PHILOSOPHY, PROCESS, PERFORMANCE, PEOPLE, PUBLICITY, PORTFOLIOS . AND MORE! “We study, we plan, we research. And yet, somehow, money still remains more of an art than a science.” October 2020 A230RONSONSOUTHJOHNSONBROADOSRTIZTREET,| 230 20TH SOUTHFLOORBROAD| PSTHILADELPHIA,,20TH FLOOR PA| P HILADELPHIA19102-4102, PA| 215.546.7500/7506 19102-4102 | 215.546.7500/7506 FAX | AJOPARTNERS.COMFAX | AJOPARTNERS.COM KEY CHARACTERISTICS AJO reflects a number of distinguishing characteristics that define what we do and how we do it. INDEPENDENT + GLOBAL VALUE-DRIVEN + DISCIPLINED COST-CONSCIOUS + COMMUNICATIVE Fifty-one clients $10.6 b United States 9.3 Large cap 6.7 Managed volatility 1.4 Small cap 0.7 Long/short 0.2 All cap 0.2 Top cap 0.1 Emerging markets/Global 1.3 All cap 0.8 Small cap 0.4 Long/short 0.1 China A <0.1 Managed volatility <0.1 As of 9/30/20 2 OUR CLIENTS AND THEIR CONTACTS PUBLIC Charlotte Firefighters Louisiana State Police Oklahoma Public Employees Sandy Thiry, 704.626.2728 Kevin Reed, 225.295.8400 Retirement System large cap ‘05 large cap ‘03 Brad Tillberg, 405.858.4874 large cap ‘03 City of Cape Coral Missouri Education Pension Trust Ferrell Jenne, 239.333.4872 Frank Aten, 573.638.2125 Oregon Public Employees large cap ‘13 large cap ‘01, long/short ’05, Retirement Fund all-world managed volatility ’16 Mike Viteri, 503.431.7918 large cap ‘03 City of Tallahassee Kent Olson, 850.891.8133 Missouri Local Government ERS large cap ‘14 Brian Collett, 573.632.6353 West Virginia Investment top cap ‘06, long/short ’07, Management Board emerging markets ’13 Trent Gregory, 304.347.7659 Florida Retirement System small cap ‘99 Tim Taylor, 850.413.1038 large cap ‘93, long/short ‘08 National Pension Service of Korea Fred Jeong, +82.63.711.0604 CORPORATE/ERISA Aetna Cone Health System Hanford Site Pension Plan Russell Smith, 860.273.1331 John Miller, 336.832.9515 Elaine Cone, 509.372.3323 small cap ‘99 emerging markets ’13, global ’15, large cap ‘04 large cap ‘18 Banco Popular Nordson Corporation Javier Rubio, 787.765.9800 Consolidated Nuclear Security Ray Cushing, 440.892.1580 large cap ‘02 Larry Wiker, 865.576.8500 large cap ‘00 large cap ‘01 Bechtel Plant Machinery Purolator Kimon Andreos, 412.843.6000 Duke Energy Jennifer Boyd, 289.998.6357 large cap ‘05 Kitty McDonough, 908.373.4499 large cap ‘06 small cap ‘98 Canada Post Southern California Edison Mike Butera, 416.204.4327 Fluor Marine Greg Henry, 626.302.1457 large cap ‘01 Barbara LaFountain, 518.395.6539 small cap ‘98 large cap ‘05 3 ENDOWMENT/FOUNDATION Commonfund Seminole Boosters University of Arkansas Foundation Kris Kwait, 203.563.5000 J. P. Sinclair, 850.644.3484 Vickie Ferguson, 479.575.3158 all cap ‘85, large cap ‘93 large cap ’16 large cap ’03, emerging markets ’13, (terminated–gulp–’95), top cap ’05, global ‘15 large cap ‘18 St Louis Archdiocesan Fund Valerie Slaughter, 314.727.7211 Richard King Mellon Foundation emerging markets ’13, large cap ’15 Ed Morgan, 724.238.8471 top cap ’03, large cap ’13 MULTI-EMPLOYER Plumbers & Pipefitters National AFTRA Retirement Fund New England Carpenters Rich Monarca, 978.752.1140 Pension Fund Christine Dubois, 212.499.4821 large cap ‘99 Toni Inscoe, 703.519.4460 ‘02 large cap ‘02 Construction Industry Laborers New Jersey Transit Amalgamated Transit Union Western Washington Laborers Carolyn Papuga, 913.906.7635 Wayne Solomon, 973.378.6151 Michelle Baker, 206.352.9744 large cap ‘06 large cap ‘04 all cap ‘14 IWA – Forest Industry Pension Operating Engineers Local 101 Plan Stephanie McLaughlin, 816.737.5959 Colleen Troelstrup, 604.433.6310 large cap ‘03 large cap ‘07 POOLED Captive Investors Fund MMBB Scott Renninger, 847.781.1400 Noradeen Farlekas, 212.870.8017 managed volatility ’15 large cap ‘16 Christian Brothers Investment SEI Investments Services Stephen Beinhacker, 610.676.1000 John Geissinger, 212.490.0800 top cap ‘03, large cap ‘03, managed large cap ‘02 volatility ’04, long/short ’05 N.B. — It is not known whether these clients approve or disapprove of AJO or the advisory services provided. All clients are listed, except those that wish to remain anonymous. 4 CLIENTS BY MANDATE, SIZE, AND TENURE MANDATE TOP CAP LARGE CAP SMALL CAP MANAGED VOLATILITY Commonfund IWA–Forest Industry Pension Plan Aetna Captive Investors Fund Louisiana State Police Duke Energy LARGE CAP Missouri Education Pension Trust Southern California Edison EMERGING MARKETS Banco Popular MMBB West Virginia Inv Mgt Board Cone Health System New England Carpenters Bechtel Plant Machinery Missouri Local Government ERS NJT Amalgamated Transit Union Canada Post ALL CAP University of Arkansas Foundation Charlotte Firefighters Nordson Corporation Missouri Local Government ERS Oklahoma PERS Christian Brothers Inv Services Western Washington Laborers City of Cape Coral Ret System Operating Engineers Local 101 Oregon PERF City of Tallahassee LONG/SHORT Plumbers & Pipefitters National Commonfund Missouri Education Pension Trust Purolator Consolidated Nuclear Security Missouri Local Government ERS Construction Industry Laborers RK Mellon Foundation Florida Retirement System SEI Investments Fluor Marine Seminole Boosters Hanford Site Pension Plan St Louis Archdiocesan Fund SIZE > $500MM $50MM – $250MM $50MM – $250MM < $50MM Florida Retirement System Duke Energy City of Tallahassee St Louis Archdiocesan Fund Canada Post Consolidated Nuclear Security Aetna City of Cape Coral Ret System SEI Investments IWA–Forest Industry Pension Plan Southern California Edison Charlotte Firefighters Captive Investors Fund Western Washington Laborers University of Arkansas Foundation $250MM – $500MM Christian Brothers Inv Services Operating Engineers Local 101 New England Carpenters Oregon PERF NJT Amalgamated Transit Union Construction Industry Laborers Bechtel Plant Machinery West Virginia Inv Mgt Board RK Mellon Foundation Purolator Banco Popular Missouri Education Pension Trust Hanford Site Pension Plan Louisiana State Police Nordson Corporation Plumbers & Pipefitters National MMBB Seminole Boosters Oklahoma PERS Commonfund Cone Health System Missouri Local Government ERS Fluor Marine TENURE > 15 YEARS > 15 YEARS 10 – 15 YEARS < 5 YEARS Florida Retirement System Oregon PERF Purolator Captive Investors Fund Commonfund Operating Engineers Local 101 Construction Industry Laborers MMBB Duke Energy Louisiana State Police IWA–Forest Industry Pension Plan Seminole Boosters Southern California Edison SEI Investments Fluor Marine West Virginia Inv Mgt Board University of Arkansas Foundation 5 – 10 YEARS Aetna RK Mellon Foundation Cone Health System New England Carpenters Oklahoma PERS St Louis Archdiocesan Fund Nordson Corporation NJT Amalgamated Transit Union City of Cape Coral Ret System Canada Post Hanford Site Pension Plan Western Washington Laborers Consolidated Nuclear Security Bechtel Plant Machinery National Pension Service of Korea Missouri Education Pension Trust City of Tallahassee Christian Brothers Inv Services 10 – 15 YEARS Banco Popular Charlotte Firefighters Plumbers & Pipefitters National Missouri Local Government ERS AFTRA Retirement Fund 5 PERFORMANCE-BASED FEES AJO Large Cap – Absolute Value Illustration: $100 million/zero base (Bottom line: fee is 15% of alpha, bounded by 0.0% and 0.6%) total fee (bp) max fee = 60 bp 60 45 30 fulcrum = 30/200 15 min fee = 0 bp alpha (bp) (200) (100) 0 100 200 300 400 500 600 While this example highlights our large-cap value strategy, the formula works with all AJO strategies. In general, we trade a lower minimum or base fee for a higher maximum fee. The tradeoff is usually symmetrical. For instance, if a client desires a base fee of, say, zero, the maximum fee is capped at twice our normal fee. With a minimum and maximum range established, it’s easy to sketch a linear profit-sharing arrangement that runs through the fulcrum (our standard fee and expected excess return). Total Fee – The manager’s annual fee is calculated quarterly and is a combination of a base fee plus a performance fee, calculated as shown below, times the average market value of the portfolio. Performance-Fee Formula – For annualized excess performance ranging from zero to 400 basis points, where excess performance is defined as the gross, time-weighted total return of the portfolio less the return of the benchmark index for an agreed-on interval, the performance-based fee shall be calculated as follows: PF = [(NF - BF) ÷ RER] * [PR - BR], where: PF = performance fee NF = normal fee (30 bp on $100 million) BF = base fee RER = required annualized excess return to earn NF (200 bp) PR = portfolio return, gross of fees BR = benchmark return (Russell 1000 Value) Minimum and Maximum Percentage Fees Minimum Fee = X% of NF Maximum Fee = (200 - X)% of NF 6 STANDARD FIXED FEES U.S. EMERGING MARKETS AJO Top Cap AJO Emerging Markets All Cap AJO Top Cap – Absolute Value 0.70% on first $25 million 0.25% on the first $250 million 0.60% on next $25 million 0.15% on the next $250 million 0.50% on next $25 million 0.10% thereafter 0.45% on next $25 million 0.40% on over $100 million AJO Large Cap AJO Large Cap – Absolute Value 500 AJO Emerging Markets Small Cap AJO Large Cap 1000 0.70% on all assets AJO Large Cap – Absolute Value AJO Managed Volatility GLOBAL 0.30% on the first $250 million AJO Global Small Cap 0.20% on the next $250 million 0.65% on all assets 0.15% on the next $500 million 0.125% thereafter ALL-WORLD LOW VOL AJO All-World Managed Volatility AJO Small Cap – Absolute Value 0.40% on all assets 0.60% on all assets Short-enabled U.S. fees are based AJO follows a most-favored-nation policy on the corresponding long-only regarding fees: no fixed-fee client pays fees, multiplied by gross exposure more than the lowest fixed fee charged (e.g., 130/30 gross exposure is 160%). for a similar mandate of the same size. 7 A230RONSONSOUTHJOHNSONBROADOSRTIZTREET,| 230 20TH SOUTHFLOORBROAD| PSTHILADELPHIA,,20TH FLOOR PA| P HILADELPHIA19102-4102, PA| 215.546.7500/7506 19102-4102 | 215.546.7500/7506 FAX | AJOPARTNERS.COMFAX | AJOPARTNERS.COM FIRM SUMMARY OVERVIEW.