Portfolio and Market Discussion Artisan Partners U.S. Value Team

Transcription

1 Artisan High Income Fund Portfolio and Market Discussion Artisan Partners U.S. Value Team George Sertl, CFA, Portfolio Manager For Institutional Investors Only Not for Onward Distribution

2 Artisan Partners U.S. Value Team Artisan Partners U.S. Value Team Portfolio Managers (L to R above) Years of Investment Experience Years at Artisan Partners James C. Kieffer, CFA George O. Sertl, CFA Daniel L. Kane, CFA 18 9 Analysts Tyler W. Hardt, CFA 9 8 Craig Inman, CFA 17 5 Seasoned investment team with strong continuity among its decision makers and a long-term track record of alpha generation across the market-cap spectrum Traders Michael J. Blonski, CFA Matthew E. Wessels ARTISAN PARTNERS 2

3 Artisan Partners U.S. Value Team Investment Philosophy Three Margin of Safety Criteria Attractive Valuation Sound Financial Condition Distinct discount Low expectations Favorable risk/reward Focus on financial flexibility and liquidity Protection in difficult environments Allow management to pursue value-enhancing initiatives We seek cash-producing businesses in strong financial condition that are selling at undemanding valuations Attractive Business Economics Focus on free cash flow and return on capital capabilities Ability to grow underlying business value Avoid value traps ARTISAN PARTNERS 3

4 Artisan Partners U.S. Value Team Investment Process Idea Generation We are open minded and resourceful within the demanding framework of our three margin of safety criteria ARTISAN PARTNERS 4

5 Artisan Partners U.S. Value Team Portfolio Construction Our focus on risk awareness is weaved into portfolio construction Artisan Value Equity Strategy Positions weighted based on strength of margin of safety criteria Attention to economic exposure Typically holdings Maximum position size generally 5%* Maximum of 25% in any one industry* Maximum of 25% in non-us companies* Typically less than 15% cash Artisan U.S. Mid-Cap Value Strategy Positions weighted based on strength of margin of safety criteria Attention to economic exposure Typically holdings Maximum position size generally 5%* Maximum of 25% in any one industry* Typically less than 10% cash Sell Discipline Value realization More attractive alternatives Changing circumstances Sell Discipline Value realization More attractive alternatives Changing circumstances Based on a model portfolio. Individual accounts may vary. *Limitations apply at the time of purchase. Market capitalization range within that of the Russell Midcap Index, updated annually as of December 31. ARTISAN PARTNERS 5

6 Artisan Value Equity Strategy

7 Artisan Value Equity Strategy Sector Weights Source: FactSet/GICS/Russell. Based on a representative portfolio. The representative portfolio information is supplemental to the Artisan Value Equity Composite presentation provided and individual accounts within the Composite may vary. ARTISAN PARTNERS 7

8 Artisan Value Equity Strategy Portfolio Statistics Fundamental Metrics Strategy Russell 1000 Value Index Russell 1000 Index Median ROE 11.0% 9.8% 11.7% Median Fixed Charge Coverage Ratio 7.4X 4.4X 5.5X Median Price/Book Value 1.8X 2.3X 3.1X Weighted Avg. P/E Ratio (FY1) X 16.4X 18.1X Weighted Avg. Enterprise Value-to-EBIT X 16.0X 15.7X Weighted Avg. Market Cap (Billions) $111.5 $125.3 $151.2 Median Market Cap (Billions) $25.3 $8.6 $9.0 Number of Securities Percent in Top 10 Holdings 36.9% 23.7% 16.8% Turnover Ratio % Source: FactSet/Russell. As of 31 Mar 2017 unless otherwise indicated. 1 Harmonic; excluding negative earners. 2 Harmonic; excluding financial sector holdings. 3 For the calendar year ended 31 Dec The representative portfolio information is supplemental to the Artisan Value Equity Composite presentation provided and individual accounts within the Composite may vary. ARTISAN PARTNERS 8

9 Artisan Value Equity Strategy Historical Characteristics ROE Fixed Charge Coverage 30% 15X 20% 10X 10% 5X 0% 0X 20X 18X 15X 14X 10X 10X 5X 6X Sep 2005 Sep 2006 Sep 2007 Sep 2008 Sep 2009 Sep 2010 Sep 2011 Sep 2012 Sep 2013 Sep 2014 Sep 2015 Sep 2016 Sep 2005 Sep 2006 Sep 2007 Sep 2008 Sep 2009 Sep 2010 Sep 2011 Sep 2012 Sep 2013 Sep 2014 Sep 2015 Sep 2016 Sep 2005 Sep 2006 Sep 2007 Sep 2008 Sep 2009 Sep 2010 Sep 2011 Sep 2012 Sep 2013 Sep 2014 Sep 2015 Sep 2016 Sep 2005 Sep 2006 Sep 2007 Sep 2008 Sep 2009 Sep 2010 Sep 2011 Sep 2012 Sep 2013 Sep 2014 Sep 2015 Sep 2016 Artisan Value Equity Russell 1000 Value Index Artisan Value Equity Russell 1000 Value Index PE FY1 1 Enterprise Value-to-EBIT 2 Artisan Value Equity Russell 1000 Value Index Artisan Value Equity Russell 1000 Value Index Source: Artisan Partners/FactSet/Russell. As of 31 Mar Information shown excludes negative earners. 2 Information shown excludes financial sector holdings. The representative portfolio information is supplemental to the Artisan Value Equity Composite presentation provided and individual accounts within the Composite may vary. ARTISAN PARTNERS 9

10 Artisan Value Equity Strategy Investment Results Average Annual Total Returns Source: Artisan Partners/Russell. Past performance does not guarantee and is not a reliable indicator of future results. Gross- and net-of-fees performance shown for the Composite. Net-of-fees composite returns were calculated using the highest model investment advisory fees applicable to portfolios within the composite. Current performance may be lower or higher than performance shown. Returns greater than one year are annualized unless otherwise noted. Composite inception: 1 Jul ARTISAN PARTNERS 10

11 VALUE Artisan Partners U.S. Value Team Factor Performance Russell 1000 Value Factor Performance Risk Technical Momentum Profitability Growth Value Relative Value Traditional Value Expected Growth Historical Growth Accelerating Sales Profit Trends Earnings Momentum Price Momentum Price Reversal Small Size Earnings Quality Earnings Risk Financial Leverage Risk Technical Momentum Profitability Growth Value Relative Value Traditional Value Expected Growth Historical Growth Accelerating Sales Profit Trends Earnings Momentum Price Momentum Price Reversal Small Size Earnings Quality Earnings Risk Financial Leverage Risk Technical Momentum Profitability Growth Value Relative Value Traditional Value Expected Growth Historical Growth Accelerating Sales Profit Trends Earnings Momentum Price Momentum Price Reversal Small Size Earnings Quality Earnings Risk Financial Leverage Price Volatility Price Volatility Price Volatility -60% -40% -20% 0% 20% 40% -60% -40% -20% 0% 20% 40% -60% -40% -20% 0% 20% 40% Source: Evercore ISI Quantitative Research. As of 31 Dec Relative Value is a factor that is measured by comparing price multiples of earnings, sales and cash flow with industry multiples and across time for a company. Traditional Value is a factor that is measured using traditional definitions of value including, dividend yield, price multiples of earnings, book value, cash flow and sales. Expected Growth is a factor that is a forward-looking measure calculated using consensus expectations of earnings growth over the next two years and expected long-term growth. Historical Growth is a factor that is measured using changes in earnings, revenues and cash flows over the recent one to three years. Accelerating Sales is a factor that measures changes in top-line growth over the past three to five years. Profit Trends is a factor that is measured using changes in gross profit related ratios such as overhead to sales, earnings to sales, sales to assets and changes in receivable and inventory over the past few years. Earnings Momentum is a factor that is measured in terms of changes in consensus earnings estimates for the next 12 months over the most recent quarter and using the most recent quarterly earnings surprise. Price Momentum is a factor that is measured over the past 6-12 months. Price Reversal is a factor that incorporates standard technical signals based on time horizons of one to four weeks. Small Size is a factor that uses market capitalization in addition to assets, sales and stock price to gauge a firm s size. Earnings Quality is a factor that is measured using return on equity variability, asset turnover, dividend growth and profit margins. Earnings Risk is a factor that measures variability of companies earning, sales and cash flow over the past 8-12 quarters, in addition to forward 1- and 2-year estimates. Financial Leverage is a factor that is calculated as a composite factor that includes degree of financial leverage, debt to equity, interest and cash flow coverage ratios. Price Volatility is a factor that is calculated using a combination of 90-day price volatility, market beta and residuals. Past performance does not guarantee and is not a reliable indicator of future results. ARTISAN PARTNERS 11

12 Artisan Value Equity Strategy Portfolio Holdings (% of total portfolio) Source: FactSet/GICS. As of 31 Mar Cash represented 6.4% of the total representative portfolio at 31 Mar Securities of the same issuer are aggregated to determine the weight in the portfolio. The representative portfolio information is supplemental to the Artisan Value Equity Composite presentation provided and individual accounts within the Composite may vary. ARTISAN PARTNERS 12

13 Artisan Value Equity Strategy Top 10 Holdings Company Initial Purchase % of total portfolio Devon Energy Corp An oil and natural gas exploration and production company. 23 Jul Air Lease Corp A global aircraft leasing company. 12 Feb Berkshire Hathaway Inc A holding company of a diverse group of businesses. 28 Mar Citigroup Inc A global financial services holding company. 24 Apr LyondellBassell Industries NV One of the world s largest chemical companies. 6 Jun Goldcorp Inc One of the lowest cost senior gold producers, with operations and development projects in politically stable jurisdictions throughout the Americas. 31 Dec Apple Inc A designer, manufacturer and marketer of consumer electronics and computers. 14 Apr Alphabet Inc A global technology company focused on areas of search, advertising, operating systems, platforms, enterprise and hardware products. 19 Dec Occidental Petroleum Corp An oil and natural gas exploration and production company. 30 Nov Cie Generale des Etablissements Michelin One of the largest tire makers in the world. 14 Jun Total 36.9% Source: Artisan Partners/FactSet. As of 31 Mar Securities of the same issuer are aggregated to determine the weight in the portfolio. The representative portfolio information is supplemental to the Artisan Value Equity Composite presentation provided and individual accounts within the Composite may vary. ARTISAN PARTNERS 13

14 Artisan U.S. Mid-Cap Value Strategy

15 Artisan U.S. Mid-Cap Value Strategy Sector Weights Source: FactSet/GICS/Russell. Based on a representative portfolio. The representative portfolio information is supplemental to the Artisan U.S. Mid-Cap Value Composite presentation provided and individual accounts within the Composite may vary. ARTISAN PARTNERS 15

16 Artisan U.S. Mid-Cap Value Strategy Portfolio Statistics Fundamental Metrics Strategy Russell Midcap Value Index Russell Midcap Index Median ROE 10.3% 9.3% 10.9% Median Fixed Charge Coverage Ratio 7.0X 4.0X 4.7X Median Price/Book Value 1.9X 2.2X 2.8X Weighted Avg. P/E Ratio (FY1) X 16.6X 18.2X Weighted Avg. Market Cap (Billions) $11.7 $13.8 $14.0 Median Market Cap (Billions) $9.1 $6.5 $6.9 Number of Securities Percent in Top 10 Holdings 28.1% 7.9% 5.1% Turnover Ratio % Source: FactSet/Russell. As of 31 Mar 2017 unless otherwise indicated. 1 Harmonic; excluding negative earners. 2 For the calendar year ended 31 Dec The representative portfolio information is supplemental to the Artisan U.S. Mid-Cap Value Composite presentation provided and individual accounts within the Composite may vary. ARTISAN PARTNERS 16

17 Artisan U.S. Mid-Cap Value Strategy Historical Characteristics ROE Fixed Charge Coverage 20% 15X 15% 10X 10% 5X 5% 0X Mar 2001 Mar 2002 Mar 2003 Mar 2004 Mar 2005 Mar 2006 Mar 2007 Mar 2008 Mar 2009 Mar 2010 Mar 2011 Mar 2012 Mar 2013 Mar 2014 Mar 2015 Mar 2016 Mar 2017 Mar 2001 Mar 2002 Mar 2003 Mar 2004 Mar 2005 Mar 2006 Mar 2007 Mar 2008 Mar 2009 Mar 2010 Mar 2011 Mar 2012 Mar 2013 Mar 2014 Mar 2015 Mar 2016 Mar 2017 Artisan U.S. Mid-Cap Value Russell Midcap Value Index Artisan U.S. Mid-Cap Value Russell Midcap Value Index PE FY1 1 Enterprise Value-to-EBIT 2 20X 18X 15X 14X 10X 10X 5X 6X Mar 2001 Mar 2002 Mar 2003 Mar 2004 Mar 2005 Mar 2006 Mar 2007 Mar 2008 Mar 2009 Mar 2010 Mar 2011 Mar 2012 Mar 2013 Mar 2014 Mar 2015 Mar 2016 Mar 2017 Mar 2001 Mar 2002 Mar 2003 Mar 2004 Mar 2005 Mar 2006 Mar 2007 Mar 2008 Mar 2009 Mar 2010 Mar 2011 Mar 2012 Mar 2013 Mar 2014 Mar 2015 Mar 2016 Mar 2017 Artisan U.S. Mid-Cap Value Russell Midcap Value Index Artisan U.S. Mid-Cap Value Russell Midcap Value Index Source: Artisan Partners/FactSet/Russell. As of 31 Mar Information shown excludes negative earners. 2 Information shown excludes financial sector holdings. The representative portfolio information is supplemental to the Artisan Mid-Cap Value Composite presentation provided and individual accounts within the Composite may vary. ARTISAN PARTNERS 17

18 Artisan U.S. Mid-Cap Value Strategy Investment Results Average Annual Total Returns Source: Artisan Partners/Russell. Past performance does not guarantee and is not a reliable indicator of future results. Gross- and net-of-fees performance shown for the Composite. Net-of-fees composite returns were calculated using the highest model investment advisory fees applicable to portfolios within the composite. Current performance may be lower or higher than performance shown. Returns greater than one year are annualized unless otherwise noted. Composite inception: 1 Apr ARTISAN PARTNERS 18

19 MCV Artisan Partners U.S. Value Team Factor Performance Russell Midcap Value Factor Performance Risk Technical Momentum Profitability Growth Value Relative Value Traditional Value Expected Growth Historical Growth Accelerating Sales Profit Trends Earnings Momentum Price Momentum Price Reversal Small Size Earnings Quality Earnings Risk Financial Leverage Risk Technical Momentum Profitability Growth Value Relative Value Traditional Value Expected Growth Historical Growth Accelerating Sales Profit Trends Earnings Momentum Price Momentum Price Reversal Small Size Earnings Quality Earnings Risk Financial Leverage Risk Technical Momentum Profitability Growth Value Relative Value Traditional Value Expected Growth Historical Growth Accelerating Sales Profit Trends Earnings Momentum Price Momentum Price Reversal Small Size Earnings Quality Earnings Risk Financial Leverage Price Volatility Price Volatility Price Volatility -75% -50% -25% 0% 25% 50% -75% -50% -25% 0% 25% 50% -75% -50% -25% 0% 25% 50% Source: Evercore ISI Quantitative Research. As of 31 Dec Relative Value is a factor that is measured by comparing price multiples of earnings, sales and cash flow with industry multiples and across time for a company. Traditional Value is a factor that is measured using traditional definitions of value including, dividend yield, price multiples of earnings, book value, cash flow and sales. Expected Growth is a factor that is a forward-looking measure calculated using consensus expectations of earnings growth over the next two years and expected long-term growth. Historical Growth is a factor that is measured using changes in earnings, revenues and cash flows over the recent one to three years. Accelerating Sales is a factor that measures changes in top-line growth over the past three to five years. Profit Trends is a factor that is measured using changes in gross profit related ratios such as overhead to sales, earnings to sales, sales to assets and changes in receivable and inventory over the past few years. Earnings Momentum is a factor that is measured in terms of changes in consensus earnings estimates for the next 12 months over the most recent quarter and using the most recent quarterly earnings surprise. Price Momentum is a factor that is measured over the past 6-12 months. Price Reversal is a factor that incorporates standard technical signals based on time horizons of one to four weeks. Small Size is a factor that uses market capitalization in addition to assets, sales and stock price to gauge a firm s size. Earnings Quality is a factor that is measured using return on equity variability, asset turnover, dividend growth and profit margins. Earnings Risk is a factor that measures variability of companies earning, sales and cash flow over the past 8-12 quarters, in addition to forward 1- and 2-year estimates. Financial Leverage is a factor that is calculated as a composite factor that includes degree of financial leverage, debt to equity, interest and cash flow coverage ratios. Price Volatility is a factor that is calculated using a combination of 90-day price volatility, market beta and residuals. Past performance does not guarantee and is not a reliable indicator of future results. ARTISAN PARTNERS 19

20 Artisan U.S. Mid-Cap Value Strategy Portfolio Holdings (% of total portfolio) Source: FactSet/GICS. As of 31 Mar Cash represented 8.2% of the total representative portfolio at 31 Mar Securities of the same issuer are aggregated to determine the weight in the portfolio. The representative portfolio information is supplemental to the Artisan U.S. Mid-Cap Value Composite presentation provided and individual accounts within the Composite may vary. ARTISAN PARTNERS 20

21 Artisan U.S. Mid-Cap Value Strategy Top 10 Holdings Company Initial Purchase % of total portfolio Air Lease Corp A global aircraft leasing company. 1 Dec Devon Energy Corp An oil and natural gas exploration and production company. 31 Dec Alleghany Corp Provides property and casualty and surety insurance. 5 Jun Celanese Corp A globally integrated producer of chemicals and advanced materials. 23 Jan Arrow Electronics Inc A global distributor of electronic components and computer products. 25 Jun Avnet Inc A global distributor of electronic components and computer products. 14 Dec Apache Corp An oil and natural gas exploration and production company. 28 Jul Torchmark Corp A provider of life and supplemental health insurance. 23 Aug Arch Capital Group Ltd A global insurance and reinsurance writer. 15 Jul Hess Corp An oil and natural gas exploration and production company. 1 Jun Total 28.1% Source: Artisan Partners/FactSet. As of 31 Mar Securities of the same issuer are aggregated to determine the weight in the portfolio. The representative portfolio information is supplemental to the Artisan U.S. Mid-Cap Value Composite presentation provided and individual accounts within the Composite may vary. ARTISAN PARTNERS 21

22 Q & A

23 Artisan Partners U.S. Value Team Valuations of REITs and Utilities In spite of valuations that look full to us, REITs and utilities meaningfully outperformed the market in 2014 through 2015, as investors thirst for yield in a low interest rate environment has pushed them higher. In 2016, we began to see a reversal of those trends, as REITs and utilities underperformed. These interest-rate proxies make up around 11% of the Russell 1000 Value Index vs. 1% of our portfolio. Our lack of exposure stems from concerns on valuations and maintaining discipline to our investment philosophy and process. Our portfolio positioning is a result of our bottom-up investment approach we want to lean into areas of exposure where we see particular value but also ensure we don t take our economic exposure too far to turn the portfolio into a macro bet. 26.0X REITs Price to AFFO 20.0X Russell 1000 Value Utilities Sector P/E (FY1) 21.0X 17.0X 16.0X Average 14.0X Average 11.0X 11.0X 6.0X 8.0X Jan 1999 Jan 2000 Jan 2001 Jan 2002 Jan 2003 Jan 2004 Jan 2005 Jan 2006 Jan 2007 Jan 2008 Jan 2009 Jan 2010 Jan 2011 Jan 2012 Jan 2013 Jan 2014 Jan 2015 Jan 2016 Jan 2017 Mar 1997 Mar 1998 Mar 1999 Mar 2000 Mar 2001 Mar 2002 Mar 2003 Mar 2004 Mar 2005 Mar 2006 Mar 2007 Mar 2008 Mar 2009 Mar 2010 Mar 2011 Mar 2012 Mar 2013 Mar 2014 Mar 2015 Mar 2016 Mar 2017 Source: Artisan Partners/FactSet/GICS/Russell. As of 31 Mar Rolling 12-month REITs Price to AFFO Source: FactSet and BofA Merrill Lynch Global Research. Based on BofA Merrill Lynch estimates of its coverage universe. Adjusted Funds from Operations (AFFO) is a measure of financial performance used primarily in the analysis of REITs. ARTISAN PARTNERS 23

24 Artisan Partners U.S. Value Team Valuations of REITs and Utilities In spite of valuations that look full to us, REITs and utilities meaningfully outperformed the market in 2014 through 2015, as investors thirst for yield in a low interest rate environment pushed them higher. In 2016, we began to see a reversal of those trends, as REITs and utilities underperformed. These interest-rate proxies make up around 25% of the Russell Midcap Value Index vs. 3% for our portfolio. Our below-benchmark exposure stems from concerns on valuations and maintaining discipline to our investment philosophy and process. Our portfolio positioning is a result of our bottom-up investment approach we want to lean into areas of exposure where we see particular value but also ensure we don t take our economic exposure too far to turn the portfolio into a macro bet. REITs Price to AFFO Russell Midcap Value Utilities Sector P/E (FY1) 26.0X 20.0X 21.0X 17.0X 16.0X Average 14.0X Average 11.0X 11.0X 6.0X Jan 1999 Jan 2000 Jan 2001 Jan 2002 Jan 2003 Jan 2004 Jan 2005 Jan 2006 Jan 2007 Jan 2008 Jan 2009 Jan 2010 Jan 2011 Jan 2012 Jan 2013 Jan 2014 Jan 2015 Jan 2016 Jan X Mar 1997 Mar 1998 Mar 1999 Mar 2000 Mar 2001 Mar 2002 Mar 2003 Mar 2004 Mar 2005 Mar 2006 Mar 2007 Mar 2008 Mar 2009 Mar 2010 Mar 2011 Mar 2012 Mar 2013 Mar 2014 Mar 2015 Mar 2016 Mar 2017 Source: Artisan Partners/FactSet/GICS/Russell. As of 31 Mar Rolling 12-month REITs Price to AFFO Source: FactSet and BofA Merrill Lynch Global Research. Based on BofA Merrill Lynch estimates of its coverage universe. Adjusted Funds from Operations (AFFO) is a measure of financial performance used primarily in the analysis of REITs. ARTISAN PARTNERS 24

25 Artisan Value Equity Strategy Relative Performance Artisan Value Equity Composite Relative to Russell 1000 Value Index Quarterly Excess Returns (bps) Up Market Outperformance* 17 out of 33 quarters (52%) Down Market Outperformance 7 out of 14 quarters (50%) Q Q Q Q Q Q Q Q Q Q Q Q Up Market Down Market Performance in Up/Down Markets Since Inception (%) Composite Russell 1000 Value Index Annualized Up Market Returns Annualized Down Market Returns Average Annual Total Return Source: Artisan Partners/FactSet/Russell. As of 31 Mar *Includes Q time period. Past performance does not guarantee and is not a reliable indicator of future results. Gross-of-fees performance shown for the Composite. Current performance may be lower or higher than performance shown. Up Market periods are those when the return of the Index is greater than 0%, while Down Market periods are those when the return is less than 0%. Annualized Up Market Return is calculated by taking the quarterly performance of the Composite and the Index, for each quarter in which the Index was up (whether or not the performance of the Composite was greater than 0%), and geometrically linking the returns to compute a cumulative total return earned during periods when the Index was up (the "up period cumulative return"). This calculation effectively assumes a return of 0% in each quarter in which the performance of the Index was negative. Annualized Up Market Return is equivalent to the annual rate of return that, if earned in each year included in this calculation would produce the up period cumulative return over the same timeframe. Annualized Down Market Return is calculated in the same way for periods in which the Index was down, and also effectively assumes a return of 0% in each quarter in which the performance of the index was positive. The Average Annual Total Return shown is equivalent to the annual rate of return that, if earned by the Composite in each year, would produce the cumulative total return achieved by the strategy. Inception: 1 Jul ARTISAN PARTNERS 25

26 Artisan U.S. Mid-Cap Value Strategy Relative Performance Artisan U.S. Mid-Cap Value Composite Relative to Russell Midcap Value Index Quarterly Excess Returns (bps) Up Market* Outperformance 19 out of 45 quarters (42%) Down Market Outperformance 12 out of 17 quarters (71%) -800 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Up Market Down Market Performance in Up/Down Markets Since Inception (%) Composite Russell Midcap Value Index Annualized Up Market Returns Annualized Down Market Returns Average Annual Total Return Source: Artisan Partners/FactSet/Russell. As of 31 Mar *Includes Q2 2009, Q4 2011, Q and Q time periods. Outperformed Q and Q Past performance does not guarantee and is not a reliable indicator of future results. Gross-of-fees performance shown for the Composite. Data represents the current investment team which began managing the portfolio in November Current performance may be lower or higher than performance shown. Up Market periods are those when the return of the Index is greater than 0%, while Down Market periods are those when the return is less than 0%. Annualized Up Market Return is calculated by taking the quarterly performance of the Composite and the Index, for each quarter in which the Index was up (whether or not the performance of the Composite was greater than 0%), and geometrically linking the returns to compute a cumulative total return earned during periods when the Index was up (the "up period cumulative return"). This calculation effectively assumes a return of 0% in each quarter in which the performance of the Index was negative. Annualized Up Market Return is equivalent to the annual rate of return that, if earnedin each year included in this calculation would produce the up period cumulative return over the same timeframe. Annualized Down Market Return is calculated in the same way for periods in which the Index was down, and also effectively assumes a return of 0% in each quarter in which the performance of the index was positive. The Average Annual Total Return shown is equivalent to the annual rate of return that, if earned by the Composite in each year, would produce the cumulative total return achieved by the strategy. Inception: 1 Apr ARTISAN PARTNERS 26

27 Artisan Partners U.S. Value Team We ve Been Here Before The team has seen a number of investment cycles during its tenure. Within these cycles, there have been short-term periods when the team s process was out of step with the market, which were historically followed by periods of outperformance. Artisan U.S. Mid-Cap Value Strategy Time Period Artisan U.S. Mid-Cap Value Strategy Russell Midcap Value Index Excess Return Next 3 Years Excess Return Next 5 Years Excess Return Apr 2000 Mar % 13.82% bps bps bps Jul 2005 Jun % 14.25% bps bps bps Apr 2009 Mar % 72.41% bps bps bps Oct 2011 Sep % 29.28% bps bps? Jan 2014 Dec % 14.75% bps?? Artisan Value Equity Strategy Time Period Artisan Value Equity Strategy Russell 1000 Value Index Excess Return Next 3 Years Excess Return Next 5 Years Excess Return Jan 2006 Dec % 22.25% bps bps bps Jan 2014 Dec % 13.45% bps?? Source: Artisan Partners/Russell/FactSet. Artisan U.S. Mid-Cap Value Composite inception: 1 Apr Artisan Value Equity Composite inception: 1 Jul As of 31 Mar Past performance does not guarantee and is not a reliable indicator of future results. Gross-of-fees performance shown for the Artisan U.S. Mid-Cap Value and Value Equity Composites. ARTISAN PARTNERS 27

28 U.S. Value Team SA Artisan Partners U.S. Value Team Biographies Artisan Partners U.S. Value Team James C. Kieffer, CFA, is a managing director of Artisan Partners and a portfolio manager on the U.S. Value team. In this role, he is a portfolio manager for the Artisan Value Equity and U.S. Mid-Cap Value Strategies. Prior to joining Artisan Partners in August 1997, Mr. Kieffer was a research analyst at the investment firm McColl Partners. Mr. Kieffer began his investment career at Wachovia Corporation working initially as a personal trust portfolio manager and later as a general equities and small-cap value research analyst in the institutional portfolio group. Mr. Kieffer holds a bachelor s degree in economics from Emory University. George O. Sertl, CFA, is a managing director of Artisan Partners and a portfolio manager on the U.S. Value team. In this role, he is a portfolio manager for the Artisan Value Equity and U.S. Mid-Cap Value Strategies. Prior to joining Artisan Partners in January 2000, Mr. Sertl was a research analyst at Schwartz Investment Counsel. Mr. Sertl began his investment career at Pauli & Company working as a research analyst in Mr. Sertl holds a bachelor s degree in economics and history from the University of Richmond and a master s degree in economics from St. Louis University. Daniel L. Kane, CFA, is a portfolio manager on the Artisan Partners U.S. Value Team. In this role, he is a portfolio manager for the Artisan Value Equity and U.S. Mid-Cap Value Strategies. Prior to joining Artisan Partners in March 2008, Mr. Kane was a senior small-cap investment analyst at BB&T Asset Management, Inc. from August 2005 to March Mr. Kane began his investment career as a domestic equities securities analyst at the State of Wisconsin Investment Board in Mr. Kane holds a bachelor s degree in finance from the University of Wisconsin-Madison and a master s degree in business administration from the University of Chicago Booth School of Business. TylerW.Hardt,CFA,is an analyst on the Artisan Partners U.S. Value Team. In this role, he conducts fundamental research as a generalist. Prior to joining Artisan Partners injune 2009, Mr. Hardt attended the Wharton School, University of Pennsylvania and served as a summer intern for the Artisan Partners U.S. Value Team. Earlier in his career, Mr. Hardt was a strategic planning analyst for American Tire Distributors from April 2005 to August 2007 and an associate for AT&T Corporation from August 2003 to March Mr. Hardt holds a bachelor s degree in finance from University of Maryland and a master s degree in business administration from the Wharton School, University of Pennsylvania. Craig Inman, CFA, is an analyst on the Artisan Partners U.S. Value Team. In this role, he conducts fundamental research as a generalist. Prior to joining Artisan Partners in February 2012, Mr. Inman was a trader and analyst at Reicon Capital from February 2002 to February Mr. Inman began his investment career in 1999 as a trader at INGInvestment Management. Mr. Inman holds a bachelor s degree in business from Wake Forest University. Michael J. Blonski, CFA, is the lead trader for the Artisan Partners U.S. Value Team. Prior to joining Artisan Partners in April 1995, Mr. Blonski was a senior auditor for Arthur Andersen, LLP from September 1991 through April Mr. Blonski holds a bachelor s degree in accounting (magna cum laude) from Marquette University and a master s degree in business administration from the University of Chicago Booth School of Business. Matthew E. Wessels is a trader for the Artisan Partners U.S. Value Team. Mr. Wessels joined Artisan Partners in June Mr. Wessels holds a bachelor s degree in finance and business economics (cum laude) and a master s degree in business administration from Marquette University.

29 Artisan Partners U.S. Value Team Biographies Client Service Team Michael D. Petroff, CFA, is a managing director of Artisan Partners and a business leader for the firm s U.S. Value team. Prior to joining Artisan Partners in March 2010, Mr. Petroff was vice president of institutional sales at Heartland Advisors, Inc. and a portfolio manager for the Heartland Value Plus Fund. Earlier in his career, he held positions as vice president of institutional equity sales for Robert W. Baird & Co., Inc. and vice president in the financial sponsors group for Deutsche Bank AG (previously BT Securities, Inc.). Mr. Petroff holds a bachelor s degree in economics from Princeton University and a master s degree in business administration from The Wharton School, University of Pennsylvania. Peter T. Montgomery is a director on the institutional client services team at Artisan Partners with responsibility for institutional marketing and client service of the strategies managed by the firm s U.S. Value team. Prior to joining Artisan Partners in March 2013, Mr. Montgomery was a client manager and product specialist at Southeastern Asset Management. Before that, he was a senior relationship manager at Private Capital Management and began his career as a relationship manager at Trusco Capital Management. Mr. Montgomery holds a bachelor s degree in economics from Western Carolina University and a master s degree in business administration from Georgia State University. Niki Wilson Armstrong is an associate director on the institutional client services team at Artisan Partners with responsibility for client support for the strategies managed by the firm s U.S. Value team. Prior to joining Artisan Partners in June 2012, Ms. Armstrong was vice president, client relations and business development at evestment Alliance. Before that, she worked at Citco Funds as a hedge fund P&L specialist and client relationship manager. Earlier in her career, Ms. Armstrong was a senior analyst in RBC Capital Markets Alternative Assets Group. Ms. Armstrong holds a bachelor s degree in finance from Florida State University. Wendy P. Hilker supports the institutional client services group responsible for the strategies managed by the firm s U.S. Value team. Prior to joining Artisan Partners in May 2014, Ms. Hilker was an executive administrative assistant at Cousins Properties Incorporated. Before that, she was a senior executive administrative assistant for the retail central market at RBC Bank in Atlanta. Ms. Hilker holds a bachelor s degree in business administration from the University of North Carolina at Chapel Hill.

30 Artisan Partners Notes and Disclosures This section of this presentation contains information important to a complete understanding of the material presented. Please review it carefully. Artisan Partners is an independent investment management firm focused on providing high value-added, active investment strategies to sophisticated clients globally. Artisan Partners Limited Partnership (APLP) is an investment adviser registered with the US Securities and Exchange Commission (SEC). Artisan Partners UK LLP (APUK) is authorized and regulated by the Financial Conduct Authority and is a registered investment adviser with the SEC. APLP and APUK are collectively, with their parent company and affiliates, referred to as Artisan Partners herein. Form ADV: Additional information about APLP or APUK, the firms, its partners, ownership, investment strategies, fees and expenses and policies is contained in each firm s respective Form ADV. Each firm will supply a copy of its Form ADV upon request. Artisan U.S. Mid-Cap Value Strategy Securities of small- and medium-sized companies tend to have a shorter history of operations, be more volatile and less liquid and may have underperformed securities of large companies during some periods. Value securities may underperform other asset types during a given period. Artisan Value Equity Strategy International investments involve special risks, including currency fluctuation, lower liquidity, different accounting methods and economic and political systems, and higher transaction costs. These risks typically are greater in emerging markets. Securities of small- and medium-sized companies tend to have a shorter history of operations, be more volatile and less liquid and may have underperformed securities of large companies during some periods. Value securities may underperform other asset types during a given period. Composite Performance: All performance results are net of commissions and transaction costs, and have been presented gross or net of investment advisory fees. For performance presented net of fees, fees may be higher for certain pooled vehicles and the composite may include accounts with performance-based fees. Dividend income is recorded net of foreign withholding taxes on ex-dividend date or as soon after the ex-dividend date as the information becomes available to Artisan Partners. Interest income is recorded on the accrual basis. Performance results for the index include reinvested dividends and are presented net of foreign withholding taxes but, unlike the portfolio's returns, do not reflect the payment of sales commissions or other expenses incurred in the purchase or sale of the securities included in the indices. IPO investments are not an integral component of the Strategy's investment process and may not be available in the future. A client s returns will be reduced by the advisory fees and other expenses it may incur in the management of its account. For example, an actively managed account of $20 million with an annual rate of return of 10% compounded over a 10-year period that was charged an advisory fee of 1.05%, would achieve a net-of-fee return of %; compared to a gross-of-fee return of 159.4% based on the same assumptions. Unless otherwise indicated, the Artisan Strategy characteristics relate to that of an investment composite or a representative account managed within a composite. It is intended to provide a general illustration of the investment strategy and considerations used by Artisan Partners in managing that strategy. Individual accounts may differ, at times significantly, from the reference data shown due to varying account restrictions, fees and expenses, and since-inception time periods, among others. Where applicable, this information is supplemental to, and not to be construed with, a current or prospective client s investment account information. Frank Russell Company ( Russell ) is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and / or Russell ratings or underlying data and no party may rely on any Russell Indexes and / or Russell ratings and / or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell s express written consent. Russell does not promote, sponsor or endorse the content of this communication. Totals may not sum due to rounding. All data shown is in USD unless otherwise indicated. Portfolio Statistics: Portfolio statistics are intended to provide a general view of the entire portfolio, or Index, at a certain point in time. Statistics are calculated using information obtained from various data sources. Artisan Partners excludes outliers when calculating portfolio statistics. If information is unavailable for a particular security Artisan may use data from a related security to calculate portfolio statistics. This material represents the views and opinions of Artisan Partners as of June 2017, are based on current market conditions, which will fluctuate, and are subject to change without notice. While the information contained herein is believed to be reliable, there is no guarantee to the accuracy or completeness of any statement in the discussion. This material is for informational purposes only and should not be considered as investment advice or a recommendation of any investment service, product or individual security. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation. Margin of Safety: Margin of Safety, a concept developed by Benjamin Graham, is the difference between the market price and the estimated intrinsic value of a business. A large margin of safety may help guard against permanent capital loss and improve the probability of capital appreciation. Margin of safety does not prevent market loss all investments contain risk and may lose value. Sector Allocation: Sector exposure percentages reflect sector designations as currently classified by GICS. The Global Industry Classification Standard (GICS ) is the exclusive intellectual property of MSCI Inc. (MSCI) and Standard & Poor s Financial Services, LLC (S&P). Neither MSCI, S&P, their affiliates, nor any of their third party providers ( GICS Parties ) makes any representations or warranties, express or implied, with respect to GICS or the results to be obtained by the use thereof, and expressly disclaim all warranties, including warranties of accuracy, completeness, merchantability and fitness for a particular purpose. The GICS Parties shall not have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of such damages. Portfolio Holdings: For the purpose of determining the portfolio's holdings, securities of the same issuer are aggregated to determine the weight in the portfolio. For an index, the largest holdings are calculated at the security level and do not aggregate securities held by an issuer. Holdings information is not intended to represent or predict portfolio investment performance or as a recommendation of any individual security. A complete list of the securities held by portfolio, other than cash and cash equivalents unless otherwise noted, as of the date indicated is included. Securities named in this material, but not listed within the portfolio holdings page were not held as of the date reported. Portfolio holdings are subject to change without notice. Upon request, Artisan Partners will furnish to any prospective client a complete list of all securities purchased over the last year, including the name of each security, the date(s) itwaspurchased and/or sold, the market price of those transactions, and the market price of those securities as of the most recent practicable date. This material is for informational purposes only and shall not be construed as investment or tax advice. Prospective investors should consult their financial and tax adviser before making investments in order to determine whether an investment will be suitable for them. In no event shall Artisan Partners have any liability for direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) losses or any other damages resulting from the use of this material Artisan Partners. All rights reserved. This material is not for use by retail investors and may not be reproduced or distributed without Artisan Partners' permission. This material must be preceded or accompanied by a presentation that complies with the Global Investment Performance Standards (GIPS ). This material may include the views of the portfolio manager and other information relating to the portfolio and portfolio securities. While we believe the data accurately reflects the investment process, this information is presented as of the date indicated and will change over time. For Institutional Investors Only Not for Onward Distribution ARTISAN PARTNERS 30