Leuthold Market Perspectives

February 2017

Do You Believe This Guy?

Dont tell The Donald, but the stock market doesnt take him seriously.

The market took JFK seriously. In April 1962, Kennedy clashed with steel companies after U.S. Steel
hiked prices 3.5%, an increase the president called, a wholly unjustifiable and irresponsible defiance of
the public interest. The S&P 500, already down several percentage points from its fall 1961 high,
plummeted 24% over the next two months as the confrontation continued.

Trump, of course, has attacked the pricing of presidential aircraft, military aircraft, and prescription
drugs, while threatening to ignite trade wars on multiple frontsand all in just the last six weeks! But
theres no sign of a 1962-like panic. To the contrary, Twitter-trolling investors have bid the S&P 500
and practically every major index to new bull market highs. Either they see some mysterious silver lin-
ing to price caps, tariffs, and trade wars, or they simply dont believe Trump will succeed in implement-
ing the more anti-business elements of his pro-business agenda.

The market recovered quickly following the 1962 Kennedy debacle, with the S&P 500 rising 80% into a
February 1966 cyclical top. We doubt the market will fare quite as well under Trump. But thats not
because were skeptical of his policy agenda or at least the version of the agenda as it exists in early
February (which may be very different from mid- or late-Februarys).

No, our skepticism stems from the conditions Trump inherits. Theyre too good: a nearly full-
employment economy, inflated market valuations, and relatively high corporate profit margins. While
there are mitigating factors in the short run that have kept us bullish, our expectations on a four-year
horizon are restrained by these initial conditions. Trump should be restrained, too.

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Trump Inherits Poor Initial Conditions

Yes, Donald Trump may have been born with a silver spoon in his mouth. But from a cyclical (and con-
trarian) perspective, it might instead have been Barack Obama who was born on third basewith the
S&P 500 in January 2009 trading at 11.4x Normalized EPS and the U.S. unemployment rate headed to-
ward 10%. Obama certainly capitalized on these fortuitous birthrights: the S&P 500 gains of +85%
and +53% during his two terms rank second and eighth in performance among the 22 presidential terms
dating back to 1928. He didnt love Wall Street, but Wall Street loved him (as well as Ben and Janet).

We think that stocks in Trumps current term will fall short of Obamas gains, mostly reflecting a valua-
tion starting point thats almost twice as high as Obamas wasan S&P 500 Normalized P/E of 22.5x.
The scatterplot (Chart 1) shows the extent to which the Normalized P/E on inauguration day influences
S&P 500 returns over the subsequent four years. While the optimal forecast horizon for most of our val-
uation tools is somewhat longer (seven to 10 years), a single presidential term is still enough for us to
observe a powerful, inverse relationshipwith a solid correlation coefficient of 0.63.

If this relationship between initial valuation and full-term returns holds tight, one can expect a cumula-
tive, price-only S&P 500 return of less than 10% by inauguration day of 2021. But theres plenty of vari-
ation around the fitted regression lineincluding an upside surprise in Obamas second term, when
the market rose more than 50% despite an initial Normalized P/E of 20.4x in January 2013. The best
Trump can hope for is a similar, outlier result. Then again, he thrives on low expectations.

Chart 1
Stock Market Valuation On Inauguration Day Versus
Subsequent S&P 500 Return During Presidential Term
200

150 Correlation Coefficient

Over 22 Presidential Terms =
-0.63
100

Cumulative
S&P 500 Price Obama
50 first term Obama
Return During Trump
Presidential predicted second term
Term return =
< 10%
0

Trump
starting
point =
-50 22.5x

2017 The Leuthold Group

-100
0 5 10 15 20 25 30 35

S&P 500 Normalized P/E on

Inauguration Day

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Trump Inherits Poor Initial Conditions (continued)

Table 1
The heated, partisan bickering that followed the presi-
dential election seems to have finally simmered down. The Stock Market By Presidential Term:
Allow us, then, to rekindle the flames. Weve just re- Initial Valuations &
vised a market study that appeared in the November Subsequent Returns
Green Book, deciding that split presidential terms Initial
S&P 500 S&P 500
(i.e., Kennedy/Johnson, Nixon/Ford) should be consid- Norm alized Price
ered a single term when tallying market returns, rather President P/E* Return*
than two (as in our original work). This minor revision Herbert C. Hoover 22.0 x -73.3 %
had a significant impact on the results, which now Franklin D. Roosevelt 6.9 162.0
Franklin D. Roosevelt 29.7 -41.3
clearly show that Democratic administrations have Franklin D. Roosevelt 11.0 27.5
experienced (caused??) much better stock market Franklin D. Roosevelt/Harry S. Truman 13.0 16.1
performance than Republican ones. The median, Harry S. Truman 11.4 68.6
Dw ight D. Eisenhow er 10.7 69.9
cumulative S&P 500 price gain during Democratic Dw ight D. Eisenhow er 15.1 35.0
presidential terms is +48.6%, about double the 24.7% John F. Kennedy/Lyndon B. Johnson 18.3 44.4
gain generated during Republican terms (Table 1). Lyndon B. Johnson 23.2 17.4
Richard M. Nixon 19.3 16.2
Richard M. Nixon/Gerald Ford 20.6 -12.9
The revised study puts bragging rights in the hands of Jimmy Carter 12.5 27.9
the Democrats, butonce againits the initial condi- Ronald Reagan 10.5 33.1
tions that seem to be mostly responsible for the dispari- Ronald Reagan 11.9 63.6
George H. W. Bush 16.5 51.2
ty. Democrats have had the good fortune to enter office Bill Clinton 19.6 79.2
with stock market valuations at much lower levels: the Bill Clinton 23.9 72.9
median S&P 500 Normalized P/E on inauguration day George W. Bush 27.6 -12.5
George W. Bush 21.3 -31.5
is 15.6x, far lower than the 19.3x median for Republi- Barack Obama 11.4 84.5
cans. Obviously, theres plenty of room for one to put a Barack Obama 20.4 52.8
partisan spin on these results (i.e., Democrats setting Donald Trump 22.5 ?
up the Republicans to fail). Managing expectations Median For Dem ocrats: 15.6 x 48.6 %
doesnt seem like Trumps style, but in the case of the Median For Republicans: 19.3 24.7
stock market it might not be a bad idea. Median For All Term s: 18.3 34.1
*M easured fro m inauguratio n day.
2 0 17 T h e L e u t h o l d Gr o u p

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Stock Market Observations
January 25, 2017
bull m arket high
Chart 1
The old bull not only refuses to die, it has us won-
S&P
500500
S&P dering if its discovered some sort of financial-asset
2200 (Daily) 2200
Fountain of Youth. Weve stressed that bull market
tops are not singular events, but rather processes
2000 2000
that tend to unfold over several months. Yet, as the
bull prepares to turn eight years old (thats 95 in
1800 1800
human years), were hard-pressed to argue that the
Dow Jones
Jones 65
65 Composite
Composite
Dow topping process has even begun. If last summers
6500 6500 all-time lows in bond yields (and the top in Utilities
6000 6000
stocks) prove lasting, future market historians may
well pinpoint July 2016 as the beginning of the end
5500
9500
5500
9500
of the bull that rose from the Great Recessions ash-
9000 Dow
Dow Jones Jones Transports
Transports 9000 es. But the probabilities are very high that several
8500 8500
8000 8000 more market cracks will present themselves before
7500 7500 a fully defensive posture is warranted.
7000 7000
6500 6500

Dow Jones Utilities

Weve presented Chart 1 (and its related Red Flag
Dow Jones Utilities
700 700
Indicator) for months on end, but we dont want to
650 650
intimate that were simply waiting to satisfy a
600 600 checklist of bearish non-confirmations. Markets
1400
Russell 2000
Russell 2000 1400
arent that simple. Yet the picture here is still one of
1300 1300 a stock market thats internally cohesive.
1200 1200
1100 1100
1000 1000
Any minor technical concern weve expressed in
recent Green Books has generally been resolved by
S&P 500 Financials
S&P 500 Financials
the next months edition. Chart 2 is a case in point:
350 350
the NYSE Weekly Advance/Decline, which has
300 300 shown a weaker trend than its Daily counterpart,
S&P 500 Cyclical
finally broke out above its September 2nd high in
500 S&P 500Sector
Cyclical Sector Index*
Index* 500 the week ended February 3rd. While thats a purely
480 480
460 460 technical observation, there are positive fundamen-
440
420
440
420
tal implications: the year-over-year change in the
400 400 NYSE Weekly A/D Line has historically led the
380 380
trend in S&P 500 earnings growth by several
NYSE
50000
Advance/Decline Line
50000
months, as shown in Chart 3. The earnings reces-
48000 NYSE Daily 48000
Advance/Decline Line
sion is over.
46000 46000

44000
x10 2016
2017 The Leuthold Group 44000
x10
2016 Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2017
*Equal-w eighted composite of Consumer Discretionary, Industrials &
Materials sectors.
Chart 2 Chart 3
2300 2300 7000
S&P 500 100
Market Breadth
2200 (Weekly) 2200 90 6000
80 Leads EPS Growth 12-Mo. Pct. Chg.,
S&P 500 12-Mo.
2100 2100 70 By Nine Months Operating EPS
5000

60 (left scale)
2000 2000 4000
50

1900 1900 40 3000

The NYSE Weekly A/D Line
finally eclipsed its high from 30
1800 last September. 1800 20
2000
NYSE Weekly
10
Advance/Decline 1000
4500 4500 0
Line
-10
4450 4450
-20
52-Wk. Chg. in NYSE -1000
-30
4400 4400 Weekly A/D Line,
-40 Advanced 39 Weeks
4350 2017 The Leuthold Group 4350 -50 (right scale)
2017 The Leuthold Group x10
2016 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2017 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

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Stock Market Observations (continued)

The stock market liquidity environment remains difficult for us to measure, since this is the first-ever
Fed tightening cycle following the QE experiment. But, in the Major Trend Index we monitor a variety
of policy tools and other liquidity surrogates that have lately been showing steady deterioration. These
measures are part of the MTIs Economic/Interest Rates/Inflation category, which fell to a 2 1/2-year
low in early February.

There are two components Chart 4

from the monthly purchasing
managers report (ISM) that
exhibit as strong a correlation CRB Raw Industrials 600

with near-term market action up 27%

550 Chart 5
as any economic data series in last
14 mos.
weve ever tested. Specifical- 500 85
ly, we monitor the spread 80
between the ISM Price 450
ISM
Price Index
75
(Chart 5) and the New Or-
400 70
ders diffusion index. That
spread, which we dubbed the Continuous 700 65

ISM Liquidity Index (Chart Commodity Index 650

60

6), dropped in January to its (CCI) 600

55

lowest level since June 2011 held back 550

50

by grain &
(which was immediately prior energy
500
45

to a severe third-quarter cor- prices 450

40

rection). Note the Price Index 400

35

has doubled from the multi- 2017 The Leuthold Group 350
2017 The Leuthold Group
2010 2011 2012 2013 2014 2015 2016 2017
30

year low of early 2016. 2010 2011 2012 2013 2014 2015 2016 2017

Chart 6
The current Liquidity Index 2400
S&P 500 & 2400

resides in the neutral zone 2200

2000 ISM Liquidity Index
2200
2000
(Table 1), and would need to 1800 1800

drop another eleven points to 1600 1600

fall into bear territory. But the 1400 1400

ISM components (and espe- 1200 1200

cially the Price Index) are 1000 1000

fairly volatile, and bear close Latest
watching in the months ahead. 800 ISM Liquidity Index = reading 800
New Orders Index Minus is the lowest
Above +10 = Prices Paid Index since June
The commodity rebound of 20
10
bullish for stocks 2011.
20
10
the past twelve months has 0 0

been mostly industrial in na- -10

-20
-10
-20
ture, with the CRB Raw In- -30 Below -20 = bearish for stocks -30

dustrials and CRB Metals In- -40

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
2017 The Leuthold Group
-40

dexes leading the way. Mean-

while, the broader Continuous Table 1
Commodity Index (CCI, Chart 4) has 2 0 17 T he Leut ho ld Gr o up
Percent S&P 500
stalled out over the last eight months,
Of Annl.
with both energy and grains failing to ISM Liquidity Index Time Returns
keep up. The industrial nature of the Above 10 11 % 12.3 %
price rebound is all the more surprising Between 0 And 10 25 14.7
in light of flattish industrial production Between -10 And 0 24 7.1
and a strong U.S. dollar. Between -20 And -10 20 7.6
Between -30 And -20 13 -1.2
Below -30 7 -7.0
Performance analysis for February 1948 to date.

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Trailing EPS Revisited

It goes without saying that the stock market remains pricey on the basis of our venerable S&P 500 Five-
Year Normalized P/E, which closed the week of February 3rd at a 90th percentile 22.5x reading. In
Chart 1, the S&P 500 12-month trailing P/E serves as a reminder as to why we normalize: the best time
to buy stocks in the last 20 years occurred with the trailing P/E literally off the chart, thanks to the Great
Recession collapse in earnings.

The S&P 500 trailing P/E has just climbed above 25xlower than in March 2009but incredibly high
for any period in which earnings werent tainted by recession. Weve highlighted the three recent occa-
sions when the trailing P/E falsely overstated market valuation on the basis of a cyclically depressed
E. They include 1992, 2001-2003, and 2009. That leaves the February 1998-November 2000 period as
the only one in history with a P/E higher than todays.

Chart 1

S&P 500 P/E on drop in earnings

45
Trailing 12-Mo. Reported EPS (2001 recession)
45

40
1936 To Date 40
Technology 2007-09
bubble recession
35 drop in earnings 35
(1990-91
recession)
30 30

25 90th percentile = 24.4x 25

70th percentile =
20 18.6x 20

15 Median = 15
16.5x
30th percentile = 12.5x
10 10

10th percentile = 8.7x

5 5
2017 The Leuthold Group

1930 1940 1950 1960 1970 1980 1990 2000 2010

Yes, we recognize that results in the Energy sector have pulled down recent S&P 500 results. But
theres always a sector or two operating under less-than-ideal conditions even in the best of economic
times thats capitalism. The latest S&P 500 trailing four-quarter net profit margin is still a solid 7.8%
(Chart 2), whichprior to this unusual cyclehad only been achieved in a few quarters surrounding the
2007 peak. (We dont remember any estimates from that era which excluded the then-inflated results of
the S&P Financial sector.) Well say it one more time: earnings arent depressed, and the often-ignored
trailing P/E today offers a reasonably accurate assessment of the markets true overvaluation.

Chart 2
S&P 500 Profit Margins based on Operating EPS 10

(based on trailing 4-qtr. data) 9

7
based on
Reported EPS 6
latest data
through Q3: 5

Operating = 8.9% 4
Reported = 7.8%
3

1
2017 The Leuthold Group

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

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Trailing EPS (continued)

How does recent earnings performance look in relation to the historical record? The regression analysis
shown in Chart 3 puts the latest trailing 12-month reported EPS figure of $89.09 right in the middle of
an eighty-year trend channelone that rises at an approximate 6% annualized clip. The superficial im-
plication might be that theres plenty of room left for EPS to rise to the top of the channel. Then again,
note that EPS fell well short of that upper band even when net profit margins reached an all-time record
of 9.2% in the third quarter of 2014.

The chart insert shows the Chart 3

trend channel associated 150 150
with S&P 500 Operating 120 120

EPS, which has only been

100
80
S&P 500 100
80
around since 1989. That EPS 60 Trailing 12-Month 60
series sits near the lower 50 50

bound of the trend channel 40 Reported EPS 40

weve built, implying (again, 30 (latest = $89.09) 30

perhaps superficially) that 20 20

Operating EPS are ripe for a
reversion to the middle or 10 10
upper part of the channel.
The problem? Margins (as
shown in Chart 2) are still so
high that they leave precious 100

little room for mean-

reversion. 50

Conclusion? The upper

channel for either series is S&P 500 12-Mo.
Operating EPS
probably an even bigger (latest = $101.42)

stretch than it looks here. 1990 2000 2010

2017 The Leuthold Group
1930 1940 1950 1960 1970 1980 1990 2000 2010

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Decline Of The Aristocracy
Chart 1
Veteran market analyst Bob Farrell reminds inves- S&P 500 Dividend Aristocrats -
tors that when parabolic uptrends eventually stop, 51 Total Return Relative 51

the next move is never sideways. We dont know Strength

(weekly)
that the Dividend Aristocrats and other bond-like
50 50

stocks traced out a true parabola into last summers 49 49

peaks, but the ugly aftermath suggests they proba-

bly did. Even with a high quality contingent like the 48 48

Aristocrats, its costly to overstay ones welcome. 47 47

In just six months, this group has surrendered all of
the excess total return it had earned over the S&P 46 46

500 since late 2011 (right about the time the obses- The Aristocrats
are now
sion with this group kicked into high gear). Our val- 45
merely market
45

uation work suggests theres more downside here, performers

over the last
especially if the bond market rout resumes after Jan- 44
five years.
44

uarys breather (which is our expectation). 43 43

We have tended to lump the Aristocrats, Low Vola- 42 42

tility, and economic insensitivity together as traits 2011 2012 2013 2014
2017 The Leuthold Group
2015 2016 2017
that are especially overvalued in an overvalued mar-
Chart 2
ket. The Utilities sector, which ranks #9 in this
months Group Selection Scoring System, provides S&P 500 Utilities - 22
Median Trailing P/E
an ideal mix of generous dividends, low price vol- (monthly) 20.1x 20

atility, and relative refuge from economic and earn- 18

ings weakness. But those traits are certainly not lost
on investors, who are still paying over 20x trailing 16

EPS for the S&P 500 Utilities stockshigher than 14

any pre-2015 cycle high. Stay away. 12

10
2017 The Leuthold Group

1990 2000 2010

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 STOCK MARKET INTERNALS
Earnings Momentum, Small/Mid/Large Caps,
Growth/Value/Cyclicals, and Additional Factors

Up/Down Earnings: Ratio Springs Above Average

Building on the momentum of the past few quarters, our one-month Q4 ratio sits comfortably above
its historical mean with a reading of 2.07. This is certainly unfamiliar territory for a ratio that has spent
the last seven quarters below the long term average. The only knock against this figure would be the
light reporting schedule for Januarywell typically see around 1500 firms reporting in the first month
of the other quarters.
3.25
The Leuthold Group
EARNINGS ADVANCE/DECLINE RATIO
Current Up/Down
Copyright 2017
Earnings Reports
3.00 First Month Of Each Quarterly Period For Jan 2017
Earnings Ratio: 2.07 Based On Reported Earnings (Q4 2016 Results)
2.75
Reporting Period: January
(Q4 2016 Results) 2.50
SOFT
LANDING
SOFT
LANDING
Earnings Reported: 2.25
Average:
532 Higher 1.83
257 Lower 2.00

1.75
Total: 789
1.50

Each day we log all of the com- 1.25

pany earnings reports published
by Investors Business Daily. 1.00 RECESSION
These are segmented into the RECESSION RECESSION

up earnings (higher YOY EPS) 0.75

and the down earnings (lower
YOY EPS). 0.50

0.25
83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

Median Q4 2016 YOY Revenue Comparisons: Going For Two In A Row

We start Q4 reporting pretty much where we left off with Q3. Top line growth is present, but not spec-
tacular in any of the market cap tiers or sectors. Well call this a Minnesota modest level of revenue
growthnot showing off, not lagging behind.

With about half of the S&P 500 reporting, were on pace for 5% YOY growth. This will be the second
consecutive quarter of positive returns after slogging through six quarters of decline.

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Stock Market Internals Small/Mid/Large Cap

Ratio Of Ratio Nears Historical Median

Using non-normalized trailing operating earnings, Small Caps are selling at a 4% premium to Large
Caps (chart). After spiking higher in December, our Ratio of Ratios settled closer to its long-term aver-
age in January (thanks, in part, to relative underperformance in the Small Cap space).

Looking at estimated operating earnings for 2017 (table), Small Caps are trading with a forward premi-
um of 11%.

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Small/Mid/Large Cap (continued)

All three market cap tiers chugged higher in January. Despite some volatility, quarterly losses have
been almost non-existent among the three indexes.
In the past five quarters, only the Russell 2000 has experienced a quarterly loss (Q1 of 2016).

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 Stock Market Internals Growth/Value/Cyclical

Growth Scores A Rare Win

After a precipitous slide to end 2016, Large Cap Theres been little action in the Growth/Cyclical
Growth stocks garnered a win over Value. dynamic since Cyclicals yuuuge win in Novem-
ber.

Mid Cap Growth ended a six month losing streak Small Cap Value (2016s big winner) was our
to Value in January. only segment in the red for the month. Since Au-
gust 2015: Growth +2%; Value +24% (in this
space).

Value Takes A BreatherStill Expensive

Historical Valuations, Growth

Historical Valuations, L3000 Growth Versus L3000 Mid
Versus Value...Large, Value Large,Caps
and Small Mid and Small Caps
Historical Averages Pct Above/Below Historical 2000
Median P/E 1982 to Date Hist. Avg. Valuation Today's Average Extreme
Growth Value Growth Value Growth Value G/V G/V G/V
Stocks Stocks Stocks Stocks Stocks Stocks Ratio Ratio Ratio
Royal Blues 27.2x 14.6x 24.7x 11.4x 10% 28% 1.86 2.17 4.35
Large Cap 21.7x 13.1x 19.9x 10.8x 9% 21% 1.66 1.96 5.80
Mid Cap 24.9x 14.4x 23.4x 12.0x 7% 21% 1.72 2.07 9.30
Small Cap 26.8x 15.7x 27.5x 12.0x -2% 31% 1.70 2.43 12.50

The median valuation for our L3000 Small Cap Value stocks last hit these levels in the late 1990s.

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 INSIDE THE BOND MARKET
Trump TradePause Before More Gain
Chart 1
2017 started on the right foot. Stocks con-
tinued to rally and bonds were stable. But a US 10-Year Yield & 50-Day Moving Average
lot of people are still complaining because
their short Treasuries and long dollar bets
havent worked out as well as they thought.

3
10-Year Yield
The U.S. 10-year yield was largely range- 10-Year 50-D SMA
bound and ended unchanged at 245 bps at
the end of January. After relentlessly bid-

2.5
ding on the Trump trade, which typically
means long risky assets, short Treasuries,
and long the dollar, the market seemed hes-

2
itant to push this trade any farther. Obvi-
ously, Trumps first couple weeks in the
White House have been quite eventful; the 1.5 The Leuthold Group 2017

concern among investors seems to be that

Trumps focus is on trade renegotiation Jan-14
Feb-14

Oct-16
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Sep-16

Nov-16
Dec-16
Jan-17
and immigration (the less positive part of
his policy), instead of tax cuts and fiscal Chart 2
stimulus (the pro-growth part of his poli-
cy). Citi Economic Surprise Index (US) vs U.S. 10-Year 3-Month Change

Despite initial policy disappointment, the

1.2
Citi ESI US (LHS)
10-year yield didnt lose any ground and
90

US 10-Yr Yield (RHS)

now sits right on the 50-Day moving aver-

0.8
60

age, which is a key level for near term di-

0.4
rection. Chart 1 shows previous breaks be-
30

low this line have led to further downside

0
0

in yields in the near term. On the other

-0.4
hand, recent economic data has been
-30

more positive overall, which offers sup-

-0.8
-60

port to interest rates. As Chart 2 shows,

-1.2
the Citi Economic Surprise Index is at the
-90

highest since 2014.

-120

-1.6
The Leuthold Group 2017

Another cloud hanging over interest rates 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17

is the still lopsided positioning. Chart 3 Chart 3

shows Commercials (smart money) are US 10-Year Treasury Futures Net Long Positions:
Non-Commercials vs Commercials (Thousands)
still very long, and speculators (Non-
Commercials) are still very short Treasur-
ies. While these extreme positions have Non-Commercials (Speculators) Net Long
900

Commercials Net Long

been pared back a bit in the last couple
weeks, they only went from all-time rec-
600

ords to previous extremes. This is one of

the bigger arguments for lower yields in
300

the near term and we think a lot more po-

sition squaring needs to happen before
0

the next leg up in bond yields.

-300
-600

The Leuthold Group 2017

Jan-12

Apr-12

Jul-12

Oct-12

Jan-13

Apr-13

Jul-13

Oct-13

Jan-14

Apr-14

Jul-14

Oct-14

Jan-15

Apr-15

Jul-15

Oct-15

Jan-16

Apr-16

Jul-16

Oct-16

Jan-17

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Trump TradePause Before More Gain (continued)
Chart 4
Besides the absence of fiscal policy help,
Probability of a 50bps Fed Hike by December 2017
the latest FOMC meeting did not inspire
any confidence for higher bond yields
either. The Fed seems less committed to

1
the hawkish stance than the market had
hoped. Having already priced in about

0.8
two hikes for 2017, the market saw no
reason to extend that bet at this moment

0.6
(Chart 4).

0.4
All these disappointments, albeit minor,
led to a weaker dollar in January. Make

0.2
no mistake, Trump does not want a
strong dollar either and this is actually The Leuthold Group 2017

0
quite consistent with his policy direc-
tion. After all, if Trumps policies aim to

Jan-16

Feb-16

Mar-16

Apr-16

May-16

Jun-16

Aug-16

Sep-16

Oct-16

Nov-16

Dec-16

Jan-17
increase exports and bring manufacturing
back to the U.S., a weaker dollar will
Chart 5
certainly make it easier. Besides, capping
the upside on the dollar also alleviates U.S. Monetary Condition Proxies
financial conditions in the U.S. (Chart 5).
As we have mentioned numerous times

1.5
before (see December report Trump US Dollar Real Effective Exchange Rate (LHS)
130

Rally-More Tortoise Less Hare Please), US 10-Yr Real Yield (RHS)

if financial conditions get too tight too

1
quickly, the reflation theme is likely to
120

be short-lived.

0.5
So far, higher inflation lives in the realm
110

0
of expectations. Actual CPI was mostly
in line while wage growth was still a bit
100

-0.5
short of expectations. Nonetheless, infla-
tion breakeven rates have held up well
and this would help lower real yields and The Leuthold Group 2017
90

-1
keep financial conditions from getting
too tight. 11 12 13 14 15 16 17

Chart 6
Higher inflation (from the current benign
level) is credit positive as it improves US 10-Year Breakeven Rates vs. Credit Spreads
borrowers ability to pay back debt.
Credits, along with inflation breakeven
2.2

rates, have been performing very well 10-Yr Breakeven (LHS)

since the election (Chart 6). This is an- Credit Spreads (RHS)
2

other key chart to watch in 2017 as any

3.5

deterioration in either inflation expecta-

1.8

tions or credits could raise doubts about

the longevity of the Trump rally. But so
1.6

far, the threat of higher interest rates

has been more than offset by the posi-
1.4

2.5

tive economic outlook.

1.2

The Leuthold Group 2017

Jan-16

Feb-16

Mar-16

Apr-16

May-16

Jun-16

Jul-16

Aug-16

Sep-16

Oct-16

Nov-16

Dec-16

Jan-17

The Leuthold GroupFebruary 2017 14

FURTHER DISTRIBUTION OF INFORMATION CONTAINED IN THIS REPORT IS PROHIBITED WITHOUT PRIOR PERMISSION.
Trump TradePause Before More Gain (continued)
Chart 7
The positive outlook is reflected in Global Business Confidence Index vs. Consumer Confidence Index
most survey-based indicators. Our
Global Business Confidence and

1.5
Global Consumer Confidence indexes
have seen sharp upturns in recent

1
months (Chart 7). Although we typi-
cally dont put as much weight on

0.5
survey-based indicators as we would

0
on price-based market indicators, it

-0.5
would be a mistake to underestimate
the power of animal spirits at this par-

-1
ticular juncture. If confidence can

-1.5
lead to real action, a lot of wonder- Business Confidence
ful things could happen. Consumer Confidence
-2
-2.5
The Leuthold Group 2017
A good example is the U.S. ISM in-
dex, a component of our Global Busi- 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
ness Confidence Index. Historically,
Chart 8
there is a strong relationship between
the ISM index and banks lending
standards for small businesses (Chart Net % Banks Tightening Standards for Small Business Loans vs. ISM Index
8). The recent surge in the ISM index
bodes well for businesses looking for Looser

70
SLOS Lending Standards - Small Biz Loans(LHS Inverted)
credit access. Standards
-30

ISM Index(RHS)

60
Needless to say, banks have to be in
good shape to make credit growth
0

possible. With the recent rise in inter-

50
est rates and the steepening of global
30

yield curves, banks are breathing

40
sighs of relief and bank stocks have
60

staged strong rallies. Chart 9 shows a

positive relationship between bank

30
stock performance and overall loan The Leuthold Group 2017
90

growth. In other words, we have the

right set-up to turn animal spirits 93 95 97 99 01 03 05 07 09 11 13 15 17

into actual credit growth, which in Chart 9

turn generates healthy inflation
US Loans To Non-Financial Corporations vs S&P 500 Banks Total Ret. Index
and economic activity.

All things considered, we maintain Loans To Non-Financial Corps - Smoothed 3M(LHS)

700

the view that the Trump reflation

250

S&P 500 Banks(RHS)

trade has more room to run but in the
600

near term we allow for a pause be-

150

fore the trend resumes.

500
400
50

300
-50

200

The Leuthold Group 2017

-150

100

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17

The Leuthold GroupFebruary 2017 15

FURTHER DISTRIBUTION OF INFORMATION CONTAINED IN THIS REPORT IS PROHIBITED WITHOUT PRIOR PERMISSION.
 MAJOR TREND INDEX
DETAIL

MTI Extends Bullish Streak

The Major Trend Index stabilized in a moderately bullish range during the past several weeks, and
closed the week of February 3rd with the ratio of positive to negative points at 1.14.

While we emphasize the importance of the weight of the evidence over periodic extremes in the indi-
vidual MTI categories, we cant help but note that the Momentum/Breadth/Divergence category is al-
most the sole carrier of the bullish torch. The Attitudinal work has dropped more than 100 points since
December 30th, while the Economic category has dropped 60 points. Theres no way to spin this mix
of MTI figures as anything other than a late-cycle configuration, and the implication is that (all
else being equal) only a moderate pullback in the Momentum work will pull the MTI into neutral
or negative territory.

The month-over-month drop in the Economic category reflects small downgrades in some of the leading
inflation indicators, along with a bearish flip in our Dollar Stability Model.

The Momentum category has recovered most of its minor stumble from the fall, closing February 3rd at
a very bullish +924. The latest weekly reading was boosted by the new bull market high in the NYSE
Weekly Advance/Decline measure, which (unlike all of the daily A/D measures) had previously been
unable to better its early September high. The technical negatives are very trivial, and include chart and
moving average analyses on the Utilities stocks and metric negative divergences in the Weekly New
figures. All in all, the technical picture is so good that weve become increasingly worried about a sud-
den whipsaw thats not signaled by the technical work. But, as already noted, if the deterioration in other
MTI elements continues at its recent pace, well have a disciplined reason to act on that worry.

HOW IT ADDS UP: POSITIVE Fe bruary 3, 2017 De ce mbe r 30, 2016

+ - Net + - Net
Intrinsic Value 48 573 -525 48 572 -524
Economic/Interest Rates/Inflation 313 237 76 352 216 136
Attitudinal 187 441 -254 256 398 -142
Supply/Demand 90 110 -20 65 110 -45
Momentum/Breadth/Divergence 985 61 924 894 133 761
1623 1422 201 1615 1429 186
Ratio: 1.14 1.13
Status: Positive Positive

The Major Trend Index is designed to recognize major market trends rather than intermediate moves, combining
over 130 individual components to assess the overall health of the stock market. Revisions and weighting adjust-
ments are made from time to time.

Major defensive market strategy moves are made when this composite reading, combining all five major indicator
groupings, turns negative on balance by a 5% margin. A positive long term view is usually appropriate when the
positives exceed the negatives by at least 5%. Ratios of positives to negatives of 0.95-1.05 are viewed as neutral
territory.

The Leuthold GroupFebruary 2017 16

FURTHER DISTRIBUTION OF INFORMATION CONTAINED IN THIS REPORT IS PROHIBITED WITHOUT PRIOR PERMISSION.
 Leuthold Core Investment Fund
Overall Morningstar Rating as of 12.31.16
among 251 funds in the Tactical Allocation
category. See full details of rating calculation on page 2.
Investment Objective
The Leuthold Core Investment Fund seeks
capital appreciation and income while
maintaining prudence in terms of managing
exposure to risk. The investment guidelines of
the Fund follow a 30%-70% Equity Exposure
and 30%-70% Fixed Income Exposure. Under
extreme market conditions, there may be a
departure from the basic core guidelines.
Fund Information
Symbol (Retail/Inst.) LCORX / LCRIX
Inception (Retail/Inst.) 11.20.95 / 1.31.06
Cusip (Retail/Inst.) 527289102 / 527289409
Initial Inv. (Retail/Inst.) $10,000 / $1MM
Net Assets $843 million
Portfolio Managers $60,000
Q4 2016 Report
Fourth Quarter Performance Positives
Domestic markets surged following the election and the Funds
U.S. traded long-stock exposure followed suit, contributing
over 3% to the quarterly return.
A big Industrials sector overweight allowed us to participate
broadly in the Trump rally. Airlines, Trading Cos. & Distributors,
and Aerospace & Defense stocks did particularly well.
Cyclical areas of the Technology sector, and an increased
Financials weight, were also constructive equity exposures.
Fourth Quarter Performance Detractors
Fixed Income allocations combined to produce a loss of over
1%, offsetting equity gains. Sovereign Market Developed Debt
had the biggest loss of the allocations.
Emerging Market stocks did not participate in the rally and
contributed a small loss during the quarter.
Growth Of $10,000 Since Inception2

Douglas Ramsey, CFA, CMT $50,000

Chun Wang, CFA, PRM
Jun Zhu, CFA $40,000

Greg Swenson, CFA $30,000

$20,000
Asset Allocation1 as of 12.31.16
$10,000
LCORX S&P 500 Lipper Flexible Fund Index Morningstar Tactical Allocation
$0
Cash 15%
Select
Industries
Fixed Income 20% Equities 59%
Dev. Mkt. Sov. Debt
Corp. Bonds
MBS Bonds
Leuthold Core Investment Fund
Emerg. Mkt. Sov. Debt Average Annual Total Returns as of December 31, 2016*
High Yield Bonds Lipper MSTAR
Munis LCORX LCRIX S&P 5003 Flexible3 Tactical3
December 2016 0.99% 0.94% 1.98% 1.17% 1.33%
Emerging Market Equities 6% Q4 2016 1.85 1.85 3.82 0.22 0.35
1-Year 4.51 4.62 11.96 7.16 6.16
3-Year 3.96 4.06 8.87 2.90 0.88
Estimated Return Statistics 5 5-Year 7.72 7.82 14.66 7.37 4.00
10-Year
FUND S&P 500 4.58 4.69 6.95 4.66 2.40
Alpha 0.31 15-Year 7.32 NA 6.69 5.31 3.55
Beta 0.52 20-Year 8.18 NA 7.68 5.72 4.31
R-Squared 51.79
Standard Dev. (annualized) 10.82 15.05 Since Inception (LCORX)4 8.31 NA 8.49 6.19 4.99
Sharpe Ratio 0.55 0.40 Since Inception (LCRIX)4 NA 5.11 7.53 5.11 2.86

*Returns for periods less than 1-year are not annualized. Per Prospectus dated 1.29.16, excluding dividends on short positions and acquired fund fees, annual
net operating expenses for LCORX/LCRIX were 1.16%/1.06%; gross operating expenses including dividends on short positions and acquired fund fees were
1.35%/1.25%. There were no fee waivers or expense reimbursements.
Performance data shown represents past performance and is no guarantee of future results. Investment return and principal will fluctuate so
shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than that shown.
For performance current to the most recent month-end, visit LeutholdFunds.com or call 800-273-6886.
1 Non-U.S. Equities and Foreign Bonds have additional risks, including but not limited to: higher volatility, political instability, and changes in currency rates.
For additional information, please see the Prospectus. 2 Performance through quarter-end. Chart assumes initial gross investment of $10,000 made on 11.20.95
LCORX. Returns include reinvestment of dividends, but do not reflect deduction of taxes one would pay on distributions or redemption of shares. The Funds past
performance is not necessarily an indication of future performance. 3 S&P 500 is a capitalization-weighted index of 500 stocks designed to measure performance
of the broad domestic economy. Lipper Flexible Fund Index is composed of funds that allocate investments across various asset classes, with a focus on total return.
MSTAR Tactical Allocation Average measures performance of funds in the Morningstar Tactical Allocation category. These indexes cannot be invested in directly.
Performance return figures are historical and reflect the change in share price, reinvested distributions, change in net asset value, and capital gains distributions,
if any. 4 LCORX inception date 11.20.95; minimum investment $10,000 or $1,000 for an IRA. LCRIX inception date 1.31.06; minimum investment for all accounts
is $1 million. 5 See next page for definitions of return statistics.
Investors should consider the investment objectives, risks, charges and expenses of the investment company carefully before investing. The
Prospectus contains this and other information about the Fund. For current Prospectus, call 800-273-6886, or visit LeutholdFunds.com.
Please read the Prospectus carefully before investing.
Not FDIC Insured ~ No Bank Guarantee ~ May Lose Value Distributor: Rafferty Capital Markets, LLC, Garden City, NY 11530
Leuthold Weeden Capital Management
 Leuthold Core Investment Fund Q4 2016 Report

Standard Deviation Select Industries Characteristics2 Vs. S&P 500

Leuthold Core Fund (LCORX) Vs. S&P 5001 FUND S&P 500
Median Market Cap $10,367MM $19,342MM
More Return More Return
10 Less Risk More Risk Wtd. Median P/E 16.2x 21.6x
Price/Cash Flow 9.9x 14.1x
Price/Sales 1.6x 2.9x
RATE OF RETURN

9
ROE 17.0% 15.2%
Operating Margin 18.7% 21.1%
8
Number of Holdings 132 500

Less Return Less Return Equity Weights By Sector

Less Risk
12 14 16
STANDARD DEVIATION
LCORX S & P 500
Top Equity Industry Group Weights
Airlines 7%
Semiconductor Equipment 7%
Life & Health Insurance 6%
Managed Health Care 6%
Trading Companies & Distributors 6%
Auto Parts & Equipment 5%
Aerospace & Defense 5%
Data Processing & Outsourced Services 5%
IT Consulting & Other Services 5%
Electronic Manufacturing Services 5%
Automotive Retail 5%
Asset Management & Custody Banks 4%
Specialized Finance 4%
Specialty Stores 4%
Railroads 4%
Biotechnology 3%
More Risk
FUND S&P 500
18
Information Technology 29% 21%
Financials 22% 15%
Industrials 21% 10%
Consumer Discretionary 15% 12%
Health Care 9% 14%
Utilities 2% 3%
Materials 0% 3%
Consumer Staples 0% 9%
Real Estate 0% 3%
Energy 0% 7%
Telecommunications 0% 3%
Top Ten Equity Holdings (12.31.16)
Lam Research Corp. 1.0%
Hawaiian Holdings Inc. 1.0%
Applied Materials Inc. 0.9%
Southwest Airlines Co. 0.9%
United Rentals Inc. 0.9%
Electronic Arts Inc. 0.9%
Teradyne Inc. 0.9%
Northrop Grumman Corp. 0.9%
Delta Air Lines Inc. 0.9%
UnitedHealth Group Inc. 0.8%

Direct Shareholder Services/Account Inquiries: Questions On Investment Disciplines:

(800) 273.6886 (612) 332.9141 Info@LWCM.com
Leuthold Funds Paula Mikl Marty Owens, CFA
c/o U.S. Bancorp Fund Services, LLC Hilary Sweeney, CFP
P.O. Box 701 Leuthold Weeden Capital Management serves as adviser
Milwaukee WI 53201-0701 to Leuthold Funds

1 S&P 500 is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy based on the changing aggregate market value of these
500 stocks. 2 Median Market Cap is the median total dollar value of all outstanding shares computed as shares times current market price; Wtd. Median P/E is the weighted
median of the current stock price divided by trailing annual earnings per share or expected annual earnings per share; Price/Cash Flow is calculated by dividing the share price
by the cash flow per share; "Price/Sales" is determined by dividing current stock price by revenue per share; "ROE" is Return on Equity which is calculated by dividing net income
for the past 12 months by common stockholder equity; "Operating Margin" is calculated by dividing operating income by net sales.
Standard Deviation Chart: Source FactSet Research Systems as of quarter-end. Estimated Return Statistics (p.1): Calculated by FactSet Research Systems as of quarter-end, return
statistics use monthly total returns calculated since inception against the benchmark cited. Standard Deviation measures historical volatility; R-squared measures funds perfor-
mance correlation (0=no correlation, 100=perfect correlation); Alpha measures risk adjusted performance: higher alpha indicates better performance than expected given its
beta; Beta measures volatility: beta <1, fund is less volatile and beta >1 indicates fund is more volatile; Sharpe Ratio measures risk vs. reward (higher ratio = better risk-adjusted
performance).
Risks: Short Selling RiskFund will suffer a loss if it sells a security short and the value of the security rises rather than falls; short selling could result in unlimited loss. Foreign
Securities Riskcompanies may be less liquid and more volatile than U.S. securities and may involve risks such as fluctuation in currency rate, differences in financial standards,
and instability of foreign governments and economies. Credit Riskissuers of debt securities may not be able to make interest or principal payments and/or may suffer adverse
changes in financial condition that would lower the credit quality, leading to greater price volatility. Asset Allocation RiskAdvisers may not correctly anticipate the relative returns
and risks of the asset classes in which the Fund invests.

Morningstar Ratings: Overall Rating derived from a weighted average of the 3-, 5-, and 10-year ratings. Within the Tactical Allocation category, for the 3-, 5-, and 10-year periods,
respectively, LCORX (LCRIX) are rated 4 (4), 5(5), and 3 (4) stars, among 251, 169, and 67 funds. For funds with at least 3 years of history, Morningstar calculates a risk-adjusted
return score that accounts for variation in monthly performance, placing more emphasis on downward variations and rewarding consistency. The top 10% of funds in each category
receive 5 stars, next 22.5% 4 stars, next 35% 3 stars, next 22.5% 2 stars, and bottom 10% 1 star. 2016 Morningstar, Inc. All Rights Reserved. The information contained herein:
(1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers
are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. DOFU: 1.27.17

Leuthold Weeden Capital Management

 Leuthold Global Fund Q4 2016 Report
Fourth Quarter Performance Positives

Overall Morningstar Rating as of 12.31.16
among 409 funds in the World Allocation catego-
ry.
See full details of rating calculation on page 2.
Investment Objective
The Leuthold Global Fund seeks capital
appreciation and income while maintaining
prudence in terms of managing exposure to risk.
The investment guidelines of the Fund follow a
30%-70% Equity Exposure and 30%-70% Fixed
Income Exposure. A minimum 40% of assets is
invested in foreign securities.
Fund Information
Symbol (Retail/Inst.) GLBLX / GLBIX
Inception (Retail/Inst.) 7.1.08 / 4.30.08
Cusip (Retail/Inst.) 527289888 / 527289870
Initial Inv. (Retail/Inst.) $10,000 / $1MM
Net Assets $116 million
Portfolio Managers
Douglas Ramsey, CFA, CMT
Chun Wang, CFA, PRM
Greg Swenson, CFA
As U.S. stocks rallied, foreign market performance was mixed;
the Fund's long-stock exposure outperformed the MSCI ACWI
and contributed nearly 2% to return.
Portfolio holdings in cyclical groups again drove equity
performance, with particularly strong results from Trading
Cos. & Distributors, Road & Rail, Commodity Chemicals, and
Construction Materials.
Fourth Quarter Performance Detractors
Fixed Income allocations combined to detract from perfor-
mance by nearly 1.5%. Of the portfolio holdings, Sovereign
Market Developed Debt had the worst results.
Exposure to securities from Emerging Market countries hurt
performance following the U.S. election, and lack of exposure
to the Energy sector was a negative.
$16,000
Growth Of $10,000 Since Inception2
$14,000
$12,000
$10,000
$8,000

Asset Allocation as of 12.31.16

1
$6,000

Cash 9%
$4,000

Global Industries $2,000

Fixed Income 26%
Equities 65%
Dev. Mkt. Sov. Debt GLBIX MSCI ACWI Gross Barclays Global Aggregate Morningstar World Allocation
Corp. Bonds $0
MBS Bonds
2008 2009 2010 2011 2012 2013 2014 2015 2016
Emerg. Mkt. Sov. Debt
High Yield Bonds
Munis Leuthold Global Fund
Average Annual Total Returns as of December 31, 2016*
Barclays MSTAR
MSCI Global World
GLBLX GLBIX ACWI 3
Aggregate3 Allocation3
December 2016 1.47% 1.53% 2.20% -0.46% 1.48%

Estimated Return Statistics 5 Q4 2016 -0.13 -0.05 1.30 -7.07 -0.58

FUND MSCI ACWI 1-Year 1.42 1.68 8.48 2.09 5.84

Alpha 0.11 3-Year 0.90 1.13 3.69 -0.18 0.93
Beta 0.64
R-Squared 87.90 5-Year 6.00 6.24 9.96 0.21 4.21
Standard Dev. (annualized) 11.90 17.53 Since Inception (GLBLX)4 4.12 NA 4.90 2.38 2.33
Sharpe Ratio 0.33 0.21 Since Inception (GLBIX)4 NA 4.14 3.88 2.19 1.80

*Returns for periods less than 1-year are not annualized. Per Prospectus dated 1.29.16, excluding dividends on short positions and acquired fund fees, annual
net operating expenses for GLBLX/GLBIX were 1.54%/1.33%; gross operating expenses including dividends on short positions and acquired fund fees were
1.76%/1.55%. There were no fee waivers or expense reimbursements.
Performance data shown represents past performance and is no guarantee of future results. Investment return and principal will fluctuate
so shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than that
shown. For performance current to the most recent month-end, visit LeutholdFunds.com or call 800-273-6886.
1 Non-U.S. Equities and Foreign Bonds have additional risks, including but not limited to: higher volatility, political instability, and changes in currency
rates. For additional information, please see the Prospectus. 2 Performance through quarter end. Chart assumes initial gross investment of $10,000 made on
4/30/08 in GLBIX. Returns include reinvestment of dividends, but do not reflect deduction of taxes one would pay on distributions or redemption of shares.
The Funds past performance is not necessarily an indication of future performance. 3 MSCI ACWI is designed to measure equity market performance of De-
veloped and Emerging Markets. Barclays Global Aggregate provides a broad based measure of global investment grade fixed-rate debt markets. MSTAR World
Allocation Average measures performance of funds in the Morningstar World Allocation category. These indexes cannot be invested in directly. Performance
return figures are historical and reflect the change in share price, reinvested distributions, change in net asset value, and capital gains distributions, if any. 4
GLBLX inception date 7.1.08; minimum investment $10,000 or $1,000 for an IRA. GLBIX inception date 4.30.08; minimum investment for all accounts is $1
million. 5 See next page for definitions of return statistics.
Investors should consider the investment objectives, risks, charges and expenses of the investment company carefully before investing.
The Prospectus contains this and other information about the Fund. For current Prospectus, call 800-273-6886, or visit LeutholdFunds.
com. Please read the Prospectus carefully before investing.
Not FDIC Insured ~ No Bank Guarantee ~ May Lose Value Distributor: Rafferty Capital Markets, LLC, Garden City, NY 11530
Leuthold Weeden Capital Management
 Leuthold Global Fund Q4 2016 Report
Standard Deviation Global Industries Characteristics2 Vs. MSCI ACWI
Leuthold Global Fund (GLBIX) Vs. MSCI ACWI1 FUND MSCI ACWI
Median Market Cap $6,115MM $8,802MM
5
More Return
Less Risk
More Return
More Risk Wtd. Median P/E 12.7x 20.9x
Price/Cash Flow 7.8x 12.9x
Price/Book 1.5x 2.8x
RATE OF RETURN

4
Price/Sales 1.1x 2.5x
ROA 5.4% 5.3%
3
ROE 13.0% 13.4%
Operating Margin 11.6% 17.0%
LT Debt/Capital 31.8% 36.2%
2 Number of Holdings 162 2,468
Less Return Less Return
Less Risk More Risk

12 14 16 18 20 22 24
Top Country Equity Weights Vs. MSCI ACWI
STANDARD DEVIATION
FUND MSCI ACWI
GLBIX MSCI ACWI Total Developed Market Exposure 78% 90%
United States 40% 52%
Top Ten Equity Holdings (12.31.16) Japan 8% 8%
Berkshire Hathaway Inc. Cl B 1.0% United Kingdom 5% 5%
SoftBank Corp. 1.0% Germany 4% 3%
KDDI Corp. 0.9% Hong Kong 3% 2%
LyondellBasell Ind. NV Cl A 0.9% Australia 3% 2%
Lear Corp. 0.8% France 3% 3%
Tosoh Corp. 0.8% Sweden 3% 1%
Delta Air Lines Inc. 0.8% Canada 2% 3%
Lotte Chemical Corp. 0.8%
EXOR Holding N.V. 0.7% Total Emerging Market Exposure 20% 10%
Thomson Reuters Corp. 0.7% South Korea 4% 2%
China 3% 2%
Taiwan 3% 1%
Top Equity Industry Group Weights

Diversified Financial Services 8%
Auto Components 7% Equity Weights By Sector
Trading Companies & Distrib. 6% FUND MSCI ACWI
Construction & Engineering 6% Financials 30% 19%
Commodity Chemicals 6% Industrials 19% 11%
Electronic Equip. Instr. & Cmpnts. 6% Materials 14% 5%
Building Products 5% Consumer Discretionary 11% 12%
Developed Wireless Telecom Srvs. 5% Information Technology 9% 16%
Life & Health Ins. & Brokers 5% Telecommunications 7% 4%
Reinsurance 4% Real Estate 4% 3%
Automobiles 4% Utilities 3% 3%
Construction Materials 4% Energy 1% 7%
Regional Banks 4% Consumer Staples 0% 9%
Emerging Diversified Banks 4% Health Care 0% 11%

Direct Shareholder Services/Account Inquiries: Questions On Investment Disciplines:
(800) 273.6886 (612) 332.9141 Info@LWCM.com
Leuthold Funds Paula Mikl Marty Owens, CFA
c/o U.S. Bancorp Fund Services, LLC Hilary Sweeney, CFP
P.O. Box 701
Milwaukee WI 53201-0701 Leuthold Weeden Capital Management serves as
adviser to Leuthold Funds
1 MSCI ACWI is designed to measure the equity market performance of developed and emerging markets. 2 Median Market Cap is the median total dollar value of all outstanding
shares computed as shares times current market price; Wtd. Median P/E is the weighted median of the current stock price divided by trailing annual earnings per share or expected
annual earnings per share; Price/Cash Flow is calculated by dividing the share price by the cash flow per share; Price/Book compares a stocks market value to the value of total assets
less total liabilities (book value); "Price/Sales" is determined by dividing current stock price by revenue per share; "ROA" is Return on Assets which is calculated by dividing net income
for the past 12 months by total average assets; "ROE" is Return on Equity which is calculated by dividing net income for the past 12 months by common stockholder equity; "Operating
Margin" is calculated by dividing operating income by net sales; "LT Debt/Capital" is calculated by dividing long-term debt by the sum of long-term debt, preferred stock and common
stockholder's equity.
Standard Deviation Chart: Source FactSet Research Systems as of quarter-end. Estimated Return Statistics (p.1): Calculated by FactSet Research Systems as of quarter-end, return statistics
use monthly total returns calculated since inception against the benchmark cited. Standard Deviation measures historical volatility; R-squared measures funds performance correla-
tion (0=no correlation, 100=perfect correlation); Alpha measures risk adjusted performance: higher alpha indicates better performance than expected given its beta; Beta measures
volatility: beta <1, fund is less volatile and beta >1 indicates fund is more volatile; Sharpe Ratio measures risk vs. reward (higher ratio = better risk-adjusted performance).
Risks: Short Selling Riskshort sales involve selling a security in anticipation that the price will decline. Fund will suffer a loss if the value of the security rises rather than falls. In theory,
short selling could result in unlimited loss. Foreign Securities Riskforeign companies may be less liquid and more volatile than U.S. securities and may involve risks such as fluctuations
in currency rates, differences in financial standards, and instability of governments and economies. Credit Riskissuers of debt securities may not be able to make interest or principal
payments and/or could suffer adverse changes in financial condition that would lower the credit quality, leading to greater price volatility. Asset Allocation RiskAdviser may not correctly
anticipate the relative returns and risks of the asset classes in which the Fund invests.
Morningstar Ratings: Overall Rating derived from a weighted average of the 3-, 5-, and 10-year (if applicable) ratings. Within the World Allocation category, for the 3-, 5-, and 10-year
periods, respectively, GLBLX/GLBIX rated 3, 3, and NA stars among 409, 322, and NA funds. For funds with at least 3 years of history, Morningstar calculates a risk-adjusted return score
that accounts for variation in monthly performance, placing more emphasis on downward variations and rewarding consistency. The top 10% of funds in each category receive 5 stars,
next 22.5% 4 stars, next 35% 3 stars, next 22.5% 2 stars, and bottom 10% 1 star. 2016 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to
Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any
damages or losses arising from any use of this information. Past performance is no guarantee of future results. DOFU: 1.27.17
Leuthold Weeden Capital Management