Q4 U.S. Stock Market Outlook

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Q4 U.S. Stock Market OutlookDelta Delays, But Doesn’t DerailOctober 2021Dave Sekera, CFA Chief U.S. Market Strategist, Morningstar Research Services LLCPreston Caldwell Head of U.S. Economics, Morningstar Research Services LLCMike Hodel, CFA Director of Equity Research, Communications Services, Morningstar Research Services LLCThis presentation is intended for institutional investors and not for onward distribution/public dissemination. 2021 Morningstar. All Rights Reserved.

Agenda U.S. Stock Market Outlook U.S. Economic Outlook Highlights across the Communications Services Sector Questions2This presentation is intended for institutional investors and not for onward distribution/public dissemination. 2021 Morningstar. All rights reserved. Please reviewDISCLOSURES at the back of this presentation for important information.

Our Stock Market Outlook

3Q 2021 U.S. Market Action Economic normalization versus the Delta variant Investors entered 2021 with high hopes as pandemic on downward trend Value outperformed early in year, but Growth saw a summer surge Tech earnings drove valuation increases across Growth Delta drove investors back to their 2020 pandemic playbook Concern that contagion spreads from Chinese market weaknessSource: Morningstar. Data as of September 24, 2021. Estimates/forecasts are indicative and for illustrative purposes only.4This presentation is intended for institutional investors and not for onward distribution/public dissemination. 2021 Morningstar. All rights reserved. Please reviewDISCLOSURES at the back of this presentation for important information.

Market Returns201920201Q20212Q2021JulyAugSeptMorningstar US Market ingstar Wide Moat orningstar US Growth IndexMorningstar US Core IndexMorningstar US Value (3.00)1.50(0.13)(1.36)16.3213.0015.44Morningstar US Large Cap IndexLarge Cap GrowthLarge Cap CoreLarge Cap 1)(1.26)15.0517.2612.8312.89Morningstar US Mid Cap IndexMid Cap GrowthMid Cap CoreMid Cap (0.13)(1.49)15.209.7416.0020.30Morningstar US Small Cap IndexSmall Cap GrowthSmall Cap CoreSmall Cap (4.50)(3.97)(2.06)12.06(0.35)12.9825.35Source: Morningstar. Data as of September 30, 2021. Past performance is not a reliable indicator of future results and data is presented for illustrative purposes.53Q2021YTD2021This presentation is intended for institutional investors and not for onward distribution/public dissemination. 2021 Morningstar. All rights reserved. Please reviewDISCLOSURES at the back of this presentation for important information.

Market Returns201920201Q20212Q2021JulyAugSeptMorningstar US Market ingstar US Market Sector ReturnsBasic MaterialsConsumer CyclicalConsumer DefensiveCommunication ServicesEnergyFinancial ServicesHealthcareIndustrialsReal 4Source: Morningstar. Data as of September 30, 2021. Past performance is not a reliable indicator of future results and data is presented for illustrative purposes.63Q2021YTD2021This presentation is intended for institutional investors and not for onward distribution/public dissemination. 2021 Morningstar. All rights reserved. Please reviewDISCLOSURES at the back of this presentation for important information.

Our Market Outlook At a 4% premium to our intrinsic valuations, the market is at the high endof fairly valued range Similar overall characteristics, but more attractive opportunities available Value category most attractive and has economic tailwinds behind it Energy sector still most undervalued, Consumer Cyclical second most Basic Mats., Communications, Cons. Defensive & Utilities fairly valued Healthcare & Real Estate most overvaluedSource: Morningstar. Data as of September 24, 2021. Estimates/forecasts are indicative and for illustrative purposes only.7This presentation is intended for institutional investors and not for onward distribution/public dissemination. 2021 Morningstar. All rights reserved. Please reviewDISCLOSURES at the back of this presentation for important information.

Our Market Outlook US economic outlook: 2021 GDP forecast 6.0%; 2022 – 4.3%; 2023 – 2.9% Interest rates: Federal funds to stay at zero through 2023 Longer rates likely to continue to drift upwards Corporate Credit Markets: credit spreads tight Vaccine: 84% of 65 y.o. fully vaccinated; 94% at least one shot67% of 18 y.o. fully vaccinated; 78% at least one shotSource: GDP Forecast from Morningstar as of August 20, 2021. Vaccination data from CDC as of October 2, 2021. Estimates/forecasts are indicative and for illustrative purposes only.8This presentation is intended for institutional investors and not for onward distribution/public dissemination. 2021 Morningstar. All rights reserved. Please reviewDISCLOSURES at the back of this presentation for important information.

U.S. Equity Market 4% OvervaluedMorningstar U.S Price to Intrinsic Value (P/FV Metric) HeatmapAll .89Source: Morningstar. Data shown is the price to fair value metric as of September 24, 2021. Past performance is not a reliable indicator of future results and data is presented for illustrative purposes.9This presentation is intended for institutional investors and not for onward distribution/public dissemination. 2021 Morningstar. All rights reserved. Please reviewDISCLOSURES at the back of this presentation for important information.

U.S. Equity Market: U.S Price to Intrinsic Value (P/FV Metric) Heatmap6/23/219/24/21All 12Small0.950.911.040.89All 40.981.07Mid1.101.00Small1.051.00Source: Morningstar. Data shown is the price to fair value metric as labeled. Past performance is not a reliable indicator of future results and data is presented for illustrative purposes.10 This presentation is intended for institutional investors and not for onward distribution/public dissemination. 2021 Morningstar. All rights reserved. Please reviewDISCLOSURES at the back of this presentation for important information.

Most Overvalued Mega-Caps ID’d at YE2020 Down or Lagging in 2021Company NameTicker Star Rating Star rdThe Walt Disney CompanyProcter & GambleThe Home DepotNvidiaPayPal Morningstar US Market IndexStock Price Stock Price 3.6%58.7%11.1%12.9%2.7%Fair Value Fair Value Change12/31/20 5.0%19.6%Price/Fair Price/FairValueValue12/31/20 .1314.9%Source: Morningstar. Latest prices, fair values and ratings shown are current as of 30 September 2021 and subject to change. Further information including analyst names, the dates and times ratingswere published and historical ratings, is available on request from your local Morningstar office. Data presented is indicative and past performance is not a reliable indicator of future results.11 This presentation is intended for institutional investors and not for onward distribution/public dissemination. 2021 Morningstar. All rights reserved. Please reviewDISCLOSURES at the back of this presentation for important information.

Updated List of Overvalued Mega-Caps Apple, Tesla, and JPMorgan all made a return appearance to our list. Visa, Mastercard, Oracle, Nike, and AbbVie have dropped off the list.Company NameAppleTeslaNvidiaJ.P. MorganUnitedHealth GroupThe Home DepotBank of AmericaProcter & GamblePayPal 1.291.601.141.161.501.201.221.892.37MarketCap ( WideWideNarrowWideWideWideNarrowNarrowStyle BoxSectorLarge GrowthTechnologyLarge GrowthConsumer CyclicalLarge GrowthTechnologyLarge ValueFinancial ServicesLarge CoreHealthcareLarge CoreConsumer CyclicalLarge ValueFinancial ServicesLarge CoreConsumer DefensiveLarge GrowthFinancial ServicesLarge Growth Communication ServicesSource: Morningstar. Latest prices, fair values and ratings shown are current as of 30 September 2021 and subject to change. Further information including analyst names, the dates and times ratingswere published and historical ratings, is available on request from your local Morningstar office. Data presented is indicative and past performance is not a reliable indicator of future results.12 This presentation is intended for institutional investors and not for onward distribution/public dissemination. 2021 Morningstar. All rights reserved. Please reviewDISCLOSURES at the back of this presentation for important information.

Trade Up In Quality: Wide Moat Companies Remain Attractive Wide-MoatStocksundervaluedrelative to No 6/23/21Moat andNarrow ne9/24/21 NarrowWideSource: Morningstar. Data shown is the price to fair value metric as labeled.13 This presentation is intended for institutional investors and not for onward distribution/public dissemination. 2021 Morningstar. All rights reserved. Please reviewDISCLOSURES at the back of this presentation for important information.

Selected Stocks: Wide Moat Large-Cap & Small-CapCompany NameYum ChinaBiogenMerck & Co.Amazon.comLockheed MartinIntelEnterprise Products PartnersConstellation BrandsBerkshire HathawayWells FargoGilead SciencesSalesforce.comDominion QQQQQQQQQQQQQQQQQQQCore LaboratoriesCompass WideWideWideWideWideWideWideStyle BoxLarge CoreLarge ValueLarge ValueLarge GrowthLarge ValueLarge ValueLarge ValueLarge CoreLarge GrowthLarge ValueLarge ValueLarge GrowthLarge ValueSectorConsumer CyclicalHealthcareHealthcareConsumer CyclicalIndustrialsTechnologyEnergyConsumer DefensiveFinancial ServicesFinancial 4744.0085.0077.000.620.740.94WideWideWideSmall GrowthSmall CoreSmall CoreEnergyBasic MaterialsTechnologySource: Morningstar. Latest prices, fair values and ratings shown are current as of 30 September 2021 and subject to change. Further information including analyst names, the dates and times ratingswere published and historical ratings, is available on request from your local Morningstar office. Data presented is indicative and past performance is not a reliable indicator of future results.14 This presentation is intended for institutional investors and not for onward distribution/public dissemination. 2021 Morningstar. All rights reserved. Please reviewDISCLOSURES at the back of this presentation for important information.

China's Common Prosperity Push Chinese stocks have declined based on combination of slowing economicgrowth and rising concerns that China’s Common Prosperity Push willreduce corporate profitability Jacky Tsang, a Hong Kong-based Morningstar equity analyst, explains: “The ultimate goal is to form a more oval-shaped income distribution forthe country that increases the proportion of the middle class anddecreases the size of the upper and lower classes. By doing so, the greaterconsumption power of a larger-sized middle class would enhance the selfsufficiency of the economy by supporting local manufacturing andreducing the reliance on external demand and mitigate geopolitical risks.”Source: Morningstar. As of September 13, 2021. Estimates/forecasts are indicative and for illustrative purposes only.15 This presentation is intended for institutional investors and not for onward distribution/public dissemination. 2021 Morningstar. All rights reserved. Please reviewDISCLOSURES at the back of this presentation for important information.

Undervalued Chinese ADRs Uncertainty about further policy actions remains, but we think margin ofsafety in these Chinese ADRs compensates investors for added risksCompany NameAlibaba GroupTencent HoldingsNetEaseSinopecYum ChinaJD.comI-Mab BiopharmaTrip.com NarrowWideStyle BoxSectorLarge CoreConsumer CyclicalLarge Growth Communication ServicesLarge Core Communication ServicesLarge ValueEnergyLarge CoreConsumer CyclicalLarge CoreConsumer CyclicalNot RatedHealthcareLarge ValueConsumer CyclicalLarge Core Communication ServicesSource: Morningstar. Latest prices, fair values and ratings shown are current as of 30 September 2021 and subject to change. Further information including analyst names, the dates and times ratingswere published and historical ratings, is available on request from your local Morningstar office. Data presented is indicative and past performance is not a reliable indicator of future results.16 This presentation is intended for institutional investors and not for onward distribution/public dissemination. 2021 Morningstar. All rights reserved. Please reviewDISCLOSURES at the back of this presentation for important information.

Rising Stocks Prices Leave Even Fewer Opportunities Behind September swoonhas led to moreundervaluedopportunitiesthan last quarterQQQQQ100%N 742 N 34N 50QQQQN 87QQQN 68QQN 49 N 99QUnder ReviewN 81 N 108 N 40N 89N 3780%60%40%20%0%Source: Morningstar. Latest prices, fair values and ratings shown are current as of 30 September 2021 and subject to change. Further information including analyst names, the dates and times ratingswere published and historical ratings, is available on request from your local Morningstar office. Data presented is indicative and past performance is not a reliable indicator of future results.17 This presentation is intended for institutional investors and not for onward distribution/public dissemination. 2021 Morningstar. All rights reserved. Please reviewDISCLOSURES at the back of this presentation for important information.

Valuation Heatmap by Sector At a P/FV of 0.85, Energyremains the most undervalued;Consumer Cyclical touchesundervalued territory Basic Materials, ConsumerDefensive, & Utilities drop tofair value Remaining sectors sic s0.950.850.940.970.950.940.98Consumer Cyclical0.940.900.890.990.921.120.96Consumer 60.840.690.850.840.90Financial 51.081.111.03Real .020.99Source: Morningstar. Data shown is the price to fair value metric as of September 24, 2020. Past performance is not a reliable indicator of future results and data is presented for illustrative purposes.18 This presentation is intended for institutional investors and not for onward distribution/public dissemination. 2021 Morningstar. All rights reserved. Please reviewDISCLOSURES at the back of this presentation for important information.

Selected Undervalued Stocks by Sector - Energy Morningstar tools to screen for undervalued stocks by Moat, sector, or styleCompany NameNational Oilwell VarcoEnergy TransferFrank's InternationalSchlumbergerCore LaboratoriesEquitrans MidstreamDiamondback EnergyHalliburtonPlains All American PipelineExxonMobilHollyFrontierPlains Gp HoldingsPioneer Natural ResourcesPhillips wNarrowNarrowNarrowStyle BoxSmall ValueMid ValueSmall ValueMid GrowthSmall GrowthSmall ValueMid ValueMid GrowthSmall ValueLarge ValueSmall ValueSmall ValueMid ValueMid ValueLarge ValueSource: Morningstar. Latest prices, fair values and ratings shown are current as of 30 September 2021 and subject to change. Further information including analyst

Oct 06, 2021 · Morningstar US Market Index 31.22 20.90 6.01 8.37 1.89 2.89 (4.58) 0.03 14.92 Morningstar Wide Moat Focus 35.65 15.09 12.33 7.45 1.99 1.43 (4.17) (0.87) 18.74 Morningstar US Growth Index

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