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»»MeritageValue EquityThe Meritage Value Equity strategy as been in existence sincethe firm’s inception in 1991, capitalizing on the firm’s convictionin quantitative methodologies to drive security selection.At the heart of the investment approach is a multi-factorranking process which identifies investment candidateswith unsustainably low valuations and strong or improvingcash flow return on investment. A qualitative overlayfocuses on risk control and assures that decisions are notfully automated. The strategy’s objective is to generateexcess return over the Russell 1000 Value Index.Core Beliefs Our multi-variable approach to valuation expands the “value” universebeyond that used by many traditional value managers, enablingownership of attractive investments not found in other value strategies.Key FactsA systematic, factor-based security selection process ishighly efficient for identifying companies that score the bestacross a set of pre-defined characteristics. The price paid fora security is the primary determinant of risk and return.Inception:December 31, 2000BenchmarkRussell 1000 ValueA distinctive process to identify and assess investment opportunitiesis crucial in order to produce differentiated results.Strategy AUMFirm AUM 1.5 Billion as of 12/31/18 225 million as of 12/31/18Firm AssociatesMeritage Portfolio Management 171
Meritage Value EquityPerformanceRisk Adjusted Return Statistics - Universe Quartile Rankings 5 Years Ending M Rank Meritage Value Equity Composite Gross of Fees5 Year MPT Statistics vs eVestment Alliance Universe of U.S. Value Equity Managers. Universe performance figures are gross of fee.Annualized Returns (%)Periods Ending 12/31/20181 Year3 Years5 Years10 YearsMeritage Value Equity Gross-9.45.35.310.1Meritage Value Equity Net2-10.14.44.49.2Meritage Value Equity Net of Institutional Fee1-10.04.64.69.4Russell 1000 Value Index-8.37.06.011.2This information is presented as supplemental information to the Composite Disclosures included at the end of this presentation.1The standard Meritage institutional fee of 0.65%/year is modeled into results. Fee breaks at higher asset levels are not reflected.2The standard Meritage private client fee of 0.875%/year is modeled into results. Fee breaks at higher asset levels are not reflected.Meritage Portfolio Management 2
Meritage Value EquityInvestment Process 500 securities reduced6to 2700 with a financialquality of C or better, anda minimum weekly tradingvolume of 5 million.Multi-factor ranking processcombines two independentperspectives: 1) Factor correlationthat spreads across valuation,investor sentiment, businessmomentum and capital efficiencyand 2) Intrinsic valuation.Top ranked candidates (6%)form primary buy listOur ProcessA sell discipline is primarilydriven by the deterioration ina stock’s multi-factor rank.Qualitative assessment follows,focused on risk control withregard to portfolio diversificationand sensitivity to value traps5-Yr. historical turnoverapproximately 65%Portfolio Construction Sector diversification: sector sizes can beup to two times the index for larger sectors;up to three times for smaller sectors.Non-U.S. holdings, including tax haven domiciles,have averaged 14% of the portfolio since inception. Portfolio construction35 - 75 securities Cash balances are primarily frictionalPortfolio characteristics controlled within rangesrelative to benchmarkPosition size ranges from 1 - 4%No quant-engineered ex-ante tracking error target orrisk optimizationMeritage Portfolio Management 3
Meritage Value EquityPerformanceCalendar Year Returns 631.211.32.07.321.8Meritage Value Equity Net of Institutional Fee-10.016.19.6-2.211.731.311.42.17.421.9Russell 1000 Value ge Value Equity GrossMeritage Value Equity Net21The standard Meritage institutional fee of 0.65%/year is modeled into results. Fee breaks at higher asset levels are not reflected.The standard Meritage private client fee of 0.875%/year is modeled into results. Fee breaks at higher asset levels are not reflected.12Consistency of ReturnsRolling 3-Year Periods vs. R1000VExceeds benchmark 54% of periodsFor Periods 12/31/2000 to 12/31/2018Performance figures gross of fee. Thisinformation is presented as supplementalinformation to the Composite Disclosuresincluded at the end of this presentation.30OutperformMeritageRussell 1000 Value20100-10Underperform-20-20-1001020Meritage Portfolio Management 304
Meritage Value EquityPortfolioQuantitative MeasuresSector Diversification (%)MeritageValueRussell1000ValueRiskRisk (5-Yr Beta)Periods Ending 12/31/20180.941.00ValueTop Ten Holdings (%)StrategyIndexEnergy8.0MaterialsVanguard Value ETF14.09.3Utilities Select Sector SPDR5.70.04.1Vanguard Cons. Staples ETF4.5Industrials6.27.4Vanguard REIT ETF3.2Consumer Discretionary7.55.2AutoZone2.7Price/Operating Earnings15.316.5Consumer Staples8.47.8Cigna2.6Price/Cash Flow10.112.5Health 0.422.5Royal Dutch Shell Plc-ADR A2.5Information Technology12.59.3CDW2.5Emergent Biosolutions2.4EarningsCFROI16.812.3Comm Services4.67.35 Year Earnings Growth Est14.013.3Utilities10.26.5Real Estate6.14.9IncomeDividend Yield2.22.93139Portfolio RankMeritage Value ScoreNon-U.S. Holdings:9.5% (5 Stocks)Up/Down CaptureRatio 5 Yrs (%)Market Cap Distribution (%)StrategyIndexNetherlands4.8Value Up90 50 Billion1555Norway1.8Value Down92 10 Billion to 50 Billion4632India1.5 2 Billion to 10 Billion3313Bermuda1.4 2 Billion60This information is presented as supplemental information to the Composite Disclosures included at the endof this presentation. Portfolio Characteristics information is for a representative account.Meritage Portfolio Management 5
Meritage Value EquityInvestment TeamMark E. Eveans CFA, CICSharon L. Divine, CFAJohn M. Wallis, CFAPresident, Chief Investment Officer,Senior Portfolio ManagerPrincipal, Senior Portfolio Managerand Director of Quantitative ResearchDirector of Qualitative ResearchMark is a founding member of Meritage.He serves as the lead manager ofthe Meritage Value Equity strategy,supports the Yield-Focus and Small CapValue Equity strategies and drives thefirm’s overall investment philosophy.Mark has over 40 years of experiencemanaging institutional and privateportfolios, preceded by four years asan institutional security analyst. Inaddition to Mark’s portfolio managementleadership, he is a primary contact tomany of the firm’s institutional andprivate clients. A past president of theKansas City Society of Financial Analysts,he currently serves on the nationalBoard of Governors of the InvestmentAdvisors Association, our industry’sleading trade association. He receivedhis B.B.A. and M.S.A. in Finance fromWichita State University with Honors.Sharon is a Principal and serves as thelead manager of the Meritage SmallCap Value Equity strategy. She leads thedevelopment of the quantitative aspectsof the firm’s equity investment processand is a primary contact for many of thefirm’s clients. Sharon has over 29 yearsof investment experience in portfoliomanagement and investment analysis.Sharon received her B.B.A. withemphasis in Computer Science andM.B.A in Finance from the Universityof Missouri-Kansas City with Honors.John leads the qualitative analysiscomponent of the firm’s equityinvestment process. He also managesthe firm’s macroeconomic environmentanalysis. John has 25 years ofinstitutional experience in portfoliomanagement, publicly traded securityanalysis and private investment analysis.John has a B.S. degree fromArizona State University andan M.B.A. in Finance from AvilaUniversity, Kansas City, Missouri.Meritage Portfolio Management 6
Institutional Fee ScheduleFee scheduleOn the first 5 million0.650%/YROn the next 20 million0.500%/YROn the next 25 million0.400%/YROn the next 150 million0.300%/YROver 200 million0.200%/YRDisclosures to follow.As a fee-based firm, Meritage does not accept other forms of compensation from referrals madeor commissions on sale of outside investment products. Other fees the client may incur includethird party custodial fees and/or trading costs from buying and selling securities.Meritage Portfolio Management 7
Meritage Value EquityDisclosuresMeritage Value Equity ReturnsAnnualized Ex-PostComposite AssetsYearEndingTotal GrossAsset-Wtd.Total NetAsset-Wtd.R1000V*BenchmarkComposite3-Yr St DevBenchmark3-Yr St DevNumber ofPortfoliosAsset-Wtd.StandardDev.End ofPeriod(Mln)CompositeAssetsvs. 3%10.82%2100.53%187.213.0%Periods Ending 12/31/2018Annualized Returns (%)1 Year3 Years5 Years10 YearsMeritage Value Equity Gross-9.45.35.310.1Meritage Value Equity Net2-10.14.44.49.2Meritage Value Equity Net of Institutional Fee1-10.04.64.69.4Russell 1000 Value Index-8.37.06.011.2The standard Meritage institutional fee of 0.65%/year is modeled into results. Fee breaks at higher asset levels are not reflected.The standard Meritage private client fee of 0.875%/year is modeled into results. Fee breaks at higher asset levels are not reflected.12Meritage Portfolio Management 8
Meritage Value Equity DisclosuresComposite Description:The Meritage Value Equity composite is an actively managed valueequity strategy that evaluates companies of all capitalization sizes andis driven by Meritage’s value-centric quantitative process. Portfolioholdings have unsustainably low valuations and strong or improvingcash flow/return on investment criteria. The Manager combines experienced-based qualitative fundamental analysis with the firm’s proprietarymulti-factor models. The benchmark is the Russell 1000 Value index.Benchmark Description:The Russell 1000 Value index is a market-cap weightedindex and measures the performance of the large-capvalue segment of the U.S. equity universe.Definition of the Firm:Meritage Portfolio Management is an independent investmentmanagement firm that is not affiliated with any parent organization.Basis for Composites:Meritage Portfolio Management’s Value Equity Composite, createdon October 1, 2006, is composed of managed, fully discretionary, feepaying accounts managed in the Meritage Value Equity strategy.Definition of Significant Cash Flows:Effective June 30, 2002, Meritage temporarily excludes portfoliosfrom the composite for periods experiencing a significant cashflow defined as an aggregate of flows exceeding 10% of theportfolios beginning market value for the month of the flow.Fees:Returns are presented gross and net of management fees. Gross-ofFees performance returns are presented before management fees.Net-of-Fees performance returns are calculated by deducting MeritagePortfolio Management’s standard fee rates from the gross compositereturn on a monthly frequency. This produces a compounding effecton the total rate of net return. Other fees reflected in both gross andnet returns include withholding taxes. Withholding taxes on foreignbased investments have been deducted from both gross and net performance, contingent on how the withholding information is receivedfrom the firm’s independent third party pricing source. Once withholding tax information is received from the custodian, performanceis trued up to be consistent with what the custodian withheld.Meritage Portfolio Management’s standardfee schedules are as follows:For Equity Strategy Composites the standard fees are: 0.875%on the first 2,500,000; 0.75% on the next 2,500,000; 0.625% onthe next 5,000,000; and 0.50% on assets over 10,000,000.of-Fees returns are calculated before the deduction of investmentmanagement fees and after the deduction of direct trading expenses.Net-of-Fees returns are calculated after the deduction of MeritagePortfolio Management’s standard investment management fee ratesand direct trading expenses. Both gross-of-fees and net-of-feesreturns are calculated after or before the deduction of withholdingtaxes on foreign dividends, contingent on how the withholding tax information is received from our independent third party pricing source.Accounts may be subject to customized commission schedules.Policies for valuing portfolios, calculating performance andpreparing compliant presentations are available upon request.Past performance is no guarantee of future results.Minimum Account Size:The established minimum portfolio market value is 200,000,effective as of 02/28/2009. A portfolio is included in the compositeone month after it reaches the minimum size inclusion level for afull performance period. A portfolio is excluded from the compositeif the portfolio market value drops below 150,000 for 2 consecutive months. Prior to 02/28/2009, the established minimum inclusionlevel was 300,000, with a minimum exclusion level of 250,000.Currency:Returns are calculated and presented in U.S. dollars.eVestment universe returns, benchmark indices and related statisticsare presented gross-of-fee. A complete list and description of MeritagePortfolio Management’s composites is available upon request.Meritage Portfolio Management claims compliance with the GlobalInvestment Performance Standards (GIPS ) and has preparedand presented this report in compliance with the GIPS standards.Meritage Portfolio Management has been independently verifiedfor the periods December 31, 2000 through June 30, 2018.Verification assesses whether (1) the firm has complied with all thecomposite construction requirements of the GIPS standards on afirm-wide basis and (2) the firm’s policies and procedures are designedto calculate and present performance in compliance with the GIPSstandards. The Meritage Value Equity composite has been examinedfor the periods December 31, 2000 through June 30, 2018. The verification and performance examination reports are available upon request.*Russell 1000 Value IndexActual investment management fees incurred by clients may vary.Calculation Methodology:Returns from cash and cash equivalents held in portfolios areincluded in total return calculations. Total return includes realized andunrealized gains and losses, plus reinvestment of income. Gross-Meritage Portfolio Management 9
Meritage Portfolio Management is an institutionally based investment managementfirm, providing asset management for families, foundations, endowments, corporationsand qualified retirement plans. The firm manages 1.5 billion in assets for local,regional, and national clients from its base in Overland Park, Kansas.7500 College Blvd., Ste 1212,Overland Park, KS 66210913.345.7000www.meritageportfolio.comMeritage Portfolio Management 10
Meritage Portfolio Management 6 Meritage Value Equity Investment Team Mark is a founding member of Meritage. He serves as the lead manager of the Meritage Value Equity strategy, supports the Yield-Focus and Small Cap Value Equity strategies and drives the firm's overall investment philosophy. Mark has over 40 years of experience
