Q ATLANTIC TRUST THE ADVISOR. Insights for Integrated Wealth Planning. Invest for the Future 2013 and Beyond YOUR WEALTH, FAMILY AND LEGACY

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1 ATLANTIC TRUST THE ADVISOR Isights for Itegrated Wealth Plaig Ivest for the Future 2013 ad Beyod YOUR WEALTH, FAMILY AND LEGACY

2 THE ADVISOR Q CONTENTS INVEST FOR THE FUTURE Thik Tak: Q & A with Jack Markwalter... Page 1 Ivest for the Future 2013 ad Beyod... Page 2 Strategic Givig: Philathropy with Purpose... Page 6 ALSO IN THIS ISSUE: Opportuity: Five Thigs You Need to Kow Now About Emergig Markets... Page 9 NOW: New O the Web See to access the latest expert commetaries ad ews. Strategic Philathropy: A Resource Guide Press Release: Atlatic Trust Lauches GeNext Iitiative, Hostig Iaugural Multi-Geeratioal Summit What You Need to Kow Now About Emergig Markets Press Release: Atlatic Trust Opes Office i Delaware The May Dimesios of Risk Press Release: Atlatic Trust Makes Strategic Move i Washigto, D.C. Lauched Jauary 2013: A New AtlaticTrust.com I additio to a ew look ad feel, this improved website houses a extesive Resource Ceter, featurig a GeNext Academy ad our experts latest commetaries. New resources for Q will iclude: - CIO Update: Asset Allocatio ad Iteratioal Equities Tax Update - Comig Soo: Atlatic Trust Blog Follow us o Facebook: AtlaticTrustPWM, ad LikedI: Questios or commets: To sed a ote to the editor or request a copy of The Advisor for a fried or colleague, please iquiry@atlatictrust.com.

3 Thik Tak Atlatic Trust s Leadership Coucil Pictured here at a plaig meetig i December. Q Give three words to describe Challegig. Markets were whipsawed, Europe experieced debt issues ad slow growth, ad the fiscal cliff domiated the market psyche. Performace. Despite these challeges, we were able to achieve strog ivestmet results o behalf of our cliets. Advise. We spet more time tha ever speakig with our cliets about the global markets ad the chagig tax ad estate plaig ladscape. These deep coversatios about big issues are what our cliets have come to expect from us as their trusted advisors. Q What does the above mea for Atlatic Trust? We have a record cliet retetio rate of 99.5%, ad we re grateful for what that says about our relatioships cliets are lettig us kow they re cofidet Q & A with Jack Markwalter Chairma ad CEO i the way we respod to challegig eviromets, ad they re also lettig their frieds, family ad colleagues kow. We ve had 22 cosecutive quarters of growth ad are maagig early $20 billio i assets compared to the $13 billio we maaged just four years ago. 1 This growth is a testamet to our team s commitmet to cliets ad is a very ecouragig way to eter Q What is oe ivestmet success? It would have to be the 20-year success of our Mid-Cap Growth Equity Strategy. This is a story that speaks to the cosistecy ad disciplie of our process ad the retetio of key people. Fred Weiss bega the Mid-Cap Strategy, ad Jay Pearlstei has bee with it for 17 years. Their leadership has resulted i the strategy s solid outperformace of its bechmark sice iceptio. It also exemplifies what we wat to accomplish as a firm o behalf of our cliets logterm growth ad results, cosistecy ad applicatio of itellectual capital. Q What do you tell those you re tryig to recruit about what they will fid at Atlatic Trust? I the past 18 moths, we ve added 18 seior wealth maagemet ad ivestmet professioals. 1 What motivates these taleted people to joi us? I firmly believe it s our fiduciary culture the cliet is at the ceter of what we do ad how we thik. I believe all of our professioals have a clear sese of missio oe that results i a deep satisfactio about takig care of our cliets ad their families. Q Why was it importat for the firm to expad the Washigto, D.C. office to be your ew mid-atlatic headquarters ad to ope a office recetly i Delaware? I the past three years, our Washigto office has see assets grow by 44%. 2 The mid-atlatic headquarters brigs Washigto ad Baltimore cliet service teams closer together to serve a importat cliet base i the regio. A office i Delaware has bee a strategic priority for quite some time. As a atioal trust compay, it s importat for us to have a presece i Delaware. Q Fial thoughts? We lauched our GeNext iitiative with our iaugural multi-geeratioal family coferece i December. Over the ext several years, we re makig a cocerted effort to egage our cliets ext geeratio family members ad address their specific eeds. To fid out more about GeNext, I ecourage you to speak with your relatioship maager. 1 Data as of September 30, As of October 31, Page 1

4 INVEST FOR THE FUTURE 2013 AND BEYOND Your Wealth, Family ad Legacy So may questios: What will the ecoomy s growth rate be i 2013? Is Europe still teeterig? Does high yield always equal high risk? What is causig a resurgece i America maufacturig? Do your childre kow your family story? The aswers to those questios, ad may others, were preseted at Atlatic Trust s iaugural multigeeratioal family coferece, the Ivest for the Future ad GeNext Summit, i December. Experts across a array of disciplies 39 iteral ad exteral ivestmet maagers ad family wealth experts preseted their best thikig o a wide variety of topics. Here are some highlights of the Summit. Page 2

5 Overview: The Ecoomy ad Ivestmet Themes Do a Google search for fiscal cliff (648 millio results) a topic that domiated the last half of Ideed, the outlook for the ecoomy cotiues to be domiated by policy issues emaatig from Washigto, accordig to David Doabedia, CFA, chief ivestmet officer for Atlatic Trust. Much is yet to be resolved, but it s clear that policy disagreemets will result i a moderate drag o the ecoomy, says Doabedia. The Fed has oce agai ratcheted up its effort to offset this drag by expadig its aggressive quatitative easig. Whatever the fiscal cliff outcome, it will restrai ecoomic growth i the first half of 2013, but a pickup is probable i the secod half. Overseas, the 2013 challeges seem less omious tha i the last couple of years. The Europea ecoomy remais quite weak but does t seem o the verge of a currecy or bakig system collapse, a real possibility fairly recetly. The sharp declie i Chia s growth rate also appears to be i the rearview mirror The ew leadership is focused o acceleratig growth, a tred that has show up i recet idicators, says Doabedia. Equity market valuatios aroud the globe appear to rage from reasoable to iexpesive. While profit margis may have peaked i the U.S., well-positioed compaies still appear to have room to produce solid earigs growth. Emergig market stocks look iexpesive ad there are opportuities to be foud i the volatility ad macro ucertaity of Europe ad Japa. Global Risk ad Reward: No Margi for Error Oe way of thikig about stocks i a global cotext is that they re the best house i a bad eighborhood. I other words, stocks are iexpesive versus bods aroud the world, with divided yields well above govermet bod yields. We thik the price of perceived safety i govermet bods is too expesive to represet good value for log-term ivestors, says Doabedia. While global macro risks are subsidig, market volatility will ot disappear, ad the Europea ecoomy remais weak. A hedge fud approach to ivestig i which correlatio to the fickleess of the overall market is eutralized ad emphasis is placed o specific log ad short positios may be a costructive portfolio allocatio i the years ahead, says Doabedia. It s importat to poit out that i 2011 ad 2012, the U.S. stock market outperformed both developed ad emergig foreig markets. Despite the oslaught of bad press from abroad, this situatio will reverse itself, so iteratioal exposure cotiues to be a importat compoet of log-term asset allocatio plaig. TAKEAWAY A global ad opportuistic approach to portfolio costructio makes sese ow ad will remai a critical dimesio of successful risk-adjusted returs i the years ahead. Set it ad forget it asset allocatio will likely prove too rigid for a dyamic market eviromet. Fially, viewig equity ivestig as a market of stocks, istead of the stock market could lead to outperformace we thik it will be a stock picker s market. U.S. Equities: Half Full or Half Empty? There s plety of room for pessimism about the U.S. ecoomy, icludig a very aemic recovery sice 2009 ad a all-time low i cofidece i our political leaders. As we eter 2013, equity ivestors wat to kow if these ecoomic cocers have bee largely discouted allowig the market to cotiue climbig the wall of worry or if they may put dowside pressure o the market. Uder virtually ay sceario, corporate profit growth is likely to slow materially after the strog recovery i recet years, says Patricia Baa, CFA, co-maager of the Atlatic Trust Disciplied Equity Strategy. However, we re ecouraged by valuatios which do t appear to be stretched ad by geerally strog corporate balace sheets. Jay Pearlstei, CFA, co-maager of Atlatic Trust s Mid-Cap Growth Equity Strategy, adds, Profit margis have probably peaked i the U.S., but well-positioed compaies still have room to produce solid earigs growth i TAKEAWAY With the multitude of issues facig the markets, we stress the importace of focusig o highquality compaies with cosistet ad predictable earigs growth, strog competitive positioig, ad whose stocks are reasoably valued ad offer attractive risk/ retur profiles. Additioally, with the prospect of potetially higher capital gais ad divided tax rates, we emphasize taxcoscious strategies. Eergy: A U.S. Reaissace ad the Road to Eergy Idepedece? That boom you hear i the backgroud of optimistic discussios about the U.S. ecoomy ca be summed up i oe word: eergy ad its resultig growth i productio, drop i imports ad boost i jobs. It s happeig i ew sites i North Dakota, Ohio, Texas Page 3

6 ad Arkasas, ad it s happeig for both oil ad shale gas. The eergy reaissace i the U.S. is real ad has begu i earest, says Bas Solleveld, vice presidet for Atlatic Trust. With all the focus o the fiscal cliff ad the slow recovery, people are amazed whe they hear that U.S. oil productio has icreased by 35% sice 2009, oil output is poised to surpass Saudi Arabia s by 2019 ad oil ad gas employmet has icreased by 25.4% i the past three years. 1 Accordig to Iformatio Hadlig Services, for every direct job created i oil, atural gas ad related idustries, three or more idirect jobs are also created, o average. Expaded shale gas productio has totally trasformed the eergy ladscape, resultig i greater ifrastructure eeds pipelies, processig, compressio ad storage; growth i field services ad capital spedig; lower atural gas prices; liquefied atural gas export potetial ad ew ecoomics i atural gas vehicles. It s importat to stress that icreased atural gas productio disproportioately beefits the U.S., says Solleveld. Oe place this shows up is i a resurgece of maufacturig. TAKEAWAY The eergy boom from compaies i atural gas-fired power geeratio; oil, gas ad power field services; petrochemical, fertilizer ad related idustries; ad evirometal products ad services has give way to ivestmet opportuities icludig those withi the Master Limited Partership (MLP) asset class. Eergy-cetric ivestmet strategies, such as Atlatic Trust s MLP Strategy, ivest i eergy ifrastructure ad offer sigificat opportuity i the midstream space, as the trasportatio bottleecks remai substatial ad build-outs i ew areas are required. It s estimated that at least $10 billio per year will be eeded over the ext 10 years to build out midstream ifrastructure. 2 Ehaced Yield: Are We There Yet? Meaig, are we at the poit at which higher-yieldig strategies have ru out of room? Eormously popular with ivestors lookig for icome, some experts believe that asset iflows are approachig bubble-like valuatios. Not so, says Gary Pzegeo, CFA, head of fixed icome for Atlatic Trust. While high yield usually also meas high risk, we see the risks associated with lower-rated corporate bods, emergig market debt, bak loas ad residetial mortgage-backed securities as risks worth takig. Most importat, ivestors are beig compesated for these risks. Yes, the magitude of flows ito high-yield corporate bods has bee impressive, but it simply reflects the lack of value i Treasuries a 10- year Treasury is ow yieldig slightly less tha 2% ad ivestors preferece for assets with less risk tha equities. 3 TAKEAWAY We believe there is eough growth ad fiacial flexibility to support cotiued low rates of defaults i corporate bods ad emergig sovereig debt. Balace sheets of domestic high-yield issuers are much stroger tha they have bee prior to previous slow growth episodes. Usually a major cocer for bods, the impact of iflatio o high-yield ad emergig market debt is likely to be muted. Summit The 20-somethigs ad 30-somethigs who took part i Atlatic Trust s iaugural GeNext Summit ejoyed a iteractive, itellectually stimulatig curriculum that egaged these extgeeratio wealth owers i fiacial ad leadership educatio. I additio to hearig from ivestmet maagers ad family wealth experts, the GeNexters participated i breakout sessios built aroud major life chages. We really focused o practical fiacial maagemet takeaways i the sessios, says Martia Fragis, maagig director for Atlatic Trust. There were thigs the ext geeratio eeded to kow yesterday, some they ca make a poit of learig over time ad other areas where they should seek guidace. We also wated to stress to them that they will eed a good advisor i their lives someoe who is part fiacial advisor, part teacher ad part life coach. Our ew GeNext iitiative is desiged to meet today s youg wealth owers ad family leaders where they are, says Jack Markwalter, chairma ad chief executive officer for Atlatic Trust. They have differet eeds, iterests ad desires whe accessig iformatio. We believe our GeNext iitiative is importat these youg people are at the forefrot of a remarkable trasitio, oe that will see $30 trillio chage hads from oe geeratio to the ext i the ext 30 years. 4 Atlatic Trust is excited about parterig with our cliet families to help prepare this geeratio to steward, cotribute to ad carry o the family s wealth, heritage, values ad legacy. Joi Atlatic Trust s GeNext etwork: AtlaticTrustGeNext Twitter.com/ATGeNext Page 4

7 Priceless: Coversatios ad Coectios for Wealth Strategies Is it about people or process? Here s oe way to discer the differece ad thik about wealth plaig i a differet light: Whe you give a gift, you pass alog somethig with meaig to a loved oe. I m givig you this book because I hope you will cherish ad ejoy it. I hope that it will make as much of a differece i your life as it has i mie, ad that whe you read it, it will remid you of me. A trasfer is somethig your tax advisor tells you that you should do: It s i my best iterest to give this to you. Wealth strategies icludes the cocepts of effective wealth trasfer, itetioal legacy plaig, multigeeratioal stewardship ad fiacial literacy, amog may others, says Judith Saxe, maagig director for Atlatic Trust. But preparig the ext geeratios for wealth really revolves aroud a differet defiitio of wealth oe that icludes history, culture, values ad discussios about all of these. The coversatios ad coectios ca be applied to educatig childre about wealth, family philathropy ad creatig a ethical will, says Saxe. TAKEAWAY Remember, it is ever too early or too late to start talkig to the ext geeratios about wealth. Good coversatios are built o a relatioship of trust ad acceptace. All questios are reasoable, eve if some aswers are deferred to a later time. It is importat to discuss ideas ad cocers with your family ad ot delegate decisio makig. It is also critical to take time to share your ow story, icludig mistakes, struggles, lessos leared ad successes. Most importatly, a family coversatio about wealth that coects the geeratios should iclude multiple evets ad coectios, ot just a oe-time meetig. View video or dowload audio recordigs from the Ivest for the Future Summit o 1 ISI, December INGAA, N. Am. Midstream Ifrastructure through 2035, Jue Federal Reserve, November 26, Acceture, The Greater Wealth Trasfer: Capitalizig o the Itergeeratioal Shift i Wealth, What were some of the highlights of the GeNext Summit for your cliets? Quick Smarts Art Graper, CFP Maagig Director, Dever My cliet, who is early 30 ad recetly married, ejoyed the opportuity to egage i ope, hoest group discussios ad to share her experieces with her peers. The Summit was so educatioal ad egagig that she is already recruitig her family for our ext coferece i Ted Bu Maagig Director, Bosto The Summit was othig short of fatastic for my cliets, may of whom were 30-somethig real estate professioals. Their positive feedback highlighted the beefit of brigig the group together to discuss timely, relevat topics i a eutral eviromet. Leah Caracheo Vice Presidet, Atlata Five of our cliets, sibligs ragig from age 25 to 35, had a very positive respose to the Summit. The older sibligs opely shared their life experieces, both positive ad egative, which provided the youger attedees some great isight o how to idetify their roles i their family s legacy ad wealth pla. Page 5

8 Wealth Strategies Strategic Givig: Philathropy with Purpose I 2011, 88% of all cotributios to philathropic ad charitable causes came from idividuals, bequests or family foudatios a staggerig $262.6 billio. I fact, total philathropic givig i the U.S. ow represets 2% of gross domestic product (GDP). 1 While ucertaity surrouds the status of the icome tax charitable deductio i 2013 ad beyod, may of our cliets cotiue to egage i givig. Noetheless, they may be ucertai of where to begi whe it comes to settig up a philathropic pla, or if they have a pla, how to put that pla ito motio strategically. Philathropy a big meltig pot holdig a wide diversity of resources, persoalities, passios, causes ad iflueces. Atlatic Trust ca help you thik strategically whe settig your givig goals. The choices for givig vehicles are wide from commuity foudatios ad givig circles to direct gifts, private foudatios ad door-advised fuds. Each optio has uique characteristics door cotrol of assets or board ivolvemet, tax deductibility, eve potetial for collaboratio with others. While these characteristics make it easier for cliets with charitable icliatio to fid the right parters, timetable ad vehicle for givig, it also meas they might eed some help workig through their choices. Philathropy is such a importat compoet of wealth plaig, whether from a legacy, persoal fulfillmet, geeratioal coectio or tax-plaig perspective, says Christie Lucero, CFP, seior vice presidet ad wealth strategist for Atlatic Trust. May times cliets start out thikig about the tax-plaig elemet, but are usig Page 6

9 Wealth Strategies that as a way to aswer somethig else stirrig i their hearts. For cliets who begi thikig about givig back ad who wat to make a differece, we ecourage them to focus o two key words: strategic philathropy. A Higher Quality of Givig Strategic philathropy is similar to itetioal asset allocatio i that it requires as much of the giver s brai as it does the bak accout. A careful ad disciplied approach to philathropic givig combies purpose, practicality ad passio. It ca help you icrease the effectiveess of your givig, alig your givig with what s i your heart, protect your itet as a door ad respod to chagig social ad ecoomic coditios. Ultimately, it s about a higher quality of givig oe that really advaces the causes ad iterests you care about most, says Lucero. It goes far beyod simply writig a check. Accordig to Strategic Philathropy, Ltd., givig with a purposeful strategy starts with becomig a iformed philathropist: Seek guidace from issue experts, charitable recipiets ad advisors. Respod to commuity ad orgaizatioal eed. Collaborate with peer doors. Coduct due diligece o gift recipiets. Evaluate the impact of charitable gifts. Select the most advatageous tools to implemet. Liste ad ask questios. Look for gaps ad strategic opportuities i areas of iterest. Reflect o persoal values ad experiece to develop a givig strategy. Cosider your legacy. 2 Effective Philathropy: Startig the Process Begiig a strategic philathropy program meas devotig time to research, due diligece, listeig ad askig the right questios of the recipiet, as well as yourself. STEP 1: Determie why you wat to give ad what criteria you will apply to your specific givig decisios. Eli Broad, a very wealthy ad ivolved philathropist, applies three key questios to the philathropic ivestmets he makes: (1) Would it happe ayway? If it s goig to happe ayway, the he does t make the ivestmet; (2) Will it make a differece 20 or 30 years from ow?; ad (3) Is there taleted leadership that ca really make it happe? If the aswer to these last two questios is o, he does t ivest. 3 STEP 2: Sped time talkig with family members ad really thikig about what you wat to accomplish. This is especially true if you ited to begi philathropy as a multigeeratioal focus withi your family. Oce you ve determied what you wat to accomplish, have a bias toward actio. STEP 3: Try to develop ew ad creative resposes to issues. It s oly beig realistic to recogize that much of what has bee doe i may issue areas social services, huger, educatio has failed o a broad scale, says Barry Berli, CFA, maagig director for Atlatic Trust. But tremedous amouts of good, ad good progress, are beig realized every day with a strategic approach to philathropy that icludes powerful, iovative tactics. STEP 4: Remember that successful ad effective givig does t happe overight (see A 20-Year Philathropic Jourey ). There s a learig curve ecessary to really give itetioally, ot accidetally, says Berli. You must also let yourself be flexible eough to respod to chages i eeds both i your ow commuity ad i broader society. For example, improvemets i body armor used i military coflicts have led to may, may more wouded ad disabled veteras tha i the past. These are soldiers who sustaied ijuries that, just a few years ago, would have bee fatal, says Berli. Oe of my cliets has tured her attetio to a ew iterest of helpig veteras, ad we re respodig i ways that recogize today s differet eeds. Guidace for the Jourey Oce you get started, you ll likely begi to ask the deeper questios: Should you fud a family foudatio with privately held stock? Should you eve have a family foudatio? What advatages does a door-advised fud give you? Does your givig really make a differece? Ad how do you istill philathropic values i your childre ad gradchildre? From the big-picture decisios What kid of impact ca I make? to the fie details How are gifts of property valued? the guidace of a trusted advisor ca help your philathropy be meaigful ad effective. Atlatic Trust s relatioship maagers ad wealth strategists are available to help you thik strategically about your logad short-term philathropic goals. To help you through this jourey, we ve developed a Strategic Philathropy Resource Guide, with materials from some of our strategic parters. I the guide, you ll fid iformatio o: Assets to Give: Holdig privately held stock, doatig iitial public offerig stock to charity ad Page 7

10 Wealth Strategies maagig your charitable gift accouts Foudatios ad Door-Advised Fuds: Uderstadig the similarities ad differeces betwee dooradvised fuds, private foudatios ad commuity foudatios Foudatios: Creatig a private foudatio, maitaiig best practices ad takig your foudatio to the ext level Family Office ad Philathropy: Ackowledgig the advatages ad disadvatages of havig your foudatio work with a family office Impactful Philathropy: Raisig your childre with philathropic values, plaig for future geeratios ad uderstadig how philathropy ca have a social impact Keep i mid that for both passio ad practical results, strategic philathropy is much like log-term, holistic wealth maagemet it s a jourey, ot ecessarily a destiatio. 1 idividuals_statistics.htm 2 Beig a iformed philathropist is made eve easier by Strategic Philathropy, Ltd. Visit their website for doors, ad click o Iformed Philathropy. Strategic Philathropy, Ltd. is a global philathropic advisory practice based i Chicago, servig cliets worldwide. The firm works with idividuals, families ad closely-held ad family-owed busiesses, helpig them pla, assess ad maage their charitable givig. 3 Chroicle of Philathropy, November 27, 2012: A 20-YEAR PHILANTHROPIC JOURNEY For early 20 years, Barry Berli, CFA, maagig director for Atlatic Trust, has worked with a cliet who has bee ivolved extesively i philathropic causes. I the begiig, the cliet had oly vague otios of what she wated to do with a very large portio of wealth. Her givig did t start with a overwhelmig passio for a particular set of causes, says Berli. I fact, that s ofte the case with cliets a small spark to kow more about ad to do somethig turs ito a burig passio. But she did start with good isticts, a good heart ad good itet about givig her moey away durig her lifetime. Berli ad his cliet started by merely talkig about some of her iterests. Berli bega by helpig the cliet make some small gifts, have some hadso ivolvemet ad lear more about various orgaizatios that reflected her iterests. It was more of a shotgu approach, but we wated to see what developed from that. Durig the ext several years, cosistet patters of stroger iterest developed, as well as a growig awareess that she related well to creative, etrepreeurial people, as opposed to istitutioal leadership that ca be foud i larger or more established charities. She had a real taste for the excitemet of gettig somethig ew off the groud, says Berli. As the cliet s philathropic iterests deepeed ad her givig grew, Berli sought outside cousel to sharpe his skills i guidig the cliet s philathropic pla. Oe of the most valuable thigs Berli leared was the importace of seekig a parter that has the muscle to really advace a cause for the door, it meas goig beyod trasactioal givig ad collaboratig with a orgaizatio with boots o the groud, carryig out the missio. Berli helped the cliet set up two door-advised fuds withi two commuity foudatios, allowig the cliet to still provide guidace o how the moey would fud grats. Berli says this approach was ot oly deeply satisfyig to his cliet, but also helped her orgaizatio expad the audiece for their message. Ultimately, Berli s cliet hired two full-time cosultats who work to idetify ad research the best programs ad people to cotiue fulfillig the cliet s philathropic missio, both locally ad globally. The cosultats allow Berli time to cotiue helpig his cliet give back to her commuity i a way that is very importat to her: aoymously. For early two decades, Berli has atteded board meetigs ad met with potetial grat recipiets to protect his cliet s idetity. Today, he cotiues to help his cliet maage her priorities ad programs to achieve both her persoal ad philathropic goals. Explore Atlatic Trust s Strategic Philathropy Resource Guide, ow available o Page 8

11 Opportuity Five Thigs You Need to Kow Now About Emergig Markets Chia had a electio, brad-buildig is the ew watchword i Asia, ad Idia still struggles with ecoomic ad regulatory reform. David Doabedia, CFA, chief ivestmet officer for Atlatic Trust, ad Robert Horrocks, Ph.D., chief ivestmet officer for Matthews Iteratioal Capital Maagemet, LLC, brig us up-to-date o what s goig o i emergig markets. 1 Whe we say growth of emergig markets, we mea ecoomies are becomig more productive. This will predomiatly happe i the maufacturig sector. We ll cotiue to see imports of capital equipmet ito Asia for more efficiecy i productio. Emergig ecoomies govermets all wat to focus o domestic demad. The growth story is cosumer-facig busiesses, broader ad more liquid capital markets, ad strog fiacial services compaies for populatios with higher disposable icome. 2 4 Brads are a big part of the growth story i Chia. The coutry is begiig to build some very good frachises. Multiple compaies makig just shoes, for example, is a very differet sceario tha compaies buildig brads a brad is more about the itagibles that result i repeat customers. Chiese customers are begiig to be less cocered about low cost ad more cocered about payig more for quality ad for what that says about them. 3 Idia is tryig to balace protectioist, ati-growth policies with huge demad from a educated ad icreasigly well-off populatio. Evetually, this will tip i favor of more growth that will create jobs ad lower prices through greater orgaizatio ad ifrastructure build-out. We see huge upside potetial whe Idia gets past these issues about moderizig its ecoomy ad its outlook. New leadership i Chia is ot as dramatic a chage as we may thik. The previous historical viewpoits those who wated a state-cotrolled ecoomy versus those who wated more rei give to market forces are goe. There are fewer big philosophical policy disagreemets. Chia s ew party chief, Xi Jipig, comes from a reformist backgroud, although he occasioally calls for a greater emphasis o Marxist priciples. This is t Chia turig its back o the market. Marxist priciples i Chia are code for cetral political authority i the hads of the Commuist Party. It has little to do with ecoomic policy. 5 The log-term case for emergig markets is still strog. While emergig markets have lagged durig the last couple of years they are ot immue to what s goig o i the rest of the world there is much optimism from recet developmets for strog log-term growth. We expect emergig ecoomies to grow about 2.5 times as fast as the developed world. I additio, after a couple of years of uderperformace, emergig markets ivestmets geerally look iexpesive. For more o the ivestmet outlook for emergig markets, please see our white paper o Page 9

12 Atlata Austi Baltimore Bosto Chicago Dever Housto New York Newport Beach Sa Fracisco Washigto, D.C Wilmigto Atlatic Trust Private Wealth Maagemet icludes Atlatic Trust Compay, a divisio of Ivesco Natioal Trust Compay (a limited-purpose atioal trust compay), ad Stei Roe Ivestmet Cousel, Ic. (a registered ivestmet adviser), both of which are wholly owed subsidiaries of Atlatic Trust Group, Ic. This documet is iteded for educatioal purposes oly ad the material preseted should ot be costrued as a offer or recommedatio to buy or sell ay security. Cocepts expressed are curret as of the date of this ewsletter oly ad may chage without otice. Such cocepts are the opiios of our ivestmet professioals, may of whom are Chartered Fiacial Aalysts (CFA ). The CFA desigatio is globally recogized ad attests to a charterholder s success i a rigorous ad comprehesive study program i the field of ivestmet maagemet ad research aalysis. Certified Fiacial Plaer Board of Stadards Ic. ows the certificatio marks CFP ad CERTIFIED FINANCIAL PLANNER i the U.S. There is o guaratee that these views will come to pass. Past performace does ot guaratee future comparable results. The tax iformatio cotaied herei is geeral ad for iformatioal purposes oly. Atlatic Trust does ot provide legal or tax advice, ad the iformatio cotaied herei should oly be used i cosultatio with your legal, accoutig ad tax advisers. To esure compliace with requiremets imposed by the IRS, we iform you that ay U.S. federal tax advice cotaied i this commuicatio (icludig ay attachmets) is ot iteded or writte to be used, ad caot be used, for the purpose of (i) avoidig pealties uder the Iteral Reveue Code or (ii) promotig, marketig or recommedig to aother party ay trasactio or matter addressed herei. To the extet that iformatio cotaied herei is derived from third-party sources, although we believe the sources to be reliable, we caot guaratee their accuracy. Ivestmet Products Offered are Not FDIC-Isured, May Lose Value ad are Not Bak Guarateed. For Public Use