HOLT Portfolio Update - Credit Suisse · HOLT Portfolio Update December 2016 Heather Kidde, CFA Portfolio Manager FOR INVESTMENT PROFESSIONALS ONLY Not for Distribution to Prospective

Credit Suisse Asset Management, LLC

Please see “Important Legal Information” for important disclosures regarding the data and information contained and the views and

opinions expressed in this material.

HOLT Portfolio Update December 2016

Heather Kidde, CFA

Portfolio Manager

FOR INVESTMENT PROFESSIONALS ONLY

Not for Distribution to Prospective or Existing Clients

Sean Burns

Senior Analyst/Portfolio Manager Christian Stauss

Portfolio Manager



Agenda

Performance Update: Mixed performance in a challenging market for active investors

Sustainable Dividend Update: Post Election Portfolio positioning

The Case for Dividend Investing: Dividend stocks remain attractive

Trades: Sustainable Dividend Portfolios

APPENDIX Performance Detail Trade Commentary

2



Performance Update

3



4

HOLT Strategies Performance

Source: Credit Suisse, Bloomberg *Returns greater than one year are annualized. Past performance is no guarantee or indicator of future results. 1The Global Sustainable Dividend All World Composite, European Sustainable Dividend Composite and US Sustainable Dividend Composite include all fully discretionary portfolios that are managed to the Global Sustainable Dividend All World Strategy, European Sustainable Dividend Strategy and US Sustainable Dividend Strategy, respectively. Prior to April 30, 2015, accounts were initially included when 95% of assets in the account were tracking the model and the cash balance comprised less than 2.5%. Beginning April 30, 2015, accounts will be initially included when the cash balance is less than 7.5% of the account. The US Large Cap Core Composite and US Small Cap Blue Chip Composite include all fully discretionary portfolios that are managed to the US Large Cap Core Strategy and US Small Cap Blue Chip Strategy, respectively. Accounts are initially included when 95% of assets in the account are tracking the model and the cash balance comprises less than 2.5%. Portfolios included in the composites are not necessarily 100% invested to the model for all time periods. All accounts pay a "wrap fee" based on a percentage of assets under management. The maximum wrap fee schedule charged to accounts in the Global Sustainable Dividend All World Composite, US Sustainable Dividend Composite, US Large Cap Core Composite and US Small Cap Blue Chip Composite is 2.0%; the maximum wrap fee schedule charged to accounts in the European Sustainable Dividend Composite is 1.5%. Actual fees incurred by clients may vary. Gross-of-fees results are gross of the entire wrap fee and are shown as supplemental information. Net-of-fees results are net of the entire wrap fee. Policies for valuing portfolios, calculating performance, and preparing compliant presentations are available upon request. For illustrative and

informational purposes only. Indices are not subject to management fees and are not available for direct investment. 2Represents the HOLT Canada model portfolio. Performance results for the Canada Portfolio are model performance results that do not represent actual trading and may not reflect the impact that material economic and market factors might have had on the adviser's decision-making if the adviser were actually managing clients' money. Assumes an annual fee of 1.50%.

Data as of November 30, 2016 Nov-16 QTD YTD 1-Yr 3-Yr* 5-Yr* ITD* Strategy AuM Inception

Sustainable Dividend Strategies:

Global Sustainable Dividend Composite1 (Gross) 1.64% -0.69% 3.46% 2.94% 2.89% 8.30% 8.44% $933 million 12/31/2010

Global Sustainable Dividend Composite (Net) 1.62% -0.76% 3.02% 2.43% 2.05% 7.35% 7.47%

MSCI AC World Daily TR Net USD (NDUEACWF) 0.76% -0.95% 5.58% 3.68% 2.99% 8.85% 6.09%

US Sustainable Dividend Composite1 (Gross) 5.28% 3.33% 12.98% 12.97% 10.50% 14.56% 14.22% $157 million 12/31/2010

US Sustainable Dividend Composite (Net) 5.26% 3.08% 12.05% 11.93% 9.24% 13.20% 12.85%

S&P 500 Index (SPX) 3.70% 1.81% 9.79% 8.05% 9.06% 14.44% 12.28%

European Sustainable Dividend Composite1 (Gross) -3.10% -6.91% -9.22% -10.64% -3.96% -- 1.49% $81 million 6/30/2013

European Sustainable Dividend Composite (Net) -3.11% -7.03% -9.78% -11.28% -4.98% -- 0.39%

MSCI Daily TR Net Europe USD (NDDUE15) -2.18% -5.36% -5.36% -7.80% -4.10% -- 1.64%

Sustainable Growth Strategies:

US Large Cap Core Composite1 (Gross) 4.79% 2.77% 2.60% 0.76% 6.25% 12.97% 8.70% $104 million 6/30/2008

US Large Cap Core Composite (Net) 4.77% 2.62% 1.86% -0.07% 5.11% 11.70% 7.45%

S&P 500 Index (SPX) 3.70% 1.81% 9.79% 8.05% 9.06% 14.44% 8.99%

US Small Cap Blue Chip Composite1 (Gross) 11.55% 10.06% 17.46% 11.97% 8.45% -- 13.74% $7 million 9/30/2012

US Small Cap Blue Chip Composite (Net) 11.52% 9.98% 16.78% 11.20% 7.31% -- 12.50%

Russell 2000 Index (RTY) 11.14% 5.85% 17.97% 12.05% 6.45% -- 13.15%

Canada Portfolio2 (Gross) 2.35% 3.85% 12.47% 9.38% 8.31% -- 10.22% $60 million 2/29/2012

Canada Portfolio (Net) 2.35% 3.46% 10.80% 7.76% 6.70% -- 8.58%

S&P/TSX Composite Index (SPTSX) 2.19% 2.83% 19.10% 15.45% 7.17% -- 6.80%



93%

99%

82%

73%

0% 20% 40% 60% 80% 100%

US All Cap Value

US Dividend Focus

Global Value

Global Dividend Focus

Inception to Date Percentile Rank

eVe

stm

en

t P

ee

r G

rou

p C

ate

go

ry

GSD

GSD

USSD

USSD

5

Data as of 9/30/2016, unless specified elsewhere; Returns are reported gross of fees.

Source: Credit Suisse, eVestment

Performance of the HOLT Strategies Ranks High vs Peers US Sustainable Dividend ranks in the 99th percentile of US Dividend Focused Funds since inception through

September 30, 2016

GSD USSD

Peer Group Comparison

Global Dividend

Focus Global Value US Dividend Focus US All Cap Value

1-Yr 18% 34% 91% 88%

3-Yr 36% 51% 90% 89%

5-Yr 38% 27% 86% 69%

ITD 73% 82% 99% 93%



Post Election Performance Summary:

Sustainable Dividend Portfolios well-positioned

6



Quantifying the impact of a Trump victory

Theme: Commentary:

Equities: In pre-market trading, S&P futures were limit down 5%, but US markets actually closed in positive territory after participants digested the outcome. This reaction draws parallels to European markets in the week following the Brexit vote. Reasonable to expect heightened volatility in the short term.

S&P 500 Index: +3.0%

MSCI All Country World Index: +0.75%

Interest Rates: Trump’s policies are seen as inflationary, sending interest rates higher. We believe the Sustainable Dividend Portfolios are well positioned for this scenario. Over the past 12 months, we have

decreased exposure to traditional defensives due to expensive valuations, interest rate sensitivity and limited growth, and we have found interesting dividend growth ideas in more cyclical sectors.

US 10 Year Treasury Yield: +55bps

Currency: The US dollar continued to strengthen against global currencies due to increasing interest rates, improving economic data, and more hawkish language from the Fed.

DXY Index: +2.75%

Source: Credit Suisse, Bloomberg, Data as of 12/5/2016; Data from 11/8/16 – 11/30/16

7



We positioned for a rising rate environment earlier in the year

• Valuation Concerns: In 2010, the Staples sector traded at 18.4x Economic P/E and offered a 2.9% dividend yield and slightly positive capital appreciation potential. In early 2016, the sector traded at 26.1x Economic P/E, offering just 2.5% dividend yield and had negative capital appreciation potential.

• Sensitivity to Interest Rates: Traditional defensives (Staples, Utilities, Telecom, REITs), dividend paying sectors exhibited a strong negative correlation to interest rates, which in many cases dominated stock specific news.

• Changing Dividend Landscape: New dividend ideas came from less obvious sectors (Tech, Financials, Industrials), due to a more attractive combination of capital appreciation potential, dividend yield and dividend growth.

Source: Credit Suisse, Bloomberg, Data as of 3/21/2016 Past performance is not a guarantee or indicator of future results.

8



Trading focused on finding a balance of yield and dividend growth

US Sustainable Dividend vs SPX Sector Positioning

GICS Sector Dec-15 Mar-16 Jun-16 Sep-16 Nov-16 Return Div Yield Div Growth

Consumer Discretionary -0.2 -2.1 -3.4 -2.7 -2.2 4.2% 1.5% 6.9%

Financials -1.1 -0.2 1.8 -0.1 1.8 12.5% 1.8% 11.5%

Industrials 1.9 4.3 4.0 8.8 8.5 7.4% 2.2% 7.4%

Information Technology -2.3 -1.4 -2.6 -5.0 -5.2 0.0% 1.6% 6.5%

Materials 6.4 5.5 5.7 6.0 5.5 5.4% 2.2% 9.3%

Cyclicals 4.7 6.0 5.4 7.0 8.3 Avg 5.9% 1.8% 8.3%

Consumer Staples 7.3 3.2 0.4 -2.2 -1.6 -3.5% 2.8% 6.1%

Energy -6.5 -6.8 -7.4 -7.3 -7.3 7.1% 2.5% 5.5%

Health Care -1.8 2.5 6.6 5.7 3.5 0.9% 1.8% 5.6%

Real Estate -2.8 -3.0 -3.2 -3.1 -2.8 -2.4% 3.6% 4.6%

Telecommunication Services -2.4 -2.8 -2.9 -2.6 -2.6 5.4% 4.8% 1.9%

Utilities -3.0 -3.5 -3.6 -3.3 -3.2 -4.2% 3.7% 5.7%

Defensives -9.2 -10.3 -10.2 -12.7 -13.9 Avg 0.6% 3.2% 4.9%

• Starting in the beginning of 2016, we rotated out of strong performing defensive names (HSY, DPS, KMB, MO) and found new dividend ideas in more cyclical sectors (DFS, WFC, ETN, LLTC). These names had capital appreciation potential and an attractive balance of moderate current yield and above average dividend growth.

• Following the election, as yields rallied, Cyclicals outperformed Defensives in the US. On average, cyclical sectors offer 1.8% yield with 8.3% projected dividend growth. Defensive sectors have a higher current yield of 3.2%, but only offer 4.9% projected growth.

Source: Credit Suisse, Bloomberg, Data as of 11/30/2016 (Returns are gross of fees from 11/8/16 – 11/30/16) Past performance is not a guarantee or indicator or future results and there is no guarantee that projected growth will occur.

9



Sector Playbook

Sector Outlook

Health Care Fears over legislation imposed on US Pharma and Biotech appear to be subsiding. Trump plans to repeal and

replace the ACA, but did not scrutinize drug prices during his campaign. The sector remains defensive with growth prospects and attractive valuations, following a period of multiple compression.

Financials We have been adding to the space over the past twelve months, finding combination of dividend yield and

growth with strong capital appreciation potential. Space will continue to benefit from rising interest rates and ROE’s could improve with easing regulation.

Industrials Aerospace & Defensive industry stands to benefit from government focus on building military strength and eliminating the sequester on defense spending. These companies also provide some protection from increasing global political uncertainty.

Technology Multiple companies would benefit from an opportunity to repatriate cash trapped overseas, and this could act as catalyst to increase the dividend and payout ratios in the sector.

Staples Concerned with valuation levels in US, considering limited growth prospects and global food deflation. See opportunity in some of the international firms with much more compelling valuations and higher yields.

Discretionary Beneficiary of lower oil price and strong US consumer, but possible protectionist policies, rising oil prices, and wage inflation could put pressure on peak margins going forward.

Energy Starting to allocate to the sector, but most Energy ideas still not meeting the sustainability and valuation criteria for inclusion in the dividend portfolios at this time.

Utilities / Telecom /

REITs Remain underweight due to valuation concerns and interest rate sensitivity.

Materials On the margins, we are adding exposure to more diversified chemicals companies though avoiding mining companies and truly “commodity” chemicals.

The views expressed above are that of the HOLT Capital Discipline team and are based on publicly available information, internally developed data and other third party sources believed to be reliable. Credit Suisse has not sought to independently verify information obtained from public and third party sources and makes no representations or warranties as to accuracy, completeness or reliability of such information. All opinions and views constitute judgments as of the date of writing without regard to the date on which the reader may receive or access the information, and are subject to change at any time without notice and with no obligation to update.

10



The Case for a Dividend Strategy:

Dividend stocks remain attractive

11



Stocks remain attractive relative to bonds

• Bonds trade at a significant premium to equities if you compare them on a relative price to earnings (income) basis. The ten year US treasury trades at roughly 42x P/E, whereas the S&P 500 is closer to 20x.

• For only the second time in the past 35 years, the S&P 500 dividend yield has been higher than the 10 yr. treasury yield in 2016.

-20

-10

0

10

20

30

40

50

60

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

PE

Ratio

(x)

US 10Yr Treasury - S&P 500 P/E Ratio

-2

0

2

4

6

8

10

1971 1976 1981 1986 1991 1996 2001 2006 2011 2016

Yie

ld (

%)

US 10Yr Treasury - S&P 500 Yield

Source: Credit Suisse, Bloomberg; Data as of 11/30/2016 Past performance is not a guarantee or indicator of future results.

12



Continued increases in rates pose significant risk to FI investments

• With bond yields still historically low, an increase in yields would still have a large impact on bond prices. For example, if bond yields increased 1%, a 10 year US treasury purchased at par ($100) would be worth $91.60, which would effectively wipe out 3.6 years of the investors income from the bond.

Government

(Gov’t)

Investment Grade

(IG)

High Yield (HY)

Present Value $100 $100 $100

Yield 2.34% 3.36% 6.64%

Period (yrs) 10 10.46 5.4

Bond prices under rising rate scenarios… (Price / Years of Income)*

+25bps 97.8 / 0.9 97.8 / 0.6 98.9 / 0.2

+50bps 95.7 / 1.8 95.7 / 1.3 97.8 / 0.3

+100bps 91.6 / 3.6 91.7 / 2.5 95.6 / 0.7

Source: Credit Suisse, Bloomberg as of 11/28/2016 Securities used: Government = USGG10YR Index, Investment Grade: BUSC Index, High Yield: BUHY Index *Assumes Present Value at par of $100. Price calculation assumes semi annual interest payment.

13



Dividend Growth: A powerful multiplier for long-term investors

US Sustainable Dividend: 2.8% Dividend Yield Global Sustainable Dividend: 3.2% Dividend Yield

Dividend Growth

0% 2.5% 5.0% 7.5% 10.0% 12.5%

Ye

ars

1 2.8% 2.9% 2.9% 3.0% 3.1% 3.2%

2 2.8% 2.9% 3.1% 3.2% 3.4% 3.5%

3 2.8% 3.0% 3.2% 3.5% 3.7% 4.0%

4 2.8% 3.1% 3.4% 3.7% 4.1% 4.5%

5 2.8% 3.2% 3.6% 4.0% 4.5% 5.0%

10 2.8% 3.6% 4.6% 5.8% 7.3% 9.1%

Dividend Growth

0% 2.5% 5.0% 7.5% 10.0% 12.5%

Ye

ars

1 3.2% 3.3% 3.4% 3.4% 3.5% 3.6%

2 3.2% 3.4% 3.5% 3.7% 3.9% 4.1%

3 3.2% 3.4% 3.7% 4.0% 4.3% 4.6%

4 3.2% 3.5% 3.9% 4.3% 4.7% 5.1%

5 3.2% 3.6% 4.1% 4.6% 5.2% 5.8%

10 3.2% 4.1% 5.2% 6.6% 8.3% 10.4%

• Dividend paying equities are different from other yielding investments, such as corporate or government bonds, in one very interesting way – investors’ yield on their initial investment may increase over time. While a company is unlikely to voluntarily increase its interest payment to debt holders, companies in strong financial

health routinely increase their dividend payments to equity holders.

• In a simplified scenario, if someone invested $100 in the Global Sustainable Dividend portfolio today they would generate $3.20 in income. If the portfolio constituents delivered 10% annualized dividend growth, in five years the investor would generate $5.20 on their initial investment.

Source: Credit Suisse, Bloomberg; Data as of 10/31/2016 Projections are not a guarantee or indicator of future performance.

14



Reversal in flow should provide general boost to equities

• Following the rally in rates, US flows reversed recent course, with large outflows in bonds and significant inflows into equities.

Source: Deutsche Bank Research as of 11/19/16

15



The Sustainable Dividend strategies still make sense for investors

In a world of lower aggregate growth and low interest rates, the Sustainable Dividend portfolios offer an attractive solution for investors seeking a combination of current income, income growth, and capital appreciation.

• Blue Chip: Focuses on high-quality companies with deep, defensive moats and ample cash flows that have consistently delivered levels of CFROI®* with sustainable levels of growth.

• Sustainable Dividends: Targets capital disciplined companies with a strong track record of returning cash to shareholders.

• Attractive Valuations: Seeks capital appreciation by investing in companies trading at a discount to intrinsic value.

• Diversification: Well diversified across sectors, countries (where applicable) and balanced between cyclical and defensive companies.

*CFROI: Cash Flow Return on Investment

The views expressed above are that of the HOLT Capital Discipline team and are based on publicly available information, internally developed data and other third party sources believed to be reliable. Credit Suisse has not sought to independently verify information obtained from public and third party sources and makes no representations or warranties as to accuracy, completeness or reliability of such information. All opinions and views constitute judgments as of the date of writing without regard to the date on which the reader may receive or access the information, and are subject to change at any time without notice and with no obligation to update.

16



Trades

17



18

Sustainable Dividend Trades

GSD:

Symbol Security NamePre

Rebalance

Post

RebalanceDelta Action

NVS Novartis AG 3.0% 2.0% -1.0% TRIM

RHHBY Roche Holding AG 3.4% 2.0% -1.4% TRIM

JNJ Johnson & Johnson 5.6% 4.6% -1.0% TRIM


Rebalance

Post


EMN Eastman Chemical Co 0.0% 1.0% 1.0% BUY

SMSEY Samsonite International SA 0.0% 1.0% 1.0% BUY

WFC Wells Fargo & Co 1.8% 2.9% 1.1% UPWEIGHT

SLB Schlumberger Ltd 0.0% 1.0% 1.0% BUY



19


USSD:


Rebalance

Post


LLTC Linear Technology Corp 1.9% 0.0% -1.9% SELL


Rebalance

Post


EMN Eastman Chemical Co 1.0% 2.0% 1.0% UPWEIGHT

WFC Wells Fargo & Co 2.3% 3.3% 1.0% UPWEIGHT

SLB Schlumberger Ltd 0.0% 1.0% 1.0% BUY



20


ESD:


Rebalance

Post


NOVN Novartis AG 5.3% 4.3% -1.0% TRIM

ROG Roche Holding AG 5.9% 4.4% -1.5% TRIM

SWEDA Swedbank AB 3.2% 2.2% -1.0% TRIM

SKY Sky PLC 3.2% 0.0% -3.2% SELL


Rebalance

Post


SMFKY Smurfit Kappa Group PLC 0.0% 1.5% 1.5% BUY

LYG Lloyds Banking Group PLC 0.0% 2.8% 2.8% BUY

SMIN Smiths Group PLC 1.5% 2.0% 0.5% UPWEIGHT

CON Continental AG 0.0% 1.5% 1.5% BUY



Appendix

21



-15% -10% -5% 0% 5% 10% 15% 20% 25%

Global Sustainable Dividend

US Sustainable Dividend

European Sustainable Dividend

Large Cap Core

Small Cap Blue Chip

HOLT Canada

Relative Performance

(indicative, gross of fee):

-2.1%

+3.2%

-3.9%

-7.2%

-0.5%

-6.6%

HOLT Strategies Performance YTD

22 Past performance does not guarantee or indicate future results.

Data as of November 30, 2016 Gross Return Net Return Benchmark

Global Sustainable Dividend 3.46% 3.02% 5.58%

US Sustainable Dividend 12.98% 12.05% 9.79%

European Sustainable Dividend -9.22% -9.78% -5.36%

Large Cap Core 2.60% 1.86% 9.79%

Small Cap Blue Chip 17.46% 16.78% 17.97%

HOLT Canada 12.47% 10.80% 19.10%

Note: Year to date returns, with the exception of HOLT Canada, represent the strategies’ monthly composite returns through November 30, 2016 and the strategies’ month to date model portfolio returns as of November 30, 2016. HOLT Canada returns represent the strategy’s model portfolio performance since inception.

Source: Credit Suisse Asset Management, LLC, Bloomberg; Data as of November 30, 2016

Sustainable Dividend Composite (Gross) Sustainable Growth Composite (Gross) Benchmark

Sustainable Dividend Composite (Net) Sustainable Growth Composite (Net)



HOLT Strategies Performance Since Inception

23 Past performance does not guarantee or indicate future results.

Sustainable Dividend Composite (Gross) Sustainable Growth Composite (Gross) Benchmark

Sustainable Dividend Composite (Net) Sustainable Growth Composite (Net)

Data as of November 30, 2016 Gross Return Net Return Benchmark

Global Sustainable Dividend 8.44% 7.47% 6.09%

US Sustainable Dividend 14.22% 12.85% 12.28%

European Sustainable Dividend 1.49% 0.39% 1.64%

Large Cap Core 8.70% 7.45% 8.99%

Small Cap Blue Chip 13.74% 12.50% 13.15%

HOLT Canada 10.22% 8.58% 6.80%

Note: Year to date returns, with the exception of HOLT Canada, represent the strategies’ monthly composite returns through November 30, 2016 and the strategies’ month to date model portfolio returns as of November 30, 2016. HOLT Canada returns represent the strategy’s model portfolio performance since inception.

Source: Credit Suisse Asset Management, LLC, Bloomberg; Data as of November 30, 2016

0% 2% 4% 6% 8% 10% 12% 14% 16%

Global Sustainable Dividend

US Sustainable Dividend

European Sustainable Dividend

Large Cap Core

Small Cap Blue Chip

HOLT Canada

Relative Performance

(indicative, gross of fee):

+2.3%

+1.9%

-0.2%

-0.3%

+0.6%

+3.4%



Global Sustainable Dividend Portfolio

24

Since inception:

Data through close November 30, 2016, unless specified elsewhere

Source: Bloomberg; Composite Performance, gross & net of fees

*Returns greater than one year are annualized.

Past performance does not guarantee or indicate future results.

STRATEGY STATISTICS

December 31, 2010 - November 30, 2016 Annualized

Return

Cumulative

Return Volatility

Sharpe

Ratio Up Capture

Down

Capture

Max

Drawdown

Tracking

Error Info Ratio Beta Correlation R2

Global Sustainable Dividend All World, Gross 8.4% 61.4% 10.2% 0.83 89.2% 69.7% -8.8% 5.2% 0.45 0.73 0.92 0.85

Global Sustainable Dividend All World, Net 7.5% 53.1% 10.2% 0.74 86.7% 72.7% -9.9% 5.2% 0.27 0.73 0.92 0.85

MSCI AC World Index 6.1% 41.9% 12.8% 0.48 - - -20.5% - - - - -

Relative (gross): 2.3% 19.5% -2.6% 11.7%

3.5% 2.9% 2.9%

8.3%

3.0% 2.4% 2.0%

7.3%

-20%

-10%

0%

10%

20%

30%

40%

YTD 1-Yr 3-Yr* 5-Yr*

Ab

so

lute

Perf

orm

ance

Performance of Active Global Dividend Funds

GSD, Gross

GSD, Net



25

Since inception:

Data through close November 30, 2016 unless specified elsewhere

Source: Bloomberg; Composite Performance, gross & net of fees

US Sustainable Dividend Portfolio

Past performance does not guarantee or indicate future results.

STRATEGY STATISTICS

December 31, 2010 - November 30, 2016 Annualized

Return

Cumulative

Return Volatility

Sharpe

Ratio Up Capture

Down

Capture

Max

Drawdown

Tracking

Error Info Ratio Beta Correlation R2

US Sustainable Dividend, Gross 14.2% 119.6% 9.8% 1.46 91.7% 66.4% -7.7% 4.6% 0.43 0.78 0.92 0.85

US Sustainable Dividend, Net 12.8% 104.4% 9.8% 1.32 88.2% 70.8% -8.0% 4.6% 0.12 0.78 0.92 0.85

S&P 500 Index 12.3% 98.4% 11.5% 1.07 - - -16.3% - - - - -

Relative (gross): 1.9% 21.2% -1.7% 8.6%

13.0% 13.0%

10.5%

14.6%

12.0% 11.9%

9.2%

13.2%

-5%

0%

5%

10%

15%

20%

25%

YTD 1-Yr 3-Yr* 5-Yr*

Ab

so

lute

Pe

rfo

rmance

Performance of Active US Dividend Funds

USSD, Gross

USSD, Net



Trade Summary

26



Name & Ticker Portfolio Action Rationale Schlumberger Ltd

(SLB) GSD USSD

BUY Schlumberger is an oil services company that provides a wide range of services including

technology, project management, and information solutions to the international petroleum

industry as well as advanced acquisition and data processing surveys. Schlumberger meets

the criteria for a high quality, relatively low volatility, and sustainable dividend payer and adds

energy exposure.

Eastman Chemical

(EMN) GSD USSD

BUY

ADD

Eastman Chemical Company, a specialty chemical company, manufactures and sells

materials, chemicals, and fibers in the United States and internationally. Eastman has

reshaped its portfolio focusing on higher margin and less cyclical businesses, which along

with strong FCF generation (currently at ~9.5% FCF yield) and improving returns on capital

should lead to a higher valuation multiple as well.

Samsonite

International (SMSEY) GSD BUY Samsonite is a global retailer engaged in the design, manufacture, sourcing and distribution

of luggage, business and computer bags, outdoor and casual bags, and travel accessories.

The recent Tumi acquisition signals an aggressive growth strategy realized in top line growth

as well as significant dividend growth.

Wells Fargo (WFC) GSD

USSD ADD Wells Fargo offers a compelling dividend yield and relative valuation following the sell off

from its recent settlement. The company is positioned to benefit from continued strength in

the domestic economy and any rise in interest rates.

Lloyds Banking Group

PLC (LYG) ESD BUY Lloyds is an attractively valued financial firm focused on the UK retail market. The company

is the largest UK mortgage lender and has good asset quality. There is potential for strong

dividend growth as management is committed to returning excess capital.

Smurfit Kappa Group

PLC (SMFKY) ESD BUY Smurfit Kappa Group manufactures container boards, solid boards, graphic boards, and

corrugated and solid board packaging products. SKG is an attractively valued packaging

company with strong FCF generation and near term growth potential given along with

positive pricing trajectory. The company has the ability to both de-lever and increase the

dividend yield going forward

Continental AG (CON) ESD BUY Continental is the second largest automotive supplier and fourth largest tire manufacture

globally. Recent pull back in shares due to concerns over global volumes of new cars sold

provides an opportunity to buy into a quality blue chip at a reasonable price. Good execution

by management.

Smiths Group PLC

(SMIN) ESD ADD Smiths Group is a high-quality, UK-based industrial conglomerate that operates globally

across a diverse mix of end markets. Increasing the position in part due to the exposure to

the Energy sector (~30% of sales) along with improvement in general industrial exposure

across other divisions. Valuation is reasonable given the strong earnings growth prospects

over the next several years.

Sustainable Dividend: Buys / Upweights

27



Sustainable Dividend: Sells/Trims

28

Name & Ticker Portfolio Action Rationale Roche Holding AG

(ROG) GSD ESD

TRIM While there is potential for long term value in Roche and other European pharmaceutical

names, near term headwinds offset near term upside. Concerns include the outcome in the

APHINITY trial, industry wide drug pricing issues, and an increase in competition on a few

key drugs.

Novartis AG (NOVN) GSD ESD

TRIM Novartis has experienced weakness in the Alcon eye care division, which has weighed on

results in recent quarters. Combined with patent expirations and a weak debut for Entresto,

a trim in the name given the substantial overweight in the sector and name makes sense.

Johnson & Johnson

(JNJ) GSD

TRIM Johnson & Johnson remains a top holding and a top idea in the portfolios due to the

diversified consumer-focused business. Trimming the name on risk mitigation due to long-

term strong performance.

Linear Technology

Corp (LLTC) USSD SELL Selling out due to acquisition by Analog Devices. The stock is up 44% YTD and selling

close to the deal price.

Sky PLC (SKY) ESD SELL Sky and 21st Century Fox are negotiating a deal for Fox to acquire the rest of Sky, a

company they already had a 39% ownership stake in. The stock is currently trading near

the deal price of £10.75, creating unsymmetrical risk around the completion of the deal.

Swedebank AB

(SWEDA) ESD TRIM Selling down position due to full valuation. The stock is up ca. 20% YTD. Increased risk

going forward as management invests in digital banking capabilities.



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