Thank you, everyone, and thank you for joining me for this behind the scenes of manager due diligence, webinar, how to drive better outcomes. I'm Chris Hart, Head of Investment Due Diligence at Orion and I'm joined with Ron Aluwalia, who's a director on the investment due diligence team with me here at Orion as well. So we really want to give you an idea. Give you a little bit of a peek behind the scenes under the hood, if you will, talk about how we do what we do from an investment due diligence process and why we think it is a good tool that you can leverage to help grow your business. So with that, let's jump into our due diligence process on the due diligence team here to Ryan. We do subscribe to some core beliefs, some core tenants that overarch and our principal beliefs regarding. What we do and how we do it and in when we look at at the due diligence process and what these core tenants are, it starts off with the fact that due diligence is a combination of art and science. We point a lot in this industry to the quantitative. Aspects of understanding a particular strategy, what what what it does and how it does it and what the risk reward profile is of that. But there is also a lot of qualitative work that is done behind the scenes that the due diligence team does as we kind of build that mosaic around a particular strategy. And all of this information helps ultimately shape our due diligence opinions when it comes to looking for product to add to the platforms and looking at the investment landscape. We do follow an institutional process. We have strategies that incorporate both active and passive vehicles for use for client portfolios. But we do understand that active management is a challenging proposition for most to find investments and investment product that can can succeed over time. So what is most important to that is to follow an institutional process which we do so that we can find those strategies that we think can ultimately Dr. Value and client value over time and have achieved in a demonstratable lesson of investment success. So from our investment due diligence team, how do we do this? What type of time tested approach do we use? We follow an institutional equity investment process. It is a multifaceted investment process that starts with the idea generation goes on to analysis and then to launch and then to monitoring. So all all of these tools we utilize along the way and different components within the process to to ultimately help select. Investment product for use in client portfolios and why is this important and why do we really do what we do? Because we follow the belief that time is an advisor's most precious commodity. And since financial advisors don't really have time or as much time as they would like to always scour the universe of an ever expanding group of investment options for use in client portfolios, we hope and. Value the partnership that we have with with our financial advisors to really leverage the work that we do because we spend all of our time throughout the weeks, months, quarters and years doing this and trying to not just find new strategies to add to the platform, but also identify any potential due diligence issues with which we might have to take some adverse actions. So with that, let's jump a little bit into the process and we'll bring a little bit of this to life. In terms of our due diligence process, the Orion Wealth management approach is multifaceted. We start with the idea generation, then we move on to our analysis. That's really the meat of the investment due diligence process. And then we go to launch and then we go to monitoring. So when we, when we look at these components individually from the idea generation phase, it's multifaceted in terms of we'll run quantitative screens. Which Ron will get into in the following slides. We'll identify gaps within the research platform where we might want to add product. We will collect all of our industry knowledge that we have. Our investment due diligence team is very seasoned. We have over a decade of of experience on average between us and we'll take all of these recommendations and try to be inclusive and when we're inclusive. Then we can ultimately make the best decisions. We'd rather look at more product and ultimately decide on less than not look at all the product that we should from the beginning and then we'll dig into the analysis phase. This is really the, the crux of the matter from a due diligence perspective. We'll send out our due diligence questionnaires, We'll conduct onsite virtual or virtual due diligence visits. We'll do our quantitative and qualitative analysis. We'll run our risk assessments and then ultimately we have a couple deliverables, some internal and some external. Internally we do run a manager scorecard, which as you can imagine, as the name implies is is a mix of of quantitative performance and risk metrics as well as our qualitative ratings. And we'll run those scorecards for every manager that carries an approved. Status research designation on the platform and then we'll write a Guiding Star research report. And this really is our primary due diligence output. I'll get into the Guiding Star Research report in just a few minutes. But the Guiding Star Research report is very important. It's comprised around 5 particular categories, R5P's if you will. And what's important about it is that it, it includes not just what a strategy does, who runs it and how it's implemented, implemented. But it has our opinion and our ratings about how we think a manager does, what it does. From the launch section, we do go to our research status recommendation. We will look to our investment due diligence committee. And formal committee structure to approve these strategies and ultimately get them available and made available on on the platform. Then we'll look to coordinate with marketing and sales for an education component in a launch component. But what's important about this multifaceted approach is when you get to the monitoring phase. This is an ongoing process. We are always looking to improve our process. It's not just front end loaded. So there are there are multiple decisions to be made here. One is the hiring decision to bring a strategy on the platform, but ultimately there is also. A back end decision where if an issue does arise that the due diligence team has identified, what are we going to do with that? Are we going to take action and potentially remove a strategy from the platform as a result. So as part of this monitoring, we can't get around performance. It's absolute and relative performance versus benchmark as well as peers. We think both of those are important and what's what's very important as well as also longterm versus shortterm. So in this investment business, we can't get away from performance. We try not to let that be the ultimate driver of what comes on or comes off the platform. But we definitely want to be aware and understand what what is going on with a particular strategy and make that designation and characterization of how we think this strategy has ultimately been able to add value over time to climb portfolios. And now I'm going to hand it over to Ron to talk a little bit more about the idea generation process. As well as the front end of our analyzed process. Thanks Chris. And now I'll provide an update on the key considerations for our manager screening process, how we really initiate a search for for our platform. So as strategies means different things for our different stakeholders. We want to make sure we're taking all of those considerations upfront. Investment strategies can mean different things for the sales team in the field, what it means for us from a due diligence perspective and what it means potentially as well for our trading team. So you'll see here the investment product prisation committee is where we have a lot of our senior leaders. Get together on a monthly basis and we'll debate and review prospective strategies, evaluate the platform where we're seeing adoption in the industry or new vehicles that have come into place and we'll discuss those applicable strategies and what that means to to Ryan and and Brinker Capital. So as part of that, we will share some of the analysis through the tools that were able to access through Morningstar, for example investment. As well as facts that and as Chris mentioned, we're, it's in our daytoday responsibilities to have manager reviews and discussions and attend conferences. So that gives us a lot of depth and breadth of what we're seeing transpiring in the industry and from our perspective through an investment, Les, does that make sense for our clients and investors. So as part of our screening process, we'll have some quick hitters as you can see in the. Second chart or second chart from the from the right looking at the consistency performance of a perspective strategy, how long a team or managers have been managing that investment mandate, what it means from a risk metric perspective in terms of relative or absolute metrics as well. And then just again just seeing how the take rate is in the industry as well we're going to. On our side, we do both analyses of as we look at what's happening in the broader industry as well as what is happening on our our platforms here at Orion as we think about where there might be some gaps or even addition managers that we need in, in terms of a desk addressing any redundancy capacity issues. Moving to the next slide. Here just to give you a sample set of some of the investment as well as the business related information that we are looking for. You know as Orion is a financial tech company, we certainly lean on Morningstar and FactSet and investment those other databases that I that I noted. As to give us some leverage upfront of how strategies are doing across different criteria. So on the on the business side you know we're going to look at considerations around as its registration staffing in terms of investment personnel specifically as well as the broader organization, legal and compliance issues are certainly top of mind for us as well. We want to make sure that. An investment team is running their strategy over a long time and it has the requisite, has a requisite checks and balances in terms of from a legal and and compliance perspective and as well as just making sure as we know markets will will fluctuate over time. There can be some impacts to to an asset base or strategy base. So we have some. Minimum thresholds there as well that we want to make sure that allows a strategy to continue to be managed prudently without interference from from a business side perspective and then as well as looking at Morningstar for example in terms of how strategies are categorized and how from a return perspective. Risk perspective as well as on a risk adjusted perspective how those strategies are faring within their respective peer groups and you'll see on this slide here gives you a quick hitter on kind of how that. Screen has been put together by by the diligence team here at at Orion and this is something that all of our team members have the ability to to administer as requests come in. Again, you know we're leaning on technology here for some benefits of of scale to to get the due diligence process and applicability of certain strategies for our platforms across all of these different criteria. Here as you'll see noted on the previous slide, how some of these kind of come through through the Morningstar database looking at SEC registration for example, compliance related matters as well as the performance related matters as we get into the strategy considerations a little bit more closer in terms of. Asset flows as well as assets under management as well as in personnel. So this gives you a feel of how the strategies are initially assessed on our side and we share this information with all of our internal stakeholders through those internal committees to make our other colleagues aware. Aware of what is being resonating in the marketplace and then as well as I mentioned before, thinking about how these strategies could be potentially additive to our platform. And now I'll hand it back over to Chris to cover our due diligence questionnaire. OK, thanks, Ron. I thought in the next section on this slide, we would dig a little bit deeper into our due diligence questionnaire. This is one of the primary documents that we do send to all of our managers and I want to highlight that we send this annually, not just upfront. It's very comprehensive, contains over 100 questions and these questions really revolve around the organizational background. Questions that are certainly strategy specific in terms of the investment process, risk management and performance. We certainly want to know who's managing these strategies, what the underlying investment philosophy and process is behind them and what are the resumes and credentials of the personnel running them. But importantly, there is an element of operational due diligence that is also incorporated and captured in this DDQ. And that falls in this compliance box in in the bottom right corner where we will look at a DV's, we will will look at SEC exam reports, we'll ask questions around business continuity, cybersecurity. And we certainly want to understand if there are any issues outside of the portfolio and performance and risk metrics that we should be aware of. At the firm or at the team level. So when we think about what is the point of this due diligence questionnaire, it is a central part of our investment due diligence process. We want to try and determine who and what is important upfront. We want to identify what is the strategies edge, what is it, what is its competitive advantage that has allowed it to be successful over time, has it been consistently implemented and ultimately. And hopefully not are there any legal or compliance issues that our team should be made aware of that may impact the status of this product. So at the end, at the end of the day, we want to look beyond the published data. We all can read lots of portfolio managers, commentaries, quarterly reviews. This due diligence questionnaire is designed to really assess the entire organization and again contribute to that mosaic. Of of information that we put together that goes into building all of the opinion that goes into our research work and more importantly our guiding Star research reports. So with that, let's talk a little bit about those Guiding Star Research reports and take a little bit of a deeper dive into them. These Guiding Star Research reports are built around our five P's and those five P's are people, philosophy and process. Full construction and implementation, parent and performance. So again, a holistic view of the strategy as well as the firm. And what's important about these guiding Star research reports is that not only do we tell you what a strategy does and how that manager does that within the strategy, but we also include our opinion. So what do we think about? The success that a strategy has had, what do we think about the parent firm? What do we think about the consistency of implementation? And when you look into these reports, each of the sections is graded on a 5 star rating system, one through 5. And the supporting comments in those guiding star reports will support whether we think something is is a three or a four. So average to above average or a five star rating which is institutional quality kind of best in class if you will. So these guiding star reports are our primary research output and answer all the important questions that an advisor may have not just about a strategy but also to leverage the due diligence team's opinion in terms of whether we think that manager has been successful in managing that strategy or with their where there may be areas for improvement. So let's take a look a little bit further at what a guiding star report looks like. This is a snippet or an example of those guiding star reports. What is important about these reports as you can you can see it's it's laid out in in an executive summary format. We are not writing pages and pages on everything that a manager does. We are trying to force our analysts and the due diligence team to put down 3456 bullet points of what they think are the central tenants to the investment philosophy and process. To the parent organization, to portfolio construction and implementation, certainly to performance into the personnel. And on the first page is is an executive summary where you'll see in the middle a description about what the strategy is and how the strategy it does. Does what it does and what it is designed to do and then towards the bottom you'll see a due diligence opinion summary as well as a key considerations. So if you're looking at this report and you haven't had a chance to get into pages 2345, this first page not only tells you who the analyst is and and how to reach them and what the minimums are and what type of vehicle it is, but it is the most important information. On page one, in terms of anything that you as an advisor should be aware of if you're selecting the strategy for use in client portfolios. Moving on to the next slide, we've talked a lot about our research process. We've talked about the guiding star reports. Ron has talked about the quantitative screens and the data that we use that that goes into all of all of the analysis that our team does. But when it comes down to the launch phase, which would be the third. Pillar of that multifaceted due diligence approach. The due diligence team is really central to this entire process and it is governed by a formal committee structure. So on this slide, you'll see some of the committees that are in place. As a product may you may move from that idea generation phase all the way through to launch and or monitoring. So on the left side you'll see the investment product partisation committee Rod had talked about that that is comprised of senior and senior individuals across various organizations or departments within the firm. So that we are prioritizing our time on the due diligence team appropriately. And the due diligence team sits in the middle. So once ideas come from the product partisation committee to us, that's when we will do things like a due diligence questionnaire and onsite visit. We will run all our investment metrics for risk and performance. We will write our guidance to our reports, do manage our scorecards, all those things that we do when we follow our our investment process for this strategy. And then ultimately we'll bring all that to the investment due diligence committee. Ron chairs the investment Product Prioritization committee. I chair the investment due diligence committee. Similar to the product prioritization committee, the due diligence committee is comprised of key senior individuals, specifically on the investment team and also our Chief Compliance Officer. So all ideas are brought to the committee, the strategy is presented formally to the committee and then voted upon and then ultimately if that strategy passes through committee, it gets launched. On the platforms, it is available for use in client portfolios. Importantly, on this chart, you do see of the blue box over top, which is the investment committee that's that sits across and above all of these committees comprised and chaired by senior members of the investment organization, really conducting oversight and making sure that all of the subcommittees underneath that are doing what they say they should be doing. And doing that appropriate oversight and governance function. So we do follow this formal committee structure as we consider this to be a key component of the institutional due diligence process that we have in place. So now that we we've talked a lot about the whole idea generation process, the analysis and the launch, we're going to move into monitoring and. Ron's gonna talk a little bit about our watch and termination process as well as the process in place that we use to continue to monitor these strategies once they've made it onto the platform. Thanks, Chris. And on that watch and termination process, on this slide, you'll see in the box on the left some of a sample of reasons for. Watch or termination that may come to our attention. Again, keep in mind this is just a quick sample of some of the different criteria and factors that we will evaluate on a manager to make sure they remain in in good standing. But as Chris noted at the beginning of this, this webinar we talked about a lot of what the due diligence team does is from an art and a science perspective. And you'll see here a lot of the criteria noted is really from a subjective or qualitative perspective. So from our vet lens, this really kind of bodes well for what we think about it is the art part of our our roles and responsibilities, because often times you will see and uncover changes and a manager, a firm from a qualitative perspective that may lead to underperformance and a strategy. Over the long term, so we're certainly cognizant of how things are developing at a firm in terms of resources, in terms of technology improvements and how that firm or how, excuse me, how that portfolio management team is interacting with their, with their leadership and making sure that they feel adequately adequately resourced to in order to continue to provide top level performance on behalf of our advisors and clients. And you'll see here as we typically start with managers and good standing and we get either a qualitative or a quantitative identification of a problem, we will always look to reach out to those managers, reach out to the leadership team as well as the portfolio management team and and discuss what has. Recently transpired and what if any implications they see on their side in management of the strategy. Now certainly we've had those conversations over the years. Chris mentioned average 10 years of of experience on the members of the due diligence team. So we're certainly familiar of how to have those conversations and really get to really the crux of what is happening within the walls of of an organization and often times. We'll have that discussion and as we have built relationships with these firms and understand really who are the the key triggers that drive performance or drive the strategy that will certainly reestablish confidence on on our side. But other times as well as we go through those discussions and if we've had other previous. Types of discussions with that manager that may lead to a potential loss of confidence on our side where we would look to recommend a replacement and certainly notify our internal key stakeholders as well of potential implications of a strategy. So gives you a little bit of the qualitative and and quantitative aspects of what we do from a daytoday basis. You know, we think our job is a lot of looking at how a strategy is performing not just directionally but also from a magnitude perspective. And we again lean on a lot of those performance databases as well to help us administer that responsibility. Moving to the next slide as we think about what that due diligence process looks like on a daytoday, week to week, month to month basis. You know, Chris noted the annual due diligence questionnaire that really kicks off our annual deep dive of an update on a particular manager or strategy. But we are certainly doing a lot more than that and we have the resources and tools available to us to provide us with, with that information on a daily basis through those databases that we. Mentioned earlier, we're able to get performance from the registered products and we have the capability whether it be on a holdings basis or returns basis to conduct ad hoc attribution on a strategy and certainly the lines to our managers are always open as there's. Looking to come through our areas or we can certainly pick up the phone and and reach out to them and just try to get a sense of how they are doing market conditions at a given point in time. On a monthly basis, we can we will connect with our due diligence committee and product presation committee that Chris and I both chair respectively and provide updates of what we're hearing and seeing from our respective managers and. Address any questions that we're getting from our internal key stakeholders and what they may be seeing from their lines. Again, from our perspective, we feel we're providing a not just a front to front solution, but a front to back solution. And we have that capability through the structure of our teams and we feel we're able to to provide that. So that we're not leaving any any stones unturned. And then also on a quarterly basis, this is certainly important as well just to give. All of you comfort of the additional eyes that are overseeing not just the managers themselves but also the due diligence team professionals here. You know we have reporting on a quarterly basis that does a deep dive on the respective strategies with respect to their peer groups, with respect to their benchmarks, what we're seeing in terms of asset flows as well. So that gives an additional. Qualitative and quantitative inputs to other stakeholders who are investment professionals that may have had a due diligence role in their previous life in their in their career. So that certainly bodes well from our perspective from again just an additional set of eyes within within the organization. We certainly wanted to share with you, you know a couple of interesting strategies that we feel you would find find it interesting. You know you'll see here on this slide looking at an equity strategy. You know, we know certainly technology has really changed the dissemination of information across the across the investing landscape and particularly in equities, right when you think about where the exchanges are located typically in the major money centers. Historically a lot of the key PM's or key strategies were kind of standard or clustered in those areas, but now with technology through multiple different types of. Technology or data providers, that information now is being more broadly disseminate across the industry. And we came across a very interesting manager off the beaten path that has a longterm track record in doing what they do, a lot of tenure in terms of experience over 617 years of average industry experience and they have for what it's where they have. Taken a dedicated approach in providing equity ownership to 2nd and 3rd generation investment personnel. So really looking to make sure that they keep people in their seats for the long term that are familiar with managing their products and. Really like their investment style and have been managing that mandate over over the long term. And what was different about this equity manager and from what we typically hear and see from a lot of strategies on this side is that there's always a lot of focus on, on the income statement in terms of top line, in terms of cost management, resulting cash flows, what it means for earnings. You know certainly you turn on, on CNBC and as we go. Go through earnings season, you'll see where the street was expecting earnings for example relative to what is being reported. But coming back to this manager that was really interesting and something that they have had in place in in day one is that they have always been doing a deep balance sheet analysis of. Prospective companies and really understanding the capital structure of those firms. And as these equity managers have access to corporate management, they are able to have discussions with them and seeing if these firms are really optimizing their balance sheet from a weighted average cost perspective. And as we've gotten into this new environment over the last 12 to 18 months of rising interest rates, you know in our opinion this approach certainly bodes well, it gives them. Another margin of safety and helps them avoid potential pitfalls from. From an investment perspective, this conservative lens really bodes well from from a downside protection. And we really see that over multiple market cycle and even in short term periods where we go through those rough patches in the market. So just an interesting manager story that we wanted to share with all of you and now I'll hand it back over to Chris to give you a interesting story on the fixed income side. Thank you, Ron. I thought we'd. Talk about another manager example this time in fixed income as Ron alluded to because finding innovation in fixed income sometimes it's not the easiest. Fixed income is very important but can be a little bit more mundane and innovation can be fine, can be a little bit more challenging to find in this asset class. But with this particular manager example we we we think we've found a pretty unique manager that has a very compelling. A fixed income offering. So just in terms of background, this is a boutique active manager focused on security selection, credit research and trade execution. But what makes this mouse trap that this firm built unique is a couple of things. First and foremost is the firm uses technology to their to their advantage. So they've built proprietary systems where they can very easily allocate bonds across different client accounts. They can pull up bid wanted list for lots of different bonds. They can and what's what's very compelling and important is that they also have a proprietary system where they can put all the bonds that are held in client accounts up for sale on a daily basis. So said differently. If someone is looking to purchase those bonds and and has a liquidity issue and they want to pay a premium for those bonds, this manager is happy to sell them those bonds and book that premium that another buyer is offering to pay for those particular securities. So technology and the use of a fixed income manager to help drive better outcomes is certainly something that resonated with our team, but very importantly also is just the. That the business structure that this firm has in place, this is a very unique structure and we do believe it can. It leads to a sustainable competitive advantage. A few slides back I had talked about kind of identifying A strategies edge. This is not only a edge from a strategy perspective but also from a from a firm and execution perspective. So the way this works is this particular firm utilizes a fully registered broker dealer. As well as an RAA structure. And what this means is they'll use that broker dealer to access the wholesale market and when they'll they'll purchase bonds essentially cutting out the middleman and avoiding those markups and then they'll pass those bonds using their technology and allocate those bonds over to client accounts. So as you can imagine, if you have better execution, what do you there are a few benefits to that. One is that. It allows the firm to take advantage of having to take less credit and interest rate risk, so using technology to their advantage allowing the execution to allow them to add alpha as well as in complement the credit research in the fixed income expertise that this firm has in house really allows them to click on. Multiple cylinders in terms of using this technology to their advantage as well as using their business structure to their advantage and ultimately benefiting client accounts. So we really just wanted to to bring this process to life a bit. There's lots of fixed income managers out there, lots of equity managers, lots of alternative managers to choose from between Ron's example on the equity side and this example on the fixed income side. We really want to bring this process of discovery to light because. Because we we do feel like that the institutional process that we follow leads us and allows us to help uncover these rocks and find managers that may be a little bit off the beaten path and certainly we can partner with and grow ultimately to the benefit of Orion and. Clients. So with that, let's turn from a manager example into kind of a conclusion slide where we're really talking about leveraging the power of the due diligence team and focus on building your business. So we've covered a lot of ground in this webinar. We've, we've talked about the process, we've talked about the committees, we've talked about launching and monitoring these strategies and we've talked about. All the things that the due diligence team does that you can take advantage with, you can take advantage of and partner with us on. And the reason why this is so important is that you know I think the size of the platform is a testament to our due diligence process. So when you look at these numbers, some of these numbers are pretty big between product available on the platform as well as our spent. Doing due diligence and the size of our investment team, but just to hit on a few key numbers, we work with 125 different asset management firms and that spans from large brand names that everyone's heard of down to some of these more specialized boutique managers highlighted in a couple of the examples that Ron and I discussed on the previous slides. We cover all different vehicles between strategist models. These are multi asset class models of. ETF's and mutual funds and we cover separately managed accounts over 130 of them, lots of different mutual funds, active mutual funds, we have passive ETF's as well as private offerings. So all all of this product that is available for use and claim propos is covered by our due diligence team and the due diligence team is purview over all of this product to select from. So what does this mean throughout the year? Ron talked a lot about that the process that we follow on a on a monthly and quarterly and annual cadence. We conduct over 400 hours of portfolio manager interviews. This is time spent with PM's and key decision makers and analyst teams usually on site which we think is a key advantage of of our process. Now we can read a lot, we can crunch a lot of numbers, but there's not a not a great substitute for being on site. With these managers at their place of work and talking to all the key to investment decision makers on the strategy that feeds our due diligence, opinions and ultimately. Leads to success in better outcomes and client portfolios. We think we offer over 200 guiding star research reports. So we spend all of our time kind of synthesizing all this knowledge of them, putting our our best thinking into these guiding star reports. So if you look at the graphic on the right seven person due diligence team including myself, on average we over 10 / 10 years of investment experience. Three members of the team hold the CFA charter. Three other team members are currently at various stages in our our CFA candidates. So it's a highly credentialed team and a diversified mix of of senior due diligence individuals with. More industry experience as well as young and up and coming sharp analysts that are pursuing their CFA's. So we really like to say you know, please work with us, partner with us, leverage the power of our due diligence team because we spend all of our time. Singularly focused trying to scour the investment landscape for the best product for to bring to you all to put into client portfolios so that you can spend more time building trust with your clients and ultimately focusing on building your business. So thank you very much. On behalf of myself and Ron, we appreciate your time and at this point we will open it up to any questions you may have. _1721001274140

Access Next-Level Investment Management: Enhancements to Core Select and Core Guided

Join us for an exciting webinar as Case Eichenberger, Head of Investment Strategy, and Mike Forker, EVP, Wealth Management Operations, present the latest enhancements to Core Select and Core Guided. Discover how these innovations are set to revolutionize your investment management process and unlock new growth opportunities for your firm.

They’ll show you how you can deliver consistent, risk-adjusted returns, help investors stay invested, and spur growth for your firm — fueled by an experienced investment team, extensive due diligence, and powerful investment management technology, including:

You’ll also learn the differences between Core Guided and Core Select and the use cases for using them to help achieve your client’s financial goals.

Orion Portfolio Solutions, LLC d/b/a Brinker Capital Investments a registered investment advisor. For financial professional use only. Not intended for public distribution.

2134-BCI-8/3/2023

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