Quarterly Capital Markets Outlook

David N.

Pearl

Executive

Vice President

and Co-CIO

William W.

Priest

Chief Executive

Officer

and Co-CIO

PRESENTED BY

The information contained in this presentation is distributed for informational purposes only and should not be considered investment advice or a recommendation of any particular security, strategy or

investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. The information contained in this presentation is accurate as of the date

submitted, but is subject to change. Any performance information referenced in this presentation represents past performance and is not indicative of future returns. Any projections, targets, or

estimates in this presentation are forward looking statements and are based on Epoch’s research, analysis, and assumptions made by Epoch. There can be no assurances that such projections,

targets, or estimates will occur and the actual results may be materially different. Other events which were not taken into account in formulating such projections, targets, or estimates may occur and

may significantly affect the returns or performance of any accounts and/or funds managed by Epoch. To the extent this presentation contains information about specific companies or securities

including whether they are profitable or not, they are being provided as a means of illustrating our investment thesis. Past references to specific companies or securities are not a complete list of

securities selected for clients and not all securities selected for clients in the past year were profitable.

Epoch’s

Quarterly

Capital Markets

Outlook

April 7, 2016 | The webinar replay will be available on our website: www.eipny.com

Barney

Rosen, MD

Senior

Research

Analyst

If you wish to ask a question, please click on the question mark icon located on the top of the screen.

S&P 500 (%)

MSCI World (%)

P/E Expansion 45.1 41.4

EPS Growth 17.4 (0.8)

Dividends 14.5 12.0

Total 77.0 52.6

Market Perspective

P/E Expansion

58.5%

Total

Return

77.0%

Dividends

22.8%

P/E

Expansion

78.8%

Total

Return

52.6%

EPS

Growth

-1.6% EPS Growth

22.7%

Dividends

18.8%

Source: Standard & Poor's; MSCI; Epoch Investment Partners; December 2015

1

S&P 500 MSCI World

Cumulative contribution to return 2012 through 2015


1,250

1,350

1,450

1,550

1,650

1,750

1,850

1,950

2,050

2,150

2,250

Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16

Index

S&P 500

17x

16x

15x

14x

13x

12x

1. Please see our White Paper dated May 29, 2014: The Power Of Zero + The Power Of The Word

Source: Standard & Poor's, Yardeni Research, Epoch Investment Partners; March 2016

P/E

S&P 500 next twelve months earnings multiples

Equity Markets Have Re-rated As A Result Of QE1

2


2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

2011 Est 2012 Est 2013 Est 2014 Est 2015 Est Actual GDP

The Big Problem: A Lack Of Growth

3

World real GDP growth estimates continue to be revised down

Source: IMF World Economic Outlook; October 2015


Source: IMF World Economic Outlook, Epoch Investment Partners; October 2015

Global GDP growth 2009-2015 (est.) in USD

China's Contribution To Growth Has Been Substantial

China 46%

Other 54%

4


-5%

0%

5%

10%

15%

20%

25%

30%

Ma

r-9

9

Aug-9

9

Jan-0

0

Jun-0

0

No

v-0

0

Apr-

01

Sep-0

1

Feb

-02

Jul-0

2

De

c-0

2

Ma

y-0

3

Oct-

03

Ma

r-0

4

Aug-0

4

Jan-0

5

Jun-0

5

No

v-0

5

Apr-

06

Sep-0

6

Feb

-07

Jul-0

7

De

c-0

7

Ma

y-0

8

Oct-

08

Ma

r-0

9

Aug-0

9

Jan-1

0

Jun-1

0

No

v-1

0

Apr-

11

Sep-1

1

Fe

b-1

2

Jul-1

2

De

c-1

2

Ma

y-1

3

Oct-

13

Ma

r-1

4

Aug-1

4

Jan-1

5

Jun-1

5

No

v-1

5

Services

Construction

Industry

Source: National Bureau of Statistics of China, Epoch Investment Partners; Third Quarter 2015

Nominal Chinese growth by sector

Sharp Slowing Of Chinese Growth In Manufacturing And Construction

5

If you wish to ask a question, please click on the question mark icon located on the top of the screen. 6

China's Rebalancing Will Run Through 2025, And Will Likely Keep IP

And Capex Growth On A Secular Downtrend

-5%

5%

15%

25%

35%

45%

55%

Consumption Investment Government Net Trade

2000 - 2010

2010 - 2020

2020 - 2030

Changing composition of China's GDP

Source: McKinsey & Company; March 2016


2% Is The New 4% For Mature Economies

7

Growth In The

Work Force Productivity Real GDP

U.S. (23% of Global GDP) 1.6

+

0.7

=

2.3

Euro Area (24%) 0.8 0.6 1.4

Japan (6%) 0.3 0.3 0.6

Mature Economies1 1.1 0.9 2.0

China (13%)

-0.2 6.7 6.5

Developing Economies2 1.2 2.7 3.9

1. Includes all 28 members of the European Union as well as Iceland, Norway and Switzerland, Australia, Canada, Hong Kong, Israel, New Zealand, Singapore, South Korea, Taiwan

2. Includes China, India, Bangladesh, Cambodia, Indonesia, Malaysia, Myanmar, Pakistan, Philippines, Sri Lanka, Thailand, Vietnam, Argentina, Barbados, Bolivia, Brazil, Chile,

Colombia, Costa Rica, Dominican Republic, Ecuador, Guatemala, Jamaica, Mexico, Peru, St. Lucia, Trinidad & Tobago, Uruguay, Venezuela, Algeria, Bahrain, Egypt, Iran, Iraq,

Jordan, Kuwait, Morocco, Oman, Qatar, Saudi Arabia, Sudan, Syria, Tunisia, United Arab Emirates, Yemen, Angola, Burkina Faso, Cameroon, Cote d’Ivoire, DR Congo, Ethiopia,

Ghana, Kenya, Madagascar, Malawi, Mali, Mozambique, Niger, Nigeria, Senegal, South Africa, Tanzania, Uganda, Zambia, Zimbabwe

Source: The Conference Board. 2015. The Conference Board Total Economy Database™, May 2015, http://www.conference-board.org/data/economydatabase/

GDP components


0

5

10

15

20

25

30

35

40Inflation Under 2% Inflation Under 1% Inflation Under 0%

Number of countries in sample (Now:34)

Source: OECD, Epoch Investment Partners, 2015

Low Rates (Almost) Everywhere

8

Number of OECD countries with low inflation

Countries


The List Of Countries With NIRPs Continues To Grow

9

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%Hungary Japan Europe Sweden Denmark Switzerland

Source: Bloomberg, Epoch Investment Partners; March 2016


Technology: The New Macro Influencer

10

The driver of a capital-light world

The last, best hope for sustaining profit margins


Structural Decline In Investment

11

-2%

0%

2%

4%

6%

8%

10%

12%

19

70

19

71

19

72

19

73

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19

77

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05

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08

20

09

20

10

20

12

20

13

20

14

20

15

Profits Net Investment

Source: Federal Reserve Bank of St. Louis; 4Q 2015

Global capex sag


Global Capex Sag

12

33%

25% 24%

22% 22% 21% 21%

20%

18% 17%

16%

14% 13%

9% 9% 9% 8% 8% 8%

7% 7% 7% 6%

3%

0% 0% 0%

5%

10%

15%

20%

25%

30%

35%

Labor-cost savings from adoption of advanced industrial robots (%, 2025)

Average global labor-cost savings: 16%

Source: BCG http:www.slideshare.net/TheBostonConsultingGroup/robotics-in-manufacturing; Minack Advisors. March 2016


Technology: Impact On Capital Returns

Return on equity components

Technology will impact all three components

𝑃𝑟𝑜𝑓𝑖𝑡𝑠 (𝜋)

𝑆𝑎𝑙𝑒𝑠 (𝑠) = Profit Margin

𝑆𝑎𝑙𝑒𝑠 (𝑠)

𝐴𝑠𝑠𝑒𝑡𝑠 (𝑎) = Asset Utilization

𝐴𝑠𝑠𝑒𝑡𝑠 (𝑎)

𝐸𝑞𝑢𝑖𝑡𝑦 (𝑠.𝑒.) = Leverage

𝑅𝑂𝐸 = 𝜋

𝑠 ×

𝑠

𝑎 ×

𝑎

𝑠.𝑒. =

𝜋

𝑠.𝑒.

13


Strong USD Has Been Painful For Companies With Overseas Sales

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

>50% Sales in U.S. All S&P 500 Companies >50% Sales Abroad

Earnings

Revenue

2015 S&P 500 (ex-energy) earnings and revenue growth

Source: FactSet, Epoch Investment Partners; March 2016

Y/Y Change


U.S. Dollar Strength Has (Finally) Started To Abate

-4.0%

-2.0%

0.0%

2.0%

4.0%Broad Trade Weighted U.S. Dollar Index

Source: Federal Reserve Bank of St. Louis; March 2016

15


U.S. Crude Production Is Slowing

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

0

2,000

4,000

6,000

8,000

10,000

12,000

19

87

19

88

19

89

19

90

19

91

19

92

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93

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97

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00

20

01

20

02

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03

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04

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05

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06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

US Crude Oil Production, 4 Week Avg. Ths Barrels Per Day (LHS) Oil Rig Count (RHS)

Source: Baker Hughes, EIA, Epoch Investment Partners; March 2016

16


Economic Data Is Beginning To Surprise On The Upside

-80

-60

-40

-20

0

20

40

60

10/1/2015 11/1/2015 12/1/2015 1/1/2016 2/1/2016 3/1/2016 4/1/2016

Economic Surprise Index in USD Economic Surprise Index in EUR

Source: Citi Economic Surprise Index; March 2016

Economic Surprise Index

17

Index


Manufacturing PMI Back Into Expansionary Territory

30

35

40

45

50

55

60

65

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

ISM Manufacturing PMI

Source: Institute for Supply Management, Federal Reserve Bank of Saint Louis, Epoch Investment Partners; March 2016

Index

Institute for Supply Management Economic Activity Index

18


Disposable Income Growth Is Outpacing GDP Growth

19

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

Jan-0

7

Apr-

07

Jul-0

7

Oct-

07

Jan-0

8

Apr-

08

Jul-0

8

Oct-

08

Jan-0

9

Apr-

09

Jul-0

9

Oct-

09

Jan-1

0

Apr-

10

Jul-1

0

Oct-

10

Jan-1

1

Apr-

11

Jul-1

1

Oct-

11

Jan-1

2

Apr-

12

Jul-1

2

Oct-

12

Jan-1

3

Apr-

13

Jul-1

3

Oct-

13

Jan-1

4

Apr-

14

Jul-1

4

Oct-

14

Jan-1

5

Apr-

15

Jul-1

5

Oct-

15

Jan-1

6

Apr-

16

Real Disposable Personal Income

Y/Y Change

Source: Federal Reserve Economic Data, Epoch Investment Partners; February 2016


Balance Shifting Slowly Back Towards Labor

20

52%

53%

54%

55%

56%

57%

58%

59%

60%

3%

5%

7%

9%

11%

13%

15%

19

80

19

81

19

82

19

83

19

84

19

85

19

86

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87

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11

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13

20

14

20

15

20

16

Recession Corporate Profits (Left Scale) Labor Compensation (Right Scale)

Source: Bureau of Economic Analysis, Epoch Investment Partners; Fourth Quarter 2015

Corporate profits vs. labor compensation, percent of GDP


Cyclical And Defensive Industry Groups

21

90

95

100

105

110

115

Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16

Cyclicals Defensives

1. Cyclicals include Automobiles & Components, Banks, Capital Goods, Diversified Financials, Energy, Insurance, Materials, Media, Semiconductors & Semiconductor Equipment,

Software & Services, Technology Hardware & Equipment, Transportation

2. Defensives include: Commercial & Professional Services, Consumer Durables & Apparel, Consumer Services, Food & Staples Retailing, Food Beverage & Tobacco, Health

Care Equipment & Services, Household & Personal Products, Pharmaceuticals Biotechnology & Life Sciences, Real Estate, Retailing, Telecommunication Services, Utilities

Source: Goldman Sachs, FactSet, S&P, Epoch Investment Partners; Indexed to 100 in January 1, 2014; April 2016

1 2

Performance relative to S&P 500

Cumulative Return


A Tale Of Two Halves: The Market

-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

Source: Federal Reserve Bank of St. Louis; March 2016

Disappointing

manufacturing

data in China

sparks global

selloff

February 11: S&P,

oil and U.S. yields

hit 2016 low

Japan adopts NIRP

Strong U.S.

employment numbers

and an easing of

China concerns

ECB announces an

increase in their

bond-buying program

and cuts interest

rates

Fed Chair Yellen

delivers dovish speech

to the Economic Club of

New York

22

S&P 500 returns, first quarter 2016


A Tale Of Two Halves: S&P 500

Sector 1st Half of First Quarter 2nd Half of First Quarter Total First Quarter

(Dec-31 to Feb-11) (Feb-11 to Mar-31)

Telecommunication Services 6.4% 9.6% 16.6%

Utilities 5.7% 9.4% 15.6%

Consumer Staples -2.2% 7.9% 5.6%

Industrials -8.4% 14.6% 5.0%

Energy -9.0% 14.3% 4.0%

Materials -10.5% 15.8% 3.6%

Information Technology -11.5% 15.9% 2.6%

Consumer Discretionary -12.4% 16.0% 1.6%

S&P 500 -10.3% 13.0% 1.3%

Financials -17.4% 15.0% -5.1%

Health Care -11.9% 7.2% -5.5%

Source: Standard & Poor's, Epoch Investment Partners; April 2016

23

S&P 500 sector returns


Health Care Multiples Compress

Sector December 31, 2015 March 31, 2016 Percent Change

S&P 500 16.10 16.61 3.2%

Health Care 16.00 14.90 -6.9%

Financials 12.66 12.40 -2.1%

Consumer Discretionary 18.14 18.09 -0.3%

Information Technology 15.97 16.33 2.2%

Industrials 15.52 16.02 3.2%

Consumer Staples 19.89 20.98 5.5%

Materials 15.34 17.16 11.9%

Telecom Services 12.30 13.93 13.2%

Utilities 15.44 17.71 14.7%

Energy 28.04 62.84 124.1%

Source: Standard & Poor's, Epoch Investment Partners; April 2016

Market aggregate Price / Earnings NTMA

24


Returns: S&P Health Care Sector Index vs. S&P 500 Index

25

84

86

88

90

92

94

96

98

100

102

104

May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16

S&P 500 Index S&P Health Care Index

Source: Standard & Poor's Data via Bloomberg, Benchmarked to May 29 2015, Epoch Investment Partners; April 2016

Returns over the last several months


S&P 500 Sectors: 2016 Consensus EPS Growth And Revisions

26

-54.3%

-2.3%

2.3% 2.4% 2.5% 3.1% 3.3% 3.7%

6.3% 7.7%

12.0%

S&P 500 Bottom-Up EPS Expected Growth 2016

-66.2%

-19.2%

-7.9% -6.8% -5.7% -5.4% -2.8% -2.4% -2.0%

-0.7%

0.0%

S&P 500 Bottom-Up Operating EPS Revisions % Change

Source: Wolf Research Portfolio Strategy, Standard & Poor's, Compustat, Thomson Financial, FactSet; April 2016

September 30, 2015 to March 31, 2016

Upward

Downward


Asset Allocation: Equities Offer Better Income Than Sovereign Bonds

27

4.35%

2.20%

3.87%

2.43%

1.41%

1.77%

0.56%

-0.05%

-1%

1%

2%

3%

4%

5%

U.K. U.S. Euro Japan

Dividend Yield 10-Year Government Bond Yield

Source: MSCI, Epoch Investment Partners; March 31, 2016

MSCI country and regional dividend yields vs. 10-year government bond yields

Select Countries 10-Year Bond Yield

U.S. 1.77%

Spain 1.36%

Italy 1.22%

France 0.48%

Germany 0.15%

Japan -0.05%

Switzerland -0.33%


Where Will Free Cash Flows Go?

28

YES

NO

Free Cash Flow

Applications

Does return on

investment

exceed the cost

of capital?

Capital Reinvestment

• Acquisitions

• Internal Projects

Shareholder Yield

• Cash Dividends

• Share Repurchases

• Debt Reduction


$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

'98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

Dividends Buybacks

Buybacks And Dividends To Continue At A High Level

Billions

S&P 500 annual buybacks and dividends

1. Projection based on current run rate; Dividends through 6/30/15; Buybacks through 6/30/15;

Source: S&P; Epoch Investment Partners; 2Q 2015

1

29


$0

$50

$100

$150

$200

$250

$300

0

50

100

150

200

250

300

De

c-9

4

Jun-9

5

De

c-9

5

Jun-9

6

De

c-9

6

Jun-9

7

De

c-9

7

Jun-9

8

De

c-9

8

Jun-9

9

De

c-9

9

Jun-0

0

De

c-0

0

Jun-0

1

De

c-0

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Jun-0

2

De

c-0

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Jun-0

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De

c-0

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Jun-0

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De

c-0

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Jun-0

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De

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Jun-0

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De

c-0

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Jun-0

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De

c-0

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Jun-0

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De

c-0

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Jun-0

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De

c-0

9

Jun-1

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De

c-1

0

Jun-1

1

De

c-1

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Jun-1

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De

c-1

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Jun-1

3

De

c-1

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Jun-1

4

De

c-1

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Jun-1

5

De

c-1

5

12-Month Average Number (Left) 12-Month Average Value (Right)

Global M&A Activity To Continue

30

Monthly global M&A deal value and number

Source: Strategas Research Partners; December 2015

# Of Deals Billions


Summary

31

Low growth reflecting demographics, productivity and

slow down in China have made 2% the new normal for

real GDP growth

Technology is the new macro: enhancing productivity,

sustaining profit margins and reconfiguring capital

allocation choices

Dividend payers and free cash flow generators should

drive relative equity returns

The diminishing impact of monetary policy (QE) on

valuation metrics will foster greater interest in active

management


A replay of this presentation will be available shortly on our website

www.eipny.com

Please feel free to contact us at 212-303-7200

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