PORTF5RMULA$

FORMULAIc TRENDING MQNEY MANAGERS

The Formulaic Trending Monthly Abstract

May 13, 2013: RAM Score
=

+56.51

Mapper Score TM

6 of 10 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 TM is a proprietary trending tool that takes into account several dynamic components related to the underlying 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 with our Portformulas intricate Formulaic correlation may be valuable for investing... Combining our trending features of RAM Score & Mapper Score TM Strategies results in a uniquely logical approach to investing that is exclusively available through Portformulas. Investing

TM (yes, we have added 4 additional The overall RAM Score has increased from +54.52 to +56.51 this month... And 6 of 10 Mapper Scores indexes to our Mapper Score System) are increasing while 1 has flat-lined, meaning 3 have declined. What has really caught my eye (and ears) this month is a two-fold interconnected relationship. First, the market has hit new highs (no doubt you have heard). But unlike any other time in history, the volatility and speed of the markets has changed dramatically. Notice the two graphs below (S&P 500 and Dow 30) and most specifically, contrast the structure from years 1975-2000 against the W pattern of years 2000-2013.

c-Price History

The stark differences are dramatic... This isnt your Grandfathers stock market anymore.

14,OOQ. 13,000.(

1,500.C 1,400.C 1,300.C

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9,000.G( 8,000.G(

1200.C 1,100.c

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900.00 800.00

7,000.Q(
6,000.01 5,000.01 4,000.01

700.00 600.00 500.00

400.00 300.00

3,000,01
2,000.01 1,000.01

200.00 100.00 5 80 85 90 95 00 05
5/9/2013

80

85

90

95

00

05

Second, most professionals in-the-know are quietly exuberant regarding this bull market. You may have noticed there was little fanfare regarding the Dow 30 surpassing 15,000 or the S&P 500 surpassing 1,600 even though neither had ever happened before. Interesting...
-

Here is a sampling of measures illustrating potential market strength that most everyone else is too quietly exuberant to talk about: 1. 2. 3. 4. 5. 6. 7. 8. Stocks have been outperforming bonds by a significant %, indicating that investors are rotating into stocks away from bonds. Recent volumes in put options has lagged volume in call options by 50%, indicating bullish money. The S&P 500 is almost 9% above its 125-day average. There has been almost 15% more trading volume on the NYSE is in advancing stocks vs. declining stocks. The number of stocks hitting new 52-week highs has continually exceeded those hitting 52-week lows for all of 2013. The VIX volatility index has experienced a declining trend since late 2012. The Federal Reserve is not tightening monetary policy. Stock price valuations are not stretched.

PORTFRMULAS

FORMuLAIC TrwNn,Nc MoN

MANAGER

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Portformulas Investing Corporation Formulaic Trending Money Manager SEC Registered Investment Advisor 6020 E Fulton St. Ada, MI 49301 (888) 869-5994 www.portformulas.net
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PORTF5RMULAS

FORMULAIc TRENDING MONEY MANAcER

9. 10. 11. 12. 13.

There is no investor euphoria (the premise of my making this list). Bond spreads have been shrinking. Economists do not believe a recession is looming. Transportation stocks, small caps and bank stocks do not appear to be retreating. And, as you can see below, the inverse of the 4-Week Moving Avg. of Initial Jobless Claims is staying in almost perfect step with the S&P 500. In theory, meaning that this bull market is not just a Fed-driven phenomenon and that our economy really is supporting this growth on its own merits.
-IC4WSA

s&p 500 Stock Price Index (SP500)

-280,000 -320,000 -360,000 -400,000 -440,000 480000
.

1,760 1,645 1,530 1,415 1,300 1,185 1,070 955 840 725 610 2014

Re
ie
.

CL*i#,47

-520,000 -560,000 -600,000 -640,000 -680,000 2007

2008

2009

2010

2011

2012

2013

FRED

Shaded areas indkate US recessions.

2013 researchstlouisfed.org

-IC4WSA (Left)

(Right)

Obviously, there are never guarantees when investing in the market, but it is nice to know that the underpinnings appear solid. And as you will see over the next few pages, our proprietary RAM Score and Mapper Score indicators seem to lend further support to the underpinnings. Our unique approach of Formulaic Trending Money Management has brought us much attention and I hope that it continues to create much value for you as an investor! At request of many, I have included the Freedom Series Portformula Performance Calculations for your reference to compare our various Freedom investment models to their corresponding indices. For more information you can visit www.portformulas.net or speak with your Financial Advisor (be sure to ask if the new Freedom Series is right for you and your investment goals). Best of Investing, Mike Walters, CEO

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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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FORMuLAIc TRENDING MONEY MANAGERS

Below you can see how the time weighted returns (TWR) of the FREEDOM SERIES models compare against their corresponding index since inception earlier this year: 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.

EEZZ1 RAM Score (Lifetime)

Momentum (13 mo)

is

_s

MACD (13

mo)

Recession Risk (13 mo)

Volatility (13 mo)

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PORTFRMULAS

FORMuLAIc TRENDING MONEY MANAGERS

TM is a proprietary trending tool that takes into account several dynamic components related to the underlying stocks 0 Mapper Score 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 stocks within an index are automatically worthy of ownership. In the FREEDOM SERIES, we seek to TM illustrates how many stocks we view worthy of consideration.) only own the stocks that meet our qualification criteria. The Mapper Score
Mapper Score TM for Dow

30

TM for Mapper Score

S&P 500

Mapper Score TM for Russell 3000

Stocks Mapped = 13 Mapper Score = 43.33%

Stocks Mapped = 179 Mapper Score = 35.80%

Stocks Mapped = 406 Mapper Score = 13.53%

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TM for NASDAQ Mapper Score

Mapper Score TM for S&P 400

Mapper Score TM for Russell 2000

Stocks Mapped

= 127

Stocks Mapped = 108 Mapper Score = 27.00%

Stocks Mapped = 109 Mapper Score = 5.45%

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Mapper Score TM for Russell 1000

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Stocks Mapped = 298 Mapper Score = 29.80%

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Mapper Score TM for S&P600

Mapper Score TM for NASDAQ 100

Stocks Mapped = 62 Mapper Score = 10.33%

Stocks Mapped = 33 Mapper Score = 33.00%

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Mapper Score TM for S&P100

Stocks Mapped = 43 Mapper Score = 43.00%

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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
-

wwiv.portformu1as.net

PORTFRMULAS

FORMuLAIc TRENDING MONEY MANAGERS

0 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 with our Portformulas intricate Formulaic Investing TM Strategies results in a uniquely logical approach to investing that is exclusively available through Portformulas.
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 Portformulas 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.

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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
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SEC Registered InvestmentAdvisor Freedom Series Portformula Performance Calculations

6020 E. Fulton St Ada, MI 49301 800-869-5994 www.Portformulas.com

FORMuLAIc TRENDING MONEY MANAGER

Russell
2000 Index 3000 Index

Freedom DJ3O -5.25% 14.57% 13.43%

12 25%
$
.

DJIA (Dow 30) Index

Freedom SP400 3.42%

-0.09%

S&P 400 Index 3.65% 1683%

15 98%

Freedom SP500

S&P 500 Index

Freedom R2000

Freedom R3000

Russell

Freedom NSDQ 7.66%

NSDQ Index

Model Difference:

4.94%

Since Model Inception:

12 30% 13.25% 17 02% 14 86% 14 28% 14 28% 17 09%

19.51%

1&68%
20.40%

16.98% 16.74%

20.87%

17.22%
14 76%

19.87%
1488%

1
10.89%

12.21%
9 29%

Rolling 12 Months

16 68%

YearTo Date:

14.91%

1208% 1 96% &04% 115% 7 80% 1.02% 2.03% 2.01%

.

13.68% 0 55% 463% 079% 7 21% 0.15% 0.70% -1.20% 2 33% 0 34% 0 67% 3.16% 382% I 52% 3.26% 3.96% 627% 0 75% 3.13% 1 26% 1 98% 2 42% 1 89% 2 99% 1 05% 1.76% 382% 1 60% -1.98% -1.55% 0.28% 0.08% 0.71% 5 59% 5 04% 5 72% 8 21% 211% 1 11% 198% 100% 5.16% 3.60% 0 87% 1 81 % 2 33% 0 43% 1 07% 580% 253% 5 98% 0.25% -0.74% 0.39% -2.24% 3 12% 3 20% 1 45% 4.81% 674% 1 62% -1.39% 1 77% 2 86% 1 33% 4.90% 317% 1 23%

12.42%

12.02%

11.18%

11.55%

:
13.81%

12.22% 1 53% 3.76% 1 10% 5 37% 1.02% 0.51% -1.85% 2 46% 2 25% 0 87% 3.75% 641% 0 77%

10.24% 0 40% 5.20% 153% 4 24% 0.86% 0.29% -3.42% 1 28% 2 53% 1 56% 3.07% 245% 1 28% 1 88% 3.40% 057% 4 06% 0.31% 1.11% -4.46% 1 61%

April 201 3 3.73% 140% 5 77% 0.60% -0.54% 0.36% -0.94% 0 70% 3 16% -0 53% 0 12% 1.73% 663 0 30%

2 07%

1 79%

March 2013

2.62%

5.57%

4A4%

February2Ol3

191%

January 201 3

7 64%

December2012

-0.92%

2.67%

334%

November2012 -2.54% 2 65% 0 63% 0 94% 3.99% 621% -426% 0 79% 0.26% 1.73% 0 01% 2.01% 3 30% I 80% 4187%

-0.26%

October2012

-1.15%

September 2012

3 87%

August 2012

0 48%

434%
0 15% 3.81% 719% 1 46%

July 2012

0 28%

June 2012

6.79%

080%

May2012

557%

April 2012

0 1 1%

March 2012

2.54%

0.54%

2.39%

1 .98%

2.93%

3.03%

4.20%

The above returns are time-weighted returns; time-weighted returns show the compound growth rate in a portfolio while eliminating the varying effect created by cash inflows and outflows by assuming a single investment at the

beginning of the period and measuring market value growth or loss at the end of that period. Time-weighted returns also reflect performance after advisory fees have been deducted. The Freedom series invests in equities and based on the qualification criteria, may hold equity positions regardless of overall market movement Past performance is no guarantee of future results. Investing in equities carries an inherent risk and it is possible that you could experience significant losses in the event of a market decline. Please consider your risk tolerance carefully before investing.

This activity is generally referred to by the Firm as a Portformula Investment Strategy. You should only invest in Poriformulas upon receiving and reading the Portformulas ADV. 2006-2012 Portformulas All Rights Reserved.

material is not complete unless all pages are included. PortformuIascK(the Firm) operates with Limited Discretionary Authority to engage solely in the implementation of specific step-by-step investment criteria and account rebalancing as indicated and selected by the client. SEC File No. 801-68276. SEC Registration does not imply a certain level of skill or training.

IMPORTANT NOTICE: Past performance is no guarantee of future results. Your actual results may vary. Investing carries an inherent element of risk. Potential for substantial loss in principal and income exists. This

page 1 of2

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6020 E. Fulton St Ada, MI 49301 800-869-5994 www.Portformulas.com SEC Registered Investment Advisor

FORMuLAIc TRENDING MONEY MANAGER

pt:fr/

Freedom Series Portformula Performance Calculations

Freedom sP100 9.50% 24.19% 20.83% 15.64% 1.84% 3.81% 2.41% 6.81% 1.06%

S&P 100 Index

Freedom SP600

S&P 600 Index 6.25% 20.14% 16.63% 1416% 1413% 2.42% 3.57% 1.10% 5.03% 0.83% 0.51% -1.85% -1.25% 1.56% 1.33% -0.35% 3.26% -2.86% -6.82% -1.34%
!

Freedom R1000

Russell 1000 Index

Freedom N100

Nasdaq 100 Index

Model Difference:

-0.06%
14.69% 1193% 1119% 2.05% 3.13% 1.12% 4.19% 0.03% -0.02% -2.67%
,

1_
820%

Since Model Inception: 17.29% 12.71% -3.00% 7.05% 2.06% 6.35% 2.18% -0.42% -2.66% -2.15% 0.87% 1.51% 3.03% -0.23% 5.41% 6.17% 1.29% 3.13% 3.94% 5.25% -0.33% -1.07% 11.13% 14.01%

15.64%

1.
15.70% 22.88%

28.34% 1979% 16.25% 0.54% 4.80% 2.85% 7.27% 1.06% 2.05% -2.22%

Rolling 12 Months:

446%
8.51%

YearTo Date:

April 2013

2.44%
E

March 2013

2.84%

February2Ol3

0.26% 2.58% -0.64%

.

January2013

December2012 0.88% -1.73% 2.68% 1.08%

November2012

1.12% -5.71% 2.35% 2.12% 1.05% 3.53% -6.82% 28% 1.54% 0.73% 3.42% -5.92%
-

October2012 2.62% 1.65% 1.87% 4.25% -6.39% -0.82% 3.31% 1.59% 0.55% -4.37% 2.38% 3.89% -0.40% 2.12%

September2012

1.84%
2.16% cfr__--3.54%

0.96% 4.68% 1.01% 347% -7.87% 1.93% -0.70% 2.04% -1.16%

August2012 0.84% 4.38% -4.53% 0.54% 2.23%

July2012

-0.84%

June 2012

May 2012

April 2012

March2012

2.68%

2.78%

2.89%

5.00%

4.80%

The above returns are time-weighted returns; time-weighted returns show the compound growth rate in a portfolio while eliminating the varying effect created by cash inflows and outflows by assuming a single investment at the beginning of the period and measuring market value growth or loss at the end of that period. Time-weighted returns also reflect performance after advisory fees have been deducted. The Freedom series invests in equities and based on the qualification criteria, may hold equity positions regardless of overall market movement Past performance is no guarantee of future results. Investing in equities carries an inherent risk and it is possible that you could experience significant losses in the event of a market decline. Please consider your risk tolerance carefully before investing.

This activity is generally referred to by the Firm as a Portformula Investment Strategy. You should only invest in Portformulas upon receiving and reading the Portformulas ADV. 2006-2012 Portformulas All Rights Reserved.

material is not complete unless all pages are included. PortformuIas(the Firm) operates with Limited Discretionary Authority to engage solely in the implementation of specific step-by-step investment criteria and account rebalancing as indicated and selected by the client. SEC File No. 801-68276. SEC Registration does not imply a certain level of skill or training.

IMPORTANT NOTICE: Past performance is no guarantee of future results. Your actual results may vary. Investing carries an inherent element of risk. Potential for substantial loss in principal and income exists. This

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