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2 VITAL: Conversations about diversification. Don't doubt diversification Maintaining a diversified portfolio cannot guarantee against loss, but investing broadly across asset types, investment styles, holding periods, and geographies can be one of the best methods to manage the risk of an overall investment portfolio. Investors tend to chase last year's winners or put too much money in a single stock or asset class. This all-too-familiar scenario often causes emotional investment decisions that can potentially undermine long-term goals. Over the long haul, a diversified portfolio may offer better returns with less risk, especially compared to an investor making common mistakes. This is illustrated in the simplified hypothetical portfolio comparisons below. Diversification is likely to win over time ■ Annualized return ■ Standard deviation Standard deviation: A common measure of investment risk, whereby lower is deemed less risky. Annual returns from 2012 (to establish best- and worst-performing asset classes going into 2013) through 2022. At the start of each year, the hypothetical Return-chaser strategy invests 100% in the best-performing asset class of the prior year; the hypothetical Contrarian strategy invests 100% in the worst-performing asset class of the prior year; and the hypothetical naive or 1/N Diversifier strategy invests equally in all asset classes each year. Asset-class returns are based on the same indexes as indicated on the preceding page. Index returns are for illustrative purposes only and do not represent actual investment performance. Index returns do not reflect any management fees, transaction costs, or expenses. Indexes are unmanaged and one cannot invest directly in an index. Sources: FactSet, Index providers, SEI. The performance data quoted represents past performance. Past performance does not guarantee future results. 12.1 16.4% 3.3% 8.2% 1.0% -1.7% .18 .16 .14 .12 .10 .08 .06 .04 .02 .00 -0.02 -0.04 Return-chaser Each year, the strategy invests only in the prior year's top-performing asset class. Contrarian Each year, the strategy invests in the prior year's worst-performing asset class. Diversifier The diversified strategy simply holds equal amounts of all available asset classes year in and year out. MIND OVER M AT TER Diversification helps smooth the ride. Spreading risk broadly ensures that all your investments aren't in the worst-performing asset class. It also increases the likelihood that part of your portfolio is allocated to better-performing assets in any given year. Remember, years like 2022, when both fixed income and equities declined in tandem, are an anomaly. MIND OVER M AT TER Over the past decade, the Return-Chaser would have beaten the other strategies 40% of the time, while the Contrarian would have won 50% of the time. The Diversifier would have come out on top in only one of those ten years. However, over the long term, the Diversifier would have achieved better returns with less volatility and risk.

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