In 2011, Miller/Howard launched the Drill Bit to Burner Tip® Strategy, designed to participate in all phases of the so-called "North American Energy Revolution," more commonly known as the "Shale Revolution." These opportunities are driven by rapid advances in drilling and completion technologies, which resulted in record amounts of oil and gas production. The United States is the world's biggest natural gas producer. We believe we are at the early stages of a potentially multi-decade return of the US to its status as an energy super power.

Strategy and Objective. The American Energy Fund mirrors the Drill Bit to Burner Tip® Strategy, which seeks to create a balanced, best-of-breed portfolio* across the North American energy value chain of producers, processors, transporters, and users. It aims to capture the benefits to investors of these dynamic developments in energy—from exploration and production to midstream pipelines that transport, process, and store commodities, to utility, industrial, and chemical users, as well as the enablers and potential beneficiaries that provide picks, shovels, and know-how. The strategy extends to less obvious participants not traditionally associated with the energy industry, such as companies tasked with improving health, safety, and efficiency of shale oil and gas drilling operations.

Investment Process. Companies are selected based on particular attributes consistent with the Drill Bit to Burner Tip® Strategy's investment subcategories—Upstream, Midstream, Downstream, and Enablers/Potential Beneficiaries.

Examples of portfolio holdings:

• Upstream: Companies that own hard-to-duplicate low-cost acreage or advanced technologies
• Midstream: Companies owning thousands of miles of pipelines with attached rights of way
• Downstream: Utility companies that possess attractive, underappreciated critical infrastructure or growth opportunities
• Enabler: Engineering and construction companies with specialized technological expertise
• Beneficiary: Businesses that derive structural competitive advantages from low-cost operations

Through a combination of qualitative and quantitative analysis, the manager selects from a universe of stocks. The manager focuses on valuation and balance sheet metrics, emphasizing quality. Quality is defined by low debt, low cost operations, repeatable, proven business models, good management, strong cash flow, and strategic features, such as geographic location.

*This portfolio does not include master limited partnerships (MLPs), publicly traded partnerships deriving most of their cash flows from real estate, natural resources, and commodities.