PORTF5RM U LAS

FoRMuLAc TRENDING MONEY MANAGERS

The Formulaic Trending Monthly Abstract

February 15, 2013: RAM Score
=

+35.54

Mapper Score TM

6 of 6 increasing

RAM Score is a proprietary trending tool that takes into account several dynamic components related to the U.S. markets and economy. It features a core baseline which allows for correlation between these multiple components so that they may be added together for an overall Ram Score. As a trending tool, we believe that a positive RAM Score indicates that the odds are stacked in favor of equity investments and a negative RAM Score indicates that odds are stacked Mapper Score is a proprietary trending tool that takes into account several dynamic components related to the underlying TM against equity investments. stocks represented within an index. It identifies certain strengths of individual stocks contained within an index and tracks how many meet minimum Our scoring requirements. As a trending tool, we believe that the higher the percentage of qualifying stocks, the greater the strength of the overall index. mechanisms do not guarantee that the markets will increase when scores are strong or decrease when the scores are weak. But we believe the long term TM correlation may be valuable for investing... Combining our trending features of RAM Score & Mapper Score with our Portformulas intricate Formulaic TM Investing Strategies results in a uniquely logical approach to investing that is exclusively available through Portformulas.

TM The overall RAM Score has increased +11.64 to 3554 this month.. Mapper Score posted 6 of 6 increasing.

Do you know what you own, why you own it, and what will indicate when to sell it?
Well the reality is that the vast, vast majority of investors cannot answer all 3 of those questions. Some may even argue that no investor (outside of Portformulas) can in fact answer all 3 ofthose questions at once. Think about it... Many investors may know what they own (mutual fund investors do not as they seldom/never know the holdings within the fund). Many investors may know why they own it (i.e., its my IRA, some stockbroker sold it to me, my brother-in-law recommended it, etc.), but often it is not always for the most reliable reasons. But very, very few investors know when to sell it (i.e., they dont have a specific purpose, they dont track any quantitative data on their holdings i.e., they bought Apple stock because it was popular and now have no idea what to do with it).

The end result is that I believe many, many people invest way too dangerously. But not for the same reasons you have ever heard before. You see, I believe investing dangerously is often very different than investing too risky. Investing dangerously usually means that the investor cannot answer those three all important questions... Do you know what you own, why you own it, and what will indicate when to sell it? Just consider how investing has changed over time... Look at this S&P 500 chart from 1972

1. :

When I look at this historical, my eyes see 4 distinct time periods. First, I notice the relative similarities from 19721985, then I notice the relative similarities from 19851995, followed by the bull market from 19952000. Finally, I notice the extreme volatility (and opportunity) from 2000January 2013. One might argue that prior to year 2000, you could get away with not being able to answer my three questions, but not today you cant!

PORTF5RMULAS

FonMLJLAc TRENoNc MONEY MANAcER

Portformulas Investing Corporation Formulaic Trending Money Manager SEC Registered Investment Advisor 6020 E Fulton St. I Ada, MI 49301 (888) 869-5994 wwv.portformu1as.net

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PORTFRMU LAS

FORMuLAIc TRENDING MONEY MANAGER

Lets look a bit deeper... As you may know, we have either live and/or unbiased backtested data for Portformulas going back to 2001. So lets take another look at a blown up S&P 500 chart that zeroes in on 2001January 2013: Dcc) ,Jrf

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Had began this chart in year 2000 (rather than 2001) you would see that in September 2000, the S&P 500 hit its high of 1,530. During January 2013, the S&P 500 high was 1,510 (20 points less than in 2000). Meaning that had you invested money in September 2000 into an S&P 500 noload mutual fund (or S&P 500 based ETF, had they existed back then)... Then in January 2013, almost 13 years later, you would have less money than when you started. A sobering fact. Equally sobering is that most all US equity indexes would depict very similarly over that same time (i.e., DJIA, Russell 1000, Russell 3000, etc.). This is why we built Portformulas, specifically to answer those three important questions... Do you know what you own, why you own it, and what will indicate when to sell it? By addressing those three questions within our Formulaic Trending Money Manager approach, look at the visual differences in the Portformulas chart from 2001January 2013:

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2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

As you can see, the end result is a dramatic visual difference (this chart is from page 6 ofthe following hypothetical that contains all the pertinent details and disclosures). In this example I used three popular equity Portformula models allocated together at 1/3 per model. Rather than losing money (as I mention above in the S&P 500) one would have increased their value 500% had money been deposited in 2001 and followed this allocation of models through January 2013. By the way, that line you see running below the green chart represents the S&P 500 over the same period of time It just appears smaller against the Portformula allocated models accumulation. When you track things over time, you can see how important it truly is to know what you own, why you own it, and what will indicate when to sell

Best of Investing, Mike Walters, CEO

PORTF5RMULAS

FoRMuLAc TREr.nir1c MONEY MANAGER

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Portformulas Investing Corporation Formulaic Trending Money Manager SEC Registered Investment Advisor 6020 E Fulton St. I Ada, MI 49301 (888) 869-5994 www.portformulas.net

PORTFRMULAS

FORMULAIc TRENDING MONEY MANAGER

RAM Score is a proprietary trending tool that takes into account several dynamic components related to the U.S. markets and economy. It features a core baseline which allows for correlation between these multiple components so that they may be added together for an overall Ram Score. As a trending tool, we believe that a positive RAM Score indicates that the odds are stacked in favor of equity investments and a negative RAM Score indicates that odds are stacked against equity investments.
RAM Score (13 mo) RAM Score (Lifetime) _S&p 500

Moving Average (13 mo)

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Bull Bear (13 mo)

Momentum (13 mo)

TRIX (13 mo)

MACD (13 mo)

Recession Risk (13 mo)

Volatility (13 mo)

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Portformulas Investing Corporation Formulaic Trending Money Manager SEC Registered Investment Advisor 6020 E Fulton St. I Ada, MI 49301 (888) 869-5994
www.portformulas.net

PORTF5RMULAS

FoRMuLAc TREr.rnm.ic MQNEY MANAGER

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PORTF5RMULAS
FORMuLAIc TRENDING MONEY MANAGER

Mapper Score is a proprietary trending tool that takes into account several dynamic components related to the underlying stocks TM represented within an index. It identifies certain strengths of individual stocks contained within an index and tracks how many meet minimum requirements. As a trending tool, we believe that the higher the percentage of qualifying stocks, the greater the strength of the overall index.

(NOTE: As such, we do not believe that all stacks within an index are automatically worthy of ownership. In the FREEDOM SERIES, we seek to only own the stocks that meet our qualification criteria. The Mapper ScoreTM illustrates how many stocks we view worthy of consideration.)

TM Mapper Score for Dow 30 Stocks Mapped = 10 Mapper Score = 33.33%

Mapper Score for S&P 500 TM Stocks Mapped = 113 Mapper Score = 22.60%

TM Mapper Score for Russell 3000 Stocks Mapped = 272 Mapper Score = 9.07%

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TM Mapper Score for NASDAQ Stocks Mapped = 82 Mapper Score = 3.04%

Mapper Score for S&P 400 TM Stocks Mapped = 71 Mapper Score = 17.75%

TM Mapper Score for Russell 2000 Stocks Mapped = 71 Mapper Score = 3.55%

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Our scoring mechanisms do not guarantee that the markets will increase when scores are strong or decrease when the scores are weak. TM But we believe the long term correlation may be valuable for investing... Combining our trending features of RAM Score & Mapper Score TM with our Portformulas intricate Formulaic Investing Strategies results in a uniquely logical approach to investing that is exclusively available through Portformulas.

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Portformulas Investing Corporation Formulaic Trending Money Manager

PORTFRMULAS

FcwMuLA,c TRENolNc MONEY MANAGER

SEC Registered Investment Advisor 6020 E Fulton St. I Ada, MI 49301 (888) 869-5994 wwiv.portformu1as.net

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PORTFR MU LAS

FORMULAIc TRENDING MONEY MANAGERS

Please note that there are a number of important disclosures that must be considered before investing in Portformulas. Please read the information and disclosures contained in Portformulas hypothetical carefully before investing. Any performance figures referenced herein are hypothetical and are not indicative of future results. Purchases and sales of securities within Poriformulas various strategies may be made without regard to how long you have been invested which could result in tax implications.
RAM Score and Mapper Score General Disclosures

The RAM Score and Mapper Score illustrations do not represent any particular Portformula strategy nor are they intended to recommend any Portformula strategy or the RAM Score feature. The information contained herein simply attempts to illustrate how our firms RAM Score feature and Mapper Score operate. The RAM Score feature can be applied to many Portformula models at no additional cost. The Mapper Score is simply an analytical informational tool. RAM Score was not developed until January 2010. Prior to January 2010, clients were utilizing RAM Scores predecessor, RAM. Clients utilizing RAM may have had different results than those reflected above. RAM Score movement prior to 2010 is hypothetical and based on retroactive application of RAM Scores indicators to market and economic conditions existing at the time. Portformulas was not managing assets prior to 2007. It is important to understand that RAM Score is only a tool designed to assist our firms management of your account. RAM Score does not guarantee any specific results or performance and even with RAM Score on your account, it is possible that your account will lose value. RAM Score moves assets into or out of the market based on various economic and market indicators. It is possible that the market will move positively while you are not invested or negatively while you are invested, resulting in losses. Any Portformula strategy may underperform or produce negative results. Just because Portformulas maps a stock does not mean that the stock will be held in a model. Client accounts may hold less stocks than those referenced in the Mapper Score illustration. Mapper Score has no impact on performance. The RAM Score illustration utilizes the S&P 500 index because it is a well-known index and provides a recognizable frame of reference. The Mapper Score analysis uses the referenced indices because they are relevant comparisons across certain Portformula models. The indices referenced herein are not publicly available investment vehicles and cannot be purchased. Furthermore, none of the indices referenced herein have endorsed Portformulas in any way.

p o ii T F5R lvi U L A S

FaRMuLAc TRN1NG MONEY MANAcEr

Portformulas Investing Corporation Form ulaic Trending Money Manager SEC Registered Investment Advisor 6020 E Fulton St. I Ada, MI 49301 (888) 869-5994 www.portformulas.net

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