Quarterly Commentary Second Quarter 2018 Performance Summary For the quarter ended June 30, 2018, the PNC International Growth Equity Composite outperformed its benchmark, the MSCI ACWI ex USA Growth Index, returning -0.63% gross of fees and -0.81% net of fees. This compares with a return of -1.42% for the MSCI ACWI ex USA Growth Index during the same period. Performance Summary as of June 30, 2018 1 2Q18 YTD International Growth Gross -0.63% 2.91% Equity Composite Net -0.81% 2.52% 1 Year 20.45% 3 Year 10.30% 5 Year 11.17% 10 Year 6.24% 19.55% 9.47% 10.34% 5.44% MSCI ACWI ex USA Growth Index -1.42% -2.28% 9.90% 6.56% 7.18% 3.01% 1 Data as of June 30, 2018. Source: Advent Portfolio Exchange (APX). Performance returns are presented gross and net of fees and include the reinvestment of all income. Gross of fee performance returns do not reflect the payment of investment advisory fees and other expenses. Actual returns will be reduced by advisory fees and other expenses that may be incurred in the management of the account. Net of fee performance was calculated using the highest management fee of 0.90%, representing the maximum advisory fees charged to client accounts invested in the Dividend Focus Equity Composite during the respective period. Past performance is no guarantee of future results. For information regarding the current investment advisory fees of PNC Capital Advisors, LLC, please refer to Form ADV, Part 2A, which is available at: https://. Please refer to our GIPS -compliant Presentation, which includes additional important disclosures and is located at the end of this commentary. Summary The International Growth Equity Composite outperformed the MSCI ACWI ex USA Growth Index during the second quarter. In terms of geographic attribution, country allocation detracted from relative investment results, while stock selection contributed. Relative results benefitted from an overweight to Ireland along with underweights to Korea and Taiwan, while an underweight to Australia and overweights to Austria and Kenya detracted. Stock selection in Canada, Germany, and Denmark contributed, while stock selection in Japan, Singapore, and Australia detracted. From a sector attribution perspective, an overweight to Healthcare and underweights to Industrials and Real Estate contributed to relative investment results. Underweights to Materials and Energy and an overweight to Financials detracted from relative results. Stock selection within the Consumer Discretionary, Technology, and Materials sectors contributed, while stock selection within Energy, Consumer Staples, and Real Estate detracted. During the quarter, the strategy reduced its exposure to European Monetary Union (EMU) Europe and Latin America and selectively added to markets in the Middle East and developed Asia. Market Commentary Global growth appears to be slowing slightly, due to decreasing global liquidity from monetary policy tightening, stronger energy prices, and foreign exchange volatility. Additionally, increased trade tensions are keeping global economies on edge. The U.S. dollar strengthened sharply during the quarter due to continued monetary policy tightening by the Federal Reserve, as well as a jump in short-term U.S. Treasury yields. Dollar strength, combined with higher energy prices and the expectation of further Fed rate hikes in 2018, led to a correction in most international currencies, particularly in many emerging markets. Volatility in emerging markets increased during the quarter, as dollar strength also led to significant capital outflows across several countries. Emerging market weakness during the second quarter is a reversal of the trend we ve seen over the last several quarters. In fact, second-quarter outflows from some emerging markets reached levels not seen since November 2016. In the U.S., an improving economy and expectations for higher inflation caused the Federal Reserve to raise interest rates at the end of the second quarter. Meanwhile, lackluster economic performance in the Eurozone has led the European Central Bank (ECB) to recently ease up on monetary policy tightening. Several developing countries surprised markets with interest-rate increases in an attempt to stabilize their weakening currencies.
Quarterly Attribution, June 30, 2018 2 International Growth Equity Representative Account vs. MSCI ACWI ex USA Growth Index International Growth Equity MSCI ACWI ex USA Growth Index Variation Attribution Analysis GICS Sector to to to Allocation Effect Selection + Interaction Effect Consumer Discretionary 14.48 7.72 1.08 13.56-1.01-0.16 0.92 8.74 1.24 0.01 1.21 1.22 Consumer Staples 7.65-2.29-0.19 15.07-0.98-0.13-7.42-1.31-0.06-0.03-0.11-0.14 Energy 2.26 2.04-0.04 2.77 10.01 0.26-0.52-7.96-0.30-0.07-0.22-0.29 Financials 20.47-4.56-0.92 10.38-5.12-0.53 10.09 0.55-0.39-0.38 0.11-0.27 Health Care 11.75 2.06 0.24 9.97 1.97 0.20 1.78 0.09 0.04 0.08 0.02 0.10 Industrials 12.20-1.82-0.23 15.53-2.32-0.38-3.33 0.50 0.14 0.04 0.04 0.09 Information Technology 21.56-1.23-0.27 19.44-2.42-0.48 2.11 1.19 0.22-0.05 0.26 0.21 Materials 2.68 7.38 0.19 8.54 0.04 0.00-5.85 7.34 0.19-0.09 0.19 0.11 Real Estate 1.14-5.83-0.06 1.80-4.08-0.07-0.66-1.76 0.01 0.02-0.02 0.01 Telecommunication Services 1.49-4.11-0.07 1.80-7.28-0.12-0.30 3.17 0.06 0.00 0.05 0.06 Utilities 1.15-1.22-0.01-1.15 1.22 0.01 0.00 0.00 Cash 4.32 4.32 0.07 0.07 100.00-0.25-0.25 100.00-1.42-1.42 1.17 1.17-0.37 1.53 1.17 2 Source: Factset. The attribution presented above reflects the results of the representative account of the International Growth Equity Composite. Performance attribution is an analysis of the strategy s representative account return relative to a selected benchmark and is calculated using daily holding information within Factset for the representative account. Please refer to the performance attribution disclosure located at the end of this report for additional attribution information. The sectors or industries reflected herein are subject to change and securities within a sector or industry may no longer be held in an account s portfolio. Sector and industry weights of any particular client may vary based on investment restrictions applicable to the account. It should not be assumed that investments in any of the sectors or industries listed were or will prove profitable. FactSet is a registered trade mark of FactSet Research Systems, Inc. and its affiliates.
One-Year Attribution, June 30, 2018 2 International Growth Equity Representative Account vs. MSCI ACWI ex USA Growth Index International Growth Equity MSCI ACWI ex USA Growth Index Variation Attribution Analysis GICS Sector to to to Allocation Effect Selection + Interaction Effect Consumer Discretionary 15.16 30.91 4.45 13.69 11.97 1.64 1.47 18.95 2.80 0.09 2.35 2.45 Consumer Staples 8.59 2.39 0.28 15.79 3.74 0.71-7.20-1.34-0.43 0.48-0.08 0.43 Energy 0.67-8.92-0.11 3.07 17.56 0.54-2.40-26.48-0.65 0.08-0.21-0.12 Financials 17.13 20.81 2.85 9.97 9.12 0.82 7.17 11.69 2.02-0.19 1.79 1.62 Health Care 13.10 28.04 3.65 10.00 7.39 0.74 3.10 20.65 2.91-0.22 2.59 2.39 Industrials 12.59 26.27 3.20 15.21 7.06 1.04-2.62 19.20 2.16 0.12 2.29 2.43 Information Technology 22.07 30.60 6.55 18.46 20.69 3.29 3.61 9.91 3.26 0.40 1.94 2.35 Materials 2.91 0.13 0.02 8.64 12.79 1.12-5.73-12.66-1.10-0.12-0.46-0.56 Real Estate 1.85-1.16-0.00 1.82 1.97 0.05 0.03-3.13-0.05 0.03-0.12-0.07 Telecommunication Services 2.34 3.40 0.20 2.13-7.20-0.07 0.21 10.61 0.28-0.02 0.27 0.27 Utilities 1.22 1.30 0.02-1.22-1.30-0.02 0.16 0.16 Cash 3.59 3.59-0.17-0.17 100.00 21.08 21.08 100.00 9.90 9.90 11.18 11.18 0.63 10.37 11.18 2 Source: Factset. The attribution presented above reflects the results of the representative account of the International Growth Equity Composite. Performance attribution is an analysis of the strategy s representative account return relative to a selected benchmark and is calculated using daily holding information within Factset for the representative account. Please refer to the performance attribution disclosure located at the end of this report for additional attribution information. The sectors or industries reflected herein are subject to change and securities within a sector or industry may no longer be held in an account s portfolio. Sector and industry weights of any particular client may vary based on investment restrictions applicable to the account. It should not be assumed that investments in any of the sectors or industries listed were or will prove profitable. FactSet is a registered trade mark of FactSet Research Systems, Inc. and its affiliates. Turning to Asia, growth in India continues to recover, with the country s most recent GDP exceeding 7.5%. However, rising oil prices are widening both trade and current account deficits. Higher-than-expected inflation and accelerating currency depreciation resulted in an interest-rate increase, the first since 2014. In China, trade tensions with the U.S. escalated over potential bans of ZTE and Huawei China s top two telecom equipment manufacturers from doing business in the U.S. In Southeast Asia, massive foreign capital outflows struck every part of the region, as currency depreciation accelerated. Most countries have raised interest rates to defend their currencies, which could potentially hamper growth in the short term. Looming elections in the next 12 months have also caused heightened volatility in the region. Tech export-heavy countries, such as South Korea and Taiwan, faced volatility caused by a slowdown in global smartphone sales and semiconductors hitting a peak cycle. Geopolitical tension between the U.S. and North Korea continued to grab headlines. European economic growth slowed but remained at elevated levels. The euro weakened and Italian bond spreads widened due to concerns regarding increased deficit spending and anti-european rhetoric. In the UK, both consumers and companies are battling post-brexit inflation, as rising input costs are squeezing corporate margins. Eastern Europe continues to experience solid growth. In Turkey, President Erdogan called for snap elections that took place on June 24. Erdogan s presidential powers will expand under the new constitution that was approved in a referendum last year.
U.S. wages and inflation remain subdued, even as business investment looks to pick up steam following December 2017 s corporate tax reform. In Canada, we believe North American Free Trade Agreement (NAFTA) negotiations and uncertainty around current and future tariffs will start to impact the economy in the short run, while long-term implications are still uncertain. Much of the focus in Mexico during the quarter was on the general election that took place on July 1, which resulted in an overwhelming victory by leftist candidate Andrés Manuel López Obrador. NAFTA/tariff uncertainties are expected to continue affecting the Mexican economy in the short run. The center of attention in Brazil continues to be on its upcoming election. During the quarter, both the Argentine peso and Brazilian real sold off, causing an emergency $50 billion International Monetary Fund deal in Argentina and a reversal in monetary policy in Brazil. Outlook and Positioning The broad-based, synchronized global growth we ve witnessed over the past several quarters has recently been showing signs of slowing. Volatility is starting to increase, as global central banks begin withdrawing liquidity and decreasing their balance sheets, and as trade tensions rise. This is largely a continuation of trends from last quarter. While valuations are elevated, they are not yet overextended and tend to be supported by an improvement in earnings. Developing markets are generally under pressure, due to both dollar strength and rising energy prices, which squeezes corporate margins and dents consumer spending. While we believe there will be some continued near-term U.S. dollar recovery, we expect dollar weakness over the medium and long terms. Looking forward, we will continue to selectively reduce our exposure to EMU (European Monetary Union) Europe, non-emu Europe, Canada, China, Korea, and Taiwan. We would like to selectively add to Southeast Asia, Australia, Eastern Europe, the Middle East, and Africa. We remain overweight in the Technology and Healthcare sectors due to their sustainable earnings growth, and we are underweight Consumer Staples and Energy. Global investors remain concerned about high relative levels of developed and developing market indebtedness, geopolitical considerations and populism, shifting central bank policies, and the sustainability of global growth. As a result, we are closely monitoring inflationary pressures, commodity prices, and geopolitical and policy risks. We continue to search for companies within attractive regions that have significant earnings growth potential, high-quality balance sheets, and strong management teams with clearly defined growth strategies. Representative Account Top Contributors and Detractors for the Quarter Ended June 30, 2018 Top Contributors Avg. Top Detractors Avg. Wirecard AG 2.24% 0.66% Canada Goose Holdings, Inc. 0.88% 0.54% lululemon athletica Inc 1.39% 0.47% GN Store Nord A/S 0.99% 0.27% Ambu A/S Class B 0.64% 0.26% Venture Corporation Limited 0.96% -0.44% Nintendo Co., Ltd. Unsponsored ADR 1.39% -0.40% Hypera S.A. 0.57% -0.31% Nihon M&A Center Inc. 1.29% -0.21% Erste Group Bank AG 1.25% -0.20% The holdings identified above do not represent all of the securities purchased, sold, or recommended for advisory clients. is determined by averaging the daily weights of each holding in the representative account. The weight is the day s market value for each holding divided by the total value of all account holdings. is the contribution of each representative account holding determined by multiplying the for each holding by the rate of return for that holding during the quarter. The result shows each holding s contribution to the account s overall return during the quarter. Past performance does not guarantee future results. To obtain the calculation methodology, a list showing each holding s contribution to the overall performance during the measurement period, or for the complete list of all securities in the strategy that were recommended during the previous year, please contact pcacompliancegroup@pnc.com.
Top Contributors Wirecard AG is a German payment processing company. In our view, Wirecard is benefitting from continued organic growth, along with additional help from recent acquisitions in strategic areas. We expect sustained e-commerce growth in Europe as well as globally should support earnings into the future. Canada Goose Holdings, Inc. is a Canadian luxury soft goods retailer. The company has performed well due to increased expectations for sales and margin expansion, which we also expect to drive earnings growth in the future. We expect Canada Goose to gain additional market share in Canada, the U.S., and Europe through new flagship store openings, apparel extensions, and growth in direct-to-consumer sales channels. lululemon athletica inc. is a Canadian designer, manufacturer, and retailer of premium athletic apparel for various lifestyle activities. The company s investments in inventory innovation, supply chain logistics, and its online channel have driven solid comparable sales growth while maintaining a price premium versus its competitors. Simultaneously, expansion in Asia continues to be robust, due to growth in consumers desire for healthy, active lifestyles. These factors supported organic sales growth of more than 20% during the most recent quarter, as well as an expansion of operating margins by more than 500 bps. Going forward, we expect continued strategic investments into product innovation and logistics, as well as an increase in brand recognition across the globe, to provide a runway for sustainable long-term growth. GN Store Nord A/S is a Danish hearing and audio device manufacturer. In our view, the company is a technology leader in its markets and continues to gain market share after creating the first made-for-iphone hearing aid. The hearing-aid market continues to experience stable growth, as populations age in developed markets and the middle class grows in emerging markets. Recent product launches have been successful and continue to give GN the ability to gain additional market share in the hearing-aid market. During the quarter, GN raised full-year guidance from more than 9% organic growth to more than 15% organic growth for its audio business, as new product launches within the fast-growing unified communications market exceeded management s expectations. Given its strong new product development history and first-to-market advantages, we believe GN will continue to take market share and improve margins over the long run. Ambu A/S is a Danish health technology company that develops, produces, and markets diagnostic and life-supporting devices for hospitals and rescue services. Ambu s development of a disposable visualization scope for pulmonary applications continues to break through historical barriers to entry in the reusable-scope market. Ambu s offering provides a sterile scope at a price point that reduces the overall cost for hospitals and patients versus higher-risk reusable scopes. Minimal competition in this space has allowed Ambu to take market share and build awareness of its advantages. Demand for existing scopes remains high, with reported growth of more than 53% year over year during the most recent quarter. In addition, FDA approval of its colonoscopy scope offering in the U.S. has expanded the market potential for the company, driving estimates higher during the quarter. Top Detractors Venture Corporation Limited is a Singaporean electronics designer, manufacturer, and service provider. The company serves customers globally in the fields of electronic, telecom, and healthcare technologies. With increasing sophistication in electronic manufacturing, driven by artificial intelligence and global connectivity, the demand for expert design and packaging has increased. Venture has transformed itself in recent years by moving further up the value chain and into the higher-margin healthcare space. During the quarter, one of the company s biggest clients in the second half of 2017 missed first quarter 2018 earnings estimates due to weakness in its main product, thus impacting Venture. Nintendo Co., Ltd. is a Japanese manufacturer and developer of gaming hardware and software. The company s new generation gaming console (Switch) is being well received by consumers. However, sales of Switch were worse than expected during the beginning of the year, and the stock responded accordingly. We expect future growth in mobile gaming will increase given the company s accelerated launch schedule. In our view, Nintendo has a strong pipeline of games, including new games in Chinese and Korean languages. Hypera S.A. is a Brazilian pharmaceuticals company with leading market share. A lack of inflation in Brazil in 2017 led to lowerthan-expected regulated pricing increases for 2018, which is pressuring margins and earnings growth. Additionally, a government inquiry into possible corruption from an ex-director is impacting the company s valuation, while also increasing volatility.
Nihon M&A Center Inc. is a Japanese investment advisor that specializes in merger and acquisition services for the smallto medium-sized enterprise (SME) market. As the overall population in Japan ages, many family owned SMEs are dealing with succession challenges, leading to a need for these type of services. Traditional investment banks tend to focus on larger enterprises, making Nihon uniquely positioned to benefit from the trends within the SME market. Erste Group Bank AG is an Austrian bank that provides banking and financial services in Austria and several Eastern European countries. The company has been a top performer in recent quarters. However, due to recent concerns over global growth and the potential delay in interest rate hikes, we believe some market participants have taken a short-term view and focused on profit taking. We expect Erste to generate sustainable earnings growth over the long term, as it is exposed to healthy, growing end markets that could soon see interest rate hikes. MANAGEMENT TEAM Martin C. Schulz, J.D. Managing Director Robert Zhang Senior Analyst Scott Camp Analyst/Trader Robert Szeles, CFA Analyst Michael Czekaj, CFA Analyst Calvin Y. Zhang Senior Analyst/ Portfolio Manager
Firm Description: As of September 29, 2009, PNC Capital Advisors, Inc. and its affiliate Allegiant Asset Management Company each merged into and with PNC Capital Advisors, LLC ( PNC Capital Advisors or the Firm ). PNC Capital Advisors, a registered investment adviser and direct wholly owned subsidiary of The PNC Financial Services Group, Inc. ( PNC ), provides investment advice with respect to equity and fixed income securities for a variety of clients, including institutional accounts and registered investment companies. For Global Investment Performance Standards (GIPS ) purposes, PNC Capital Advisors, LLC includes: 1) Assets under management of PNC Bank, N.A. that were previously attributed to a predecessor firm, Mercantile, which prior to September 14, 2007 was defined to include the assets of Mercantile-Safe Deposit and Trust Company and its subsidiary, Mercantile Capital Advisors, Inc. Effective September 14, 2007, Mercantile-Safe Deposit and Trust Company was merged into PNC Bank, N.A., and in conjunction with such merger, PNC Capital Advisors, Inc. became a subsidiary of PNC Bank, N.A. PNC Capital Advisors, Inc. commenced serving as subadvisor to certain clients of PNC Bank, N.A. effective February 11, 2008. 2) Assets under management of PNC Municipal Investment Group, formerly a part of PNC Bank, N.A., now a business unit of PNC Capital Advisors. 3) Assets under management of the Advantage Equity Portfolio Management Team, formerly a part of PNC Institutional Investment Group ( PNC IIG ), a part of PNC Bank, N.A., now a business unit of PNC Capital Advisors. 4) Wrap program assets managed by Allegiant Advisory Services, formerly a part of Allegiant Asset Management Company. 5) Assets under management of Allegiant Asset Management Company (excluding Allegiant Advisory Services), formerly a wholly owned subsidiary of National City Corporation, now an institutional subsidiary of the PNC Financial Services Group, Inc. and part of PNC Capital Advisors. Compliance Statement: PNC Capital Advisors, LLC claims compliance with the Global Investment Performance Standards (GIPS ) and has prepared and presented this report in compliance with the GIPS standards. PNC Capital Advisors, LLC has been independently verified for the period beginning September 29, 2009 through December 31, 2016 by Ashland Partners and Company, LLP, and for the periods January 1, 2017 through December 31, 2017 by ACA Performance Services, LLC. 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. The International Growth Equity Composite has been examined by Ashland Partners & Company LLP for the period January 1, 2008 through December 31, 2016, and for the periods January 1, 2017 through December 31, 2017 by ACA Performance Services, LLC. The verification and performance examination reports are available upon request. Verification: Compliance with the GIPS standards for the predecessor firm (Allegiant Asset Management Company) was verified by Ashland Partners & Company LLC for the period January 1, 2008 through September 29, 2009 and by a previous verifier for the period January 1, 1998 through December 31, 2007. In addition, a performance examination was conducted on the International Growth Equity Composite for the period January 1, 1998 through December 31, 2007 by a previous verifier. Copies of the verification reports as well as policies for valuing portfolios, calculating performance, and preparing compliant presentations are available upon request. A list of composite descriptions is also available upon request. PNC Capital Advisors International Growth Equity Composite Composite Inception Date: September 30, 1997 Composite Creation Date: September 30, 1997 Gross of Fees Net of Fees 3 Yr Ex-Post Benchmark 3 Yr Ex-Post Number of Composite Composite Firm Std Dev Std Dev Portfolios Dispersion Assets Assets Year % % Comp % % Benchmark % (Year-end) (Std Dev %) ($ millions) ($ millions) 2017 42.72 41.65 11.85 32.01 11.68 2 N/A 631.1 50,300 2016 (5.69) (6.40) 11.45 (0.57) 12.21 2 N/A 428.0 48,659 2015 4.01 3.23 11.10 4.09 11.76 1 N/A 364.3 41,592 2014 (4.96) (5.67) 12.20 (4.43) 12.24 1 N/A 298.0 41,062 2013 30.73 29.74 16.47 22.55 15.70 1 N/A 245.2 36,882 2012 16.28 15.42 18.51 16.81 18.85 1 N/A 141.1 34,425 2011 (12.54) (13.21) 20.45 (12.10) 20.96 1 N/A 120.4 35,113 2010 18.11 17.24 12.25 1 N/A 149.4 33,318 2009 37.59 36.59 29.37 1 N/A 121.6 32,318 2008 (43.79) (44.23) (42.70) 2 N/A 173.3 27,606 Composite Description: The investment objective of the International Growth Equity Composite is to seek capital appreciation by investing in a portfolio of equity securities of foreign issuers. Effective September 1, 2005, the Firm changed the composite name from International Equity to International Growth Equity to reflect the portfolio s focus on growth stocks. Results from all accounts have been continuous from the first full month under management to present or last full month under management. The International Growth Equity Composite was created September 30, 1997. Benchmark: Effective March 1, 2016, the Firm changed the benchmark for the composite from the MSCI EAFE Growth (net) Index to the MSCI ACWI ex USA Growth Index. The Firm changed the benchmark in order to better reflect the Composite s exposure to emerging markets. Prior to March 1, 2016, the benchmark for the composite was the MSCI EAFE Growth (net) Index. The MSCI ACWI ex USA Growth Index is an unmanaged standard foreign securities index that captures large- and mid-cap securities exhibiting overall growth style characteristics across both Developed Markets (DM) countries and Emerging Markets (EM) countries outside North America. Minimum Account Size: All discretionary accounts in excess of $2 million have been included in the composite. Calculation of Results: Accounts are valued using trade date accounting and are denominated in U.S. dollars. Performance results reflect the reinvestment of interest, dividends, and realized capital gains and include cash, cash equivalents, convertible securities, and preferred securities, if applicable. Dividends and interest are recorded on an accrual basis and are gross of all applicable foreign withholding taxes, if any. Performance results are presented on a gross and net basis and include the reinvestment of all income. The net results reflect the deduction of 1.00% for the period prior to January 1, 2004, and 0.75% thereafter, representing the maximum advisory fees charged to client accounts during the respective periods in the International Growth Equity Composite. The actual fees paid by a client may vary based on assets under management and other factors. Past performance is no guarantee of future results. Dispersion: The dispersion of annual return is measured by the standard deviation across asset-weighted portfolio returns represented within the composite for a full year. Prior to 2007, the dispersion of annual return was calculated across equal-weighted portfolio returns. For periods during which five or fewer accounts were included in the composite for a full year, standard deviation is not disclosed because it is not considered meaningful. Fee Schedule: The management fee schedule is as follows: 0.75% on amounts up to $25 million, 0.65% on next $25 million, and 0.55% on amounts over $50 million. The actual fees paid by a client may vary based on assets under management and other factors.
The MSCI ACWI ex USA Growth Index is an unmanaged standard foreign securities index that captures large and mid cap securities exhibiting overall growth style characteristics across both Developed Markets (DM) countries and Emerging Markets (EM) countries outside North America. Performance attribution is an analysis of the representative account return relative to a selected benchmark and is calculated using daily holding information within Factset for the representative account. It does not reflect the payment of transaction costs, fees and expenses of the portfolio. Attribution is broken down into two primary effects: sector allocation (that portion of the representative account s excess return that is attributable to over-or under-weighting a sector or industry relative to the benchmark) and security selection (the portion of the representative account s excess return that is derived from choosing different securities from the benchmark). s are calculated using the closing price of any given security and do not necessarily reflect the actual trading price of such security. Accordingly, s shown above may differ from actual portfolio returns. Portfolio to measures the impact that each security has on the portfolio s total return and is calculated using daily holding information within Factset by multiplying the beginning weight for a given security by its total return on a daily basis, and geometrically linked for any given period. Accordingly, the to shown above could differ from actual returns when there is a significant different between the trade price and the closing price of a given security. Portfolio holdings that are included in the benchmark index are assigned to the same industries and sectors to which they are assigned by the index provider. Portfolio holdings that are not assigned by the index provider but that are included in the Factset database are assigned to the index providers, industries, and sectors by PNC Capital Advisors, LLC. Attribution is not exact, but should be considered an approximation of the relative contribution of each of the factors considered. This publication is for informational purposes only. Information contained herein is believed to be accurate, but has not been verified and cannot be guaranteed. Opinions represented are not intended as an offer or solicitation with respect to the purchase or sale of any security and are subject to change without notice. Statements in this material should not be considered investment advice or a forecast or guarantee of future results. To the extent specific securities are referenced herein, they have been selected by the author on an objective basis to illustrate the views expressed in the commentary. Such references do not include all material information about such securities, including risks, and are not intended to be recommendations to take any action with respect to such securities. The securities identified do not represent all of the securities purchased, sold or recommended and it should not be assumed that any listed securities were or will prove to be profitable. Past performance is no guarantee of future results. PNC Capital Advisors, LLC claims compliance with the Global Investment Performance Standards (GIPS ). To receive a list of composite descriptions of PNC Capital Advisors, LLC and/or a presentation that complies with the GIPS standards, please send an email to Compliance at pcacompliancegroup@pnc.com. PNC Capital Advisors, LLC is an SEC-registered investment adviser, offering an array of investment strategies. Registration with the SEC does not imply any level of skill or training. PNC Capital Advisors, LLC is an indirect subsidiary of The PNC Financial Services Group, Inc. PNC Capital Advisor s strategies and the investment risks and advisory fees associated with each strategy can be found within Part 2A of the firm s Form ADV, which is available at https://. The PNC Financial Services Group, Inc. All rights reserved. INVESTMENTS: NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE