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PD RTFR M U LAS

FORMLJLAC mENDING MONEY MANAGER

The Formulaic Trending Mon thly Abstract


July 15, 2012: Overall RAM Score
=

+20.86

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.

The overall RAM Score has increased from +14.95 last month to +20.86 this month... Representing a significant (albeit relatively small) 5+ point increase... But more interesting is that all 7 subcomponents are once again posftive. I dont believe we have ever seen all seven subcomponents registering positive with such a low overall RAM Score being posted. In some ways that is comforting, yet in other ways it validates all the concerns and hesitation that have become commonplace in the markets/economy. I believe this further explains the recent phenomenon of unusually high-inflow into index funds/ETFs over managed funds (the assumption being that managed money is losing out to unmanaged money). Well, at Portformulas we believe one should not settle for an index fund/ETF when one can use qualifying criteria to make strategic selections of individual stocks from within the desired index. In fact, this was the catalyst for our launching the Freedom Series in March 2012... Below you can see how the time weighted returns (TWR) ofthe models compore ogainst their corresponding index since inception:
. . . . . .

March 2012 April 2012 May 2012 June 2012 Since Inception Model Difference

2.54c -0.11% -5.57% 6.79% 3.29% +3.79% Freedom NSDQ 3.0 o 1.28% -2.45% 3.07% 4.92% +5.99%

DJIA(Dow3O) 2.01% 0.01% -6.21% 3.99% -0.50%

March 2012 April 2012 May 2012 June 2012 Since Inception Model Difference

0.79% -4.26% 0.80% -2.48% +1.18% Freedom SP500 3.26 o 1.52% -3.82% 3.16% 4.01% +4.27%

S&P400 1.73% -0.30% -6.63% 1.73% -3.66%

March 2012 April 2012 May 2012 June 2012 Since Inception Model Difference

NASDAQ 4.20% -1.46% -7.19% 3.81% -1.07%

March 2012 April 2012 May 2012 June 2012 Since Inception Model Difference

S&P 500 3.13% -0.75% -6.27% 3.96% -0.26%

Russell 2000

March2012
April 2012 May 2012 June 2012 Since Inception Model Difference

0.54%
1.60% -3.82% 1.76% -0.02% +1.52%

2.39%
-1.62% -6.74% 4.81% -1.54%

March 2012
April 2012 May 2012 June 2012 Since Inception Model Difference

1.98 o 1.23% -3.17% 4.90% 4.86% +5.68%

Russell 3000 2.93% -0.77% -6.41% 3.75% -0.82%

**The above returns are time-weighted returns; time-weighted returns show the compound growth rate in a portfolio while eliminating the vaiying 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 overail 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 ofa market decline. Please consider your risk tolerance carefuily before investing.

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FaRMLJTAIC TRTNOJNT MONEY MANAcE

Portformulas Investing Corporation TM Form ulczic 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 MANAGER

Simply put, we do not believe that all stocks within an index are worthy of ownership. As such, we seek to only own the stocks that fit our TM qualification criteria. (Take a look at our Mapper Score to see how many stocks are considered worthy of consideration based upon such criteria). Turning back to the markets and economy, the Fed is frustrated with the slow growth of the economy and the fact that record low interest rates have done little to spur demand. However, the Fed can likely claim that had rates not remained so low, the economy would be much worse off than it is. The real issue here is that the Fed needs to jump-start and/or stimulate the banks to loosen up on lending to quality borrowers.
Europe continues to throw curveballs and mixed signals as headlines shift from Greece and France to include Spain and Italy. In another part of

the world, China is reported to be slowing again as well. All in all, the US markets and economy are struggling with mixed signals, both positive and negative.
RAM Score reflects all 7 of 7 subcomponents as positive even though there was just a meager 5 point increase this month Resulting in a score of +20.86 regardless of mixed signals. The Mapper Scores have experienced only minor changes with the exception of a healthy jump for the

DJIA as it increased 9%. 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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FORMuLAIC TRENoNc MONEY MANAGER

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(888) 869-5994 www.portformulas.net

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RAM Score (Lifetime) S&P 500

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FORMULAIC TRENDING MONEY MANAGER

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Mapper ScoreTM for Various Indexes:

Dow Jones 30 Stocks Mapped = 7 Mapper Score = 22.58% TM

S&P 500 Stocks Mapped = 71 TM Mapper Score = 14.20%

Russell 3000 Stocks Mapped = 162 Mapper Score = 5.40% TM

NASDAQ Stocks Mapped = 63 TM Mapper Score = 2.33%

S&P 400 Stocks Mapped = 41 TM Mapper Score = 1 0.25%

Russell 2000 Stocks Mapped = 42 TM Mapper Score = 2.10%

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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 TM 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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