Portfolio Characteristics

Transparent Value combines the characteristics of passive and active investing into a single investment product that aims to provide transparency and consistent performance with a competitive fee structure.

Our research suggests that there are limited opportunities for excess returns over time through active management, particularly in the large-cap market segment. In addition, we believe recent market activity has highlighted the potential weakness in traditional active equity strategies.

Mutual Fund Characteristic The characteristics listed above are for illustration purposes only. The list is not exhaustive and there is no guarantee that some or even any of the characteristics listed above will be included in any Transparent Value investment product, or that the characteristics will necessarily translate into investment performance. The TV Investment Methodology is not suitable for all investors.

*Liquid Portfolios Transparent Value considers portfolios to be liquid if they invest in publicly traded securities on a national securities exchange.

^Unique Investment Philosophy- Transparent Value's RBP^® and RBP^® probability methodologies are the subject of a patent application filed with the United States Trademark and Patent Office.

No Manager Dependence - Transparent Value Funds are based on indexes. Transparent Value's portfolio managers have no selection discretion.

The funds seek to track a quantitative strategy index and, as a result, the funds may have a lower return.

RBP^®

The revenue growth necessary to support the current stock price. Required Business Performance^® is used as a benchmark against which to measure management’s ability to perform in the future. It is calculated using a reverse discounted cash flow valuation model that uses the current stock price as the primary input.

RBP^® Probability

The likelihood that management will deliver the Required Business Performance^® to support the stock price. It is calculated by fitting the company’s historical revenue growth to a distribution, then finding the company’s Required Business Performance within this historical distribution.
In the hypothetical example below, the company’s RBP^® Probability, represented by green, is 35% while its Behavioral Risk Indicator, represented by red, is 65%. RBP® Probability

Behavioral Risk Indicator

The likelihood that investors’ systematic behavioral biases have caused misalignment between the stock price and management’s ability to deliver. The Behavioral Risk Indicator is designed to capture the impact that human psychology has on the subjective valuation process used by investors. It is defined as one minus the RBP^® Probability.
In the hypothetical example below, the company’s RBP^® Probability, represented by green, is 35% while its Behavioral Risk Indicator, represented by red, is 65%.

RBP^® Methodology

A system of fundamental stock analysis that uses a reverse discounted cash flow valuation model to determine what the stock’s current price implies in terms of future free cash flow and revenue (Required Business Performance^® ) as well as the calculation of the likelihood that management can deliver the Required Business Performance^® , known as RBP^® Probability.

RBP^® Platform

The Transparent Value decision support tool consisting of an interactive database containing the proprietary data produced by Transparent Value. Included are the Required Business Performance^® (RBP^® ) values, RBP^® Probabilities and Behavioral Risk Indicators for more than 2,000 global stocks, the Transparent Value mutual fund rating system providing coverage of more than 3,000 funds, and also broad market indicators.

RBP^® Snapshot

Provides updated company-specific RBP^® information based on the company's most recent quarterly financial data. The RBP^® Snapshot consists of the RBP^® probability and RBP^® values for a particular company.