiting the gross or pure gross of fee results by 3%, which represents the highest known annual wrap fee charged by any of the sponsors of the Separately Managed Account program that Anchor participates in. Effective 6/30/2017, the net returns presented are calculated using Style Advisor/Informa Investment Solutions. The monthly net return is compounded to calculate the quarterly, YTD and annual returns. The numbers may be slightly different from net returns published prior to 6/30/2017, which were calculated by simply subtracting 3% from the annual gross return. Net returns presented for calendar years prior to 2017 use the prior methodology. Additional information regarding policies for calculating and reporting model returns is available upon request.

This publication has been prepared by Anchor Capital Advisors, LLC (Anchor). This publication is for educational purposes only and should not be considered investment advice and does not constitute an offer or solicitation of any transaction in any securities referred to herein. Any recommendation contained herein may not be suitable for all investors. Although the information contained in the subject report (not including disclosures contained herein) has been obtained from sources we believe to be reliable, the accuracy and completeness of such information and the opinions expressed herein cannot be guaranteed. Opinions offered constitute the current judgment of Anchor and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions.