2016 ECONOMIC OUTLOOK As we head into 2016, Raymond James Investment Strategy Committee members share their outlook for the upcoming year with the following key insights and advice for investors. For a full copy of the Raymond James 2016 Outlook, please contact your financial advisor. 2015 REVIEW MODERATE DOMESTIC GROWTH JOB MARKET IMPROVEMENT MUTED INFLATION DECLINING OIL PRICES GDP growth1 unemployment trend of PCE2 per barrel3 2.2% 5.0% 1.3% 37 $ FIXED INCOME Investment grade bonds were just positive in 2015; while high yield underperformed. RISING INTEREST RATES The Federal Reserve raised rates for the first time in nine years. S&P 500 typically gains 5% in the year following the first Fed hike. 2016 INTERNATIONAL EQUITIES DECLINE Large cap U.S. equities (1.4%) outperformed non-U.S. developed large cap (-0.8%) and emerging markets (-14.9%). FLAT U.S. EQUITIES Narrow in 2015, despite the first 10% correction since 2012.

A few mega-cap stocks propped up the market; during August lows, 60% of the largest 4,000 U.S. companies were down at least 20% from three-year highs. TRENDS A cautiously optimistic outlook for 2016 means a key theme for investors will be finding growth without taking too much risk. As legendary investor Benjamin Graham once stated, “The essence of portfolio management is the management of risks, not the management of returns.” THE ECONOMY HEADWINDS Tighter U.S. monetary policy Geopolitical uncertainty A strong U.S.

dollar Lower commodity prices Slow global growth, particularly China Moderate U.S. economic growth Low interest rates European improvement A healthy labor market TAILWINDS Slower earnings growth Strong consumer spending Stabilizing oil prices – forecast to be in the $60 range in Q4 2016 An ongoing housing recovery 80 9.4M MILLION HOUSEHOLD FORMATION: 2- 5% SINGLE-DIGIT PACE. SINCE 2004. ARE ENTERING THEIR PRIME RENTAL/ OWNERSHIP YEARS. SHOULD TREND HIGHER AT A SHOULD INCREASE AT A LOW RENTAL HOUSEHOLD FORMATIONS MILLENNIALS EXISTING HOME PRICES EXISTING HOME SALES 500K VS. 1.6M (2015) RATE. (2006 - 2014) EQUITY MARKETS SECULAR BULL MARKET S&P 500 RETURNED 250% 4 SINCE THE MARCH 2009 LOW. MODEST EQUITY GAINS P  ositive earnings growth should lead to upper single-digit to low doubledigit total returns for the S&P 500. Secular bull markets tend to last 14 to 15 years and compound at 16% per year. The current bull market should have another 7 to 8 years. EXPECTED 4-6% EARNINGS GROWTH REASONABLE PRICE-TO-EARNINGS MULTIPLE OF 18X PUTS THE S&P 500 IN THE 10.4% AVERAGE RETURN 2,200–2,230 RANGE. EQUITY ALLOCATION RECOMMENDATION5 Hypothetical Allocation Long-term average return of the S&P 500 since 1921 5.0% EARNINGS GROWTH 40% 4.5% FROM DIVIDENDS International Equity 60% 20% Equity 5% + 0.9% PRICE-TO-EARNINGS MULTIPLE EXPANSION Emerging Market Equity Domestic Equity 75% 10.4% AVERAGE RETURN EQUITY MARKET THEMES TO WATCH HOMELAND CYBERSECURITY GLOBALIZATION/ INTERNATIONAL MARKETS LONGEVITY DIGITIZATION OF SOCIETY TECHNOLOGY REVOLUTIONS ENERGY EFFICIENCY FINANCIAL SERVICES MODERN MEDICINE DIVIDENDS FIXED INCOME DIVERGENT GLOBAL MONETARY POLICY Different economies are traveling at different speeds, and central bank intervention is at an unprecedented level.

2015 saw 67 central bank interest-rate reductions; as the U.S. begins tightening, Europe continues easing. RISING INTEREST RATES FED FUNDS TARGET RATE INCREASED IN DEC. 2015 0%-0.25% TO 0.25%-0.50% FIVE-YEAR RATE TEN-YEAR RATE 1.711% 2.220% -0.085% 0.562% ITALY 0.568% 1.539% UNITED KINGDOM 1.278% 1.890% 9% JAPAN 0.014% 0.246% 8% HONG KONG 1.000% 1.488% U.S. 1% TREASURY MATURITIES 30 Yr 20 Yr 10 Yr 0% HIGH YIELD AA CORPORATE 2% than the PREFERRED SECURITES 4.0% MUNICIPAL Yield (%) 3.6% 4% 3% LOWER 5.9% 5% 7 Yr points 5.5% 6% BB CORPORATE 7% 5 Yr basis 0.5% 8.7% 3 Mo is almost 180 0.4% U.S.

TREASURY YIELD CURVE VS. SPREAD PRODUCTS 3 Yr FIVE-YEAR RATE 0.3% SPREADS Source: Bloomberg As of: 01/04/2016 Germany’s 0.2% 1 Yr GERMANY 0.1% 6 Mo UNITED STATES 0.0% Source: Bloomberg As of: 12/24/2015 KEY QUESTIONS FOR YOUR ADVISOR 1 Is my portfolio appropriately positioned in line with my overall goals? 2 Is my level of portfolio risk appropriate for my current situation? 3 What tactical investment opportunities might exist in 2016? The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market.

Inclusion of this index is for illustrative purposes only. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. There is an inverse relationship between interest rate movements and fixed income prices. Generally, when interest rates rise, fixed income prices fall and when interest rates fall, fixed income prices generally rise. 1 Through 9/30/2015; 2 Personal Consumption Expenditures vs.

the Fed’s 2% target, as of 11/30/2015; 3 As of 12/31/2015; 4 On a total return basis; 5 Asset allocation does not ensure a profit or protect against a loss. International investing involves additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability. These risks are greater in emerging markets.

©2016 Raymond James & Associates, Inc., member New York Stock Exchange/ SIPC. ©2016 Raymond James Financial Services, Inc., member FINRA/SIPC. Investment products are: not deposits, not FDIC/NCUA insured, not insured by any government agency, not bank guaranteed, subject to risk and may lose value.

Past performance does not guarantee future results. There is no assurance any of the trends mentioned will continue or forecasts will occur. Investing involves risks, including the possible loss of capital.

Dividends are not guaranteed and will fluctuate. 16-WWW-0442 CW 2/16 .