Prepared for: Portfolio Review Sample Client - Morgan · PDF filePrepared for: Sample Client Prepared by: MSSB Financial Advisor This is a generic WealthBench sample report, intended

Prepared for:

Sample Client

Prepared by:

MSSB Financial AdvisorThis is a generic WealthBench sample report, intended to inform you of one of the many resources available through Morgan Stanley Wealth Management. This material does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectivesof those who receive it. Your Financial Advisor will discuss your risk tolerancefinancial situation and objectives with you and use this information to create areport specifically for you. That report will list security specific informationinstead of the asset classes listed here. The WealthBench report is hypotheticaland designed to educate you regarding some of the risks of your portfolio. It isnot an offer to buy or sell any security or participate in any trading strategy.

This material is not complete without the 'Important Information and Disclosures' section found at the end of this report.

Portfolio Review

Report Date 11/15/2012

Table of Contents prepared for Sample Client 2


Portfolio Risk Overview Accounts 4 Asset Class Risk Impact 5 Portfolio Risk Impact 6 Portfolio Holdings Detail 7 Equity Overview 9 Equity Risk Impact 10 Equity Holdings Detail 11 Fixed Income Overview 12 Fixed Income Risk Impact 13 Fixed Income Holdings Detail 14 Alternative Investment Overview 15 Alternative Investment Risk Impact 16 Alternative Investment Holdings Detail 17 Stress Test Global Macroeconomic Scenarios 18 Global Macroeconomic Scenarios Detail 19

Table of Contents prepared for Sample Client 3


User Selected Stress Tests 27 User Selected Stress Test Detail 28 Appendix Important Information and Disclosures 36 Glossary 47

Accounts prepared for Sample Client 4

This material is not complete without the 'Important Information and Disclosures' section found at the end of this report. Market values and risk statistics used in this report are calculated as of market close on the trading day prior to the date of this report.

This Portfolio Review is provided by Morgan Stanley via an investment analysis tool created by MSCI, in order to provide information regarding the asset allocation and risk of the accounts listed below. This Portfolio Review has been created to provide you and your Financial Advisor with information in an effort to better understand the features and characteristics of the portfolio, and to help you in your investment decision-making process. The methodologies used by this tool to analyze specific investments are proprietary to MSCI. Please see the methodologies in the 'Important Information and Disclosures' section at the end of this report for more information.

Any information presented in this report, which may take into account your assets in one or more Employee Retirement Income Security Act of 1974, as amended (“ERISA”)-covered employee benefit plans and/or one or more individual retirement accounts, is for general education and information purposes only, and should not be viewed as fiduciary investment advice or specific recommendations with respect to any particular investment or asset allocation mix under the Investment Advisers Act of 1940 as amended, ERISA, the Internal Revenue Code (the “Code”) or any other applicable law. In applying any particular asset allocation risk model to your individual circumstances, you should consider your other assets, income and investments, in addition to any interest(s) you may have in ERISA-covered employee benefit plans and/or individual retirement accounts. Thus, it is very important for you to insure that you review this material to make sure that it includes all of your assets, income and investments, as you deem appropriate.

AccountsAccount Name Account Number Tax Status Market Value Percent Last Updated Data SourcePrimary Account taxable 10,000,000 100.0% 09/19/2012 ManualTotal 10,000,000 100.0%

Asset Class Risk Impact prepared for Sample Client 5


The information below describes the Risk Impact of each Asset Class within your account(s). Detailed descriptions of risk statistics as well as the methodologies used to generate these statistics are outlined in the 'Important Information and Disclosures' section at the end of this report.

Asset Class Level Risk Analysis - Current Holdings

Description 0% 80% Market Value PercentStandard Deviation Risk Impact Tail Loss Tail Gain

Equity 3,500,000 35.0% 17.9 76.6% (84,350) 101,972Large Cap Equities 1,300,000 13.0% 15.9 25.9% (29,469) 34,854Mid Cap Equities 1,200,000 12.0% 18.3 27.5% (31,022) 35,999Small Cap Equities 600,000 6.0% 21.6 15.7% (18,448) 24,333International Equities 400,000 4.0% 20.8 10.1% (9,861) 10,929Fixed Income 4,550,000 45.5% 2.5 8.4% (8,503) 9,343US Fixed Income - Taxable 1,700,000 17.0% 3.3 4.2% (4,402) 5,468US Fixed Income - Tax Exempt 2,300,000 23.0% 1.8 -1.1% (4,324) 4,334Non-US Fixed Income 550,000 5.5% 9.3 5.7% (3,759) 4,494Cash and Equivalents 450,000 4.5% 0.0 0.0% (23) 31Cash and Equivalents 450,000 4.5% 0.0 0.0% (23) 31Alternative Investments 1,500,000 15.0% 6.1 10.9% (5,735) 7,226Hedged Strategy 600,000 6.0% 7.1 5.2% (2,904) 3,577Credit Structures 300,000 3.0% 7.9 2.6% (1,963) 1,671Private Equity Fund/Fund of Funds 600,000 6.0% 4.5 3.1% (1,917) 2,970Total 10,000,000 100.0% 7.7 - (86,105) 105,748

Market Value Risk Impact

Portfolio Risk Impact prepared for Sample Client 6

This material is not complete without the 'Important Information and Disclosures' section found at the end of this report. Market values and risk statistics used in this report are calculated as of market close on the trading day prior to the date of this report. ^ Denotes positions that have been manually entered. Please see the 'Important Information and Disclosures' section for more information.

The information below lists the 10 positions in the portfolio with the highest 'Risk Impact.' Detailed descriptions of risk statistics as well as the methodologies used to generate these statistics are outlined in the 'Important Information and Disclosures' section at the end of this report.

Top Contributors to Risk Description Ticker Market Value Percent St Dev Risk Impact Tail Loss Tail Gain

Mid Cap Growth (USD) ^ 400,000 4.0% 18.9% 9.4% (10,726) 12,528Mid Cap Core (USD) ^ 400,000 4.0% 18.3% 9.2% (10,341) 11,998Mid Cap Value (USD) ^ 400,000 4.0% 18.0% 9.1% (10,033) 11,705Large Cap Value (USD) ^ 433,333 4.3% 16.8% 9.1% (10,442) 12,509Large Cap Core (USD) ^ 433,333 4.3% 15.9% 8.7% (9,803) 11,580Large Cap Growth (USD) ^ 433,333 4.3% 15.4% 8.3% (9,404) 11,159Non-US Fixed Income (USD) ^ 550,000 5.5% 9.3% 5.7% (3,759) 4,494Small Cap Growth (USD) ^ 200,000 2.0% 22.1% 5.3% (6,162) 8,205Emerging Markets Equities (USD) ^ 200,000 2.0% 22.3% 5.3% (4,883) 5,755Small Cap Core (USD) ^ 200,000 2.0% 21.6% 5.3% (6,149) 8,111Rest Of Portfolio 10,000,000 63.5%

Portfolio Risk Ranking Diversification Benefit

Current Holdings (7.74%) Barclays Capital Global Aggregate (5.77%)

MSCI - World Index (17.64%) U.S. - S&P 500 (15.87%)

Standard Deviation (%)

0 2 4 6 8 10

Standard Deviation (%)

Equity (6.45%) Fixed Income (1.99%)

Cash and Equivalents (0.00%) Alternatives (0.96%)

Risk (7.74%) Diversification Benefit (17.62%)

Portfolio Holdings Detail prepared for Sample Client 7


Detailed descriptions of the risk statistics below as well as the methodologies used to generate these statistics are outlined in the 'Important Information and Disclosures' section at the end of this report.

All Positions - Current HoldingsDescription Ticker Percent Market Value St Dev Risk Impact Tail Loss Tail Gain

Equity 35.0% 3,500,000 17.9% 76.6% (84,350) 101,972Large Cap Equities 13.0% 1,300,000 15.9% 25.9% (29,469) 34,854

Large Cap Core (USD) ^ 4.3% 433,333 15.9% 8.7% (9,803) 11,580Large Cap Growth (USD) ^ 4.3% 433,333 15.4% 8.3% (9,404) 11,159Large Cap Value (USD) ^ 4.3% 433,333 16.8% 9.1% (10,442) 12,509

Mid Cap Equities 12.0% 1,200,000 18.3% 27.5% (31,022) 35,999Mid Cap Core (USD) ^ 4.0% 400,000 18.3% 9.2% (10,341) 11,998Mid Cap Growth (USD) ^ 4.0% 400,000 18.9% 9.4% (10,726) 12,528Mid Cap Value (USD) ^ 4.0% 400,000 18.0% 9.1% (10,033) 11,705

Small Cap Equities 6.0% 600,000 21.6% 15.7% (18,448) 24,333Small Cap Core (USD) ^ 2.0% 200,000 21.6% 5.3% (6,149) 8,111Small Cap Growth (USD) ^ 2.0% 200,000 22.1% 5.3% (6,162) 8,205Small Cap Value (USD) ^ 2.0% 200,000 21.3% 5.2% (6,200) 8,098

International Equities 4.0% 400,000 20.8% 10.1% (9,861) 10,929Core International Equities (USD) ^ 2.0% 200,000 20.5% 4.9% (5,377) 6,004Emerging Markets Equities (USD) ^ 2.0% 200,000 22.3% 5.3% (4,883) 5,755

Fixed Income 45.5% 4,550,000 2.5% 8.4% (8,503) 9,343US Fixed Income - Taxable 17.0% 1,700,000 3.3% 4.2% (4,402) 5,468

Asset Backed (USD) ^ 3.4% 340,000 9.3% 3.5% (2,324) 2,778High Yield (USD) ^ 3.4% 340,000 9.3% 3.5% (2,324) 2,778Long Gov/Corp (USD) ^ 3.4% 340,000 9.4% -2.7% (4,513) 4,268Short/Intermediate Gov/Corp (USD) ^ 3.4% 340,000 0.4% 0.0% (84) 101US Taxable Other (USD) ^ 3.4% 340,000 1.0% -0.1% (198) 197

US Fixed Income - Tax Exempt 23.0% 2,300,000 1.8% -1.1% (4,324) 4,334Long Muni (USD) ^ 7.7% 766,667 1.7% -0.4% (1,815) 1,780Short/Intermediate Muni (USD) ^ 7.7% 766,667 0.6% -0.1% (349) 369Tax Free Core (USD) ^ 7.7% 766,667 4.0% -0.6% (2,313) 2,409

Non-US Fixed Income 5.5% 550,000 9.3% 5.7% (3,759) 4,494Non-US Fixed Income (USD) ^ 5.5% 550,000 9.3% 5.7% (3,759) 4,494

Cash and Equivalents 4.5% 450,000 0.0% 0.0% (23) 31Cash and Equivalents 4.5% 450,000 0.0% 0.0% (23) 31

Cash & Equivalents - Tax Free (USD) ^ 1.5% 150,000 0.0% 0.0% (8) 10Cash and Equivalents (USD) ^ 1.5% 150,000 0.0% 0.0% (8) 10Other Cash & Equivalents (USD) ^ 1.5% 150,000 0.0% 0.0% (8) 10

Portfolio Holdings Detail prepared for Sample Client 8


Description Ticker Percent Market Value St Dev Risk Impact Tail Loss Tail GainAlternative Investments 15.0% 1,500,000 6.1% 10.9% (5,735) 7,226Hedged Strategy 6.0% 600,000 7.1% 5.2% (2,904) 3,577

Equity Long Short (USD) ^ 2.0% 200,000 7.9% 1.7% (1,309) 1,114Managed Futures/Macro (USD) ^ 2.0% 200,000 9.2% 2.3% (1,410) 2,350Relative Value/Event Driven (USD) ^ 2.0% 200,000 5.3% 1.2% (1,050) 948

Credit Structures 3.0% 300,000 7.9% 2.6% (1,963) 1,671Credit Structures (USD) ^ 3.0% 300,000 7.9% 2.6% (1,963) 1,671

Private Equity Fund/Fund of Funds 6.0% 600,000 4.5% 3.1% (1,917) 2,970Private Equity Funds (USD) ^ 6.0% 600,000 4.5% 3.1% (1,917) 2,970

Total 100.0% 10,000,000 7.7% - (86,105) 105,748

Equity Overview prepared for Sample Client 9


Asset Class Level Risk Analysis - Current Holdings: Equity


Large Cap Equities 1,300,000 13.0% 15.9 25.9% (29,469) 34,854Large Cap Growth 433,333 4.3% 15.4 8.3% (9,404) 11,159Large Cap Value 433,333 4.3% 16.8 9.1% (10,442) 12,509Large Cap Core 433,333 4.3% 15.9 8.7% (9,803) 11,580Mid Cap Equities 1,200,000 12.0% 18.3 27.5% (31,022) 35,999Mid Cap Growth 400,000 4.0% 18.9 9.4% (10,726) 12,528Mid Cap Value 400,000 4.0% 18.0 9.1% (10,033) 11,705Mid Cap Core 400,000 4.0% 18.3 9.2% (10,341) 11,998Small Cap Equities 600,000 6.0% 21.6 15.7% (18,448) 24,333Small Cap Growth 200,000 2.0% 22.1 5.3% (6,162) 8,205Small Cap Value 200,000 2.0% 21.3 5.2% (6,200) 8,098Small Cap Core 200,000 2.0% 21.6 5.3% (6,149) 8,111International Equities 400,000 4.0% 20.8 10.1% (9,861) 10,929Core International Equities 200,000 2.0% 20.5 4.9% (5,377) 6,004Emerging Markets Equities 200,000 2.0% 22.3 5.3% (4,883) 5,755


Equity Risk Impact prepared for Sample Client 10


Allocation and Risk Top Contributors to RiskMarket Value Risk Impact

0 10 20 30

International Equities

Small Cap Equities

Mid Cap Equities

Large Cap Equities

0 10 20 30

International Equities

Small Cap Equities

Mid Cap Equities

Large Cap Equities

Description Market Value

Percent St Dev Risk Impact

Tail Loss Tail Gain

Mid Cap Growth (USD) ^ 400,000 4.0% 18.9% 9.4% (10,726) 12,528

Mid Cap Core (USD) ^ 400,000 4.0% 18.3% 9.2% (10,341) 11,998

Mid Cap Value (USD) ^ 400,000 4.0% 18.0% 9.1% (10,033) 11,705

Large Cap Value (USD) ^ 433,333 4.3% 16.8% 9.1% (10,442) 12,509

Large Cap Core (USD) ^ 433,333 4.3% 15.9% 8.7% (9,803) 11,580

Sector AllocationThere are no holdings meeting the selection criteria in this portfolio.

Equity Holdings Detail prepared for Sample Client 11


Equity PositionsDescription Ticker Percent Market Value St Dev Risk Impact Tail Loss Tail Gain

Equity 35.0% 3,500,000 17.9% 76.6% (84,350) 101,972Large Cap Equities 13.0% 1,300,000 15.9% 25.9% (29,469) 34,854

Large Cap Core (USD) ^ 4.3% 433,333 15.9% 8.7% (9,803) 11,580Large Cap Growth (USD) ^ 4.3% 433,333 15.4% 8.3% (9,404) 11,159Large Cap Value (USD) ^ 4.3% 433,333 16.8% 9.1% (10,442) 12,509

Mid Cap Equities 12.0% 1,200,000 18.3% 27.5% (31,022) 35,999Mid Cap Core (USD) ^ 4.0% 400,000 18.3% 9.2% (10,341) 11,998Mid Cap Growth (USD) ^ 4.0% 400,000 18.9% 9.4% (10,726) 12,528Mid Cap Value (USD) ^ 4.0% 400,000 18.0% 9.1% (10,033) 11,705

Small Cap Equities 6.0% 600,000 21.6% 15.7% (18,448) 24,333Small Cap Core (USD) ^ 2.0% 200,000 21.6% 5.3% (6,149) 8,111Small Cap Growth (USD) ^ 2.0% 200,000 22.1% 5.3% (6,162) 8,205Small Cap Value (USD) ^ 2.0% 200,000 21.3% 5.2% (6,200) 8,098

International Equities 4.0% 400,000 20.8% 10.1% (9,861) 10,929Core International Equities (USD) ^ 2.0% 200,000 20.5% 4.9% (5,377) 6,004Emerging Markets Equities (USD) ^ 2.0% 200,000 22.3% 5.3% (4,883) 5,755

Fixed Income Overview prepared for Sample Client 12


Asset Class Level Risk Analysis - Current Holdings: Fixed Income


US Fixed Income - Taxable 1,700,000 17.0% 3.3 4.2% (4,402) 5,468Short/Intermediate Gov/Corp 340,000 3.4% 0.4 0.0% (84) 101Long Gov/Corp 340,000 3.4% 9.4 -2.7% (4,513) 4,268Asset Backed 340,000 3.4% 9.3 3.5% (2,324) 2,778High Yield 340,000 3.4% 9.3 3.5% (2,324) 2,778US Taxable Other 340,000 3.4% 1.0 -0.1% (198) 197US Fixed Income - Tax Exempt 2,300,000 23.0% 1.8 -1.1% (4,324) 4,334Short/Intermediate Muni 766,667 7.7% 0.6 -0.1% (349) 369Long Muni 766,667 7.7% 1.7 -0.4% (1,815) 1,780Tax Free Core 766,667 7.7% 4.0 -0.6% (2,313) 2,409Non-US Fixed Income 550,000 5.5% 9.3 5.7% (3,759) 4,494Non-US Fixed Income 550,000 5.5% 9.3 5.7% (3,759) 4,494


Fixed Income Risk Impact prepared for Sample Client 13



-10 0 10 20 30

Non-US Fixed Income

US Fixed Income - Tax Exempt

US Fixed Income - Taxable

-10 0 10 20 30

Non-US Fixed Income

US Fixed Income - Tax Exempt

US Fixed Income - Taxable



Tail Loss Tail Gain

Non-US Fixed Income (USD) ^ 550,000 5.5% 9.3% 5.7% (3,759) 4,494

Asset Backed (USD) ^ 340,000 3.4% 9.3% 3.5% (2,324) 2,778

High Yield (USD) ^ 340,000 3.4% 9.3% 3.5% (2,324) 2,778

Short/Intermediate Gov/Corp (USD) ^ 340,000 3.4% 0.4% 0.0% (84) 101

Short/Intermediate Muni (USD) ^ 766,667 7.7% 0.6% -0.1% (349) 369

Fixed Income AllocationThere are no holdings meeting the selection criteria in this portfolio.

Fixed Income Holdings Detail prepared for Sample Client 14


Fixed Income PositionsDescription Ticker Percent Market Value St Dev Risk Impact Tail Loss Tail Gain

Fixed Income 45.5% 4,550,000 2.5% 8.4% (8,503) 9,343US Fixed Income - Taxable 17.0% 1,700,000 3.3% 4.2% (4,402) 5,468

Asset Backed (USD) ^ 3.4% 340,000 9.3% 3.5% (2,324) 2,778High Yield (USD) ^ 3.4% 340,000 9.3% 3.5% (2,324) 2,778Long Gov/Corp (USD) ^ 3.4% 340,000 9.4% -2.7% (4,513) 4,268Short/Intermediate Gov/Corp (USD) ^ 3.4% 340,000 0.4% 0.0% (84) 101US Taxable Other (USD) ^ 3.4% 340,000 1.0% -0.1% (198) 197

US Fixed Income - Tax Exempt 23.0% 2,300,000 1.8% -1.1% (4,324) 4,334Long Muni (USD) ^ 7.7% 766,667 1.7% -0.4% (1,815) 1,780Short/Intermediate Muni (USD) ^ 7.7% 766,667 0.6% -0.1% (349) 369Tax Free Core (USD) ^ 7.7% 766,667 4.0% -0.6% (2,313) 2,409

Non-US Fixed Income 5.5% 550,000 9.3% 5.7% (3,759) 4,494Non-US Fixed Income (USD) ^ 5.5% 550,000 9.3% 5.7% (3,759) 4,494

Alternative Investment Overview prepared for Sample Client 15


Asset Class Level Risk Analysis - Current Holdings: Alternatives


Hedged Strategy 600,000 6.0% 7.1 5.2% (2,904) 3,577Relative Value/Event Driven 200,000 2.0% 5.3 1.2% (1,050) 948Equity Long Short 200,000 2.0% 7.9 1.7% (1,309) 1,114Managed Futures/Macro 200,000 2.0% 9.2 2.3% (1,410) 2,350Credit Structures 300,000 3.0% 7.9 2.6% (1,963) 1,671Credit Structures 300,000 3.0% 7.9 2.6% (1,963) 1,671Private Equity Fund/Fund of Funds 600,000 6.0% 4.5 3.1% (1,917) 2,970Private Equity Funds 600,000 6.0% 4.5 3.1% (1,917) 2,970


Alternative Investment Risk Impact prepared for Sample Client 16

This material is not complete without the 'Important Information and Disclosures' section found at the end of this report. Market values and risk statistics used in this report are calculated as of market close on the trading day prior to the date of this report. ^ Denotes positions that have been manually entered. This report may make use of risk 'proxies' for some investments, meaning that risk statistics are derived not from your position in the investment but instead from the performance of an index. If this is the case for one of the positions above, you will see the phrase "Proxied To" followed by the index next to the name of the position. See the 'Important Information and Disclosures' section at the end of this report for more details.


0 2 4 6 8

Private Equity Fund/Fund of Funds

Credit Structures

Hedged Strategy

0 2 4 6 8

Private Equity Fund/Fund of Funds

Credit Structures

Hedged Strategy



Tail Loss Tail Gain

Private Equity Funds (USD) ^ 600,000 6.0% 4.5% 3.1% (1,917) 2,970

Credit Structures (USD) ^ 300,000 3.0% 7.9% 2.6% (1,963) 1,671

Managed Futures/Macro (USD) ^ 200,000 2.0% 9.2% 2.3% (1,410) 2,350

Equity Long Short (USD) ^ 200,000 2.0% 7.9% 1.7% (1,309) 1,114

Relative Value/Event Driven (USD) ^ 200,000 2.0% 5.3% 1.2% (1,050) 948

Alternative Investment Holdings Detail prepared for Sample Client 17

This material is not complete without the 'Important Information and Disclosures' section found at the end of this report. Market values and risk statistics used in this report are calculated as of market close on the trading day prior to the date of this report. ^ Denotes positions that have been manually entered. This report may make use of risk 'proxies' for some investments, meaning that risk statistics are derived not from your position in the investment but instead from the performance of an index. If this is the case for one of the positions above, you will see the phrase "Proxied To" followed by the index next to the name of the position. See the 'Important Information and Disclosures' section at the end of this report for more details.

Alternatives PositionsDescription Ticker Percent Market Value St Dev Risk Impact Tail Loss Tail Gain

Alternative Investments 15.0% 1,500,000 6.1% 10.9% (5,735) 7,226Hedged Strategy 6.0% 600,000 7.1% 5.2% (2,904) 3,577

Equity Long Short (USD) ^ 2.0% 200,000 7.9% 1.7% (1,309) 1,114Managed Futures/Macro (USD) ^ 2.0% 200,000 9.2% 2.3% (1,410) 2,350Relative Value/Event Driven (USD) ^ 2.0% 200,000 5.3% 1.2% (1,050) 948

Credit Structures 3.0% 300,000 7.9% 2.6% (1,963) 1,671Credit Structures (USD) ^ 3.0% 300,000 7.9% 2.6% (1,963) 1,671

Private Equity Fund/Fund of Funds 6.0% 600,000 4.5% 3.1% (1,917) 2,970Private Equity Funds (USD) ^ 6.0% 600,000 4.5% 3.1% (1,917) 2,970

Global Macroeconomic Scenarios prepared for Sample Client 18

*Please refer to the Glossary section located at the end of this report for descriptions and definitions of certain terms used in this document.For detailed information about the methodology used to generate stress test values, please see the 'Risk Analysis Methodology' section at the end of this report.This material is not complete without the 'Important Information and Disclosures' section found at the end of this report.Market values and risk statistics used in this report are calculated as of market close on the trading day prior to the date of this report.

Stress testing is a technique used to project potential upside or downside movement for a given set of shocks to the financial markets. Below certain hypothetical global macroeconomic scenarios are captured in order to illustrate potential upside/downside movements to your portfolio.

-10.0%

-7.5%

-5.0%

-2.5%

0.0%

2.5%

Deep Recession Exogenous Shock Robust EconomicExpansion

Stagnation

Deep Recession The economy retrenches, with housing weakness and higher unemployment. Profits decline sharply.

Some deflation sets in. Excess liquidity and policy keeps rates low. The US dollar weakens. Protectionist

trade policies begin to emerge.

Exogenous Shock A highly unfavorable event or events negatively affects global confidence. Profits decline in the short-

term. Inflation worries or deflation fears surface. Interest rates fall and credit spreads widen. Currency

volatility picks up. Unsettled geopolitical conditions may arise.

Robust Economic Expansion

US and global economic growth significantly picks up. Profits increase significantly. Inflationary

pressures intensify. Interest rates rise more than expected. The US dollar strengthens due to rising

interest rates. Geopolitical concerns are not a hindrance to growth.

Stagnation Below-trend growth persists for several quarters. Profits experience a shortfall vs. 2010. Inflation begins

to arise. Short-term interest rates move up. The US dollar is relatively stable. Global tensions show few

signs of easing.

Most and Least Impacted Positions - Current Holdings Deep Recession Exogenous Shock Robust Economic Expansion Stagnation

Largest % Loss

Small Cap Growth (USD) ^ -25.5%Mid Cap Growth (USD) ^ -25.3%Emerging Markets Equit...) ^ -24.5%

Mid Cap Growth (USD) ^ -13.9%Large Cap Value (USD) ^ -13.8%Large Cap Core (USD) ^ -13.5%

Long Gov/Corp (USD) ^ -22.5%Tax Free Core (USD) ^ -7.3%US Taxable Other (USD) ^ -3.0%

Small Cap Growth (USD) ^ -10.8%Long Gov/Corp (USD) ^ -10.6%Emerging Markets Equit...) ^ -10.5%

Largest % Gain

US Taxable Other (USD) ^ 0.8%Tax Free Core (USD) ^ 1.5%Long Gov/Corp (USD) ^ 10.8%

Long Muni (USD) ^ 0.8%Tax Free Core (USD) ^ 1.8%Long Gov/Corp (USD) ^ 6.6%

Small Cap Growth (USD) ^ 10.9%Mid Cap Growth (USD) ^ 11.3%Emerging Markets Equi...) ^ 13.6%

Cash & Equivalents - ...) ^ 0.0%Cash and Equivalents ...) ^ 0.0%Other Cash & Equivale...) ^ 0.0%

Deep Recession Stress Test Scenario prepared for Sample Client 19

*Please refer to the Glossary section located at the end of this report for descriptions and definitions of certain terms used in this document.For detailed information about the methodology used to generate stress test values, please see the 'Risk Analysis Methodology' section at the end of this report.This material is not complete without the 'Important Information and Disclosures' section found at the end of this report. Market values and risk statistics used in this report are calculated as of market close on the trading day prior to the date of this report.

The specific events and factors used in the Stress Test are captured and illustrate the potential upside/downside movements to the portfolios defined in this report.

% Change in Market Value

-30.0%

-20.0%

-10.0%

0.0%

10.0%

Large CapEquities

Mid Cap Equities Small CapEquities

InternationalEquities

US Fixed Income -Taxable

US Fixed Income -Tax Exempt

Non-US FixedIncome

Cash andEquivalents

Hedged Strategy Credit Structures Private EquityFund/Fund of

Funds

DetailsDescription Market Value Stressed Value % ChangeEquity 3,500,000 2,685,673 -23.3%Large Cap Equities 1,300,000 1,007,417 -22.5%Mid Cap Equities 1,200,000 908,402 -24.3%Small Cap Equities 600,000 458,813 -23.5%International Equities 400,000 311,041 -22.2%Fixed Income 4,550,000 4,528,949 -0.5%US Fixed Income - Taxable 1,700,000 1,697,254 -0.2%US Fixed Income - Tax Exempt 2,300,000 2,316,451 0.7%Non-US Fixed Income 550,000 515,244 -6.3%Cash and Equivalents 450,000 450,108 0.0%Cash and Equivalents 450,000 450,108 0.0%Alternative Investments 1,500,000 1,436,525 -4.2%Hedged Strategy 600,000 565,820 -5.7%Credit Structures 300,000 271,694 -9.4%Private Equity Fund/Fund of Funds 600,000 599,011 -0.2%Total 10,000,000 9,101,255 -9.0%

Deep Recession Stress Test Scenario prepared for Sample Client 20


Assumptions* Event Description EUR/USD 2.1%JPY/USD 1.9%DJUBS Cmdty -19.6%MSCI WxUS -20.4%MSCI EM -24.5%Russell 2000 -23.6%S&P 500 -22.5%VIX 78.5%30 Year CMT 360M -0.8%2 Year CMT 24M -0.4%2Yr Swp Rate 24M -0.3%

Economic Growth The economy retrenches, with housing weakness and higher unemployment

S&P Profits Profits decline sharply

CPI Inflation Some deflation sets in

US Treasury Excess liquidity and policy keep rates low

Currency Markets The US dollar weakens

Geopolitics Protectionist trade policies begin to emerge

Exogenous Shock Stress Test Scenario prepared for Sample Client 21




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5.0%

Large CapEquities





Non-US FixedIncome

Cash andEquivalents


Funds

DetailsDescription Market Value Stressed Value % ChangeEquity 3,500,000 3,050,534 -12.8%Large Cap Equities 1,300,000 1,124,386 -13.5%Mid Cap Equities 1,200,000 1,040,286 -13.3%Small Cap Equities 600,000 528,562 -11.9%International Equities 400,000 357,301 -10.7%Fixed Income 4,550,000 4,557,064 0.2%US Fixed Income - Taxable 1,700,000 1,703,877 0.2%US Fixed Income - Tax Exempt 2,300,000 2,320,235 0.9%Non-US Fixed Income 550,000 532,952 -3.1%Cash and Equivalents 450,000 450,010 0.0%Cash and Equivalents 450,000 450,010 0.0%Alternative Investments 1,500,000 1,473,572 -1.8%Hedged Strategy 600,000 585,326 -2.4%Credit Structures 300,000 287,432 -4.2%Private Equity Fund/Fund of Funds 600,000 600,814 0.1%Total 10,000,000 9,531,179 -4.7%

Exogenous Shock Stress Test Scenario prepared for Sample Client 22


Assumptions* Event Description EUR/USD -4.7%JPY/USD 4.5%DJUBS Cmdty -11.9%MSCI WxUS -10.8%MSCI EM -10.8%Russell 2000 -11.9%S&P 500 -13.5%VIX 71.1%30 Year CMT 360M -0.5%2 Year CMT 24M -0.3%2Yr Swp Rate 24M -0.3%

Economic Growth A highly unfavorable event or events negatively affects global confidence

S&P Profits Profits decline in the short-term

CPI Inflation Inflation worries or deflation fears surface

US Treasury Interest rates fall and credit spreads widen

Currency Markets Currency volatility picks up

Geopolitics Unsettled geopolitical conditions may arise

Robust Economic Expansion Stress Test Scenario prepared for Sample Client 23




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Large CapEquities





Non-US FixedIncome

Cash andEquivalents


Funds

DetailsDescription Market Value Stressed Value % ChangeEquity 3,500,000 3,837,079 9.6%Large Cap Equities 1,300,000 1,414,521 8.8%Mid Cap Equities 1,200,000 1,320,294 10.0%Small Cap Equities 600,000 658,072 9.7%International Equities 400,000 444,191 11.0%Fixed Income 4,550,000 4,406,415 -3.2%US Fixed Income - Taxable 1,700,000 1,618,794 -4.8%US Fixed Income - Tax Exempt 2,300,000 2,230,191 -3.0%Non-US Fixed Income 550,000 557,430 1.4%Cash and Equivalents 450,000 449,841 0.0%Cash and Equivalents 450,000 449,841 0.0%Alternative Investments 1,500,000 1,517,619 1.2%Hedged Strategy 600,000 609,928 1.7%Credit Structures 300,000 313,564 4.5%Private Equity Fund/Fund of Funds 600,000 594,126 -1.0%Total 10,000,000 10,210,954 2.1%

Robust Economic Expansion Stress Test Scenario prepared for Sample Client 24


Assumptions* Event Description EUR/USD -2.1%JPY/USD -1.9%DJUBS Cmdty 7.5%MSCI WxUS 7.5%MSCI EM 13.6%Russell 2000 9.7%S&P 500 8.8%VIX -2.0%2 Year CMT 24M 1.6%30 Year CMT 360M 2.1%2Yr Swp Rate 24M 1.6%

Economic Growth US and global economic growth picks up

S&P Profits Profits increase significantly

CPI Inflation Inflationary pressures intensify

US Treasury Interest Rates Interest Rates rise more than expected

Currency Markets The US dollar strengthens modestly

Geopolitics Geopolitical concerns are not a hindrance to growth

Stagnation Stress Test Scenario prepared for Sample Client 25




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Large CapEquities





Non-US FixedIncome

Cash andEquivalents


Funds

DetailsDescription Market Value Stressed Value % ChangeEquity 3,500,000 3,161,325 -9.7%Large Cap Equities 1,300,000 1,182,890 -9.0%Mid Cap Equities 1,200,000 1,078,955 -10.1%Small Cap Equities 600,000 538,271 -10.3%International Equities 400,000 361,209 -9.7%Fixed Income 4,550,000 4,426,195 -2.7%US Fixed Income - Taxable 1,700,000 1,630,772 -4.1%US Fixed Income - Tax Exempt 2,300,000 2,265,763 -1.5%Non-US Fixed Income 550,000 529,660 -3.7%Cash and Equivalents 450,000 449,951 0.0%Cash and Equivalents 450,000 449,951 0.0%Alternative Investments 1,500,000 1,467,407 -2.2%Hedged Strategy 600,000 583,172 -2.8%Credit Structures 300,000 292,478 -2.5%Private Equity Fund/Fund of Funds 600,000 591,757 -1.4%Total 10,000,000 9,504,879 -5.0%

Stagnation Stress Test Scenario prepared for Sample Client 26


Assumptions* Event Description EUR/USD -3.1%JPY/USD 0.7%DJUBS Cmdty 2.0%MSCI WxUS -9.4%MSCI EM -10.5%Russell 2000 -10.3%S&P 500 -9.0%VIX 24.5%2 Year CMT 24M 0.9%30 Year CMT 360M 0.9%2Yr Swp Rate 24M 0.9%

Economic Growth Below-trend growth persists for several quarters

S&P Profits Profits experience a shortfall vs. 2010

CPI Inflation Inflation begins to rise

US Treasury Short-term interest rates move up

Currency Markets The US dollar is relatively stable

Geopolitics Global tensions show few signs of easing

User Selected Stress Tests prepared for Sample Client 27


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0.0%

5.0%

Asian Crisis (1997) Black Monday(1987)

Lehman Default(2008)

September 11thTerrorist Attacks

(2001)

Asian Crisis (1997) The Asian Crisis (1997) Stress Test Scenario Analysis represents the historical market moves during the

period 7/1/1997 and 7/15/1997. The assumptions reflect how the market reacted during this historical

period. The stress test analysis reflects what would happen to your portfolio assuming identical market

reaction.

Black Monday (1987)

The Black Monday (1987) Stress Test Scenario Analysis represents the historical market moves during

the period 10/15/1987 and 10/29/1987. The assumptions reflect how the market reacted during this

historical period. The stress test analysis reflects what would happen to your portfolio assuming identical

market reaction.

Lehman Default (2008)

The Lehman Default (2008) Stress Test Scenario Analysis represents the historical market moves during

the period 9/25/2008 and 10/9/2008. The assumptions reflect how the market reacted during this

historical period. The stress test analysis reflects what would happen to your portfolio assuming identical

market reaction.

September 11th Terrorist Attacks (2001)

The September 11th Terrorist Attacks (2001) Stress Test Scenario Analysis represents the historical

market moves during the period 9/10/2001 and 9/24/2001. The assumptions reflect how the market

reacted during this historical period. The stress test analysis reflects what would happen to your portfolio

assuming identical market reaction.Most and Least Impacted Positions - Current Holdings Asian Crisis (1997) Black Monday (1987) Lehman Default (2008) September 11th Terrorist Attacks (

Largest % Loss

Emerging Markets Equit...) ^ -1.8%Non-US Fixed Income (U...) ^ -0.6%Asset Backed (USD) ^ -0.6%

Small Cap Growth (USD) ^ -32.1%Small Cap Core (USD) ^ -30.6%Small Cap Value (USD) ^ -29.0%

Small Cap Growth (USD) ^ -31.4%Small Cap Core (USD) ^ -29.3%Mid Cap Growth (USD) ^ -28.6%

Emerging Markets Equit...) ^ -13.6%Small Cap Growth (USD) ^ -12.3%Small Cap Core (USD) ^ -10.7%

Largest % Gain

Large Cap Value (USD) ^ 3.8%Large Cap Core (USD) ^ 3.9%Large Cap Growth (USD) ^ 4.0%

Managed Futures/Macro...) ^ 6.5%Tax Free Core (USD) ^ 6.9%Long Gov/Corp (USD) ^ 23.9%



Asian Crisis (1997) Stress Test Scenario prepared for Sample Client 28

*Please refer to the Glossary section located at the end of this report for descriptions and definitions of certain terms used in this document.For detailed information about the methodology used to generate stress test values, please see the 'Risk Analysis Methodology' section at the end of this report.This material is not complete without the important disclosures and information found at the end of this report.

The specific events and factors used in the Asian Crisis (1997) Stress Test are captured and illustrate the potential upside/downside movements to the portfolios defined in this report.


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1.0%

2.0%

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4.0%

Large CapEquities





Non-US FixedIncome

Cash andEquivalents


Funds

DetailsDescription Market Value Stressed Value % ChangeEquity 3,500,000 3,610,330 3.2%Large Cap Equities 1,300,000 1,350,697 3.9%Mid Cap Equities 1,200,000 1,242,891 3.6%Small Cap Equities 600,000 618,593 3.1%International Equities 400,000 398,150 -0.5%Fixed Income 4,550,000 4,553,746 0.1%US Fixed Income - Taxable 1,700,000 1,702,178 0.1%US Fixed Income - Tax Exempt 2,300,000 2,305,086 0.2%Non-US Fixed Income 550,000 546,482 -0.6%Cash and Equivalents 450,000 449,993 0.0%Cash and Equivalents 450,000 449,993 0.0%Alternative Investments 1,500,000 1,499,814 0.0%Hedged Strategy 600,000 600,526 0.1%Credit Structures 300,000 301,328 0.4%Private Equity Fund/Fund of Funds 600,000 597,959 -0.3%Total 10,000,000 10,113,883 1.1%

Asian Crisis (1997) Stress Test Scenario prepared for Sample Client 29


Assumptions* Event Description EUR/USD -3.3%JPY/USD -0.7%DJUBS Cmdty -1.0%MSCI WxUS 1.0%MSCI EM -1.8%Russell 2000 3.1%S&P 500 3.9%VIX -9.5%30 Year CMT 360M -0.2%2 Year CMT 24M -0.1%2Yr Swp Rate 24M -0.1%

Event Overview

The Asian Crisis (1997) Stress Test Scenario Analysis represents the historical market moves during the period 7/1/1997 and

7/15/1997. The assumptions reflect how the market reacted during this historical period. The stress test analysis reflects what would

happen to your portfolio assuming identical market reaction.

Catalyst The Thai government devalued the Baht, a decision that is widely perceived as the starting point of the Asian Crisis. At this stage,the

crisis seemed to be small and local.

Catalyst US equity markets fell 7% on the realization that this was no longer a local crisis.

Catalyst The crisis continued for about a year and some even consider the Russian Crisis in 1998 as the third phase of the Asian Crisis.

Black Monday (1987) Stress Test Scenario prepared for Sample Client 30


The specific events and factors used in the Black Monday (1987) Stress Test are captured and illustrate the potential upside/downside movements to the portfolios defined in this report.


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10.0%

Large CapEquities





Non-US FixedIncome

Cash andEquivalents


Funds

DetailsDescription Market Value Stressed Value % ChangeEquity 3,500,000 2,740,769 -21.7%Large Cap Equities 1,300,000 1,066,853 -17.9%Mid Cap Equities 1,200,000 927,531 -22.7%Small Cap Equities 600,000 416,567 -30.6%International Equities 400,000 329,818 -17.5%Fixed Income 4,550,000 4,712,478 3.6%US Fixed Income - Taxable 1,700,000 1,796,250 5.7%US Fixed Income - Tax Exempt 2,300,000 2,366,186 2.9%Non-US Fixed Income 550,000 550,041 0.0%Cash and Equivalents 450,000 450,190 0.0%Cash and Equivalents 450,000 450,190 0.0%Alternative Investments 1,500,000 1,488,304 -0.8%Hedged Strategy 600,000 589,025 -1.8%Credit Structures 300,000 277,732 -7.4%Private Equity Fund/Fund of Funds 600,000 621,548 3.6%Total 10,000,000 9,391,741 -6.1%

Black Monday (1987) Stress Test Scenario prepared for Sample Client 31


Assumptions* Event Description EUR/USD 3.5%JPY/USD 2.8%DJUBS Cmdty -1.9%MSCI WxUS -19.9%Russell 2000 -30.6%S&P 500 -17.9%VIX 191.6%2 Year CMT 24M -1.7%30 Year CMT 360M -1.2%

Event Overview

The Black Monday (1987) Stress Test Scenario Analysis represents the historical market moves during the period 10/15/1987 and



Catalyst The US stock market (S&P 500) experienced a sharp decline of 20%.

Catalyst The crash reduced U.S. stock values by $1 trillion.

Catalyst World markets fell sharply following the decline in the US market.

Lehman Default (2008) Stress Test Scenario prepared for Sample Client 32


The specific events and factors used in the Lehman Default (2008) Stress Test are captured and illustrate the potential upside/downside movements to the portfolios defined in this report.


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-10.0%

0.0%

10.0%

Large CapEquities





Non-US FixedIncome

Cash andEquivalents


Funds

DetailsDescription Market Value Stressed Value % ChangeEquity 3,500,000 2,577,293 -26.4%Large Cap Equities 1,300,000 978,805 -24.7%Mid Cap Equities 1,200,000 872,066 -27.3%Small Cap Equities 600,000 424,414 -29.3%International Equities 400,000 302,009 -24.5%Fixed Income 4,550,000 4,532,181 -0.4%US Fixed Income - Taxable 1,700,000 1,690,313 -0.6%US Fixed Income - Tax Exempt 2,300,000 2,326,193 1.1%Non-US Fixed Income 550,000 515,675 -6.2%Cash and Equivalents 450,000 450,074 0.0%Cash and Equivalents 450,000 450,074 0.0%Alternative Investments 1,500,000 1,434,156 -4.4%Hedged Strategy 600,000 563,592 -6.1%Credit Structures 300,000 270,884 -9.7%Private Equity Fund/Fund of Funds 600,000 599,680 -0.1%Total 10,000,000 8,993,705 -10.1%

Lehman Default (2008) Stress Test Scenario prepared for Sample Client 33


Assumptions* Event Description EUR/USD -6.9%JPY/USD 6.7%DJUBS Cmdty -15.5%MSCI WxUS -23.1%MSCI EM -26.2%Russell 2000 -29.3%S&P 500 -24.7%VIX 94.8%2 Year CMT 24M -0.5%30 Year CMT 360M -0.3%2Yr Swp Rate 24M -0.5%

Event Overview

The Lehman Default (2008) Stress Test Scenario Analysis represents the historical market moves during the period 9/25/2008 and



Catalyst In the 1st half of 2008, Lehman stock lost 73% of its value as the credit market continued to tighten.

Catalyst On September 9, 2008, Lehman's shares plunged 45% to $7.79, after it was reported that the Korean Development Bank had put

talks of buying Lehman on hold.

Catalyst Lehman announced a loss of $3.9 billion and their intent to sell off a majority stake in their investment-management business, which

includes Neuberger Berman.

Catalyst Company announced it would file for Chapter 11 bankruptcy protection citing bank debt of $613 billion, $155 billion in bond debt, and

assets worth $639 billion.

Catalyst Window begins two weeks subsequent to the event in question, as the gravity of the ramifications of the default set in.

September 11th Terrorist Attacks (2001) Stress Test Scenario prepared for Sample Client 34


The specific events and factors used in the September 11th Terrorist Attacks (2001) Stress Test are captured and illustrate the potential upside/downside movements to the portfolios defined in this report.


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Large CapEquities





Non-US FixedIncome

Cash andEquivalents


Funds

DetailsDescription Market Value Stressed Value % ChangeEquity 3,500,000 3,169,104 -9.5%Large Cap Equities 1,300,000 1,193,705 -8.2%Mid Cap Equities 1,200,000 1,083,137 -9.7%Small Cap Equities 600,000 535,919 -10.7%International Equities 400,000 356,344 -10.9%Fixed Income 4,550,000 4,558,865 0.2%US Fixed Income - Taxable 1,700,000 1,707,394 0.4%US Fixed Income - Tax Exempt 2,300,000 2,310,706 0.5%Non-US Fixed Income 550,000 540,766 -1.7%Cash and Equivalents 450,000 450,120 0.0%Cash and Equivalents 450,000 450,120 0.0%Alternative Investments 1,500,000 1,479,865 -1.3%Hedged Strategy 600,000 587,316 -2.1%Credit Structures 300,000 285,942 -4.7%Private Equity Fund/Fund of Funds 600,000 606,607 1.1%Total 10,000,000 9,657,955 -3.4%

September 11th Terrorist Attacks (2001) Stress Test Scenario prepared for Sample Client 35


Assumptions* Event Description EUR/USD 2.1%JPY/USD 3.0%DJUBS Cmdty -6.7%MSCI WxUS -8.4%MSCI EM -13.6%Russell 2000 -10.7%S&P 500 -8.2%VIX 18.6%2 Year CMT 24M -0.6%30 Year CMT 360M 0.2%2Yr Swp Rate 24M -0.6%

Event Overview

The September 11th Terrorist Attacks (2001) Stress Test Scenario Analysis represents the historical market moves during the period

9/10/2001 and 9/24/2001. The assumptions reflect how the market reacted during this historical period. The stress test analysis

reflects what would happen to your portfolio assuming identical market reaction.

Catalyst Four airplanes were hijacked from US east coast airports.

Catalyst Around 9:00AM, two airplanes crashed into the World Trade Center towers. 45 minutes later, another airplane crashed into the

Pentagon in Washington, D.C.. The fourth airplane crashed into a field in Somerset County, Pennsylvania.

Catalyst Trading was suspended on the NYSE and resumed only on September 17th.

Important Information and Disclosures prepared for Sample Client 36

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WealthBench does not purport to recommend or implement a specific investment strategy or securities transaction. All results use simplifying estimates and assumptions that are based on historical market data and are not tailored to your specific investment returns and risk characteristics. As investment returns as well as the other factors not modeled vary from the WealthBench assumptions, your actual risks will vary (perhaps significantly) from those presented in this report. No scenario, tool or analysis has the ability to accurately predict the future, eliminate risk or guarantee investment results. WealthBench DOES NOT include the effect of taxes, investment costs, and fees that could materially affect the illustration provided and the decisions that you may make. The inclusion of these factors will reduce any hypothetical values referenced herein.

The risk of a specific investment may be more or less than the risk results generated by the WealthBench tool. The assumptions are based on historic prices of securities and where noted, indices may also be used as proxies for securities that are difficult to price. Indices are not managed and it is not possible to directly invest in an index. WealthBench results may vary with each use and over time.

The assumptions used in this Risk Analysis are estimates primarily based on methodologies employed by Risk Metrics, an unaffiliated third party vendor, for modeling portfolio risk. The portfolio risk is calculated by analyzing individual risk assumptions for each security currently held in a client’s portfolio, externally and/or as a What If holding by the Financial Advisor. Securities not included in the analyses may have characteristics similar, inferior or superior to those being analyzed.

Manually Entered Positions

A manually entered position is one that your Financial Advisor has entered in the WealthBench tool to produce this analysis.

A manually entered position that is reflected in the Current Holdings section of this material either represents a security currently owned by you but held at another firm or a security held by you at Morgan Stanley Smith Barney LLC but entered into WealthBench tool manually due to technical limitations. If you hold the security at another firm, the position is being included in this material at your request and evidenced by the account statement you provided from the custodian.


Manually Entered Positions (Continued)

A manually entered position that is reflected in the What If section of this material either represents a security currently owned by you but held at another firm, a security held by you at Morgan Stanley Smith Barney LLC but entered into WealthBench tool manually due to technical limitations and/or a security not currently owned by you but is being included so that we can conduct a What If analysis. If you hold the security at another firm, the position is being included in this material at your request and evidenced by the account statement you provided from the custodian.

Where information has been entered manually; every effort has been made to assure accuracy. However, you have received, either from Morgan Stanley Smith Barney LLC or from another firm where you hold positions entered manually, a statement of account reflecting your holdings. It is your responsibility to compare the information manually entered in WealthBench and reflected in this report with those statements of account. If there are any discrepancies between the information manually entered in WealthBench and reflected in this report and those statements of account, you must notify your Financial Advisor immediately.

PLEASE SPEAK TO YOUR MORGAN STANLEY SMITH BARNEY LLC FINANCIAL ADVISOR FOR MORE INFORMATION

Risk Analysis Methodology

The WealthBench tool, created by MSCI, uses proprietary, mathematically based models of risk to determine risk statistics for the positions in your portfolio and for the portfolio itself. MSCI employs a variety of different models to determine this information, making use of a variety of "risk factors" that vary according to the investment vehicle and the asset class of each holding in your portfolio. Examples of these risk factors may include a) historical returns, b) yield curves, and c) credit spreads. In addition, security-specific attributes (for example time to expiry or strike price) may also be used to model the risk of each of your holdings. MSCI will also determine the overall risk of your portfolio by first considering the risk of each holding by using the risk methodology just described, then by considering the percentage weighting of each holding in your portfolio as well as the degree to which your investments are correlated or not correlated to each other (which helps determine whether each of your investments are expected to perform similarly or differently from each other over time).

These models, and the methodologies used in their creation, may change from time to time and risk factors used to determine risk may vary for each investment product.

Use of Proxies

For certain investments, due to either a lack of price history or a lack of daily performance information, the WealthBench tool is unable to generate risk statistics. Private Alternative Investments, for example, may not provide enough information to generate risk statistics because they are less frequently valued. In such cases, MSCI and Morgan Stanley Smith Barney LLC have attempted to simulate risk statistics for the investment in question through the use of a “proxy” with a positive correlation to the investment. Such proxies typically include daily published investment indices (e.g., the HFRX Global Hedge Fund Index). In cases where a proxy cannot be identified, the investment is excluded from the analysis (see Excluded Securities, below).

Excluded Securities

Certain securities you hold may not be included in the Risk Analysis due to nature of the security and availability of data required to model risk. Securities excluded from the analysis are listed in the “Securities Not Included” section of the report on the Accounts page. Securities such as Private Equity Funds and Structured Products fall within the category of excluded securities. Unknown securities will also be excluded from this report and will be found in this section of the report.


What If Scenarios

What If Scenarios allow you to review and compare the results of the Risk Analysis of your current portfolio against a hypothetical portfolio of positions that you may or may not own, or may not own in the same quantities. The What If Scenario depicted in this report, including the asset allocation and particular securities in the What If Scenario, are hypothetical illustrations only.

Morgan Stanley Smith Barney LLC is not recommending that you adopt the hypothetical portfolio shown in this report or any of its components. Rather, we are presenting it so that you have a basis for comparison when you consider the risk characteristics of your current holdings. After discussing with you the analyses in this report, and your ability and willingness to take risk, your Financial Advisor can work with you to construct a portfolio that meets your needs.

The methodology used by the WealthBench tool to calculate risk statistics for the positions included in the What If report and for the What If portfolio is identical to the methodology described above under Risk Analysis Methodology with the exception that the portfolio has been altered as described to include different positions.

The What If scenario is not and should NOT be construed as a guarantee of future performance.

Please note :Options and non 1940 Investment Company Act registered funds included in What If portfolio reports but not currently held by the recipient, must be preceded or accompanied by the applicable options disclosure document and/or prospectuses.

The performance of the What If scenario under any Stress Test as described below under Stress Testing should NOT be construed as a guarantee of future performance.

Stress Testing

Stress testing is a measure of how sensitive a portfolio is to changes in one or more "risk factors" and is designed to illustrate how it might react under a certain market scenario or set of events. The report will list various assumptions about changes to world market indexes, interest rates, exchange rates, and individual security prices as defined for the individual stress-test, and will then illustrate hypothetical values for investments in the current portfolio and/or the What If portfolio based on the methodology described in the Risk Analysis Methodology section above. Stress Tests show how much a portfolio could have lost/gained under various hypothetical scenarios given certain assumptions on market performance at a certain point in time combined with the correlation of the risk factors present in your portfolio and the risk factors that were observed during a past event or a hypothetical event. An example of a risk factor would be a drop of 20% in the S&P 500 index. The time period listed in the Stress Test event may or may not be representative of the performance of those securities over a longer term.

PLEASE NOTE THAT RESULTS OF THE STRESS TEST SCENARIOS ARE NOT GUARANTEES OF WHAT WILL HAPPEN BASED ON THESE ASSUMPTIONS. Securities markets are affected by many factors, most of which cannot be anticipated. The purpose of this exercise is help you decide if the hypothetical changes illustrated herein actually occurred in your portfolio, would you be able to maintain your current strategies or should you consider changing those strategies in the pursuit of your financial goals.

Any results illustrated are hypothetical in nature and do not reflect actual investment results and are NOT guarantees of future results. Since the future cannot be forecasted, actual results will vary from the information shown including estimates and assumptions. The results may vary with each use and over time. It is possible that these variations may be material. The degree of uncertainty normally increases with the length of the future period covered. As a result Morgan Stanley Smith Barney LLC cannot give any assurances that any estimates, assumptions or other aspects of the following analyses will prove correct. They are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those shown. No investment strategy or asset allocation can eliminate risk or guarantee investment results. Past performance is no guarantee of future results.


In addition, it is important to keep in mind that while the pricing information used in this material’s calculation methodologies is historic, what has happened in the past cannot guarantee or be indicative of what will happen in the future.

Risk Analysis Statistics

RiskGrade

RiskGrades are a standardized measure of volatility created by MSCI, and are calibrated for easier interpretation than standard deviation. A RiskGrade of 100 is scaled to reflect 20% annualized standard deviation, which was the average volatility of (market-cap weighted) global equities from January 1995 to December 1999 (based on 21 indices in 20 countries). Hence a RiskGrade of 100 is generally the baseline for normal equity market risk, and can be used to compare all other investments (e.g., a bond fund with a RiskGrade of 33 is about a third as risky as a diversified global portfolio of stocks during normal market conditions).

The RiskGrade calculation uses 3 years of monthly data points (calculated based on month-end values), for which the monthly volatility is converted to an annual volatility. An annual volatility of 20%, or 0.2, converts to a RiskGrade of 100.

Risk Impact (aka Marginal Standard Deviation)

Risk Impact or Marginal Standard Deviation shows how much risk a given holding is contributing to a specific portfolio. The Risk Impact of a security is a function of its weight within the portfolio, its individual volatility and its correlation to the other portfolio holdings. Risk Impact is calculated using 3 years of monthly data points (calculated based on month-end values).

Standard Deviation

The standard deviation is a measure of volatility and how widely returns are spread around the mean. In general, 68% of returns will fall within +/- 1 standard deviation of the mean, 95% will lie within +/- 1.96 standard deviations and 99% will lie within +/- 2.58 standard deviations from the mean.

Standard Deviation is calculated using 3 years of monthly data points (calculated based on month-end values), and the calculation is scaled to an annualized value, reflecting the standard deviation of annual returns.

Tail Loss

Tail Loss is the average loss expected during times when the Value at Risk (VaR) is exceeded (please see definition for VaR). Where VaR represents the threshold value, Tail Loss represents the average expected loss that is experienced on occasions when the VaR threshold is crossed. WealthBench calculates Tail Loss using one year of daily data points and reflects the Tail Loss for a single trading day.

Tail Gain

Tail Gain is the average gain expected during time periods with the highest 5% of returns. WealthBench calculates Tail Gain using one year of daily data points and reflects the Tail Gain for a single trading day.


Value at Risk

Value at Risk (VaR) focuses specifically on the downside risk (loss) associated with a portfolio. It estimates the expected loss at a certain level of confidence over a given horizon. VaR is comprised of three components: Time period, Confidence interval, and a Loss amount. The WealthBench tool calculates VaR using a 95% Confidence Interval and a daily time period. The loss amount can be expressed in either dollar or percentage terms:

A position with a VaR of $1,000 suggests that 95% of the time, the position will lose no more than $1,000 on a given day. It can also be said that 5% of the time, the position will lose at least $1,000.

Similarly, a position with a VaR of 1% suggests that 95% of the time, the position will lose no more than 1% of its value on a given day. Said differently, 5% of the time, the position will lose at least 1% of its value.

Key Investment Considerations

Asset Allocation

Asset allocation does not assure a profit or protect against loss in declining financial markets.

Auction Rate Securities (ARS)

Auction Rate Preferred Securities (ARPS) are auction rate preferred stock issued by closed-end taxable and municipal (tax-exempt and taxable) bond funds. Municipal Auction Rate Securities (MARS) are long-term (20-30 year maturities) municipal bonds issued with a floating rate that resets periodically. Dividends/rates are reset through an auction process, at a predetermined frequency (for example, 7 or 28 days) and, assuming a successful auction, ARS typically trade at par. Some MARS are taxable. Tax-exempt ARPS and MARS may be subject to the Alternative Minimum Tax (AMT).

Due to market conditions, certain ARS are experiencing no or limited liquidity. Therefore, the price(s) for any ARS shown in this report may not reflect the price(s) you would receive upon a sale at auction or in a secondary market transaction, and are not an indication of any offer to purchase at such price. There can be no assurance that a successful auction will occur or that a secondary market exists or will develop for a particular security. The prices of any ARS shown in this report in most cases reflect par value, but may be derived from various sources. These prices may differ from: prices provided to us or our affiliates by outside pricing services; our or our affiliates' own internal bookkeeping valuations; prices of transactions executed in any secondary market that exists or may develop; and/or the prices at which issuer repurchases or redemptions may occur. Please contact your Financial Advisor with any questions or for additional information.

For important information on auction rate securities and Morgan Stanley Smith Barney LLC role in the auction process, please see Morgan Stanley Smith Barney LLC Material Auction Rate Securities Practices and Procedures, which can be obtained from your Financial Advisor or at: www.morganstanley.com/about/inside/governance/ars.html


Alternative Investments

Alternative investments often are speculative and include a high degree of risk. Investors could lose all or a substantial amount of their investment. Alternative investments are suitable only for eligible, long-term investors who are willing to forgo liquidity and put capital at risk for an indefinite period of time. They may engage in leverage and other speculative practices that may increase the volatility and risk of loss. Categorically, alternative investments have higher fees and expenses than traditional investment vehicles, and such fees and expenses can lower the returns achieved by investors.

Note that no formal trading markets exist for private alternative investments. They are generally illiquid and may not be currently priced and values may not necessarily have been reduced to reflect prior distributions. The values and prices assigned to the investments are estimates, based on information typically received from the funds' general partners, managing members, sponsors, administrators, or advisors of the funds and/or underlying funds, are typically subject to change and are as-of a date prior to the date of this report.

Where applicable, see the particular fund statement for the final prices. These values and prices may not be realized upon the sale or ultimate disposition of the securities. For investment in funds valued in non-US Dollar currencies, the valuations received have been converted to US Dollars using then prevailing foreign exchange rates. If you have any questions regarding these investments, please contact your Financial Advisor.

Private Alternative Investments listed in this report are not in our possession, and are included solely as a service to the customer, are not covered by the Securities Investor Protection Corporation (SIPC), and information contained herein is derived from an external service for which we are not responsible.

Commodities

Investing in commodities entails significant risks. Commodity prices may be affected by a variety of factors at any time, including but not limited to, (i) changes in supply and demand relationships, (ii) governmental programs and policies, (iii) national and international political and economic events, war and terrorist events, (iv) changes in interest and exchange rates, (v) trading activities in commodities and related contracts, (vi) pestilence, technological change and weather, and (vii) the price volatility of a commodity. In addition, the commodities markets are subject to temporary distortions or other disruptions due to various factors, including lack of liquidity, participation of speculators and government intervention.

Exchange Traded Funds, Mutual funds and Unit Investment Trusts (UITs)

Investors should carefully consider the investment objectives and risks as well as charges and expenses of the exchange traded fund/mutual fund/UIT before investing. To obtain a prospectus, contact your Financial Advisor or visit the fund company’s website. The prospectus contains this and other information about the exchange traded fund/mutual fund/UIT. Read the prospectus carefully before investing.

Fixed Income

Investing in fixed income securities involves interest rate risk, credit risk, and inflation risk. Interest rate risk is the possibility that bond prices will decrease because of an interest rate increase. When interest rates rise, bond prices and the values of fixed income securities generally fall. Credit risk is the risk that a company will not be able to pay its debts, including the interest on its bonds. Inflation risk is the possibility that the interest paid on an investment in bonds will be lower than the inflation rate, decreasing purchasing power.


Floating Rate Securities

Many floaters specify rate minimums (floors) and maximums (caps). Floaters are not protected against interest rate risk. In a declining interest rate environment, floaters will not appreciate as much as fixed-rate bonds. A decline in the applicable benchmark rate will result in a lower interest payment, negatively affecting the regular income stream from the floater.

Hedge Fund of Funds

Hedge funds and many funds of funds are private investment vehicles restricted to certain qualified private and institutional investors. They are often speculative and include a high degree of risk. Investors can lose all or a substantial amount of their investment. They may be highly illiquid, can engage in leverage and other speculative practices that may increase volatility and the risk of loss, and may be subject to large investment minimums and initial lock-ups. They involve complex tax structures, tax inefficient investing and delays in distributing important tax information. Categorically, hedge funds and funds of funds have higher fees and expenses than traditional investments, and such fees and expenses can lower the returns achieved by investors. Funds of funds have an additional layer of fees over and above hedge fund fees that will offset returns.

High Yield Bonds

High Yield Fixed Income Investments, also known as junk bonds, are considered speculative, involve greater risk of default, tend to be more volatile than investment grade fixed income securities and have a greater risk of price fluctuation and loss of principal and income then U.S. government Treasury bills, notes and bonds.

International Equity/Emerging Markets

Foreign investing involves certain risks not typically associated with investments in domestic corporations and obligations issued by the U.S. government, such as currency fluctuations and controls, restrictions on foreign investments, less governmental supervision and regulation, less liquidity and the potential for market volatility and political instability. In addition, the securities markets of many of the emerging markets are substantially smaller, less developed, less liquid and more volatile than the securities of the U.S. and other more developed countries.

International Fixed Income and Emerging Market Debt

Foreign fixed income securities may involve greater risks than those issued by U.S. companies or the U.S. government. Economic, political and other events unique to a country or region will affect those markets and their issuers, but may not affect the U.S. market or similar U.S. issuers.

Managed Futures

Managed futures investments are speculative, involve a high degree of risk, use significant leverage, are generally illiquid, have substantial charges, subject investors to conflicts of interest, and are suitable only for the risk capital portion of an investor’s portfolio. Before investing in any partnership and in order to make an informed decision, investors should read the applicable prospectus and/or offering documents carefully for additional information, including charges, expenses and risks. Investors should read the prospectus and/or offering documents carefully for additional information, including charges, expenses and risks. Managed futures investments do not replace equities or bonds but rather may act as a complement in a well-diversified portfolio.


Money Market Funds

An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

Small/Mid Cap Equity

Stocks of medium-sized companies entail special risks, such as limited product lines, markets, and financial resources, and greater market volatility than securities of larger, more established companies.

Stocks

Investing in stock securities involves volatility risk, market risk, business risk, and industry risk. The prices of stocks fluctuate. Volatility risk is the chance that the value of a stock will fall. Market risk is the chance that the prices of all stocks will fall due to conditions in the economic environment. Business risk is the chance that a specific company’s stock will fall because of issues affecting it such as the way the company is managed. Industry risk is the chance that a set of factors particular to an industry group will adversely affect stock prices within the industry. Companies paying dividends can reduce or cut payouts at any time.

Options

Options are not suitable for all investors. Before engaging in the purchase or sale of options, potential clients should understand the nature of and extent of their rights and obligations and be aware of the risks involved, including, without limitation, the risks pertaining to the business and financial condition of the issuer of the underlying security or instrument. Options investing, like other forms of investing, involve tax considerations, transaction costs and margin requirements that can significantly affect the profit and loss of buying and writing options. The transaction costs of options investing consist primarily of commissions (which are imposed in opening, closing, exercise and assignment transactions), but may also include margin and interest costs in particular transactions. Transaction costs are especially significant in options strategies calling for multiple purchases and sales of options, such as multiple leg strategies, including spreads, straddles and collars. If you are considering options as part of your investment plan, your Morgan Stanley Smith Barney LLC Financial Advisor is required to provide you with the 'Characteristics and Risks of Standardized Options' booklet from the Options Clearing Corporation. Clients should not enter into options transactions until they have read and understood the Disclosure Document, as options are not suitable for everyone, and discuss transactions costs with their Financial Advisor. Please ask your Morgan Stanley Smith Barney LLC Financial Advisor or call Morgan Stanley Smith Barney LLC Options Help Desk at 1.800.877.8766 for a copy of the booklet.

Prior to including options positions in a what if portfolio proposal, clients must receive a copy of the disclosure document, 'Characteristics and Risks of Standardized Options' (ODD).

The Options Disclosure Document is also accessible via the OCC website

A copy of the ODD is also available online at: http://www.theocc.com/about/publications/character-risks.jsp

Options are not suitable for every investor. This report must be accompanied by or preceded by a copy of the booklet, 'Characteristics and Risks of Standardized Options' (ODD) Investors should not enter into options transactions until they have read and understood the ODD.


Private Funds

Private Funds (which include hedge funds are private equity funds) often engage in speculative investment techniques and are only suitable for long-term, qualified investors. Investors could lose all or a substantial amount of their investment. They are generally illiquid, not tax efficient, and have higher fees than many traditional investments.

Real Assets

Real assets may include precious metals, commodities, oil and gas interests and timber interests. The prices of real assets tend to fluctuate widely and in an unpredictable manner. Real assets may be affected by several factors, including global supply and demand, investors’ expectations with respect to the rate of inflation, currency exchange rates, interest rates, investment and trading activities of hedge funds and commodity funds, and global or regional political, economic or financial events and situations.

REITS

REIT's investing risks are similar to those associated with direct investments in real estate: lack of liquidity, limited diversification, and sensitivity to economic factors such as interest rate changes and market recessions.

Structured Products

An investment in Morgan Stanley Smith Barney LLC Structured Investments involves risks. These risks can include but are not limited to:-Fluctuations in the price, level or yield of underlying instruments, interest rates, currency values and credit quality-Substantial loss of principal-Limits on participation in appreciation of underlying instrument -Limited liquidity- Morgan Stanley Smith Barney LLC credit risk -Conflicts of Interest

Glossary prepared for Sample Client 47

2 Year CMT 24M - The 2 year rate on the zero curve that is bootstrapped from the Treasury yield curve. The curve relates the zero rate on a treasury security to its time to maturity based on the closing market bids of actively traded short term treasuries. The yields are calculated from composites of quotes by the Federal Reserve Bank of New York, and the 2 year CMT represents the shorter end of the yield curve.

2Yr Swap Rate 24M - The fixed rate on a interest rate swap with a 2 year tenor (maturity), that is paid by the fixed payer. The counterparties of an interest rate swap often exchange fixed interest rate payments for floating payments which are pegged to a floating rate such as the London Interbank Offer Rates (LIBOR) plus a spread.

30 Year CMT 360M - The 30 year rate on the zero curve that is bootstrapped from the Treasury yield curve. The curve relates the zero rate on a treasury security to its time to maturity based on the closing market bids of actively traded long term treasuries. The yields are calculated from composites of quotes by the Federal Reserve Bank of New York, and the 30 year CMT represents the longer end of the yield curve.

Adjusted Cost - A bond's original cost less amortization of any premium or plus the accretion of any discount. For zero coupon bonds it is the cost basis plus accreted interest.

Asset Allocation - Asset allocation is the process of determining what portions of your portfolio holdings are to be invested in the various asset classes.

Asset Class - Asset class is a standard term that broadly defines a category of investments. The three basic asset classes are Cash, Bonds, and Stocks. Bonds and Stocks are often further subdivided into more narrowly defined classes.

Bonds - Bonds are either domestic (U.S.) or global debt securities issued by either private corporations or governments. Domestic government bonds are backed by the full faith and credit of the U.S. Government and have superior liquidity and, when held to maturity, safety of principal. Domestic corporate bonds carry the credit risk of their issuers and thus usually offer additional yield. Domestic government and corporate bonds can be sub-divided based upon their term to maturity. Short-term bonds have an approximate term to maturity of 1 to 5 years; intermediate-term bonds have an approximate term to maturity of 5 to 10 years; and long-term bonds have an approximate term to maturity greater than 10 years.

Callable Bond - Right of issuer to redeem bonds prior to stated maturity at a specified price by giving notice of redemption in a manner specified in the bond indenture.

Cash - Cash and cash equivalents are investments of high liquidity and safety with a known market value and a very short-term maturity. Examples are treasury bills and money market funds.

CBOE VIX - The Chicago Board Options Exchange (CBOE) VIX Index is a key barometer of investor sentiment and market volatility. Although often referred to as the Fear Index, the VIX measures the volatility of equity prices both up and down. The index is estimated by averaging the weighted prices of near term S&P 500 stock index option to gauge the expectations of near term (30-day) market volatility.

Certificates of Deposit (CDs) - CDs are insured by the FDIC, an independent agency of the U.S. Government, up to a maximum amount of $250,000 (including principal and interest) for all deposits held in the same insurable capacity (e.g. individual account, joint account) per CD depository, through December 31, 2013. On January 1, 2014, the maximum insurable amount will return to $100,000 (including principal and interest) for all insurable capacities except IRAs and certain self-directed retirement accounts, which will remain at $250,000 per depository. For more information visit the FDIC website at www.fdic.gov. Investors are responsible for monitoring the total amount held with each CD depository. All deposits at a single depository held in the same insurable capacity will be aggregated for purposes of the applicable FDIC insurance limit, including deposits (such as bank accounts) maintained directly with the depository and CDs of the depository held through Morgan Stanley Smith Barney LLC. A secondary market in CDs may be limited. CDs sold prior to maturity are subject to market risk and therefore investors may receive more or less than the amount invested or the face value. Callable CDs are callable at the sole discretion of the issuer.


Corporate Bonds - Corporate bonds are debt obligations issued by private and public corporations. Investment Grade (IG): refers to corporate bonds rated in the top four rating categories by Moody's Investors Service (Baa3 and above), Standard & Poor's (BBB- or above) or Fitch Ratings (BBB or above).

High Yield (HY): refers to bonds rated below Baa3/BBB-/BBB and are considered non-investment grade. They have speculative characteristics and present significant risks beyond those of other securities, including greater credit risk and price volatility in the secondary market. You should consider these risks alongside your individual circumstances, objectives and risk tolerance before investing in high yield bonds. High yield bonds should comprise only a limited portion of a balanced portfolio.

Coupon - Annual rate of interest payable on an interest bearing security expressed as a percentage of principal amount.

Current Holdings - Your current holdings represents all the investment assets you currently own (or a subset of your assets, the securities held in the Morgan Stanley Smith Barney LLC accounts listed at the beginning of this report and based on the information you provided regarding securities held outside of Morgan Stanley Smith Barney LLC).

Dated - Date of issuance from which interest usually starts to accrue.

Diversification Benefit - Risk is not additive. Total risk is less than the sum of its parts because of diversification between different assets. For example, if a USD based investor holds a JPY denominated bond, she is exposed to rising Japanese interest rates and devaluation of JPY relative to USD. Clearly, her total risk is not just the interest rate and FX risk added together, because the likelihood that interest and FX rates both move out of her favor at the same time is less than 100%. In summary, diversification measures risk reduction that arises from holding a collection of assets that are not perfectly correlated.

DJ-UBS Commodity - The Dow Jones - UBS Commodity Index. The index represents commodities which are weighted to account for economic significance and market liquidity. On an annual basis, weighting restrictions apply so that no single component has more than a 15% or less 2% weighting in the index. It is composed of futures contracts on physical commodities traded on U.S. exchanges with the exception of aluminum, nickel and zinc, which trade on the London Metal Exchange (LME).

Duration - A measure of bond price volatility for given changes in interest rates, expressed in years, which is similar to (but more precise than) average life. It is calculated as the weighted average length of time to the receipt of security payments; the weights used are the present values of the payments (principal and/or interest) using the yield to maturity or other specified rate as a discounting rate.

Equities - Equity securities are stock of domestic and foreign corporations.

Domestic stocks are equity securities of U.S. corporations. Domestic stocks are often sub-divided based upon the market capitalization of the company (the market value of the company's stock). "Large cap" stocks are from larger companies, "mid cap" from the middle range of companies, and "small cap" from smaller, perhaps newer, companies. Generally, small cap stocks experience greater market volatility than stocks of companies with larger capitalization. Small cap stocks are generally those from companies whose capitalization is less than $500 million, mid cap stocks those between $500 million and $5 billion, and large cap over $5 billion. Large cap, mid cap and small cap may be further sub-divided into "growth" and "value" categories. Growth companies are those with an orientation towards growth, often characterized by commonly used metrics such as higher price-to-book and price-to-earnings ratios. Value companies are those with an orientation towards value, often characterized by commonly used metrics such as lower price-to-book and price-to-earnings ratios.

International stocks are equity securities from foreign corporations. International stocks are often sub-divided into those from "developed" countries and those from "emerging” countries

EUR/USD - The exchange rate between the Euro and the U.S. Dollar. It represents the number of units of the Euro Currency that can be exchanged for one US Dollar.

Federal Agency Securities - Federal agency securities or 'agencies' are debt instruments issued by U.S. government agencies and government sponsored enterprises (GSEs). Many GSEs maintain a direct line of credit with the U.S. Government. However, GSEs are federally sponsored, not government guaranteed; the debt issued is a liability of the GSE, not of the U.S. government.


Floating/Inflation Linked Securities - These securities adjust or 'float' periodically against a benchmark rate, such as the Consumer Price Index (CPI). They pay a coupon equal to the benchmark rate, plus a fixed 'spread' and reset on a periodic basis. The initial interest rate on an inflation-linked or floating security may be lower than that of a fixed-rate security of the same maturity because investors expect to receive additional income due to future increases in CPI, or the linked reference interest rate. However, there can be no assurance that these increases will occur.

Foreign Bonds - Foreign bonds are issued by sovereign countries and foreign corporations and are typically denominated in non-U.S. dollar currency. Investing in foreign markets entails greater risks than those normally associated with domestic markets, such as political, currency, economic and market risks. International investing should comprise only a limited portion of a balanced portfolio.

Interest - The rate that is earned on a debt security, expressed as an annual percentage of the principal amount, assuming semi-annual payments.

JPY/USD - The exchange rate between the Japanese Yen and the U.S. Dollar. It represents the number of units of the Japanese Yen that can be exchanged for one US Dollar.

Liquidity - Liquidity is the ease with which an investment can be converted into cash.

Market Value - The value of an individual holding or total value of holdings in an account or portfolio.

Maturity - Date upon which principal becomes due and payable.

Monthly Cash Flow - Interest and principal expected in a given month.

MSCI Emerging Market - The MSCI Emerging Market Index is a free float adjusted market capitalization index designed to measure equity market performance of emerging or developing markets. The Index consists of 21 emerging market country indices: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand and Turkey.

MSCI World ex US - The MSCI World Index excluding the United States. It is a free float- adjusted index that is designed to measure the equity market performance of global developed markets outside of the United States. It consists of 23 developed market country indices including: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom.

Municipal Bonds - Interest on municipal bonds is generally exempt from federal income tax. However, some municipal bonds may be subject to the alternative minimum tax (AMT). Typically state tax-exemption applies if securities are issued within one's state of residence and local tax-exemption typically applies if securities are issued within one's city of residence. Insurance does not pertain to market values which will fluctuate over the life of the bonds; it covers only the timely payment of interest and principal. Credit quality varies depending on the specific issuer and insurer.

Principal - Assumed to be based upon matured, called, and other redemptions in the next 24 calendar months.

Put Bond - Right of bondholder to require the issuer to purchase bonds prior to maturity or upon occurrence of specified event or conditions.

Rating - Credit quality of issuer. Rating services tracked are Moody's, Standard & Poor's and Fitch.

Real Return - The real return is the total return of your portfolio minus the inflation rate.

Redemption Information - Par amount of portfolio by redemption date. This date is assumed to be the first occurring of either: maturity date, call date, put date, or pre-refunding date.

Risk - Risk is the chance that the actual return of an investment, asset class, or portfolio will be different from its expected or average return.


Russell 2000 - The Russell 2000 Index measures the performance of approximately 2000 smallest equity securities based on a combination of their market capitalization and index membership from the U.S. equity universe. It is a subset of the Russell 3000, and is constructed to provide a comprehensive small cap barometer that is reconstituted annually to ensure larger capitalization stocks do not distort the performance characteristics of the small cap universe.

S&P 500 - The S&P 500 Index is regarded as the most widely accepted barometer of the U.S. equity market. It consists of 500 blue chip, large cap stocks, which combined represent approximately 75% of all U.S. equities by market capitalization. To be eligible for inclusion into the index, a company must meet criteria of market capitalization, liquidity, public float and sector classifications.

U.S. Treasury Securities - Treasuries are debt obligations issued by the U.S. Government.

Underlying Rating - For insured municipal bonds, the underlying rating is the credit rating of the issuer. This is shown in conjunction with the credit rating of the insurer, where applicable.

Yields - YTM (Yield to Maturity) - The rate of return anticipated on a bond if it is held until the maturity date. YTM is considered a long-term bond yield expressed as an annual rate. The calculation of YTM takes into account the current market price, par value, coupon interest rate and time to maturity. It is also assumed that all coupons are reinvested at the same rate.

YTC (Yield to Call) - The yield of a bond or note if held until the call date. This yield is valid only if the security is called prior to maturity. The calculation of yield to call is based on the coupon rate, the length of time to the call date and the market price.

Documents

Prepared for: Portfolio Review Sample Client - Morgan · PDF filePrepared for: Sample Client Prepared by: MSSB Financial Advisor This is a generic WealthBench sample report, intended