Smead Value Fund 1st Quarter 2019 Webcast - Smead Capital Management

 
Smead Value Fund 1st Quarter 2019 Webcast - Smead Capital Management
Smead Value Fund
                                                                                             1st Quarter 2019 Webcast

   This material is provided for informational purposes only and should not be
   construed as investment advice. Forecasts and opinions reflect the personal
     judgments of the presenter and may not reflect those of Smead Capital
          Management. Statements and opinions are subject to change.

www.smeadcap.com                                                        © 2019 Smead Capital Management (SCM), All Rights Reserved.

             Opinions are subject to change, are not guaranteed, and should not be considered recommendations to buy or sell any security.
Smead Value Fund 1st Quarter 2019 Webcast - Smead Capital Management
Today’s Agenda

       Performance, Characteristics and Top 10 Holdings
             Cole Smead, CFA, Portfolio Manager

       Featured Stock: NVR Inc.
             Tony A. Scherrer, CFA, Portfolio Manager

       Stock Market Morality
             Bill Smead, Lead Portfolio Manager

2
Smead Value Fund 1st Quarter 2019 Webcast - Smead Capital Management
Quarter-End Performance
    Total Returns (%) as of March 31, 2019

                                                                                                                                                  Since
                                                            Qtr            YTD            1 Year         3 Year         5 Year        10 Year   Inception

     Smead Value Fund Investor Class (SMVLX)               8.13%          8.13%           7.25%          11.17%          8.36%        16.38%     8.11%

     Smead Value Fund A Share w/ load (SVFAX)              1.90%          1.90%           1.13%          9.06%           7.10%        15.57%     7.40%

     Smead Value Fund A Share w/o load (SVFAX)             8.11%          8.11%           7.30%          11.24%          8.37%        16.25%     7.97%

     Smead Value Fund I1 Share Class (SVFFX)*              8.18%          8.18%           7.54%          11.48%          8.65%        16.66%     8.34%

     Russell 1000 Value Index                             11.93%          11.93%          5.67%          10.45%          7.72%        14.52%     6.54%

     S&P 500 Index                                        13.65%          13.65%          9.50%          13.51%         10.91%        15.92%     8.32%

     *Institutional Shares were renamed I1 shares on 11/21/2014 with a new ticker SVFFX
     Investor Shares Gross Expense Ratio 1.31%
     A Shares Gross Expense Ratio 1.27%
     I1 Shares Gross Expense Ratio 1.02%
     Performance data quoted represents past performance; past performance does not guarantee future results. The investment return and
     principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.
     Current performance of the Fund may be lower or higher than the performance quoted. Performance data current to the most recent month end
     may be obtained by calling 877-807-4122. Performance for SVFAX (w/load) reflects maximum sales charge of 5.75%. Performance for SVFAX
     does not reflect maximum sales charge of 5.75%. If reflected, the load would reduce the performance amount quoted. SVFAX applies
     a maximum Deferred Sales Charge on Class A shares only to purchases of $1,000,000 or more that are redeemed within 18 months of
     purchase. Performance data does not reflect the redemption fee. If it had, returns would be reduced.
     Investor Class shares of the Fund commenced operations on January 2, 2008. I1 Class shares of the Fund commenced
     operations on December 18, 2009. Performance shown for I1 Class shares prior to its inception reflects the performance of
     Investor Class shares. Class A shares of the Fund commenced operations on January 24, 2014. Performance shown for
     Class A shares prior to its inception reflects the performance of Investor Class shares, adjusted to reflect Class A expenses.

3    Performance data is annualized for periods longer than one year. Performance data is cumulative for periods shorter than one year.
Smead Value Fund 1st Quarter 2019 Webcast - Smead Capital Management
Smead Value Fund
    Key Facts and Characteristics as of March 31, 2019

                                                          Price to
                                                          Earnings
                                                           (P/E)

4    Past performance does not guarantee future results. P/E: Price to earnings ratio.
Smead Value Fund 1st Quarter 2019 Webcast - Smead Capital Management
Smead Value Fund
    Top Ten Holdings as of March 31, 2019

                                                                       Percentage of Fund

                                             NVR Inc                                                                                     6.31%

                                         Amgen Inc                                                                                      6.19%

                          Discovery Inc Class A                                                                                         6.16%

                          American Express Co                                                                                          5.99%

                                       Target Corp                                                                            5.43%

                                            Aflac Inc                                                                     5.09%

                    Berkshire Hathaway Inc B                                                                           4.87%

               Walgreens Boots Alliance Inc                                                                          4.69%

                         JPMorgan Chase & Co                                                                   4.23%

                Bank of America Corporation                                                                    4.20%

                                                      0.00%       1.00%        2.00%       3.00%       4.00%       5.00%       6.00%      7.00%   8.00%

5    Fund holdings and sector allocations are subject to change at any time and are not recommendations to buy or sell any security.
Smead Value Fund 1st Quarter 2019 Webcast - Smead Capital Management
Portfolio Additions / Deletions
    First Quarter 2019

         >    Trims to position weightings:
               – Aflac Inc. (AFL)
               – Berkshire Hathaway Inc. (BRK.B)
               – Target Corp. (TGT)

         >    New positions:
               – Booking Holdings Inc. (BKNG)
               – Cummins Inc. (CMI)
               – Qualcomm Inc. (QCOM)

         >    Sells:
               – Nordstrom Inc. (JWN)
               – Tegna Inc. (TGNA)

6    Current and future holdings are subject to change at any time and are not recommendations to buy or sell any security.
Smead Value Fund 1st Quarter 2019 Webcast - Smead Capital Management
Today’s Agenda

     Performance, Characteristics and Top 10 Holdings
           Cole Smead, CFA, Portfolio Manager

        Featured Stock: NVR Inc.
              Tony A. Scherrer, CFA, Portfolio Manager

        Stock Market Morality
              Bill Smead, Lead Portfolio Manager

7       CFA is a registered trademark owned by the CFA Institute.
Smead Value Fund 1st Quarter 2019 Webcast - Smead Capital Management
Featured Stock: NVR Inc.

                                                     Our Eight Criteria
                                                     Required over entire holding period

                                         1.    Meets an economic need
                                         2.    Strong competitive advantage (wide moats or barriers to entry)
                                         3.    Long history of profitability and strong operating metrics
                                         4.    Generates high levels of free cash flow (FCF)
                                         5.    Available at a low price in relation to intrinsic value

                                                                Favored, but not required
    6.     Management’s history of shareholder friendliness                                     For companies that don’t meet one of these, we
                                                                                                believe our required criteria will ultimately correct or
    7.     Strong balance sheet                                                                 overwhelm.

    8.     Strong insider ownership
                                                                                                May also relate to timing/portfolio weighting
           (preferably with recent purchases)

         Past performance is no guarantee of future results. Current and future holdings are subject to change at any time and are not
8
         recommendations to buy or sell any security.
Smead Value Fund 1st Quarter 2019 Webcast - Smead Capital Management
Featured Stock: NVR Inc.
    Meets an Economic Need

                                                                                                       “we estimate that the
                                                                                                      U.S. economy is about
                                                                                                     2.5 million housing units
                                                                                                     below what is needed to
                                                                                                         match long-term
                                                                                                             demand”

     Past performance is no guarantee of future results. Source: FreddieMac
9
     (http://www.freddiemac.com/research/insight/20181205_major_challenge_to_u.s._housing_supply.html)
Smead Value Fund 1st Quarter 2019 Webcast - Smead Capital Management
Featured Stock: NVR Inc.
     Meets an Economic Need

      Founded in 1948 under Ryan Homes, to serve the post-war economy

10    Past performance is no guarantee of future results. Source: www.nvrinc.com.
Featured Stock: NVR Inc.
     Strong Competitive Advantage

11    Past performance is no guarantee of future results. Source: http://www.nvrinc.com/Investor.aspx.
Featured Stock: NVR Inc.
     Strong Competitive Advantage

12    Past performance is no guarantee of future results. Source: Bloomberg.
Featured Stock: NVR Inc.
     Long History of Profitability & Operating Metrics

13    Past performance is no guarantee of future results. Source: FactSet. Data as of 12/31/2018.
Featured Stock: NVR Inc.
     High Levels of Free Cash Flow

      Past performance is no guarantee of future results. Source: Bloomberg. Operating Cash Flow: In accounting, a measure of the amount of cash
      generated by a company's normal business operations. OCF is calculated by adjusting net income for items such as depreciation, changes to
      accounts receivable and changes in inventory. Capital Expenditures: Funds used by a company to acquire or upgrade physical assets such as
      property, industrial buildings or equipment. Free Cash Flow: A measure of financial performance calculated as operating cash flow minus capital
14    expenditures. Free cash flow (FCF) represents the cash that a company is able to generate after laying out the money required to maintain or
      expand its asset base.
Featured Stock: NVR Inc.
     Low Price in Relation to Intrinsic Value

                                                                                                                              Price to Earnings (P/E) – Last 12 Months (LTM)
                                                                                                                              P/E Relative to S&P 500 Index
15    Past performance is no guarantee of future results. Source: FactSet. Data for the time period 12/31/2010 – 3/29/2019.
Featured Stock: NVR Inc.
     History of Shareholder Friendliness

                                                                                USD ($)

                                                                                                                                                   Price
      Past performance is no guarantee of future results. Source: Morningstar research report “NVR’s Land-Light Model Is Here to Stay” September
16
      18, 2013. Data for the left-hand chart is for the time period 1/1/1999 – 12/31/2018. Data for the right-hand chart 3/31/1999 – 3/29/2019.
Featured Stock: NVR Inc.
     NVR Inc.: Strong Balance Sheet

Land Inventory as a % of Total Assets

17    Past performance is no guarantee of future results. Source: Bloomberg. Data as of 12/31/2018.
Featured Stock: NVR Inc.
     NVR Inc.: Strong Balance Sheet

18    Past performance is no guarantee of future results. Source: Buckingham Initiation report Jan 11, 2019; Bloomberg.
Featured Stock: NVR Inc.
     NVR Inc.: Insider Ownership

                        Top Insider Holders                % held                  Value
                                Saville Paul               3.30%                 $336.2 Mil                    Insider Profile
                              Schar Dwight                 1.65%                 $168.4 Mil            Insider % of Shrs held: 6.3%
                             Moran William                 0.74%                 $75.7 Mil            No. of Insiders owning: 20
                          Martchek Jeffrey                 0.18%                 $18.3 Mil           # Buys - Opn Mkt (6mo): 3
                          Malzahn Daniel D                 0.11%                 $11.5 Mil
                             Henley Robert                 0.04%                  $3.9 Mil
                         Donahue Timothy                   0.03%                  $3.5 Mil

19    Past performance is no guarantee of future results. Source: Bloomberg. Data as of 3/31/2019.
Featured Stock: NVR Inc.
     NVR Inc.: Insider Ownership

                         NVR, Inc: Insider Ownership – Industry Sentiment

                                                                                                                               Price
20    Past performance is no guarantee of future results. Source: Bloomberg. Data for the time period 3/30/2005 – 3/31/2019.
Today’s Agenda

      Performance, Characteristics and Top 10 Holdings
            Cole Smead, CFA, Portfolio Manager

      Featured Stock: NVR Inc.
            Tony A. Scherrer, CFA, Portfolio Manager

        Stock Market Morality
              Bill Smead, Lead Portfolio Manager

21
Stock Market Morality
                                                                                 Presented by:
                                                             Lead Portfolio Manager Bill Smead

www.smeadcap.com                                                        © 2019 Smead Capital Management (SCM), All Rights Reserved.

             Opinions are subject to change, are not guaranteed, and should not be considered recommendations to buy or sell any security.
Agenda

        History of stock market morals

        Why have morals underperformed the last five years?

        How to trust the morals

23
Stock Market Morality
     History of stock market morals

                                       Cheap stocks have outperformed rich stocks since 1926

      Past performance is no guarantee of future results. Source: https://www.therichinvestor.com/wp-content/uploads/2018/10/Value-
24
      versus-growth.jpg. Data for the time period 1/1/1926 – 12/31/2016.
Stock Market Morality
     History of stock market morals

                                                      Profits and free cash flow drive equities
                  Earnings (12 months ended)

                                                                                                                                           Price (Monthly Ranges)
      Past performance is no guarantee of future results. Source: Peter Lynch, One Up on Wall Street. Securities Research Co. and Philip
25
      Morris. Data for the time period 7/1/1981 – 12/31/1993.
Stock Market Morality
     History of stock market morals

                                               Strong balance sheets & earnings consistency

26    Past performance is no guarantee of future results. Source: GMO monthly data 1/1982-12/2003.
Stock Market Morality
     History of stock market morals

                                                                 Low turnover outperforms

     The Center for Retirement Research at Boston College study on fees
     and trading costs of equity mutual funds used in 401(k) plans:
         – A universe of thousands of U.S. stock funds average trading costs of

              1.44% of total assets

         – Average of 0.14% in the bottom quintile

         – Average of 2.96% in the top quintile

         – These real costs are not reported in expense ratios

      Past performance is no guarantee of future results. Source: Fees and Trading Costs of Equity Mutual Funds in 401(k) Plans and Potential
27
      Savings from ETFs and Commingled Trusts.
Stock Market Morality
     History of stock market morals

                                                            Parabolic manias crush capital

      Past performance is no guarantee of future results. Source: BofA Merrill Lynch https://finance.yahoo.com/news/no-way-
28
      ecommerce-stocks-valuable-152910607.html). Data for the time period 1/1/1977 – 12/31/2018.
Agenda

        History of stock market morals

        Why have morals underperformed the last five years?

        How to trust the morals

29
Stock Market Morality
     Why have morals underperformed the last five years?

                                             New-era tech; AI and data analytics are the bomb!

30    Past performance is no guarantee of future results. Source: FactSet. Data for the time period 4/1/2017 – 3/31/2019.
Stock Market Morality
     Why have morals underperformed the last five years?

                                                       Demographics have not yet coalesced

      Past performance is no guarantee of future results. Source: JPMorgan Housing Forecast, January 8, 2019. Data for the time period
31
      1/1/1981 – 12/31/2018.
Stock Market Morality
     Why have morals underperformed the last five years?

                                                            The Fed caved

32    Past performance is no guarantee of future results.
Stock Market Morality
     Why have morals underperformed the last five years?

                                                                       Morals haven’t mattered

                                                                                                                                                          Number of Stocks
      Past performance is no guarantee of future results. Source: Left side:The Wall Street Journal (https://www.wsj.com/articles/red-ink-
      floods-ipo-market-1538388000, data for the time period 1/1/1980 – 12/31/2018. Right side: GMO White Paper “The Late Cycle Lament” Dec
33    2018. Data for the time period 1/1/1995 – 12/31/2018. Price–sales ratio, P/S ratio, or PSR, is a valuation metric for stocks. It is calculated by
      dividing the per-share stock price by the per-share revenue.
Stock Market Morality
     Why have morals underperformed the last five years?

                                                               We’ve entered the crazy stage
          Comparative Performance

34    Past performance is no guarantee of future results. Source: Fundstrat, April 5, 2019. Data for the time period 12/31/1997 – 12/31/2017.
Agenda

        History of stock market morals

        Why have morals underperformed the last five years?

        How to trust the morals

35
Stock Market Morality
     How to trust the morals
                                        “Don’t Believe The Hype” -Public Enemy

                                                                                                                               Price
36    Past performance is no guarantee of future results. Source: Bloomberg. Data for the time period 3/10/2000 – 5/30/2003.
Stock Market Morality
     How to trust the morals

                                                         Consumer spending demographics

      Past performance is no guarantee of future results. Source: Fundstrat, April 5, 2019. Data as of 12/31/2018. PCE: personal consumption
37
      expenditures. Data for the time period 1/1/2019 – 12/31/2028 is projected.
Stock Market Morality
     How to trust the morals

                                                                 Stick to our Eight Criteria

      Past performance is no guarantee of future results. Source: https://www.kiplinger.com/article/investing/T052-C000-S002-value-vs-
38
      growth-stocks-which-will-come-out-on-top.html.
Stock Market Morality
     How to trust the morals

                                                                Plan for a stronger economy

      Past performance is no guarantee of future results. Source: Fundstrat, April 5, 2019. Data for the time period 1/1/1935 – 12/31/2018. Data
39
      for time periods after 1/1/2019 are estimates.
Stock Market Morality
     How to trust the morals

                                                             Believe in higher interest rates

                                                                                                                             Rate
40    Past performance is no guarantee of future results. Source: Bloomberg. Data for the time period 4/9/1980 – 4/5/2019.
Stock Market Morality
     How to trust the morals

                                                             Increase in millennial families

      Past performance is no guarantee of future results. Source: Fundstrat, “The Long Game”, 2019 Strategy. Data as of 12/31/2017. Population
41
      shown in millions.
Stock Market Morality
     How to trust the morals

                                                                        Stay the course

      Past performance is no guarantee of future results. Source: ThinkAdvisor (http://www.thinkadvisor.com/2015/08/31/why-and-when-active-
42
      managers-shine-and-how-to-spot). Data for the time period 1/1/1995 – 12/31/2013.
Agenda

        History of stock market morals

        Why have morals underperformed the last five years?

        How to trust the morals

43
Today’s Agenda

      Performance, Characteristics and Top 10 Holdings
            Cole Smead, CFA, Portfolio Manager

      Featured Stock: NVR Inc.
            Tony A. Scherrer, CFA, Portfolio Manager

      Stock Market Morality
            Bill Smead, Lead Portfolio Manager

44
Definitions
12 Month Yield is the sum of a fund's total trailing 12-month interest and dividend payments divided by the last month's ending share price (NAV) plus any capital
gains distributed over the same period.
Under Basel III, the minimum capital adequacy ratio that banks must maintain is 8%. The capital adequacy ratio measures a bank's capital in relation to its risk-
weighted assets. The capital-to-risk-weighted-assets ratio promotes financial stability and efficiency in economic systems throughout the world.
Basis point: A basis point is one hundredth of one percent, used chiefly in expressing differences of interest rates.
Bond Ratings: All fund securities have been rated by a Nationally Recognized Statistical Ratings Organization such as Moody’s, Standard & Poor’s or Fitch. When
a bond is rated by more than one organization, Smead Value Fund uses the highest rating available. Credit quality ratings pertain to the underlying securities of
the fund and not to the fund itself.
Book Value: A company's common stock equity as it appears on a balance sheet, equal to total assets minus liabilities, preferred stock, and intangible assets
such as goodwill.
Capital expenditure, or CapEx, are funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment.
Cash Flow: A revenue or expense stream that changes a cash account over a given period.
Cash Flow From Operating Activities (CFO): Cash flow from operating activities is reported on the cash flow statement in a company's quarterly and annual
reports.
CDS Spread: The buyer of the protection in a credit default swap pays a premium to the seller, and this premium is called the CDS spread.
Cash dividend coverage ratio: a ratio that helps in estimating the company’s ability to meet its dividend payouts using only operating cash flows.
Debt/Equity: A measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity.
Debt/Total Capital: A company's debt-to-capital ratio or D/C ratio is the ratio of its total debt to its total capital, its debt and equity combined.
Dividend yield is represented as a percentage and can be calculated by dividing the dollar value of dividends paid in a given year per share of stock held by the
dollar value of one share of stock.
Dow Jones Internet Commerce Index (DJECOM) is designed to measure the 15 largest and most actively traded internet commerce stocks
DSPBMORG Index is the Federal Reserve U.S. household debt service ratio mortgage obligations. It represents household debt service payments and financial
obligations as a percentage of disposable personal income; seasonally adjusted.
Earnings before interest, tax, depreciation and amortization (EBITDA) is a measure of a company's operating performance.
Earnings per share (EPS) is the portion of a company's profit allocated to each outstanding share of common stock.
Fixed-charge coverage ratio: A measure of a firm's ability to meet its fixed-charge obligations.
Free Cash flow: measures the cash generating capability of a company by adding non-cash charges (e.g. depreciation) and interest expense to pretax income.
Free cash flow per share is a measure of a company's financial flexibility that is determined by dividing free cash flow by the total number of shares
outstanding.

45
Definitions
Free cash flow to sales (FCF Sales) is a valuation ratio that measures a company's surplus cash flow against sales revenues.
Free cash flow yield is an overall return evaluation ratio of a stock, which standardizes the free cash flow per share a company is expected to earn against its
market price per share.
Gross national product (GNP) is an estimate of total value of all the final products and services produced in a given period by the means of production owned by a
country's residents.
Gross margin: A company's total sales revenue minus its cost of goods sold (COGS), divided by total sales revenue.
The indicated yield is a way to forecast a stock's annual dividend yield.
Leverage: The relationship of debt to equity.
The Mortgage Credit Availability Index (MBA Index) provides the only standardized quantitative index that is solely focused on mortgage credit. It is calculated
using several factors related to borrower eligibility (credit score, loan type, loan-to-value ratio, etc.). These metrics and underwriting criteria for over 95
lenders/investors are combined by MBA using data made available via the AllRegs® Market Clarity® product and a proprietary formula derived by MBA to
calculate the MCAI, a summary measure which indicates the availability of mortgage credit at a point in time.
MSCI World ex US Index: A market capitalization weighted index designed to provide a broad measure of equity-market performance throughout the world.
Intrinsic value is the actual value of a company or an asset based on an underlying perception of its true value including all aspects of the business, in terms of
both tangible and intangible factors.
Mutual Fund Portfolio Turnover: A measure of the trading activity in the fund's portfolio of investments. In other words, how often securities are bought and sold.
Net margin: is the percentage of revenue remaining after all operating expenses, interest, taxes and preferred stock dividends (but not common stock dividends)
have been deducted from a company's total revenue.
NASDAQ-100 is a stock market index made up of 104 equity securities issued by 100 of the largest non-financial companies listed on the NASDAQ. It is a modified
capitalization-weighted index.
Nasdaq Composite Index is the market capitalization-weighted index of approximately 3,000 common equities listed on the Nasdaq stock exchange.
Nifty Fifty refers to the 50 popular large-cap stocks on the New York Stock Exchange in the 1960s and 1970s that were widely regarded as solid buy and hold
growth stocks, or "Blue-chip" stocks.
Operating Cash Flow (OCF): refers to the amount of cash a company generates from the revenues it brings in, excluding costs associated with long-term
investment on capital items or investment in securities
Operating margin: a margin ratio used to measure a company's pricing strategy and operating efficiency.
The price-to-cash-flow ratio is the ratio of a stock's price to its cash flow per share.
The price-to-book ratio (P/B Ratio) is a ratio used to compare a stock's market value to its book value.

46
Definitions
Price/Earnings (P/E): the ratio of a firm’s closing stock price & its trailing 12 months’ earnings/share.
Price to tangible book value (PTBV) is a valuation ratio expressing the price of a security compared to its hard, or tangible, book value as reported in the
company's balance sheet.
Pretax profit margin: a company's earnings before tax as a percentage of total sales or revenues.
A REIT, or Real Estate Investment Trust, is a company that owns or finances income-producing real estate.
Return on assets (ROA) is an indicator of how profitable a company is relative to its total assets.
Return on equity (ROE) is the amount of net income returned as a percentage of shareholders equity.
Return on total capital is a profitability ratio that measures profit earned by a company using both its debt and equity capital
Return on invested capital (ROIC) is a profitability ratio. It measures the return that an investment generates for those who have provided capital, i.e. bondholders
and stockholders.
Russell 1000 Index is an index that represents the highest-ranking 1,000 stocks in the Russell 3000 Index, which represents about 90% of the total market
capitalization of that index.
Russell 1000 Growth Index refers to a composite that includes large and mid-cap companies located in the United States that also exhibit a growth probability.
Russell 1000 Value Index refers to a composite of large and mid-cap companies located in the United States that also exhibit a value probability.
S&P 500 Index: A market-value weighted index consisting of 500 stocks chosen for market size, liquidity, and industry group representation.
Standard deviation is a measure of the dispersion of a set of data from its mean.
The supplementary leverage ratio is the ratio of a banking organization's tier 1 capital to its total leverage exposure, which includes all on-balance-sheet assets
and many off-balance-sheet exposures.
The US 10 Year Treasury note is a debt obligation issued by the United States government with a maturity of 10 years upon initial issuance. A 10-year Treasury note
pays interest at a fixed rate once every six months, and pays the face value to the holder at maturity.
The Wilshire 5000 Total Market Index: A market-capitalization-weighted index of the market value of all stocks actively traded in the US.
Tier 1 common capital ratio is a measurement of a bank's core equity capital compared with its total risk-weighted assets that signifies a bank's financial
strength.
The Tier 1 leverage ratio is the relationship between a banking organization's core capital and its total assets.
The Tier 1 capital ratio is the ratio of a bank's core equity capital to its total risk-weighted assets (RWA).
Tier 1 common capital ratio is a measurement of a bank's core equity capital compared with its total risk-weighted assets that signifies a bank's financial
strength.
Total Capital Ratio is the ratio of total capital to risk weighted assets (RWAs).

47
Disclosures

 Past performance is no guarantee of future results.

 Consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. The
 statutory and summary prospectuses contain this and other information about the Fund and is available at
 www.smeadcap.com or by calling 877-807-4122. Read carefully before investing.

 Mutual fund investing involves risk. The Fund is non-diversified, meaning it may concentrate its assets in fewer individual
 holdings than a diversified fund. Therefore, the fund is more exposed to individual stock volatility than a diversified fund.

 Information provided does not constitute investment advice and no investment decisions should be made based on any
 information provided. Information reflects the views of Smead Capital Management as of a particular time. Such views are
 subject to change without notice. Information regarding holdings, allocations and other allocations are for illustrative purposes
 only and may not be representative of current or future investments or allocations. This information is not a recommendation to
 purchase or sell a security or follow any strategy or allocation. Any forward-looking statements or forecasts are based on
 assumptions and actual results may vary from any statements or forecasts. While Smead Capital Management has used
 reasonable efforts to obtain information from reliable sources, no representations or warranties are made as to the accuracy,
 reliability or completeness of Fourth-party information presented in this material. This material is not to be duplicated or
 recreated without prior written consent of Smead Capital Management.

 Frank Russell Company is the Source: and owner of the trademarks, service marks and copyrights related to the Russell
 Indexes. Russell® is a trademark of Russell Investment Group.

 The Smead Value Fund is distributed by ALPS Distributors, Inc. ALPS Distributors, Inc. and Smead Capital Management are not
 affiliated.

48
| Questions & Answers
 Email info@smeadcap.com or call 877.701.2883

                                  | SMEAD CAPITAL MANAGEMENT
                                   1001 4th Avenue, Suite 4305
                                   Seattle, WA 98154

                                                            SVF000410 Exp. 7/31/2019
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