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March | 2020

COVID-19 “BLACK SWAN” ARRIVES:Navigating a Once-a-Century Global Demand and Supply Shock

By Abe Sheikh, FSA MAAA Chief Investment Officerand Portfolio Manager

2 cougarglobal.com

COVID-19 “BLACK SWAN” ARRIVES: Navigating a Once-a-Century Global Demand and Supply Shock

Exhibit 1: Number of cases of COVID-19 outside China is growing exponentially

COVID-19 is a once-a-century “black swan” event. Recall that a black swan event is one that is unpredictable with foresight, has

a very low probability of occurrence but carries enormous negative consequences for the population and economy. COVID-19 is a

demand and supply shock to the system. A demand shock reduces the ability of consumers to spend, while a supply shock reduces

the ability of producers to produce goods.

Source: Bloomberg, Cougar Global Investments. As of March 17, 2020

KEY TAKEAWAYS:1. COVID-19 is a once-a-century “black swan” event.

2. Travel restrictions, quarantines and social distancing should be effective but will exact a significant toll on the economy. We expect a sharp contraction in first and second quarter 2020 gross domestic product (GDP) growth.

3. Growth should rebound sharply later this year, once the medical emergency and threat to the population from COVID-19 has abated.

4. Cougar Global’s conservative diversified portfolios have an important place in your client’s long-term investment strategy.

1. COVID-19 is a once-a-century “black swan” event:The global economy and financial markets are in the midst of a once-a-century black swan event. The rapid spread of the novel

coronavirus – COVID-19 – has caught governments and world health bodies off guard. The panic is understandable. COVID-19 is new

to humans, and there is no effective treatment or vaccine available right now. Exhibit 1 shows confirmed cases globally, including current

estimates of fatality rates. Notably, while the number of new cases in China has plateaued, there has been an exponential increase in the

number of new cases outside China, particularly in Europe, Iran, the U.S., and the U.K.

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

1/11

/202

0

1/13

/202

0

1/15

/202

0

1/17

/202

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1/19

/202

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/202

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1/25

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1/27

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1/31

/202

0

2/2/

2020

2/4/

2020

2/6/

2020

2/8/

2020

2/10

/202

0

2/12

/202

0

2/14

/202

0

2/16

/202

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2020

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2020

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2020

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2020

3/9/

2020

3/11

/202

0

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3/17

/202

0

Fatality rate

Conf

irmed

Cas

es o

f CO

VID-

19

COVID-19: Confirmed Cases and Fatality Rate

2019-nCov Globally Confirmed Cases (China) 2019-nCov Globally Confirmed Cases (ex-China) Fatality rate

cougarglobal.com 3

COVID-19 “BLACK SWAN” ARRIVES: Navigating a Once-a-Century Global Demand and Supply Shock

-26.1%

-16.3%

-20.2%

-21.1%

-21.8%

-22.3%

-24.3%

-27.5%

-31.9%

-33.3%

-35.9%

-54.3%

-60% -50% -40% -30% -20% -10% 0%

S&P 500 Index

S&P 500 Consumer Staples

S&P 500 Healthcare

S&P 500 Info Tech

S&P 500 Utilities

S&P 500 Communication Services

S&P 500 Real Estate

S&P 500 Consumer Discretionary

S&P 500 Industrials

S&P 500 Materials

S&P 500 Financials

S&P 500 Energy

2020 YTD price performance

Exhibit 2: Stocks are pricing in the immediate hit to the economy because of the impact of COVID-19

2. Travel restrictions, quarantines and social distancing should be effective but will exacta significant toll on the economy. We expect a sharp contraction in first and second quarter 2020 GDP: Global governments have responded with measures to reduce the spread of the virus through travel restrictions, quarantines and social

distancing requirements. Large gatherings – including concerts, sports events to name a couple – have been discouraged or banned.

Travel has been restricted to prevent further spread. The impact of this on the economy is significant, and this has been reflected in

sharp drops in stock prices, as Exhibit 2 below shows. The S&P 500 is down 26% this year, with all sectors posting sharp declines. At

Cougar Global, we estimate that first and second quarter U.S. and global GDP are likely to show contractions, indicating that we are in

the midst of an economic recession.

3. Growth could rebound sharply later this year, once the medical emergency and threat to the population from COVID-19 has abated: Governments and central banks have responded to the potential economic impact of COVID-19 through a range of fiscal and monetary

measures. On the fiscal side, this includes a $1.2 trillion stimulus in the U.S., and legislation to provide expedited unemployment and

sick leave benefits, reduce tax and student loan payments. On the monetary side, the Federal Reserve and other central banks have

sharply cut interest rates, and started quantitative easing measures designed to keep funding costs low for businesses. We anticipate

the U.S. and global economy are likely to experience a sharp contraction in the months to come, followed by a rebound later this year.

Source: Bloomberg, Cougar Global Investments. As of March 16, 2020

4 cougarglobal.com

COVID-19 “BLACK SWAN” ARRIVES: Navigating a Once-a-Century Global Demand and Supply Shock

Exhibit 3: Cougar Global’s portfolios remain defensively positioned

4. Cougar Global’s conservative diversified portfolios have an important place in your client’s long-term investment strategy: Given the unprecedented nature of the economic shock, the short-term outlook remains extremely unclear. In our view, there remain

significant risks of further losses in the stock market, and we would caution against investing aggressively in the current environment.

Our portfolios remain defensively positioned, as Exhibit 3 below shows.

Global Tactical Strategy Conservative

2%10 % 5 %

83% 63%

15 %

2% 5 %

15 % 25 %

55%

18 %25%

30%

33%

2% 10%

30%45%

8% 2%

15 %

GoldCashTotal Fixed Income Total Int'l EquityTotal US Equity

Global Tactical Strategy Conservative Growth

Global Tactical Strategy Moderate Growth

Global Tactical Strategy Growth

Asset Class Symbol PreviousMonthCurrent Month Change

PreviousMonth

Current Month Change

PreviousMonth

Current Month Change

PreviousMonth

Current Month Change

U.S. Large Cap IVV 5 5 0 10 10 0 20 20 0 15 15 0

U.S. Small Cap IJR 0 0 0 5 5 0 5 5 0 5 5 0

Nasdaq 100 QQQ 0 0 0 0 0 0 0 0 0 10 10 0

Developed International IEFA 5 5 0 5 5 0 15 15 0 25 25 0

Emerging Markets IEMG 5 5 0 10 10 0 5 5 0 5 5 0

China A-Shares ASHR 0 0 0 0 0 0 10 10 0 15 15 0

TOTAL EQUITIES 15 15 0 30 30 0 55 55 0 75 75 0

U.S. Aggregate Bonds AGG 54 54 0 48 48 0 20 20 0 3 3 0

U.S. 1-3 Year Treasury Bonds SHY 19 19 0 5 5 0 0 0 0 0 0 0

High Yield Corporate Bonds HYG 10 10 0 10 10 0 13 13 0 5 5 0

TOTAL FIXED INCOME 83 83 0 63 63 0 33 33 0 8 8 0

Cash CASH 2 2 0 2 2 0 2 2 0 2 2 0

Gold IAU 0 0 0 5 5 0 10 10 0 15 15 0

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About Cougar Global InvestmentsCougar Global Investments is a globally oriented macro asset-class portfolio manager that uses a disciplined portfolio-construction methodology which combines macroeconomic analysis with downside-risk management. Cougar Global Investments' guiding belief is that the goal of investing is to generate consistent compound growth, primarily achieved by seeking to minimize loss.

About Carillon Tower AdvisersCarillon Tower Advisers is a global asset-management company that combines the exceptional insight and agility of individual investment teams with the strength and stability of a full-service firm. Carillon Tower Advisers and partner affiliates – ClariVest Asset Management, Cougar Global Investments, Eagle Asset Management, Reams Asset Management (a division of Scout Investments) and Scout Investments – offer a range of investment strategies through multiple vehicles in order to help investors meet their long-term business and financial goals.

DISCLOSURES An investment in Exchange Traded Funds (ETF), structured as a mutual fund or unit investment trust, involves the risk of losing money and should be considered as part of an overall program, not a complete investment program. An investment in ETFs involves additional risks: non-diversified, the risks of price volatility, competitive industry pressure, international political and economic developments, possible trading halts, and index tracking error. All investments are subject to risk. Asset allocation and diversification do not ensure a profit or protect against a loss. There is no assurance that any investment strategy will be successful or that any securities transaction, holdings, sectors or allocations discussed will be profitable.

Cougar Global Investments calculates the Macro Economic Scenario (MES) analysis by assigning probabilities to each of the five economic scenarios (Growth, Stagnation, Inflation, Chaos and Recession) over the next 12 months. Macroeconomic scenarios are based on quantitative data sourced from various firms and then weighted and may be adjusted based upon Cougar Global Investments thought capital. MES are subject to change. These are hypothetical examples and are not representative of any specific situation. Actual economic results may vary. Economic forecasts set forth may not develop as Cougar MES indicates and there can be no guarantee that these strategies promoted will be successful. Past performance is no guarantee of future results. Macro Economic Scenarios: Growth – U.S. economy is growing at or above its potential growth rate, Recession – U.S. economy is shrinking (negative quarter over quarter growth rate), Stagnation – U.S. economy is growing at lower than its potential growth rate, Inflation – Consumer Price Index (CPI) inflation rate is higher than U.S. economy’s potential growth rate, Chaos – a high impact, low probability event (“Black Swans”).

Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful. Small-and mid-capitalization companies are subject to higher volatility than those of large-capitalized companies. International and emerging market investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. Stock investing involves risk, including the risk of loss. Investments in emerging market issuers are subject to a greater risk of loss than investments in issuers located or operating in more developed markets. This is due to, among other things, the potential for greater market volatility, lower trading volume, higher levels of inflation, political and economic instability, greater risk of a market shutdown and more governmental limitations on foreign investments in emerging market countries. High Yield/Junk Bonds are not investment grade securities, involve substantial risks and generally should be part of the diversified portfolio of sophisticated investors. Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity and redemption features. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and are subject to availability and change in price. Mortgage-Backed Securities are subject to credit, default risk, prepayment risk that acts much like call risk when you get your principal back sooner than the stated maturity, extensions risk, the opposite of prepayment risk, and interest rate risk. Investing in IAU involves additional risks. The market price of the Shares will be as unpredictable as the price of gold has historically been and the price received upon the sale of Shares may be less than the value of the gold represented by them.Government bonds and Treasury bills are guaranteed by the U.S. Government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. The fund’s concentrated holding will subject it to greater volatility than a fund that invests more broadly. The fast price swings of commodities will result in significant volatility in an investor’s holdings. Precious metal investing is subject to substantial fluctuation and potential for loss. All indexes mentioned are unmanaged and cannot be invested into directly. Past performance is no guarantee of future results. The indexes don’t reflect charges, expenses, fees and is not indicative of any particular investment. Commodity-linked investments may be more volatile and less liquid than the underlying instruments or measures, and their value may be affected by the performance of the overall commodities baskets as well as weather, disease, and regulatory developments. The MSCI ACWI® (All Country World Index) measures the performance of large and mid-cap stocks across 23 developed markets (DM) and 24 emerging markets (EM) countries. The Eurostoxx50® Index provides a Blue-chip representation of supersector leaders in the Eurozone (covers Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain). The S&P 500 or Standard & Poor's 500 Index is a market-capitalization-weighted index of the 500 largest U.S. publicly traded companies. The S&P 500 Price index measures the performance of 500 widely held stocks in US equity market. Standard and Poor's chooses member companies for the index based on market size, liquidity and industry group representation.

Cougar Global optimizes portfolios in US dollars for four risk categories. GTS – Conservative may be suitable for clients who have accumulated sufficient wealth to begin making regular withdrawals for income requirements while potentially achieving investment returns sufficient to preserve capital over a full investment cycle. GTS – Conservative Growth may be suitable for clients who may have occasional income needs and are willing to take moderate downside risk to achieve investment returns GTS – Moderate Growth may be suitable for clients who have a long term investment horizon and can tolerate downside volatility in the course of a market cycle. GTS – Growth may be suitable for clients who have a long term investment horizon and can tolerate higher downside volatility in the course of a market cycle. The conversion dates from sub-advisors to ETFs are April 30, 2008, for GTS - Conservative; February 29, 2008 for GTS – Moderate Growth; and October 31, 2007 for GTS – Conservative Growth. As of December 31, 2008, Cougar Global stopped using sub-advisors.

This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from Cougar Global Investments, Carillon Tower Advisers or any of its other affiliates to participate in any of the transactions mentioned herein. Opinions and estimates offered constitute Cougar’s judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine, together with their own professional advisers, if any investment mentioned herein is believed to be suitable to their personal goals. All holdings are subject to change daily.

Cougar Global Investments Limited (Cougar Global) is an investment manager that utilizes tactical asset allocation to construct globally diversified portfolios. Effective 4/30/15, Cougar Global Investments is a wholly owned subsidiary of Raymond James International Canada which is a wholly owned subsidiary of Raymond James International Holdings. Raymond James International Holdings is a wholly owned subsidiary of Raymond James Financial as is Carillon Tower Advisers.. Prior to 4/30/15, Cougar Global was an independent investment management firm not affiliated with any parent organization. Cougar Global is registered as a Portfolio Manager with the Ontario Securities Commission (OSC) and with the United States Securities and Exchange Commission (SEC) as a Non-Resident Investment Advisor. Prior to 01/02/2013, the firm was named Cougar Global Investments LP.

To learn more about Cougar Global’s strategies, philosophy and capabilities visit cougarglobal.com or call 1.800.521.1195.