Opportunities on the Horizon: Investing Through a Slowing Economy

Overview | WEALTH OUTLOOK 2023 | MID-YEAR EDITION | 23 Long-term wealth creation It is generally recognized that the three key ingredients for long-termwealth creation are: 1. A long-term focus 2. Sticking to a disciplined investment framework and avoiding the temptation to time the market 3. Patience In our view, all are elements of a strategic asset allocation framework. Adhering to these principles day after day is a good recipe for seeking long-term success. Some days may be more difficult than others, but a thoughtful strategic asset allocation can help dampen panic when the market is most volatile, potentially reducing the chance of irrational or emotional investor decision-making. FIGURE 3 : Less Volatility, Drawdowns with AVS L3 29.9% 13.4% 13.5% 0 5% 10 15 20 25 30 35 -23.4% -16.1% -15.2% -35 -30 -20 -20 -15 -10 -5% 0 Average Volatility AverageDrawdown S&P 500 AVS L3 (Net of fee) AVS L3 (Gross of fee) Source: Citi Global Wealth Investments and Bloomberg as of May 1, 2023. FIGURE 4 : Volatilities and Drawdowns During 10 Different Severe Selloffs Drawdown Dates --S&P 500 Annualized Volatility Drawdown Peak Date Trough Date S&P 500 AVS L3 (Net of Fee) AVS L3 (Gross of fee) S&P 500 AVS L3 (Net of Fee) AVS L3 (Gross of fee) 2007-10-09 2009-03-09 37.3% 17.1% 17.1% -55.3% -40.7% -39.1% 2000-09-01 2002-10-09 22.9% 9.7% 9.6% -47.4% -30.7% -25.9% 2020-02-19 2020-02-23 79.8% 35.3% 35.3% -33.8% -23.1% -23.1% 2022-02-03 2022-10-12 23.7% 12.4% 12.3% -24.5% -21.9% -21.1% 2018-09-20 2018-12-24 20.5% 9.0% 9.0% -19.4% -10.1% -9.8% 2015-07-20 2016-02-11 19.0% 9.3% 9.3% -13,0% -11.1% -10.3 2000-03-24 2000-04-14 27.0% 12.5% 13.4% -11.1% -6.8% -6.2% 2018-01-26 2018-02-08 29.7% 10.4% 10.4% -10.1% -5.7% -5.7% 2012-04-02 2012-06-01 14.2% 8.2% 8.2% -9.6% -7.2% -7.2% 2020-09-02 2020-09-23 24.5% 10.7% 10.7% -9.5% -4.2% -4.2% Average 29.9% 13.4% 13.5% -23.4% -16.1% -15.2% Source: Citi Global Wealth Investments and Bloomberg as of May 1, 2023. The performance of the AVS level 3 portfolio was calculated on an asset class level using indexes to proxy for each asset class. Gross of fees returns do not reflect the deduction of advisory fees. Net performance results reflect a deduction of 2.5%annual maximum fee that can be charged in connection with advisory services that covers advisory fees and transaction costs All performance information shown above is hypothetical not the actual performance of any client account. Hypothetical information reflects the application of a model methodology and selection of securities in hindsight. No hypothetical record can completely account for the impact of financial risk in actual trading. For example, there are numerous factors related to the equities, fixed income or commodities markets in general which cannot be, and have not been accounted for in the preparation of hypothetical performance information, all of which can affect actual performance. The returns shown above are for indexes and do not represent the result of actual trading of investable assets/securities. The asset classes used to populate the allocationmodel may underperform their respective indexes and lead to lower performance than the model anticipates.