Copeland Capital Management Risk Managed Dividend Growth Fund (CDGRX) Class A (CDCRX) Class C (CDIVX) Class I. June 30, 2016

Transcription

1 Copeland Capital Management Risk Managed Dividend Growth Fund (CDGRX) Class A (CDCRX) Class C (CDIVX) Class I June 30, 2016 Page 1 NLD Review Code: 1303-NLD-8/22/2016

2 How the Fund Works - Three Components of Alpha Generation Result: CDGRX An All Cap Dividend Growth strategy with a goal to provide capital appreciation, income growth and preservation of principal III. Sector Signals I. Dividend Growth Stocks II. Copeland s Experienced Team Past performance is not a guarantee of future results. Please refer to the Appendix for additional disclosures. Page 2

3 Part I Dividend Growth Stocks Page 3

4 Average Annual Return Why Dividend Growth 20% All Cap Stocks: March 31, 1981 December 31, % 16% 14.9% 14% 12% 10% 12.2% 10.3% 9.3% 8% 6% 4% 4.2% 2% 0% Div Growers & Initiators Russell 3000 Index Flat Div Payers Non Div Payers Div Cutters & Eliminators Copyright 2015 Ned Davis Research, Inc. Further distribution prohibited without prior permission. All Rights Reserved. See NDR Disclaimer at For data vendor disclaimers refer to The information presented is intended to illustrate performance of All Cap stocks according to their dividend policy. Returns shown include dividends reinvested. This is not the performance of any strategy overseen by Copeland and there is no guarantee that investors will experience the type of performance reflected in the information presented. Strategies managed by Copeland s investment team are subject to transaction costs, management fees, trading fees or other expenses not represented in the information presented. Dividend Growers included stocks that raised their existing dividend or initiated a new dividend during the previous 12 months. Flat Dividend Payers included stocks that pay a dividend but have not raised or lowered their existing dividend during the previous 12 months. Non Dividend Payers included stocks that have not paid a dividend during the previous 12 months. Dividend Cutters included stocks that lowered their existing dividend or eliminated their dividend during the previous 12 months. There is no guarantee that companies will declare dividends or, if declared, that they will remain at current levels or increase over time. You cannot invest directly in an Index. For information on the Index shown above as well as other important information, please refer to the Appendix. Page 4

5 Average Annual Return Average Annual Return Average Annual Return Dividend Growth at Work in Large Cap Stocks 8% 3% -2% 11% 6% 9.8% Div Growers & Initiators Large Cap Stocks: Jan 31, 1972 Dec 31, % 7.2% 2.5% -0.8% S&P 500 (EW) Flat Div Payers Non Div Payers Div Cutters & Eliminators Large Cap Stocks: Jan 31, 1972 Dec 31, 2015 Div Growers S&P 500 (EW) Flat Div Payers Non Div Payers 19% 14% 9% 4% -1% -6% -11% -16% 4.7% 4.4% 3.9% 1.2% -5.8% Large Cap Dividend Growth by Decade 17.3% 15.2% 15.2% 4.4% 9.2% 11.9% 8.9% 10.3% 8.9% 7.3% 3.0% 0.1% -1.8% -8.3% -14.7% 13.0% 11.0% 9.8% 7.6% 's 1990's 2000's 2010's Div Growers & Initiators Flat Div Payers S&P 500 (EW) Non Div Payers Div Cutters 1/31/ /31/2015 Volatility (SD) Upside Capture Downside Capture Div Grower & Initiator 15.9% 93.9% 85.2% 2.0% 1% Div Cutters -4% 13% 18% 23% 28% Risk (Standard Deviation) Copyright 2015 Ned Davis Research, Inc. Further distribution prohibited without prior permission. All Rights Reserved. See NDR Disclaimer at For data vendor disclaimers refer to The information presented is intended to illustrate performance of Large Cap stocks according to their dividend policy. Returns shown include dividends reinvested. The charts above do not represent the performance of any strategy overseen by Copeland and there is no guarantee that investors will experience the type of performance reflected in the information presented. Strategies managed by Copeland s investment team are subject to transaction costs, management fees, trading fees or other expenses not represented in the information presented.. Dividend Growers included stocks that raised their existing dividend or initiated a new dividend during the previous 12 months. Flat Dividend Payers included stocks that pay a dividend but have not raised or lowered their existing dividend during the previous 12 months. Non Dividend Payers included stocks that have not paid a dividend during the previous 12 months. Dividend Cutters included stocks that lowered their existing dividend or eliminated their dividend during the previous 12 months. There is no guarantee that companies will declare dividends or, if declared, that they will remain at current levels or increase over time. You cannot invest directly in an Index. For information on the Index shown above as well as other important information, please refer to the Appendix. Page 5 Flat Div Payer 18.0% 97.5% 98.7% S&P 500 (Equal Weight) 17.6% 100.0% 100.0% Non Div Payer 24.9% 120.4% 132.5% Div Cutter 25.1% 99.7% 129.2%

6 Average Annual Return Average Annual Return Average Annual Return Dividend Growth at Work in Mid Cap Stocks 15% 10% 5% 0% 16% 15% 14% 13% 12% 11% 10% 9% 8% Page 6 Mid Cap Stocks: Mar 31, 1981 Dec 31, % Div Growers & Initiators 12.1% Russell Mid Cap 10.7% Flat Div Payers 9.2% Non Div Payers Mid Cap Stocks: Mar 31, 1981 Dec 31, 2015 Div Growers RMID Flat Div Payers 7.7% Div Cutters 7% 13.0% 15.0% 17.0% 19.0% 21.0% 23.0% 25.0% Risk (Standard Deviation) Div Cutters Non Div Payers 25% 20% 15% 10% 5% 0% 17.7% 13.4% 15.4% 7.8% Mid Cap Dividend Growth by Decade 11.2% 12.7% 11.3% 15.9% 19.5% 11.9% 3/31/ /31/2015 Volatility (SD) Upside Capture Downside Capture Div Grower & Initiator 15.1% 88.4% 79.7% Flat Div Payer 16.9% 88.9% 94.1% Russell Mid Cap 16.6% 100% 100% Non Div Payer 23.7% 125.2% 134.5% Div Cutter 22.6% 93.6% 111.4% 10.1% 7.8% 5.0% -1.6% 3.8% 15.8% 10.4% 14.1% 13.7% -5% 's 2000's 2010's Div Growers & Initiators Flat Div Payers RMID Non Div Payers Div Cutters Copyright 2015 Ned Davis Research, Inc. Further distribution prohibited without prior permission. All Rights Reserved. See NDR Disclaimer at For data vendor disclaimers refer to The information presented is intended to illustrate performance of Mid Cap stocks according to their dividend policy. Returns shown include dividends reinvested. The charts above do not represent the performance of any strategy overseen by Copeland and there is no guarantee that investors will experience the type of performance reflected in the information presented. Strategies managed by Copeland s investment team are subject to transaction costs, management fees, trading fees or other expenses not represented in the information presented.. Dividend Growers included stocks that raised their existing dividend or initiated a new dividend during the previous 12 months. Flat Dividend Payers included stocks that pay a dividend but have not raised or lowered their existing dividend during the previous 12 months. Non Dividend Payers included stocks that have not paid a dividend during the previous 12 months. Dividend Cutters included stocks that lowered their existing dividend or eliminated their dividend during the previous 12 months. There is no guarantee that companies will declare dividends or, if declared, that they will remain at current levels or increase over time. You cannot invest directly in an Index. For information on the Index shown above as well as other important information, please refer to the Appendix. 2.7%

7 Average Annual Return Average Annual Return Average Annual Return Dividend Growth at Work in Small Cap Stocks 20% 15% 10% 5% 0% 25% 16.9% Div Growers & Initiators Small Cap Stocks: Mar 31, 1981 Dec 31, % 9.7% 9.3% 2.0% Flat Div Payers Russell 2000 Non Div Payers Div Cutters & Eliminators Small Cap Stocks: Mar 31, 1981 Dec 31, 2015 Small Cap Dividend Growth by Decade 25% 21.9% 20% 17.6% 16.3% 13.2% 15% 13.4% 11.5% 10.9% 9.8% 10% 7.0% 5% 1.2% -1% -6% 's 2000's 2010's Div Growers & Initiators Flat Div Payers Russell 2000 Non Div Payers Div Cutters 15.8% 12.7% 11.9% 11.5% 10.0% 7.4% 3.5% 4.2% 0.9% -3.4% 20% 15% 10% 5% Page 7 Div Growers Flat Div Payers Russell 2000 Div Cutters Non Div Payers 0% 15% 20% 25% 30% Risk (Standard Deviation) 3/31/81-12/31/15 Volatility (SD) Upside Capture Downside Capture Div Grower & Initiator 15.6% 86.1% 61.8% Flat Div Payer 18.0% 84.4% 83.9% Russell % 100.0% 100.0% Non Div Payer 25.8% 130.5% 123.3% Div Cutter 23.5% 74.0% 102.2% Copyright 2015 Ned Davis Research, Inc. Further distribution prohibited without prior permission. All Rights Reserved. See NDR Disclaimer at For data vendor disclaimers refer to The information presented is intended to illustrate performance of Small Cap stocks according to their dividend policy. Returns shown include dividends reinvested. The charts above do not represent the performance of any strategy overseen by Copeland and there is no guarantee that investors will experience the type of performance reflected in the information presented. Strategies managed by Copeland s investment team are subject to transaction costs, management fees, trading fees or other expenses not represented in the information presented.. Dividend Growers included stocks that raised their existing dividend or initiated a new dividend during the previous 12 months. Flat Dividend Payers included stocks that pay a dividend but have not raised or lowered their existing dividend during the previous 12 months. Non Dividend Payers included stocks that have not paid a dividend during the previous 12 months. Dividend Cutters included stocks that lowered their existing dividend or eliminated their dividend during the previous 12 months. There is no guarantee that companies will declare dividends or, if declared, that they will remain at current levels or increase over time. You cannot invest directly in an Index. For information on the Index shown above as well as other important information, please refer to the Appendix.

8 Consistency of Dividend Growth The table below shows the percentage of time Dividend Growth stocks outperform their respective benchmarks over rolling periods Data as of 12/31/2015 Initiation Date Benchmark (total return) One Year Rolling Three Year Rolling Five Year Rolling Ten Year Rolling Large Cap Dividend Growers 3/31/1981 Russell 1000 Index 61% 63% 83% 92% Mid Cap Dividend Growers 3/31/1981 Russell Mid Cap Index 60% 66% 73% 83% Small Cap Dividend Growers 3/31/1981 Russell 2000 Index 82% 95% 98% 100% International Dividend Growers 9/30/1994 MSCI EAFE Index 71% 80% 94% 100% Copyright 2015 Ned Davis Research, Inc. Further distribution prohibited without prior permission. All Rights Reserved. See NDR Disclaimer at For data vendor disclaimers refer to The information presented is intended to illustrate the performance of stocks according to their dividend policy. Returns shown include dividends reinvested. This is not the performance of any strategy overseen by Copeland and there is no guarantee that investors will experience the type of performance reflected in the information presented. Strategies managed by Copeland s investment team are subject to transaction costs, management fees, trading fees or other expenses not represented in the information presented. Dividend Growers included stocks that raised their existing dividend or initiated a new dividend during the previous 12 months. There is no guarantee that companies will declare dividends or, if declared, that they will remain at current levels or increase over time. You cannot invest directly in an Index. For information on the Index shown above as well as other important information, please refer to the Appendix. Page 8

9 Median Annualized Dividend Growth Median Annualized Price Return Why Dividend Growth 20% 18% 16% Relationship Between Dividend Growth Rate & Price Return Div Growth Price return 13.2% 15.0% 14% 12% 14% 12% 10% 8% 6% 4% 2% 0% 9.6% 8.0% 9.4% 6.0% 6.3% 4.3% 3.4% 0.3% 5th 4th 3rd 2nd 1st Quintile Data above is based on a universe of all stocks that have paid a dividend for 25 years through 12/31/15. 10% 8% 6% 4% 2% 0% Page 9 The stocks were ranked by their rate of dividend growth and put into quintiles. The median dividend growth rate of each group is compared to the median annualized price return of each group. Source: FactSet Research / Copeland Capital Management. The information presented is intended to illustrate the performance of all stocks that have paid a dividend for 25 years according to their dividend policy. This is not the performance of any strategy overseen by Copeland and there is no guarantee that investors will experience the type of performance reflected in the information presented. Strategies managed by Copeland s investment team are subject to transaction costs, management fees, trading fees or other expenses not represented in the information presented. There is no guarantee that companies will declare dividends or, if declared, that they will remain at current levels or increase over time. Please refer to the Appendix for additional disclosures.

10 Dividend Growth: Large Cap Example Ecolab Inc. (Ticker = ECL) DivYield: 1.2%, Payout Ratio: 41% Growing Dividends: Ecolab has paid a dividend for 79 straight years, including 24 years of consecutive raises with an average annual growth rate of 12% since The rising dividend has pushed the stock price higher over time as shown in the charts below, resulting in an annual price return of 15% over the same period. Attractive Business Model: Ecolab is a global leader in providing water, hygiene and energy technologies and services. The vast majority of the company s cleaning and treatment products are consumed through processes that require frequent replacement, thereby creating a business model that his highly recurring in nature. Also, low capital intensity leads to significant cash flow generation. Attractive growth prospects: By selling mission critical products and also consistently helping customers reduce costs through process improvement, Ecolab has established a long track record of double digit top- and bottom-line growth. Large addressable market opportunities and favorable secular trends should allow for continued healthy growth, including above average dividend growth. $120 $80 $40 Ecolab Inc. (ECL): Stock Price Appreciation vs. Dividend Growth Dividend (RS) Price (LS) 12% annual Dividend Growth rate since 1992 Annual price return of 15% over same time period $1.40 $1.05 $0.70 $0.35 $0 $0.00 Source: FactSet Research. The information presented is intended to illustrate the performance of a single stock. This is not the performance of the firm and there is no guarantee that investors will experience the type of performance reflected in this graph. Copeland has not owned this stock during the entire period shown. Past performance is no guarantee of future results. Returns shown include dividends reinvested. There is no guarantee that companies will declare dividends or, if declared, that they will remain at current levels or increase over time. Please refer to the Appendix for additional disclosures. Page 10

11 Dividend Growth: Mid Cap Example Ross Stores (Ticker = ROST) DivYield: 0.9%, Payout Ratio: 20% Growing Dividends: Since initiating its dividend in 1994, Ross has raised its payout for 22 consecutive years, including a 15% increase in Ross maintains ample earnings and cash flow coverage, which should support further expansion of the dividend for the foreseeable future. Attractive Business Model: While retail is highly competitive, the off-price segment, in which Ross is one of two dominant players, affords significant structural advantages. For example, the depth of inventory is often far too limited to allow e-commerce players to effectively compete. Additionally, buying and negotiating expertise is required and Ross benefits from its merchandise buyers long-term relationships with sellers. These factors support superior margins and new store growth versus peers. Result: Ross is among the strongest cash generators in the Consumer Discretionary sector, and has a history of returning that cash to shareholders. In addition to its aforementioned dividend growth, Ross has also been aggressive in buying back stock, reducing its share count by 3.5% per year over the last 10 years. All of these factors have allowed Ross to outpace the return of the Consumer Discretionary ETF by more than 11x since it was launched in $60 ROST: Stock Price Appreciation vs. Dividend Growth $0.51 $40 23% annual Dividend Growth rate since 1994 Annual price return of 27% over same time period $0.34 $20 $0.17 $0 $0.00 Source: FactSet Research. The information presented is intended to illustrate the performance of a single stock. This is not the performance of the firm and there is no guarantee that investors will experience the type of performance reflected in this graph. Copeland has not owned this stock during the entire period shown. Past performance is no guarantee of future results. Returns shown include dividends reinvested. There is no guarantee that companies will declare dividends or, if declared, that they will remain at current levels or increase over time. Please refer to the Appendix for additional disclosures. Page 11

12 Dividend Growth: Small Cap Example J&J Snack Foods Corp. (Ticker = JJSF) DivYield: 1.3%, Payout Ratio: 40% Entrenched, durable niche food business: Since formation in 1971, J&J Snack Foods has expanded its product portfolio from a successful soft pretzel business to include frozen beverages, cookies, churros, and other snacks. Consumers purchase these items - such as SuperPretzels at stadiums across America - regardless of where we are in a given economic cycle. Notably, management concentrates on niches that are unlikely to attract the largest food companies as competitors, establishing scale in production and distribution, and cultivating relationships within key sales channels. Consistent track record of organic growth and low capital intensity support rising dividends: Over the past decade, sales have nearly doubled and earnings more than doubled on the back of healthy margin expansion. With a resilient product portfolio, minimal debt, and low capital expenditure requirements, J&J generates significant excess cash flow that is used primarily to reinvest in the business, make small acquisitions, and pay a rising dividend. Result: J&J has posted a 12% annualized price return since 2005, boosted by an 18% annualized pace of dividend increases. $120 JJSF: Stock Price Appreciation vs. Dividend Growth $1.60 $100 $80 $60 18% annual Dividend Growth rate since 2005 Annual price return of 14% over same time period $1.20 $0.80 $40 $20 $0.40 $0 $0.00 Source: FactSet Research. The information presented is intended to illustrate the performance of a single stock. This is not the performance of the firm and there is no guarantee that investors will experience the type of performance reflected in this graph. Copeland has not owned this stock during the entire period shown. Past performance is no guarantee of future results. Returns shown include dividends reinvested. There is no guarantee that companies will declare dividends or, if declared, that they will remain at current levels or increase over time. Page 12

13 Why Dividend Growth Now All Cap Dividend Growth stocks are less expensive today (6/30/16) relative to the Russell 3000 Index (14% discount) compared to the historical median of a 11% premium. The chart below illustrates the historical relative valuation of the top quintile of Dividend Growth stocks compared to the Russell 3000 Index. Source: FactSet. Valuation discounts or premiums do not guarantee future returns will be greater or lower than the benchmark. There is no guarantee that companies will declare dividends or, if declared, that they will remain at current levels or increase over time. You cannot invest directly in an Index. For information on the Index shown above as well as other important information, please refer to the Appendix. Page 13

14 Annualized Return Annualized Return What Happens in Rising and Declining Rate Environments 10.0% Performance of Stocks During Periods of Rising Interest Rates January 31, 1972 December 31, % 0.0% 4.8% 2.1% 1.3% -2.3% -3.4% Rising Rates -5.0% Div Growers & Initiators S&P 500 Index EW Flat Div Payers Non Div Payers Div Cutters & Eliminators 25.0% Performance of Stocks During Periods of Declining Interest Rates January 31, 1972 December 31, 2015 Declining Rates Copyright 2015 Ned Davis Research, Inc. Further distribution prohibited without prior permission. All Rights Reserved. See NDR Disclaimer at For data vendor disclaimers refer to The information presented is intended to illustrate performance of stocks according to their dividend policy during periods of rising and declining interest rates as determined by the Fed Funds rate. Returns shown include dividends reinvested. This is not the performance of any strategy overseen by Copeland and there is no guarantee that investors will experience the type of performance reflected in the information presented. Strategies managed by Copeland s investment team are subject to transaction costs, management fees, trading fees or other expenses not represented in the information presented. Dividend Growers included stocks that raised their existing dividend or initiated a new dividend during the previous 12 months. Flat Dividend Payers included stocks that pay a dividend but have not raised or lowered their existing dividend during the previous 12 months. Non Dividend Payers included stocks that have not paid a dividend during the previous 12 months. Dividend Cutters included stocks that lowered their existing dividend or eliminated their dividend during the previous 12months. There is no guarantee that companies will declare dividends or, if declared, that they will remain at current levels or increase over time. You cannot invest directly in an Index. As of December 31, 2014, NDR updated its methodology to incorporate liquidity requirements to improve accuracy. For information on the Index shown above as well as other important information, please refer to the Appendix. Page % 15.0% 10.0% 5.0% 0.0% 13.1% 11.2% 11.0% Div Growers & Initiators Flat Div Payers S&P 500 Index EW Non Div Payers Div Cutters & Eliminators 5.6% 0.7%

15 Part II Copeland s Experienced Team Page 15

16 Why Copeland Capital People Philosophy Copeland is 100% employee owned, ensuring our interests are completely aligned with those of our clients. Our sole focus is on delivering superior risk adjusted returns across all of our strategies. Portfolio Managers average over 25 years of industry experience at leading firms and have graduated from some of the country s most elite colleges and universities. We believe that stocks with sustainable Dividend Growth consistently outperform the market with less risk. Our sole focus on Dividend Growth Investing and deploying our methodology across all capitalization ranges both domestically and internationally gives us a distinct competitive advantage. We adhere to a repeatable, rules-based, and emotionless investment process. Process Our proprietary multi-factor ranking system combined with our in-depth fundamental research process historically has produced consistently strong risk adjusted returns. Past performance is no guarantee of future results. There is no guarantee that any investment strategy will achieve its objectives, generate profits or avoid losses. Products Our boutique structure allows us to offer concentrated strategies while adhering to the capacity constraints of our various products. Our strategies are available in multiple vehicle formats such as Separately Managed Accounts, Manager Models, Mutual Funds and Hedge Funds. Page 16

17 Philosophy We believe that stocks with sustainable dividend growth consistently outperform the market with less risk. There is no guarantee that any investment strategy will achieve its objectives, generate profits or avoid losses. There is no guarantee that companies will declare dividends or, if declared, that they will remain at current levels or increase over time. Past performance is no guarantee of future results. Page 17

18 Dividend Growth Leads the Way Dividends define our universe, drive our total return solution and are the centerpiece for our research process. Dividend Growth stocks are ranked using a proprietary fundamental ranking system. This model evaluates multiple factors in an effort to establish each company s ability to grow its dividends in the future. Factors we have found to be predictive of strong dividend growth and total returns include: Dividend Coverage Free Cash Flow Generation Growth in the Underlying Business Return on Capital Top-ranked stocks within the model are subject to deep fundamental analysis. Page 18

19 Multi-Factor Model - Domestic Output of Multi-Factor Model from 12/31/1990 to 12/31/ % 16.0% 16.1% 14.7% 14.0% 12.0% 10.0% 13.0% 12.6% 11.8% 10.1% 9.4% 8.0% 6.0% 4.0% 2.0% 0.0% 1st Quintile 2nd Quintile All Dividend Achievers 3rd Quintile 4th Quintile Russell 3000 Index TR 5th Quintile Copeland prefers to purchase securities from the top few quintiles of this model universe of Dividend Growth companies to create the Risk Managed Dividend Growth Strategy. Source: FactSet/Morningstar Direct/Copeland Capital Management. The information presented is intended to illustrate the performance of domestic small, mid and large capitalization dividend growth stocks according to a quantitative multi-factor model. Returns shown include dividends reinvested. This is not the performance of any strategy overseen by Copeland and there is no guarantee that investors will experience the type of performance reflected in the information presented. Strategies managed by Copeland s investment team are subject to transaction costs, management fees, trading fees or other expenses not represented in the information presented. There is no guarantee that companies will declare dividends or, if declared, that they will remain at current levels or increase over time. You cannot invest directly in an Index. For information on the Index shown above as well as other important information, please refer to the Appendix. Page 19

20 Fundamental Analysis Copeland s research process is designed to identify companies with strong competitive positions that support steadily rising dividends. Competitive Advantage: Low cost vs. differentiation strategies; scale, market share, pricing power, network effects, brands; high ROIC Management s allocation of free cash flow: Reinvest to defend and enhance competitive position, promote growth Distribute to stakeholders: rising dividends, buybacks, pay down debt Assess the sustainability and pace of future Dividend Growth: Evaluate the success of reinvestment efforts: Consistency of ROIC Dividend coverage ratios; Business growth prospects; Management s commitment to future dividend increases Valuation: Dividend yield relative to dividend growth projection, cash flow multiples, P/E s, etc. Output from Multi-Factor Model Competitive Advantage Analysis Evaluate Cash Flow Allocation Assess the Sustainability and Pace of Dividend Growth Total return = Dividend yield + dividend growth +/- valuation change The Dividend Guides Us: Dividends define our universe, support our total return solution, and are the centerpiece of our research process. Valuation Portfolio Page 20

21 Sell Discipline Stocks are sold for the following reasons: Dividend Cut: Any holding that cuts or even fails to raise its dividend is sold. Dividend Quality: Portfolio candidates must meet minimum thresholds of cash flows and earnings supporting the dividend yield. Violation of these thresholds has been found to be predictive of a future dividend cut. Quantitative Ranking Deteriorates: Problems are often exhibited in the quantitative rankings when factors such as earnings momentum, cash flow or return on capital deteriorate. This is a red flag for detailed analyst review. Sector Signals: When a sector generates a negative (SELL) signal, all dividend stock holdings in that sector are sold. There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses. Page 21

22 Part III Sector Signals Page 22

23 Sector Selection Process We rely on a proprietary tactical sector signaling model we call Protego. Protego: (Latin) to protect or defend Philosophy behind the model: Participate in the upside and seek to avoid significant market declines Key Inputs to the Model: Volatility and price changes of each sector Index Creation of volatility-adjusted trend lines for each sector Rising trend line = positive signal (invest in the sector) Falling trend line = negative signal (do not invest in the sector) Please refer to the Appendix for additional disclosures. Page 23

24 How the Sector Signals Work We universe weight all sectors with positive signals. 9 Positive Sectors 7 Positive Sectors 5 Positive Sectors Health 9% Finan. 10% Mater. 5% Indus. 13% Disc. 15% Tech 16% Energy 13% Utilities 5% Stpl. 14% Disc. 17% Finan. 11% Mater. 6% Indus. 15% Tech 19% Energy 15% Stpl. 17% Disc. 24% Indus. 22% Tech 25% Energy 21% Mater. 8% When fewer than 4 sectors are positive, a Bear Market is signaled and cash is added to the portfolio: 3 Positive Sectors 2 Positive Sectors 1 Positive Sector No Positive Sectors Mater. 17% Energy 29% Cash 25% Disc. 29% Mater. 19% Disc. 31% Cash 50% Disc. 25% Cash 75% Cash 100% * Copeland considers the Telecommunications sector to be part of the Utilities sector. Page 24

25 Investment Process Universe of Dividend Growth Stocks We select from U.S. stocks that have demonstrated at least five years of consistent dividend increases and have market capitalizations of at least $250 million. Stock Selection We screen and rank stocks within their respective sectors based on key fundamental factors. Sector Selection CDGRX A volatility adjusted trend line determines the portfolio cash allocation and sector exposure. The output is binary, either invest in a sector or exclude it entirely. When there are three or fewer investable sectors the portfolio initiates a cash position. We deploy our top ranked names across the sectors that are positive. The result of our process is the Copeland Risk Managed Dividend Growth Fund (CDGRX). There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses. Past performance is not a guarantee of future results. Please refer to the Appendix for additional disclosures. Page 25

26 CDGRX Characteristics Page 26 Past performance is not a guarantee of future results. Please refer to the Appendix for additional disclosures. Source: Morningstar Direct

27 CDGRX Characteristics As of 6/30/16, two sectors are positive, with 50% allocated to cash. Copeland considers the Telecommunications sector to be part of the Utilities sector. Industry sectors and asset allocation are presented to illustrate examples of the diversity of areas in which the fund may invest, and may not be representative of the fund s current or future investments. Portfolio holdings are subject to change, are subject to risk and should not be considered investment advice. Past performance is not a guarantee of future results. Please refer to the Appendix for additional disclosures. Page 27

28 Conclusion Dividend Growth Stocks have historically outperformed their benchmarks with less risk Copeland Capital Management is a preeminent provider of Dividend Growth solutions The Funds employ a tactical methodology instead of following a traditional Buy and Hold approach We target relative returns in bull markets, but absolute performance in bear markets Our strategies can go to 100% cash We believe combining our Dividend Growth investment process with a rules based tactical sector signaling methodology should protect capital in the short-term and enhance long-term risk adjusted returns There is no guarantee that any investment will achieve its objectives, goals, generate positive returns, or avoid losses. There is no guarantee that companies will declare dividends or, if declared, that they will remain at current levels or increase over time. Past performance is not a guarantee of future results. Please refer to the Appendix for additional disclosures. Page 28

29 Appendix Page 29

30 Page 30 Footnotes and Disclosures: Risk Managed Dividend Growth Mutual Fund Composite Copeland Capital Management, LLC (CCM), a 100% employee-owned registered investment adviser, provides innovative dividend growth solutions to its clients. CCM claims compliance with the Global Investment Performance Standards (GIPS ) and has prepared and presented this report in compliance with the GIPS standards. CCM has been independently verified for the period December 31, 2005 through March 31, 2016 by Kreischer Miller. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation. The Composite has not been examined for specific verification. CCM created this composite on December 31, The Composite represents all discretionary managed accounts managed by CCM in the Risk Managed Dividend Growth Mutual Fund style. CCM uses a proprietary, quantitative model to screen more than 7,000 U.S. traded equities to identify those demonstrating the strongest cash flow and dividend growth, and members of positively trending sectors based on our quantitative sector signal model for inclusion in a portfolio of approximately 40 to 50 stocks. Net returns reflect the deduction of CCM's management fee at 1%, the highest charged for a Composite account, plus mutual fund expenses, and includes transaction costs. All accounts in the composite are subject to these charges. The performance does not include a sales load that might have been charged on shareholder accounts; where charged, performance would be lower. Dispersion in the annual rates of return for the composite is measured using the asset-weighted standard deviation method. The standard deviation is presented in percentage points of return. Accounts are added to the composite in their first full calendar month after being invested in this style with CCM. Terminated accounts are removed from this composite after the final full month under CCM s management. A complete list and description of CCM s composites is available upon request. Additional information regarding CCM s policies and procedures for valuing portfolios, calculating performance, and preparing compliant presentations are available upon request. Holdings are for informational purposes only and should not be deemed a recommendation to buy the specific securities mentioned. Holdings are subject to change, may not be representative of current holdings, and are subject to risk. Past performance is not indicative of future performance. Performance results of the Composite are based on U.S. dollar returns. Footnotes: Annual or Most Recent Quarter # of Portfolios Internal Dispersion Three Year Ex-Post Standard Deviation Composite The S&P 500 Index consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with stock's weight in the Index proportionate to its each market value. You cannot invest directly in an index. (a) Internal Dispersion is calculated using the asset-weighted standard deviation of all portfolios that were included in the composite for the entire year. With fewer than five accounts in the composite, a measure of dispersion is not applicable. (b) Ex-post calculations are not presented for periods of less than 36 months. Copeland Capital Management s standard advisory fee is 1.00%. Three Year Ex-Post Standard Deviation S&P 500 Market Value (in millions) % of Total Firm Assets Annual Performance Gross-of-Fees Net-of-Fees S&P 500* 2Q16 1 N/A(a) 9.2% 11.1% $ % N/A 2.0% 2.5% N/A N/A N/A N/A N/A N/A N/A N/A(b) N/A(b) N/A N/A N/A N/A N/A

31 Disclosures Holdings are for informational purposes only and should not be deemed a recommendation to buy the specific securities mentioned. Holdings are subject to change, may not be representative of current holdings, and are subject to risk. The value of an investment in the Funds and the return on investment both will fluctuate and redemption proceeds may be higher or lower than an investor s original cost. Total return is calculated assuming reinvestment of all dividends. Total returns would have been lower had the Adviser, the Distributor, the Administrator, and Custodian not waived or reimbursed a portion of their fees. For performance numbers current to the most recent month-end please call COPELAND. Investors should carefully consider the investment objectives, risks, charges and expenses of the Copeland Risk Managed Dividend Growth Fund and the Copeland International Risk Managed Dividend Growth Fund. This and other important information about each Fund is contained in their prospectus, which can be obtained by calling COPELAND ( ). The prospectus should be read carefully before investing. The Copeland Risk Managed Dividend Growth Fund and the Copeland International Risk Managed Dividend Growth Fund are distributed by Northern Lights Distributors, LLC member FINRA. Copeland Capital Management, LLC and Northern Lights Distributors, LLC are not affiliated. Mutual Funds involve risk including possible loss of principal. There is no assurance that the Fund will achieve its investment objectives. There is no guarantee that companies will declare dividends or, if declared, that they will remain at current levels or increase over time. The Fund may invest in MLP s. Holders of MLP units have limited control and voting rights on matters affecting the partnership. In addition, there are certain tax risks associated with an investment in MLP units and conflicts of interest exist between common unit holders and the general partner, including those arising from incentive distribution payments. The Fund may invest in REIT s. A REIT's performance depends on the types and locations of the rental properties it owns and on how well it manages those properties. Real estate values rise and fall in response to a variety of factors, including local, regional and national economic conditions, interest rates and tax considerations. The adviser's judgments about the return tracking characteristics of securities may prove incorrect and may not produce the desired results. The fund may invest in small and medium capitalization companies both domestically and internationally, and the value of these company securities may be subject to more abrupt or erratic market movements than those of larger, more established companies or the market averages in general. A higher portfolio turnover will result in higher transactional and brokerage costs. Overall securities market risks may affect the value of individual securities in which the Copeland strategies invest. Factors such as foreign and domestic economic growth and market conditions, interest rate levels, and political events affect the securities markets. Foreign Investing Risk: Investments in foreign countries are subject to country-specific risks such as political, diplomatic, regional conflicts, terrorism, war, social and economic instability and policies that have the effect of decreasing the value of foreign securities. The risks associated with foreign investments are heightened when investing in developing or emerging markets. The governments and economies of emerging market countries feature greater instability than those of more developed countries. Such investments tend to fluctuate in price more widely and to be less liquid than other foreign investments. Foreign investments may experience greater volatility than U.S. investments. Page 31

32 Disclosures Continued Index Disclosures You cannot invest directly in an Index. The S&P 500 EW Index consists of 500 stocks. It is an equal weighted index which gives the same weight, or importance, to each stock in a portfolio or index fund. The smallest companies are given equal weight to the largest companies in an equal-weight index fund or portfolio. The Russell Mid Cap Index is comprised of the 800 smallest companies in the Russell 1000 Index. The Russell 1000 Index measures the performance of the 1000 large cap U.S. companies based on total market capitalization, which represents approximately 92% of the investable U.S. equity market. The Russell 2000 Index is comprised of the smallest 2000 companies in the Russell 3000 Index. The Russell 3000 Index measures the performance of the 3000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market. The MSCI EAFE Index (Europe, Australasia, Far East) is a free float adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada. The MSCI EAFE Index consists of the following 22 developed market country indices: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom. The MSCI All Country World Ex-US Index is a market capitalization-weighted index designed to provide a broad measure of stock performance throughout the world, with the exception of US-based companies. It includes both developed and emerging markets. Morgan Stanley Capital International is the owner of the trademark service marks and copyrights. Currency Unless otherwise specified or disclosed, the currency used for data in the report is US Dollar (USD). Dividend Yield - The company's total annual dividend payments divided by its market capitalization, or the dividend per share, divided by the price per share. R-squared measures the strength of the linear relationship between the portfolio and the benchmark. R-squared at 1.00 implies perfect linear relationship and zero implies no relationship exists. Excess Return the excess return is a measure of the investment s return in excess of the benchmark s return. Page 32

33 Disclosures Continued Standard deviation is a measure of the variability of returns-the higher the standard deviation, the greater the range of performance (i.e., volatility). Alpha is a measure of the difference between actual returns and expected performance, given the level of risk as measured by beta, where beta measures sensitivity to index movements. Beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. Information Ratio is a measure of the risk-adjusted return of a security or a portfolio in comparison to the returns of a benchmark. The Downside Capture ratio is the ratio of the manager's overall performance to the benchmark's overall performance, considering only quarters that are negative in the benchmark. A Down Capture ratio of less than 1.0 indicates a manager that outperformed the benchmark in the benchmark's negative quarters. Tracking Error is a measure of how closely a portfolio follows the index to which it is benchmarked. Ned Davis Research Additional Disclosures Ned Davis Research adjusted its calculation method as of December 31, 2014 to capture only those names that meet a certain liquidity threshold in order to better represent the investable universe. As a result, historical performance information may differ from previously disseminated performance information for stocks according to their dividend policy. This is not the performance of the firm and there is no guarantee that investors will experience the same type of performance. Due to methodology differences in calculating performance, Morningstar performance numbers may vary slightly from other providers Morningstar, Inc. All rights reserved. The Morningstar information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or redistributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Copeland does not review the Morningstar data. You should check the fund's current prospectus for the most up-to-date information concerning applicable loads, fees and expenses. For performance numbers current to the most recent month-end please call COPELAND. When used as supplemental sales literature, the Investment Profile must be preceded or accompanied by the fund's current prospectus as well as this disclosure statement. Fund portfolio statistics change over time. The fund is not FDIC insured, may lose value and is not guaranteed by a bank or other financial institution. Page 33

34 For more information about Copeland Capital Management and any of our strategies please contact: Sales Support: Headquarters Eight Tower Bridge 161 Washington St, Suite 1325 Conshohocken, PA Page 34