At the Midpoint of 2020

July 17, 2020

Dear Kimball Creek Partners and Friends:

We are at the midpoint of 2020, and it would be an understatement to say it’s been a challenging year so far in the United States and around the world. We’ve faced health, social, and economic crises that continue to impact our communities and our economy. That is why we’re looking ahead for new ways to face these challenges together and to prepare now for better times. LPL Research’s Midyear Outlook 2020: The Trail to Recovery charts a path forward.

The stock market is forward-looking: It focuses on what’s happening today and what it sees on the path ahead. Much of the recent real-time economic data—such as transportation activity,
home sales, and jobless claims—is showing tangible evidence that economic activity—while still depressed—has begun to make a comeback. The path of the economic recovery remains uncertain, but based on the deep impact and multi-staged recovery, LPL Research expects a 3–5% contraction in gross domestic product in 2020.

Already stocks are pricing in a steady economic recovery beyond 2020 that may be supported if we receive breakthrough treatments to end the COVID-19 pandemic. LPL Research’s 2020 year-
end S&P 500 Index target range is 3,250–3,300, based on a price-to-earnings ratio (PE) of just below 20 and a normalized earnings per share (EPS) number of $165. However, the optimism
showing in the S&P 500 Index now may limit the size of the gains over the rest of the year.

Turning to the bond market, LPL Research expects interest rates to head higher over the rest of 2020 but remain near historically low levels, with a year-end forecast of 1–1.5% on the 10-year
US Treasury yield. If realized, this would be the lowest interest-rate level on record to end a year.

It’s still going to be a challenging environment with significant uncertainty that may lead to more volatility for the next few months, especially with the highly anticipated presidential election in
November. It’s important for investors to continue to focus on the fundamental drivers of investment returns and their long-term financial goals.

LPL Research’s Midyear Outlook 2020 provides updated views of the pillars for investing—the economy, bonds, and stocks. As the headlines change daily, continue to look to these pillars as
trail markers on your investment journey, and to the Midyear Outlook 2020 to help provide perspective on facing these challenges now and preparing to move forward together.

Please contact me if you have any questions.

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Important Information
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change. References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

All data is provided as of June 30, 2020.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.

All index data from FactSet.

This Research material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy. Securities offered through LPL Financial, member FINRA/SIPC. Investment advice and financial planning offered through Financial Advocates Investment Management DBA Kimball Creek Partners, a Registered Investment Advisor. Financial Advocates Investment Management, Kimball Creek Partners and LPL Financial are separate entities.

Please remember to contact Financial Advocates Investment Management and Kimball Creek Partners in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you want to impose or modify any reasonable restrictions to our investment advisory services, or if you wish to direct that Financial Advocates Investment Management, and Kimball Creek Partners effect any specific transactions for your account. Please be advised that there can be no assurance that any email request will be reviewed and/or acted upon on the day it is received – please be guided accordingly. Trading instructions sent by email will NOT be honored. A copy of our current written disclosure statement discussing our advisory services and fees continues to remain available for your review upon request.

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