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Large-Cap Growth Equity Portfolio Update

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Large-Cap Growth Equity Portfolio Update Large-Cap Growth Equity Q3 2017 Portfolio Update INVESTOR PRESENTATION 1974 2017 Strictly Confidential. Not For Distribution. September 30, 2017 LATEEF PERFORMANCE QTD YTD 3 yr 5 yr 7 yr 10 yr Lateef Large-Cap Growth Equity* 2.38 12.87 5.59 8.42 10.09 5.17 S&P 500® 4.48 14.24 10.81 14.22 14.38 7.44 *Performance for Lateef Non-Taxable Large-Cap Growth Equity Composite (net of fees), as of September 30, 2017. See full Performance Report with disclosures, as of September 30, 2017, on page 12. The S&P 500® Index is an unmanaged stock market index and is not available for direct investment. The S&P 500® Index is comprised of 500 common stocks which are generally representative of the U.S. stock market. The information presented on this slide supplements the Lateef Non-Taxable Large-Cap Growth Equity Composite provided in this presentation and is provided as supplemental information. Past performance does not guarantee future results. Performance is shown net of fees. 1974 2017 This document is not complete without the “Important Disclosures” pages. 1 | Strictly Confidential. Not for Distribution. Q3 2017 PORTFOLIO HIGHLIGHTS* Leaders Total Mkt. Performance Laggards Total Mkt. Performance Return Contribution Return Contribution Facebook 13.2% 0.9% Newell Brands -20.0% -1.0% Visa 12.4% 0.8% Advance Auto Parts1 -27.7% -0.9% Autodesk 11.3% 0.7% Allergan -15.4% -0.8% 1Position sold in August 2017. Total Market Return represents Representative Account holding period return. Note: The Total Market Return reflects the stock price performance, including dividend income, for Q3 2017. The holdings identified above do not represent all of the securities purchased, sold, or recommended for advisory clients. To obtain the full contribution to return report for all of the Representative Account holdings for Q3 2017, along with the calculation methodology, please contact us at (415) 461-3800. *For the Lateef Large-Cap Representative Account, an actual account in the Non-Taxable Large-Cap Growth Equity Composite. The list of top 3 and bottom 3 holdings should not be considered a recommendation to purchase or sell a particular security, represents only a small percentage of the entire portfolio and the securities purchased for advisory clients, and may not remain in the portfolio at the time you receive this report. You should not assume that investments in the securities identified were or will be profitable or that decisions we make in the future will be profitable. Past performance does not guarantee future results. See Footnote Disclosure #1 on “Footnote Disclosures” pages. 1974 2017 This document is not complete without the “Important Disclosures” pages. 2 | Strictly Confidential. Not for Distribution. YTD 2017 – through September 30, 2017 PORTFOLIO HIGHLIGHTS* Leaders Total Mkt. Performance Laggards Total Mkt. Performance Return Contribution Return Contribution Facebook 48.5% 3.1% Advance Auto Parts1 -50.3% -2.4% Autodesk 51.7% 2.8% Schlumberger -15.1% -0.8% Visa 35.6% 2.0% Sabre -26.0% -0.6% 1Position sold in August 2017. Total Market Return represents Representative Account holding period return. Note: The Total Market Return reflects the stock price performance, including dividend income, year-to-date through September 30, 2017. The holdings identified above do not represent all of the securities purchased, sold, or recommended for advisory clients. To obtain the full contribution to return report for all of the Representative Account holdings for the year through September 30, 2017, along with the calculation methodology, please contact us at (415) 461-3800. *For the Lateef Large-Cap Representative Account, an actual account in the Non-Taxable Large-Cap Growth Equity Composite. The list of top 3 and bottom 3 holdings should not be considered a recommendation to purchase or sell a particular security, represents only a small percentage of the entire portfolio and the securities purchased for advisory clients, and may not remain in the portfolio at the time you receive this report. You should not assume that investments in the securities identified were or will be profitable or that decisions we make in the future will be profitable. Past performance does not guarantee future results. See Footnote Disclosure #1 on “Footnote Disclosures” pages. 1974 2017 This document is not complete without the “Important Disclosures” pages. 3 | Strictly Confidential. Not for Distribution. September 30, 2017 LARGE-CAP HOLDINGS CONSUMER DISCRETIONARY ENERGY FINANCIALS HEALTHCARE INDUSTRIALS INFORMATION TECHNOLOGY Current and future portfolio holdings are subject to change and risk. References to these companies are not a solicitation or a recommendation to buy, hold or sell any securities. See Footnote Disclosure #2 on “Footnote Disclosures” page. 1974 2017 This document is not complete without the “Important Disclosures” pages. 4 | Strictly Confidential. Not for Distribution. DXC Technology (DXC) – Position purchased August 2017 RECENT PURCHASE DXC Technology was formed by a merger of Computer Science Services (CSC) and Hewlett Packard Enterprises’ Enterprise Services (HPES) segment. This merger was completed on April 3, 2017. DXC is now the third-largest provider of end-to-end IT services, leveraging technology and next generation solutions to drive business outcomes for clients. DXC should be able to accelerate their services toward digital solutions which enables their clients to increase revenue and reduce costs. DXC has over 170K employees, 6,000 customers, and over 200 Fortune 500 clients. Investment Thesis We believe that the integration of CSC and HPES creates an opportunity for a proven management team to simplify business operations of a historically bloated enterprise while delivering next-generation IT solutions to its broad legacy customer base. Growth of these next- generation implementations, combined with 700 bps of margin expansion and disciplined capital allocation, should result in double-digit profit growth on industry-low earnings multiples. Opportunities: . Core Services to Clients – DXC provides services that enable their clients’ businesses to operate more efficiently. DXC’s three segments: Global Business Services (GBS), Global Infrastructure Services (GIS), and United States Public Sector (USPS) each help enable clients’ use of technology to improve their businesses. DXC’s services include enabling digital services, infrastructure hosting and maintenance, mobility, and security services. Simplification Roadmap – Our analysis concludes that DXC has an opportunity to simplify their offerings, reduce redundancy, and optimize their workforce and delivery processes. If DXC successfully implements these strategies, then we believe they can improve profitability by over 700 bps over the next three years. Management Leadership – We have confidence in this management to unlock the potential value of DXC as CEO Mike Lawrie and CFO Paul Saleh executed a similar strategy at CSC by simplifying their offerings from 2,000+ custom offerings to 140 standard offers, reducing costs, and investing in digital platforms from 2012-2016. Leverage Key Partnerships – DXC has strong preferred partnerships with Microsoft, Dell/EMC, ServiceNow, Amazon and Hewlett-Packard Enterprise, which should help DXC maintain and grow their services as well as leverage their combined R&D dollars. Capital Allocation – We believe that management’s clear articulation of their capital allocation priorities will be rewarded over time. Management targets the following allocation of operating cash: Capital expenditures 35%, acquisitions 7%, business reinvestment 7%, restructuring 17%, debt service 4%, and shareholder return 30%. References to companies are not a solicitation or a recommendation to buy, hold or sell any securities. 1974 2017 This document is not complete without the “Important Disclosures” pages. 5 | Strictly Confidential. Not for Distribution. Alaska Air Group (ALK) – Position purchased August 2017 RECENT PURCHASE Alaska Air Group, Inc. (ALK) operates flights to over 120 destinations with nearly 1,200 daily departures under the Alaska, Virgin America, and Horizon Air brands. Destinations are concentrated in the U.S. domestic market, particularly on the West Coast, but expands to Mexico, Canada, Costa Rica, and Cuba. Though Alaska’s primary hub is Seattle, WA, the December 2016 acquisition of Virgin America significantly expands Alaska Airlines’ reach to San Francisco, Los Angeles, and the East Coast. Via the company’s strategic plan rooted in operations efficiency, employee focus, brand development, customer loyalty, and low cost/lower fares, Alaska seeks to become the dominant airlines of the West Coast. Investment Thesis Alaska Airlines has traditionally enjoyed dominant share and customer loyalty in the Pacific Northwest out of its Seattle and Portland hubs. The December 2016 acquisition of Virgin America has expanded Alaska’s reach throughout the West Coast, and has given the company valuable real estate in California hubs like San Francisco and Los Angeles. Customer relevance (the ability to reach an intended destination in a single flight) in San Francisco has increased to 70% from 9% pre-merger. We believe that through the expansion, Alaska will take share in both the West Coast and transcontinental routes to the East Coast from legacy networks. We further believe that ALK will benefit from the comparatively high GDP growth of the Western U.S. Opportunities: . Leverage to the West Coast Economy: We believe Alaska’s new territory in California creates
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