Global High Dividend ADR Strategy Q Commentary. Market Review: Performance:

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1 S C H A F E R C U L L E N C A P I T A L M A N A G E M E N T Global High Dividend ADR Strategy Q Commentary Market Review: Global equity markets posted strong gains in the first quarter of 2017, fueled by growing optimism for global economic growth, the prospect of fiscal stimulus and more business-friendly reform policies. While in the U.S., market sentiment climbed in anticipation of the pro-growth economic agenda of the new administration, international markets were buoyed by rising global reflation prospects and government-led reform initiatives. The Federal Reserve raised interest rates by 25 basis points in March, the first of three targeted hikes in 2017, on the back of strong employment figures and rising inflation expectations. Against this backdrop, equities outperformed fixed income, long-term interest rates remained mostly range-bound, and the U.S. Dollar depreciated against all major currencies. While precious metals, such as gold, silver and platinum, and base metals, including iron and copper, posted solid gains year-to-date, energy prices remained subdued. By region, emerging markets such as China, India and Korea, which are expected to benefit from reform initiatives, outperformed developed markets such as Norway and Canada, which are primarily energyexporting economies. Gains in developed markets were led by Europe, with countries like Spain, Netherlands and Sweden being among the top performers and Asia Pacific ex Japan, where Singapore, Hong Kong and Australia outperformed. In Europe, equities remained well supported by elevated levels of merger and acquisition activity, despite ongoing concerns regarding upcoming national elections. By sector, the largest beneficiary was the Information Technology sector, fueled by momentum growth stocks, followed by Health Care, where constituents rebounded after underperforming in the prior year. Energy was the laggard for the quarter, as market participants weighed the OPEC production cuts against rising output from U.S. exploration and production companies. By style class, growth outperformed value and large caps outperformed small caps. With the near-term outlook for asset markets having become more uncertain and volatile, adhering to the price disciplines of low price earnings and high dividend yield has become all the more important in generating satisfactory absolute and risk-adjusted returns. We believe that our strategy of buying shares in strong companies, at attractive valuations and holding them for the long term remains attractive in this environment. Performance: The strategy posted strong absolute returns in the quarter while modestly underperforming our benchmark, which is in-keeping with our performance profile since inception, whereby we generate alpha by outperforming in flat and down markets and underperforming in strong cyclical-driven up markets. We continue to believe that our strategy is well positioned to outperform on a risk-adjusted basis over a full market cycle. 1 of 8

2 Global High Dividend ADR Returns vs. Benchmark Q1 1 Year 3 Year 5 Year 7 Year Since Incept * SCCM Global ADR (gross) SCCM Global ADR (net) S&P Global 1200 Index MSCI World Index *March Performance for periods greater than 1 year is annualized. Portfolio Attribution: Sector Attribution 2 of 8 Source: SCCM/Bloomberg, 3/31/2017. Our stock selection in the Consumer Staples, Health Care and Consumer Discretionary sectors was the largest contributor to relative performance in the quarter, where our well-positioned companies, with unique catalysts driving higher earnings growth and shareholder value creation outperformed, including Philip Morris International, Kimberly-Clark, Unilever, Roche, Merck and ProSieben. Our stock selection within the Industrials sector was also a positive contributor to relative performance, with Siemens and Boeing outperforming during the quarter.

3 Our underweight position in Information Technology was the top detractor, with the sector posting strong gains year-to-date fueled by momentum growth stocks, as was our overweight position in Energy, which underperformed in the quarter on the back of lower crude oil prices. We remain comfortable with these allocation decisions based on valuations and the long-term outlook for our portfolio companies and we continue to find new, attractively valued investment opportunities across a number of sectors. Stock selection hurt relative performance in Information Technology, Financials, Energy, Materials and Utilities, where near-term factors held back some of our investments. Cash was a detractor from performance during the quarter. Country Attribution Source: SCCM/Bloomberg, 3/31/2017. Our overweight positions and stock selection in the United Kingdom and Germany, which posted strong gains in the quarter, were the primary contributors to relative performance, where a diverse set of wellpositioned companies performed strongly, including British American Tobacco, Diageo, BAE Systems, GlaxoSmithKline, Siemens, ProSieben and Allianz. Our overweight allocation to Switzerland and France and our underweight allocation to the United States, Japan and Netherlands aided relative performance. Our stock selection in the United States was the primary detractor from relative performance, where our higher quality, mostly non-cyclical holdings, such as Pfizer, Altria and Microsoft, underperformed cyclical companies with higher levels of operating leverage. Our overweight position in Russia, which 3 of 8

4 underperformed in the quarter, also detracted from relative performance, as did our stock selection in Canada. We retain confidence in these allocation decision based on the attractive valuations of our holdings across these countries. Cash was a detractor from performance during the quarter. Portfolio Changes Purchases: Smurfit Kappa (Ireland, Materials) Smurfit Kappa (Smurfit) is an Ireland-based integrated producer of paper-based packaging products, with approximately 75% of its revenues coming from Europe and the rest from Latin America. The company stands to benefit from an ongoing economic recovery in Europe, as well as growth in e-commerce, which remains underpenetrated in the region. The majority of its revenues come from global consumer staple companies, which are increasingly focused on higher end packaging, as customers move away from traditional retail outlets to e-commerce platforms, and as retailers use packaging as an advertising tool. Smurfit has established a strong footprint in Latin America which is recovering after years of political turmoil, and we remain confident in the company s ability to enter into other new markets globally to enhance growth. Smurfit offers strong earnings and cash flow growth given its focus on reducing leverage and capital spending levels, which should support dividend growth and free cash flow generation. Furthermore, as higher-cost producers exit the market, the industry should consolidate further, putting Smurfit in a sweet spot since it has leading market share and is a lowcost producer, as well as a potential takeout candidate for larger companies. Despite these compelling long-term drivers, the company is trading at an attractive valuation relative to industry peers and on an absolute basis. Shares of Smurfit Kappa are valued at 12.0x forward earnings and offer a 3.3% dividend yield. ING Groep N.V. (Netherlands, Financials) ING Groep N.V. (ING) is a leading global retail and commercial bank with an established position in the Benelux markets and a growing presence in Central and Eastern Europe. Following a significant restructuring program, ING is well positioned to generate higher and more stable returns on equity with a simplified business model that balances the stability of its core markets with the growth of its challenger markets. The bank is significantly geared to a macroeconomic recovery in Europe and remains defensively positioned from an asset quality and regulatory uncertainty perspective given its solid balance sheet and strong capital position. A leader in digital banking technology, ING has had a successful track record of expanding into new markets via digital channels, capturing low-cost deposits and cross selling new lending services such as credit, insurance and asset management products. The bank is committed to being at the forefront of digital innovation and is investing additional capital to create a scalable omnichannel platform that will reduce costs, improve compliance oversight and standardize banking operations across its footprint. Against the backdrop of a potential normalization of interest rates globally, a solid capital position and a management team focused on cost cutting and operational efficiency, ING s commitment to a progressive dividend growth policy is credible and should offer meaningful upside as capital requirements are clarified and earnings growth picks up momentum. Shares of ING trade at 11.8x forward earnings, 1.0x book value and offers a 5.3% dividend yield. Sales: Vodafone (United Kingdom, Telecommunications) We liquidated our position in Vodafone, a global telecommunications provider with businesses in the United Kingdom, Continental Europe, the Middle East, Asia and Africa. While the company remains well positioned to navigate the dynamics in the 4 of 8

5 European telecommunications market, we exited our position in light of more attractive alternatives in the region. The stock trades at 7.0x 2017 EV/EBITDA, with a 6% dividend yield. BHP (United Kingdom, Materials) We liquidated our position in BHP in light of more attractive alternatives in this sector. The company faces a challenging operating environment for some of its primary commodity exposures, such as iron ore and coking coal, and we have found opportunities to upgrade the portfolio with other names in the sector. The stock trades at 11.5x forward earnings, with a 4.7% dividend yield. Market Outlook: Within the global universe, European equities are more than one standard deviation cheaper than their U.S. peers on a Price/Book basis, which translates into one of the widest valuation discounts over the last forty years. Further, Europe s earnings, which over several decades have tracked those in the United States, have lagged meaningfully in the latest market cycle and have room to surprise, though short-term political uncertainties continue to hold back investor sentiment. A recovery in European earnings is further bolstered by positive economic indicators, including higher capital spending as a percentage of GDP, rising capacity utilizations, declining unemployment rates, and stronger business and consumer confidence. Within Emerging Markets, the outlook has improved, but given the wide diversity of countries and companies which fall under this umbrella term, some countries and companies remain better positioned than others. Moreover, rising global reflation prospects should remain supportive to global earnings growth, with a strong positive correlation between global producer price index trends and global earnings. We continue to believe that our strategy is well positioned from a long-term perspective given the strong outperformance potential from a reversal of the historically extreme multi-year underperformance of 1) international versus U.S. equities and 2) value versus growth equities. MSCI Europe vs. U.S. Price/Book Source: J.P. Morgan, Global Equity Strategy, Mislav Matejka, April 3, In the United States, the current expansion, which began in early 2009, is now in its eight year and is the second longest bull market since 1928, at over 96 months in duration and up over 250%. A significant 5 of 8

6 portion of returns in this cycle has come from valuation expansion, with P/E multiples expanding over 70%, and earnings growth accounting for only 28% of the return. 1 With indicators of U.S. long-term inflation levels decelerating and corporate earnings growth relatively muted, the market is now focused on fiscal stimulus coming from Washington to deliver further earnings growth, namely corporate tax reform and regulatory relief. In terms of monetary policy, the Federal Reserve continues to embark on its tightening cycle, forecasting three quarter-point rate hikes in 2017, dependent on economic data. Against the backdrop of rising interest rates, market correlations, which have remained high, should normalize, presenting a promising environment for active managers to differentiate performance. In a world where, until recently, over $10 trillion of sovereign bonds globally offered a negative yield, there is a clear need for investment assets that offer sustainable long-term returns, which is what our strategy attempts to offer. While continued accommodative monetary policies have created some pockets of froth and excess in asset markets, we believe that over the long-term, fundamentally-driven value investing could potentially deliver meaningful outperformance relative to passive, technically-driven momentum ETFs. While passive strategies have outperformed over the last eight years, fueled by strong inflows, the environment for active managers is supportive going forward, with managers having typically outperformed benchmarks in lower- or negative-return environments 2. As monetary policy in several major developed markets has likely reached the limit of its effectiveness, investors need to prepare for some eventual form of normalization in long-term interest rates. Given the flexibility afforded to our strategy by our focus on three key investment variables including 1) low price/earnings ratios, 2) high dividend yields and 3) strong earnings/dividend growth, we believe that we are well positioned across a number of potential interest rate environments. With equity price multiples having recovered closer to historical norms, going forward we believe that the bulk of returns will be generated via the components of dividend yield and earnings/dividend growth, which is in line with the long-term norm of equity markets globally. On both these measures we consider our portfolio to be well positioned with a higher, 4.1% dividend yield and a faster and more sustainable dividend growth profile relative to the benchmark, MSCI World. Year-to-date, 68% of our portfolio companies have raised their dividend payments by an average of 7.2% YoY. In this regard, strong dividend increasers include Boeing, Smurfit Kappa, BNP Paribas, Michelin, British American Tobacco, Cisco and Deutsche Telekom. With strong balance sheets and continued earnings growth, we anticipate that this trend will continue in 2017 and beyond. Thank you for your continued support and please do not hesitate to contact us with any questions. Best Regards, Schafer Cullen Capital Management, Inc. 1 Goldman Sachs, Global Strategy Paper, March 22, Strategas Research Partners, March 31, of 8

7 Disclosure: Schafer Cullen Capital Management (SCCM or the Adviser ) is an independent investment advisor registered under the Investment Advisers Act of This information should not be used as the primary basis for any investment decision nor should it be considered as advice to meet your particular investment needs. The portfolio securities and sector weights may change at any time at the discretion of the Adviser. It should not be assumed that any security transactions, holdings or sectors discussed were or will be profitable, or that future recommendations or decisions will be profitable or equal the investment performance discussed herein. Investing in equity securities is speculative and involves substantial risk. Past performance is no guarantee of future results. Market conditions can vary widely over time and can result in a loss of portfolio value. Individual account performance results will vary and will not match that of the composite or model. This variance depends on factors such as market conditions at the time of investment, and / or investment restrictions imposed by a client which may cause an account to either outperform or underperform the composite or model s performance. A list of all recommendations made by SCCM within the immediately preceding period of not less than one year is available upon request. The strategy depicted in this report has been managed in accordance with the investment objectives of the strategy as determined by the Adviser. The Adviser has selected benchmarks, which in their opinion closely resemble the style of the securities held in the composite or model portfolio of the strategy (e.g. large cap value, small cap value, international, etc.). The securities held in the composite or model are actively managed while the benchmark index is not. Investors should be aware that the Adviser makes no attempt to match the portfolio securities, or the security weightings of the benchmark. The composite or model s performance will be affected greater by the price movements of individual securities as the composite or model is more concentrated, generally less than 100 securities, while a comparative benchmark will generally have between 500 and 2,500 securities where individual security price movements have a lesser affect. An individual cannot invest directly in an index. In the case where this report displays model results, please be aware that such results do not represent actual trading and that results may not reflect the impact that material economic and market factors might have had on the Adviser's decision-making if the Adviser were actually managing clients' money. Model and actual results reflect the deduction of advisory fees, brokerage or other commissions, and any other expenses that a client would have paid or actually paid (Net of Fee performance) and reflect the reinvestment of dividends and other earnings. Schafer Cullen Capital Management, Inc. makes no representation that the use of this material can in and of itself be used to determine which securities to buy or sell, or when to buy or sell them; SCCM makes no representation, either directly or indirectly, that any graph, chart, formula or other device being offered herein will assist any person in making their own decisions as to which securities to buy, sell, or when to buy or sell them. For comparative purposes, the adviser uses the MSCI World Index. All opinions expressed constitute Schafer Cullen Capital Management s judgment as of the date of this report and are subject to change without notice. 7 of 8

8 Appendix: Portfolio Exposure and Characteristics as of 3/31/2017 Portfolio Exposure Sectors % Assets Regions % Assets Consumer Discretionary 5.3 Developed Asia Pacific 3.2 Consumer Staples 16.0 Europe 45.3 Energy 7.1 North America 47.2 Financials 21.2 Asia Pacific Emerging 0.0 Health Care 14.3 Latin America 0.0 Industrials 11.6 EMEA 1.3 Information Technology 9.7 Materials 6.0 Real Estate 0.0 Developed Markets 95.7 Telecommunications 4.6 Emerging Markets 1.3 Utilities 1.4 Cash 2.9 Cash 2.9 Total Total 100 Top Country Exposure United States United Kingdom Switzerland Germany France Netherlands Japan Canada Ireland Russia Top Ten Holdings JP Morgan Chase Microsoft General Electric Cisco Systems Pfizer Johnson & Johnson Boeing Altria Group MetLife ProSieben Portfolio Characteristics Forward Price / Earnings Forward Dividend Yield LT Debt / Capital Est. LT EPS Growth Weighted Avg. Market Cap ($B) SCCM Global High Dividend ADR MSCI World Index of 8