RBC Dominion Securities Access and A+ Programs

Transcription

1 RBC Dominion Securities Access and A+ Programs March 31, 2018 Franklin Bissett Investment Management Review Franklin Bissett Investment Management, part of Franklin Templeton Investments Canada. Source for data and information provided by Franklin Templeton Investments, as of March 31, 2018, unless otherwise noted.

2 Topics for Discussion Franklin Templeton and Franklin Bissett Investment Capabilities Overview A Legacy of Expertise in the Canadian Capital Markets A Leader in Managed Account Programs Unique Service Coverage Franklin Bissett Portfolio Manager Structure Investment Strategy A Distinctive Approach to the GARP Style Absolute, Relative and Risk-Adjusted Return Objectives Mandates Canadian All Cap 12 Fixed Income 17 Dividend Income 28 Our Current Outlook 35 Appendix 36 2

3 Franklin Templeton and Franklin Bissett

4 Investment Capabilities Overview FRANKLIN TEMPLETON INVESTMENTS Total Combined Assets Under Management : CAD$950.3 Billion 2 Equity 5 Fixed Income 8 Multi-Asset Solutions 11 Alternatives AUM CAD$405.9 Billion CAD$373.6 Billion CAD$159.8 Billion CAD$20.8 Billion CAPABILITIES Value Government Income Commodities Deep Value Municipals Real Return Infrastructure Core Value Corporate Credit Balanced/Hybrid Real Estate Blend Bank Loans Total Return Hedge Funds Growth At a Reasonable Price (GARP) Securitized Target Date/Risk Private Equity Growth Multi-Sector Target Return ActiveQuant Currencies Absolute Return Convertibles Sukuk Tactical Asset Allocation Sector Managed Volatility Shariah Smart Beta INVESTMENT Templeton Global Equity Group (1940) Franklin Templeton Fixed Income Group Franklin Templeton Multi-Asset Solutions Franklin Real Asset Advisors (1984) TEAMS Franklin Equity Group (1947) (1970) Templeton Global Macro (1986) (1996) Darby Overseas Investments (1994) Franklin Mutual Series (1949) Franklin LAM-Fixed Income (1993) Franklin SystematiQ (2011) K2 Advisors (1994) Franklin Templeton Emerging Markets Franklin Bissett Investment Mgmt (1982) Pelagos Capital Management (2005) Equity (1987) Franklin Bissett Investment Mgmt (1982) Source: Franklin Templeton Investments (FTI), as of March 31, 2018, based on latest available data. Total combined Assets Under Management (Total AUM) combines U.S. and non-u.s. AUM of the investment management subsidiaries of the parent company, Franklin Resources, Inc. (FRI) [NYSE: BEN], a global investment management organization operating as FTI. Only selected business entities within FTI claim compliance with the GIPS standards as described in the table of contents if applicable. Total and platform AUM includes discretionary and non-discretionary accounts, including pooled investment vehicles, separate accounts and other vehicles. Total and platform AUM may also include advisory accounts with or without trading authority. In addition, assets for which certain FTI advisers provide limited asset allocation advisory services, and assets that are not allocated to FTI products are not included in the AUM figures shown. Franklin Templeton Multi-Asset Solutions may invest in various investment platforms advised by a number of investment advisory entities within FTI. Platform AUM reported for FT Multi-Asset Solutions therefore may include certain AUM separately reported under each utilized investment platform. Total AUM also includes assets managed by certain FTI advisers that do not form part of the selected investment platforms shown. As a result, the combined platform AUMs may not equal Total AUM and may be calculated and reported separately for regulatory or other purposes under each investment adviser. Each local asset manager may be considered as an entity affiliated with or associated to FTI by virtue of being a direct or indirect wholly-owned subsidiary of FRI, an entity or joint venture in which FRI owns a partial interest, which may be a minority interest, or a third party asset management company to which investment advisory services have been delegated by an FTI adviser. Franklin Local Asset Management (LAM) includes Franklin Bissett Investment Management, which is part of Franklin Templeton Investments Corp. In Canada, the advisor to the Franklin Templeton Multi-Asset Solutions mandates is Fiduciary Trust Company of Canada, a wholly owned subsidiary of Franklin Templeton Investments Corp. Franklin Templeton Multi-Asset Solutions is a business name used by Fiduciary Trust Company of Canada. 4

5 Franklin Bissett Investment Management A Legacy of Expertise in the Canadian Capital Markets Founded in 1982 and joined Franklin Templeton Investments in 2000 CAD$19.56 billion in assets under management as of March 31, 2018 Equity strategies: CAD$13.50 billion Fixed Income strategies: CAD$6.06 billion Institutional Retail Traditional Institutional (Pensions) Insurance Platforms White Label Sub-Advisory Investment Categories Fundamental Equity Active Quantitative Equity Systematic Beta Open-End Mutual Funds SMA/UMA Exchange-Traded Funds High Net Worth Fixed Income Multi-Asset 5

6 A Leader in Managed Account Programs Franklin Bissett Enters SMA Market 1994 Franklin Bissett Enters UMA Market 2005 Franklin Bissett AUM: $19.56 billion SMA/UMA: $2.9 billion 2018 Franklin Bissett has managed portfolios in these programs for over 20 years Franklin Templeton remains committed to this area of long-term growth in Canada Franklin Bissett Investment Management assets as of March 31,

7 Unique Service Coverage Three Distinct Support Levels for Advisors DEALER RESOURCES Head Office Team LOCAL PRESENCE Franklin Templeton Sales Team SPECIALIZED SUPPORT Franklin Bissett Portfolio Management Team Helping Advisors 1. Open New Accounts 2. Gain Additional Contributions 3. Retain Clients 7

8 Franklin Bissett Portfolio Manager Structure Managed Accounts RBC Dominion Securities Strategy Franklin Bissett Canadian All Cap SMA Franklin Bissett Fixed Income SMA Franklin Bissett Dividend Income SMA Co-Lead Managers Garey Aitken, Tim Caulfield Tom O Gorman, Darcy Briggs Les Stelmach, Ryan Crowther For additional information on specific responsibilities and professional biographies, please see the Appendix. 8

9 Investment Strategy

10 Equity Investing at Franklin Bissett A Distinctive Approach to the GARP Style Growth at a Reasonable Price discipline across all fundamental equity investment strategies An exacting definition of the G in GARP Growth defined as sustainable profits Looking for strong, consistent earnings and cash flow growth Focused on financially stable companies Portfolio companies often are engaged in shareholder-friendly actions such as share buybacks and well-executed dividend plans Bottom-up security selection process Estimated intrinsic values exceed current share prices 10

11 Absolute, Relative and Risk-Adjusted Return Objectives RISK-ADJUSTED RETURN OBJECTIVE ABSOLUTE RETURN OBJECTIVE High single-digit to low double-digit annualized returns over longer time periods RELATIVE RETURN OBJECTIVE Target 200 bps in annualized excess returns relative to the benchmark RISK OBJECTIVES Primary risk objective: To ensure investors are compensated for the risk taken Secondary risk objective: To maintain less return volatility than the benchmark Strategy dependent, but beta target is typically ; alpha target is 300 bps annualized 11

12 RBC Dominion Securities Access and A+ Programs Mandates Canadian All Cap Core equity portfolio Benchmark: S&P/TSX Composite Index All Cap SMA mandate exclusive to Access and A+ Programs Fixed Income Active fixed income portfolio Dividend Income Blended portfolio seeking capital appreciation and tax-efficient income 12

13 Top Holdings Franklin Bissett Canadian All Cap SMA As of March 31, 2018 Top 20 Holdings 1 As of March 31, 2016 Top 10 Overweights & Underweights 2 Name Weight (%) Brookfield Asset Management 6.53 Canadian National Railway 5.49 Royal Bank of Canada 5.22 Toronto Dominion Bank 5.15 Restaurant Brands International 4.96 CIBC 4.26 CP Railway 3.95 Bank of Nova Scotia 3.88 Bank of Montreal 3.78 Onex 3.29 Dollarama Inc Alimentation Couche Tard 2.56 Metro 2.56 Franco-Nevada 2.52 Enbridge 2.48 Toromont Industries 2.34 Saputo 2.14 Enghouse Systems 2.12 Power 2.05 ATCO 1.79 Total Number of Equity Positions 53 Name Weight (%) Brookfield Asset Management Restaurant Brands International Onex CP Railway Canadian National Railway Toromont Industries Metro Enghouse Systems Ltd Dollarama Inc CIBC Name Weight (%) Suncor Energy* BCE* Manulife Royal Bank of Canada Toronto Dominion Bank Magna International* Waste Connections* Canadian Natural Resources National Bank of Canada* Pembina Pipeline* Top twenty weights are represented as a percentage of entire portfolio excluding cash. Securities shown are top twenty within the asset class. 2. Overweight and underweight portfolio holdings are in comparison to the S&P/TSX Composite Index. *Asset not held in the portfolio during the period. Information is based on a Franklin Bissett Canadian All Cap SMA model portfolio, representative of the investment strategy. This model portfolio is indicative of the allocation that would be used for new accounts being opened and is updated as of the end of each calendar quarter. The allocation of existing accounts may differ from the allocation used for new accounts due to differences in the timing of purchases and sales, general market conditions and other factors specific to each existing account due to client considerations. 13

14 Sector Allocation 1 Franklin Bissett Canadian All Cap SMA As of March 31, 2018 Financials Energy Industrials Consumer Discretionary Consumer Staples Materials Information Technology Telecommunication Services Utilities Real Estate Health Care 38,23 34,79 15,29 18,54 13,89 9,71 9,59 5,50 7,46 3,60 4,89 11,52 3,71 3,79 3,24 4,58 3,19 3,73 0,52 3,04 0,00 1, Portfolio (%) S&P/TSX Composite (%) 1. Sector allocation is represented as a percentage of asset class and may not total 100% due to rounding. Information is based on a Franklin Bissett Canadian All Cap SMA model portfolio, representative of the investment strategy. This model portfolio is indicative of the allocation that would be used for new accounts being opened and is updated as of the end of each calendar quarter. The allocation of existing accounts may differ from the allocation used for new accounts due to differences in the timing of purchases and sales, general market conditions and other factors specific to each existing account due to client considerations. 14

15 Portfolio Activity Franklin Bissett Canadian All Cap SMA (December 31, 2017 March 31, 2018) Top 3 Purchases: Top 3 Sales: Manulife Sun Life Financial Fortis CIBC Bank of Montreal Toronto Dominion Bank Information is based on a Franklin Bissett Canadian All Cap SMA model portfolio, representative of the investment strategy. This model portfolio is indicative of the allocation that would be used for new accounts being opened and is updated as of the end of each calendar quarter. The allocation of existing accounts may differ from the allocation used for new accounts due to differences in the timing of purchases and sales, general market conditions and other factors specific to each existing account due to client considerations. 15

16 Performance (Gross of Fees) Franklin Bissett Canadian All Cap SMA As of March 31, 2018 Calendar Year Returns (%) Canadian All Cap (%) S&P/TSX Composite Index (%) Returns (%) 1 Year 3 Years* 5 Years* 10 Years* 15 Years* Inception 1 * Canadian All Cap (%) S&P/TSX Composite Index (%) Standard Deviation (%) 1 Year 3 Years* 5 Years* Canadian All Cap (%) S&P/TSX Composite Index (%) Other Risk Statistics 1 Year 3 Years* 5 Years* Risk-Adjusted Returns (Alpha) Beta Tracking Error (%) Information Ratio Inception Date: March 31, *Annualized. FOR ILLUSTRATIVE AND DISCUSSION PURPOSES ONLY. THE PURE GROSS AND GROSS PERFORMANCE INFORMATION PRESENTED HEREIN ARE BASED ON MODEL AND REPRESENTATIVE ACCOUNTS AS DESCRIBED BELOW. ALL PERFORMANCE IS REPORTED IN CANADIAN DOLLARS. THE MODEL AND REPRESENTATIVE ACCOUNTS FOLLOW A SIMILAR INVESTMENT STRATEGY AND UTILIZE THE SAME RESEARCH AS THE FRANKLIN BISSETT ALL CAP SMA MODEL PORTFOLIO (the MODEL PORTFOLIO ). From July 1, 2013 to present, the pure gross performance is based on a model account maintained by Franklin Bissett Separately Managed Accounts and assumes the following: (1) a portfolio size of $10 million; (2) the reinvestment of dividends and other earnings; (3) the effects of any corporate actions; (4) that the portfolio securities are valued daily using the most recent published end of day prices; and (5) no trading expenses. From July 1, 2010 to June 30, 2013, the pure gross performance was generated using FactSet Portfolio Analysis application using actual trade information and month end closing prices from a representative account, and does not include trading expenses. From January 1, 2008 to June 30, 2010, the gross performance, including trading expenses, is based on a composite performance provided by a third party sponsor. From March 31, 1999 to December 30, 2007, the gross performance, including trading expenses, is based on a rep account/composite provided by a third party sponsor. Fees and expenses including trading expenses and cash may not be included in the performance calculations provided which may not be representative of an actual portfolio which includes fees, cash and trading expenses. Accordingly, we do not represent that it is accurate or complete, or that it should be relied upon as such. Actual client returns may differ for a variety of reasons including, but not limited to, differences in: performance calculation methodology, portfolio size, percentages held in each security, the timing of purchases and sales, price per security, cash, fees and expenses. These differences may result in returns that may vary from those presented. Taking into account fees and trading expenses would result in lower rates of return. Returns represent past performance of model rep accounts and composites. The performance does not represent any client accounts managed by Franklin Bissett Separately Managed Accounts. Past performance does not guarantee future results and may not be repeated. 16

17 RBC Dominion Securities Access and A+ Programs Mandates Canadian All Cap Core equity portfolio Benchmark: S&P/TSX Composite Index All Cap SMA mandate exclusive to Access and A+ Programs Fixed Income Active fixed income portfolio Dividend Income Blended portfolio seeking capital appreciation and tax-efficient income 17

18 Fixed Income Investing at Franklin Bissett Canadian fixed income expertise across multi-sector, credit and duration-targeted strategies Diversified sources of investment return worldwide A global research and risk management platform with multi-sector coverage Favourable allocations and superior execution based on size, market relationships and global presence Strong long-term returns in diverse market conditions 18

19 One of the World s Largest Investment Platforms Calgary Dublin Los Angeles Rancho Cordova San Mateo Mexico City Boston Coral Gables Fort Lauderdale New York City Ridgefield Park Short Hills Stamford 2 Toronto Washington DC Nassau Edinburgh Frankfurt Geneva Leeds London Luxembourg Vienna Bratislava Bucharest Budapest Poznań Warsaw Istanbul Chennai Dubai Hyderabad Mumbai Bangkok Ho Chi Minh City¹ Hong Kong Kuala Lumpur Seoul Shanghai¹ Singapore Tokyo A Premier Global Asset Manager 70 years of experience CAD$950.3 billion in total AUM Bogotá 1 Buenos Aires Rio de Janeiro São Paulo Cape Town Melbourne Sydney Over 600 investment professionals worldwide, with over 180 dedicated to fixed income Research Offices Trading Platforms Risk Management Specialists 1. Joint venture partners with Franklin Templeton Investments. 2. Majority ownership interest. As of March 31,

20 Canadian Expertise Grounded in Global Perspective TOP-DOWN Franklin Templeton Fixed Income Policy Committee 18 Investment Professionals LOCAL FIXED INCOME ASSET MANAGEMENT FRANKLIN BISSETT FIXED INCOME TEAM 7 Investment Professionals Average Experience: 18 Years 45 Investment Professionals FRANKLIN BISSETT INVESTMENT MANAGEMENT Franklin Templeton Fixed Income AUM: CAD$373.6 Billion Quantitative Analysis 7 Professionals Municipals 31 Professionals Bank Loans 18 Professionals Global Sovereign/EM 12 Professionals Global Macro 20 Professionals Corporate Credit 33 Professionals Mortgages 9 Professionals As of March 31, BOTTOM-UP 20

21 Research-Driven, Disciplined and Risk-Focused Building a Fundamental Franklin Bissett Fixed Income Portfolio INVESTABLE UNIVERSE Formulate Macroeconomic & Sector Views Interest rates Growth and inflation Fiscal and monetary policy Country outlook Volatility Sector fundamentals and valuation Define Portfolio Strategy Duration position Yield curve position Sector allocation Country allocation Currency allocation Determine Portfolio Suitability Relative value analysis Duration and curve impacts Diversification and concentration issues Sector weight changes Individual credit analysis Solid financials and fundamentals Quality management Liquidity FRANKLIN BISSETT PORTFOLIO Risk Monitoring, Portfolio Rebalancing and Sell Discipline The above chart is for illustrative and discussion purposes only. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. 21

22 Investment Risk Management at Franklin Templeton As investors and stewards of our clients capital, we are constantly searching for greater transparency into the drivers of investment risk in our strategies and assuring alignment with investment team convictions and client expectations. Investment risk management at Franklin Templeton: Begins with the portfolio management team s research process and the assessment of market and active risk Is supported by integrated risk analytics for the portfolio management team s use Is strengthened by the independent Investment Risk Management Group that reports directly to the CEO Serves multiple stakeholders, including investors, portfolio managers, fund boards and regulators Is powered by actionable insights from 20+ risk consultants with an average of 10 years experience and 75+ risk analysts located around the globe Combines a mosaic of analytics, oversight protocols and collaborative consultation with portfolio managers Integrated Independent Insightful As of March 31,

23 Strategy Overview Franklin Bissett Fixed Income SMA A Canadian fixed income mandate, focused on the entire Canadian universe, with the objective of generating superior risk-adjusted returns and a steady income stream over a full economic cycle Diversification across sector, industry, issuer and maturity Overweight credit securities for added long-term value Maintain moderate average term to maturity Control risk through portfolio construction and monitoring Investing exclusively in investment-grade bond (BBB < 15%) Duration +/- 2 years of the benchmark 23

24 Sector Allocation and Top 10 Holdings Franklin Bissett Fixed Income SMA As of March 31, 2018 Corporate Bonds Provincial Bonds Federal Bonds Municipal Bonds Cash 1,90 1,07 0,00 4,79 19,13 28,11 32,75 33,50 36,50 42, Portfolio (%) FTSE TMX Canada Universe Bond Index (%) Weight Top 10 Holdings 1 (%) Canada Post Corp 4.080% Due Canada Govt 5.000% Due Ontario Prov 6.500% Due Manitoba Prov 4.400% Due Alberta Prov 3.900% Due New Brunswick Prov 5.500% Due Manulife Financial Corp FF % 4.80 Due Municipal Finance Authority of BC 2.950% 4.79 Due Transcanada Pipelines 3.690% Due North West Redwater Partnership 2.800% 3.69 Due Total Total Number of Holdings 24 Sector allocation may not total 100% due to rounding. 1. Top ten weights are represented as a percentage of entire portfolio excluding cash. Securities shown are top ten within the asset class. Information is based on a Franklin Bissett Fixed Income SMA model portfolio, representative of the investment strategy. This model portfolio is indicative of the allocation that would be used for new accounts being opened and is updated as of the end of each calendar quarter. The allocation of existing accounts may differ from the allocation used for new accounts due to differences in the timing of purchases and sales, general market conditions and other factors specific to each existing account due to client considerations. 24

25 Portfolio Characteristics Franklin Bissett Fixed Income SMA As of March 31, 2018 Quality Breakdown Portfolio (%) FTSE TMX Canada Universe Bond Index (%) AAA AA A BBB Term Breakdown Portfolio (%) FTSE TMX Canada Universe Bond Index (%) Short: <5 Years Mid: 5 10 Years Long: >10 Years Portfolio FTSE TMX Canada Universe Bond Index Yield to Worst 2.79% 2.57% Duration 7.03 Years 7.47 Years Asset mix may not total 100% due to rounding. Information is based on a Franklin Bissett Fixed Income SMA model portfolio, representative of the investment strategy. This model portfolio is indicative of the allocation that would be used for new accounts being opened and is updated as of the end of each calendar quarter. The allocation of existing accounts may differ from the allocation used for new accounts due to differences in the timing of purchases and sales, general market conditions and other factors specific to each existing account due to client considerations. Performance is presented in Canadian dollars, assumes reinvestment of dividends and other earnings and is gross of fees. Taking into account fees would result in lower rates of return. Returns represent past performance. Past performance does not guarantee future results and may not be repeated. 25

26 Portfolio Activity Franklin Bissett Fixed Income SMA (December 31, 2017 March 31, 2018) Top Purchase: Bank of Nova Scotia Top Sale: Royal Bk Cda NVCC FF Information is based on a Franklin Bissett Fixed Income SMA model portfolio, representative of the investment strategy. This model portfolio is indicative of the allocation that would be used for new accounts being opened and is updated as of the end of each calendar quarter. The allocation of existing accounts may differ from the allocation used for new accounts due to differences in the timing of purchases and sales, general market conditions and other factors specific to each existing account due to client considerations. 26

27 Performance (Gross of Fees) Franklin Bissett Fixed Income SMA As of March 31, 2018 Calendar Year Returns (%) Fixed Income (%) FTSE TMX Canada Universe Bond Index (%) Returns (%) 1 Year 3 Years* 5 Years* 10 Years* 15 Years* Inception 1 * Fixed Income (%) FTSE TMX Canada Universe Bond Index (%) Standard Deviation (%) 1 Year 3 Years* 5 Years* 10 Years* 15 Years* Inception 1 * Fixed Income (%) FTSE TMX Canada Universe Bond Index (%) Inception Date: April 24, *Annualized. FOR ILLUSTRATIVE AND DISCUSSION PURPOSES ONLY. THE SIMULATED RETURNS SHOWN HEREIN ARE THE GROSS RETURNS OF THE FRANKLIN BISSETT FIXED INCOME SEPARATELY MANAGED ACCOUNT (SMA) MODEL PORTFOLIO (the MODEL PORTFOLIO ) FOR THE PERIOD INDICATED, WHICH IS REPRESENTATIVE OF THE INVESTMENT STRATEGY. The simulated returns assume the following: (1) a portfolio size of $10 million; (2) valuation procedures in which trades are valued using their actual fill price received for the same trade made for similar strategies managed by the Franklin Bissett Fixed Income Investment Management Team; (3) the accrual of interest income; (4) the reinvestment of dividends, interest income and other earnings; (5) the effects of any corporate actions and partial calls; and (6) that the portfolio securities are valued daily using the most recent published end of day prices. Actual client returns may differ for a variety of reasons including, but not limited to, differences in: performance calculation methodology, portfolio size, valuation procedures, percentages held in each security, the timing of purchases and sales, fees and expenses. These differences may result in returns that vary from those of the Model Portfolio. The gross performance is presented in Canadian dollars, includes trading expenses but does not include the deduction of any management fees. Taking into account all potential fees and expenses, net performance would be lower. Returns represent past performance. Past performance does not guarantee future results and may not be repeated. 27

28 RBC Dominion Securities Access and A+ Programs Mandates Canadian All Cap Core equity portfolio Benchmark: S&P/TSX Composite Index All Cap SMA mandate exclusive to Access and A+ Programs Fixed Income Active fixed income portfolio Dividend Income Blended portfolio seeking capital appreciation and tax-efficient income 28

29 Strategy Overview Franklin Bissett Dividend Income SMA Suited for investors seeking: Capital appreciation Lower-than-benchmark volatility Attractive portfolio yield The vast majority of investments must pay, or be implementing, a dividend at time of purchase Emphasis is placed on a growing income stream over time Canadian Equities Leveraging our in-house fundamental research U.S. Equities Deep market for high quality companies with dividend growth Preferred share exposure generally enhances income and reduces overall portfolio volatility 29

30 Asset Mix Franklin Bissett Dividend Income SMA As of March 31, 2018 Portfolio Yield: 3.75% Asset Class Current Allocation Range Benchmark Canadian Dividend Equity 67.30% 60% to 88% 75% U.S. Dividend Equity 23.15% 10% to 30% 25% Preferred Shares 4.74% 0% to 15% 0% Cash 4.82% 2% to 10% 0% Asset mix may not total 100% due to rounding. Please refer to the Important Disclosures slide for the definition of dividend yield. Information is based on a Franklin Bissett Dividend Income SMA model portfolio, representative of the investment strategy. This model portfolio is indicative of the allocation that would be used for new accounts being opened and is updated as of the end of each calendar quarter. The allocation of existing accounts may differ from the allocation used for new accounts due to differences in the timing of purchases and sales, general market conditions and other factors specific to each existing account due to client considerations. Performance is presented in Canadian dollars, assumes reinvestment of dividends and other earnings and is gross of fees. Taking into account fees would result in lower rates of return. Returns represent past performance. Past performance does not guarantee future results and may not be repeated. 30

31 Top Holdings Franklin Bissett Dividend Income SMA As of March 31, 2018 Canadian Equity Portion of the Portfolio Top 20 Holdings 1 Weight (%) Royal Bank of Canada 4.18 CIBC 4.06 Toronto Dominion Bank 3.96 Brookfield Asset Management 3.22 Bank of Montreal 3.22 Bank of Nova Scotia 3.02 Canadian National Railway 2.88 IGM Financial 2.57 Power Financial 2.30 Enbridge 2.29 Fortis 2.26 Inter Pipeline 2.16 TELUS 2.08 Rogers Communications 2.05 Enbridge Income Fund 1.84 Vermilion Energy Inc Nutrien Ltd Capital Power 1.56 Restaurant Brands International 1.50 Riocan REIT 1.47 Total Number of Canadian Dividend Equity Positions 38 As of March 31, 2016 U.S. Equity Portion of the Portfolio Top Holdings 1 Weight (%) Intel 2.32 Microsoft 1.97 JP Morgan Chase 1.77 McDonald s 1.70 Pfizer 1.58 Duke Energy 1.45 Wells Fargo 1.44 Johnson & Johnson 1.38 United Parcel Service 1.33 Coca-Cola 1.32 Merck 1.23 Procter & Gamble 1.06 Kinder Morgan 1.05 Union Pacific 1.05 Kraft Heinz 0.96 Total Number of U.S. Dividend Equity Positions Top holdings weights are represented as a percentage of entire portfolio excluding cash. Securities shown are top holdings within the asset class. Information is based on a Franklin Bissett Dividend Income SMA model portfolio, representative of the investment strategy. This model portfolio is indicative of the allocation that would be used for new accounts being opened and is updated as of the end of each calendar quarter. The allocation of existing accounts may differ from the allocation used for new accounts due to differences in the timing of purchases and sales, general market conditions and other factors specific to each existing account due to client considerations. 31

32 Sector Allocation 1 Franklin Bissett Dividend Income SMA As of March 31, 2018 Canadian Equity Portion of the Portfolio Financials 42,37 34,79 Energy 23,76 18,54 8,14 Telecommunication Services 4,58 Industrials 5,83 9,71 Utilities 5,68 3,73 5,59 Materials 11,52 4,27 Real Estate 3,04 2,22 Consumer Discretionary 5,50 2,14 Consumer Staples 3,60 Information Technology 0,00 3,79 Health Care 0,00 1, Portfolio (%) S&P/TSX Composite (%) Portfolio (%) S&P/TSX Composite (%) Canadian Equity Yield As of March 31, 2016 U.S. Equity Portion of the Portfolio Information Technology 18,56 24,87 Consumer Staples 18,29 7,65 18,09 Health Care 13,71 13,88 Financials 14,73 Industrials 10,26 10,21 Consumer Discretionary 7,34 12,67 7,32 Energy 5,74 6,25 Utilities 2,86 0,00 Materials 2,86 0,00 Real Estate 2,78 0,00 Telecommunication Services 1, Portfolio (%) S&P 500 Index (%) Portfolio (%) S&P 500 Index (%) U.S. Equity Yield Sector allocation is represented as a percentage of asset class and may not total 100% due to rounding. Please refer to the Important Disclosures slide for the definition of dividend yield. Information is based on a Franklin Bissett Dividend Income SMA model portfolio, representative of the investment strategy. This model portfolio is indicative of the allocation that would be used for new accounts being opened and is updated as of the end of each calendar quarter. The allocation of existing accounts may differ from the allocation used for new accounts due to differences in the timing of purchases and sales, general market conditions and other factors specific to each existing account due to client considerations. Performance is presented in Canadian dollars, assumes reinvestment of dividends and other earnings and is gross of fees. Taking into account fees would result in lower rates of return. Returns represent past performance. Past performance does not guarantee future results and may not be repeated. 32

33 Portfolio Activity Franklin Bissett Dividend Income SMA (December 31, 2017 March 31, 2018) Top 3 Purchases: Top 3 Sales: Sun Life Financial Union Pacific Manulife Russel Metals General Electric Toronto Dominion Bank 1. Denotes holding is part of the U.S. portion of the portfolio. Information is based on a Franklin Bissett Dividend Income SMA model portfolio, representative of the investment strategy. This model portfolio is indicative of the allocation that would be used for new accounts being opened and is updated as of the end of each calendar quarter. The allocation of existing accounts may differ from the allocation used for new accounts due to differences in the timing of purchases and sales, general market conditions and other factors specific to each existing account due to client considerations. 33

34 Performance (Gross of Fees) Franklin Bissett Dividend Income SMA As of March 31, 2018 Calendar Year Returns (%) Dividend Income (%) Benchmark 1 (%) Returns (%) 1 Year 3 Years* 5 Years* 10 Years* 15 Years* Inception 2 * Dividend Income (%) Benchmark 1 (%) Standard Deviation (%) 1 Year 3 Years* 5 Years* 10 Years* 15 Years* Inception 2 * Dividend Income (%) Benchmark 1 (%) Other Risk Statistics 1 Year 3 Years* 5 Years* 10 Years* 15 Years* Inception 2 * Risk-Adjusted Returns (Alpha) Beta Tracking Error (%) Information Ratio The benchmark is a combination of the following indices: 70% S&P/TSX Composite Index, 20% S&P 500 Index, 10% S&P/TSX Preferred Share Index. From October 1, 2014 to March 31, 2016 the benchmark was comprised of 60% S&P/TSX Composite Index, 25% S&P 500 Index, 15% S&P/TSX Preferred Share Index. From July 1, 2007 to September 30, 2014, the benchmark was composed of 60% S&P/TSX Composite Index, 25% S&P 500 Index, 15% BMO Nesbitt Burns 50 Preferred Shares Index (NB50 PSI). Prior to June 30, 2007, the benchmark was composed of 50% S&P/TSX Composite Index, 25% S&P 500 Index, 25% BMO Nesbitt Burns 50 Preferred Shares Index (NB50 PSI). 2. Inception Date: March 31, *Annualized. FOR ILLUSTRATIVE AND DISCUSSION PURPOSES ONLY. THE RETURNS SHOWN HEREIN ARE THOSE OF THE FRANKLIN BISSETT DIVIDEND INCOME SMA MODEL PORTFOLIO (the MODEL PORTFOLIO ). From October 1, 2015 to present, the pure gross performance is based on a model account maintained by Franklin Bissett Separately Managed Accounts and assumes the following: (1) a portfolio size of $10 million; (2) the reinvestment of dividends and other earnings; (3) the effects of any corporate actions; (4) that the portfolio securities are valued daily using the most recent published end of day prices; and (5) no trading expenses. Prior to September 30, 2015 performance information presented herein are those of a model account maintained and reported by a third party dealer. The model account follows a similar investment strategy and utilizes the same research as the Franklin Bissett Dividend Income SMA model portfolio (the Model Portfolio ). Accordingly, we do not represent that the model or dealer performance is accurate or complete, or that it should be relied upon as such. Actual client returns may differ for a variety of reasons including, but not limited to, differences in: portfolio size, percentages held in each security, the timing of purchases and sales, price per security, fees and expenses. These differences may result in returns that may vary from those presented. Performance is presented in Canadian dollars, assumes reinvestment of dividends and other earnings and is gross of fees. Taking into account fees would result in lower rates of return. Returns represent past performance. Past performance does not guarantee future results and may not be repeated. 34

35 Our Current Outlook As of March 31, 2018 Canadian equity market volatility has been notable, with the S&P/TSX 60 VIX Index (VIXC, a measure of Canadian equity market volatility) having risen in The trajectory of the Canadian dollar vis a vis the U.S. dollar will continue to have implications for the competitive positioning of businesses and operating earnings. While interest rates have recently risen, the current interest rate environment remains constructive for equities. With the Canadian equity market remaining at an elevated level, certain parts of the Canadian market appear vulnerable to us; however, we are continuing to find attractive opportunities, particularly in sectors and securities that have not kept pace with the more favoured parts of the market. Our fixed income positioning: Underweight fixed income relative to benchmark weights We remain slightly defensive with regard to duration and an emphasis on credit, where we maintain a slight preference for higher-quality versus lower-quality assets Credit valuations are becoming stretched, but the asset class remains supported by a decidedly favourable supply/demand backdrop, especially in Canada The information is not a complete analysis of every aspect of any market, country, industry, security or portfolio. Statements of fact are from sources considered to be reliable, but no representation or warranty is made as to their completeness or accuracy. Because market and economic conditions are subject to rapid change, opinions provided are valid only as of the date indicated. The views expressed may not be relied upon as investment advice and are not share class specific. 35

36 Appendix

37 Franklin Bissett Equity Group: Years of Experience and Responsibilities Name Industry Since Firm Since Responsibilities Garey Aitken, CFA, MBA Chief Investment Officer Tim Caulfield, CFA VP, Director of Equity Research Les Stelmach, CFA SVP, Portfolio Manager Ryan Crowther, CFA VP, Portfolio Manager Ralph Lindenblatt, CFA SVP, Portfolio Manager Richard Fortin, CFA VP, Portfolio Manager Jason Hornett, CFA VP, Portfolio Manager Andrew Buntain, CFA VP, Institutional Portfolio Manager Izabel Flis, CFA VP, Portfolio Manager Jayson Moss, CFA Research Analyst Mike Richmond, CFA Research Analyst Neil Forster, CFA, MBA Research Analyst Mitchell McCartney, CFA Research Analyst Chris Lankester Investment Operations Analyst Dino Kurbegovic Portfolio Assistant Shelly Wilson Executive Assistant CFA and Chartered Financial Analyst are trademarks owned by CFA Institute February, 1998 Chief Investment Officer Portfolio Management: Canadian Equity and Dividend Strategies 1999 January, 2007 Portfolio Management: Canadian Equity Strategies Research: Financials 1999 January, 2006 Portfolio Management: Dividend Strategies Research: Energy 2002 February, 2008 Portfolio Management: Dividend Strategies Research: Materials 1998 January, 2001 Portfolio Management: Small/Micro Cap Strategies Research: Small/Micro Cap strategies across all sectors 1996 January, 2009 Portfolio Management: Small/Micro Cap Strategies Research: Small/Micro Cap strategies across all sectors 1997 November, 1997 Portfolio Management: Quantitative Strategies 1995 May, 2007 Communication of FBIM process, philosophy and strategies to internal and external constituencies 2001 January, 2001 Portfolio Management: ActiveQuant and Systematic Beta (Employed in ETFs) Strategies Research: Pipelines and Infrastructure, Retailing, Cable, Broadcasting, Consumer Staples, Telecommunication Services, Utilities 2004 November, 2011 Research: Consumer Discretionary, Industrials, Health Care, Information Technology 2001 August, 2013 Research: Energy Equipment and Services, Special Situations, Real Estate 2006 March, 2014 Research: Small/Micro Cap strategies across all sectors 2011 May, 2011 Special Situations 2000 November, 2000 Investment Operations 2017 June, 2017 Investment Operations 2000 February, 2000 Support Portfolio Management Team 37

38 Sector Research Coverage Canadian Fundamental Equity Strategies Energy Materials Industrials Energy Equipment & Services Pipelines, Infrastructure Les Stelmach Mike Richmond Izabel Flis Ryan Crowther Jayson Moss Our investors benefit from a time-tested investment process predicated on extensive fundamental research and valuation work. SECTOR Consumer Discretionary Consumer Staples Health Care Financials Information Technology Telecommunication Services Utilities SUB-GROUP Retailing, Cable, Broadcasting ANALYST COVERAGE Jayson Moss Izabel Flis Izabel Flis Jayson Moss Tim Caulfield Jayson Moss Izabel Flis Izabel Flis -Garey Aitken, CFA Chief Investment Officer Franklin Bissett Investment Management Real Estate Mike Richmond Special Situations Mike Richmond Mitchell McCartney Ralph Lindenblatt Various Sectors Small/Micro Cap Richard Fortin Neil Forster Additional Resources Leveraging the Franklin Templeton Platform Risk Analysis Equity Trading Legal Marketing and Distribution CFA and Chartered Financial Analyst are trademarks owned by CFA Institute. 38

39 Franklin Bissett Fixed Income Group: Years of Experience and Responsibilities Name Industry Since Firm Since Responsibilities Tom O Gorman, CFA, MBA SVP, Director of Fixed Income Darcy Briggs, CFA, CPA, CGA, FRM SVP, Portfolio Manager Adrienne Young, CFA, MBA VP, Director of Credit Research Jeffrey Johnson, CFA, FRM, MBA VP, Portfolio Manager Brian Calder, CIM VP, Senior Trader and Portfolio Manager Sevrika Galipeau, CFA Portfolio Manager/Research Analyst Darius Taheri Junior Trader 1987 June, 2010 Portfolio Management: Strategy Development and Implementation Credit Focus: Insurance and Other Financials, High Yield 1994 January, 2005 Portfolio Management: Strategy Development and Implementation Macro, Rates and Currency Lead Credit Focus: Energy (Exploration, Integrated), CMBS, High Yield 1994 June, 2014 Director of Credit Research Portfolio Management: Strategy Development and Implementation Credit Lead Credit Focus: Communication, Financials (Banks and Services), Industrials (Consumer, Services and Transportation), Infrastructure (Health Care), Real Estate 1996 May, 2005 Portfolio Management: Short-Term and Money Market Strategies Credit Focus: Energy (Distribution, Generation and Pipelines), Auto Finance, Industrials (Diversified, Manufacturing, Resources and Transportation), Infrastructure (Utilities), Securitization (ABS, ABCP) 1999 August, 2001 Portfolio Management: Government and Core Strategies Trading: Fixed Income, Currency and Derivative Trading Credit Focus: Government (Federal, Provincial, Municipal and CMB/NHA) 2007 December, 2009 Portfolio Management: Money Market Strategies Credit Focus: Infrastructure (Transportation), Insurance, Energy 2014 May, 2017 Trading: Fixed Income, Currency and Derivative Trading CFA and Chartered Financial Analyst are trademarks owned by CFA Institute. 39

40 Biography Garey J. Aitken, MBA, CFA Chief Investment Officer Developed Markets Equity Franklin Local Asset Management Franklin Bissett Investment Management Calgary, Alberta, Canada Garey Aitken is the chief investment officer of Franklin Bissett Investment Management, leading Franklin Bissett s equity operations and has been with Franklin Bissett since In addition to the chief investment officer responsibilities, Mr. Aitken shares co-lead manager responsibilities of the Franklin Bissett Canadian Equity Program (2003), Franklin Bissett Monthly Income and Growth Fund (since inception), Franklin Bissett Energy Corporate Class (since inception), Franklin ActiveQuant Canadian Fund (since inception), Franklin ActiveQuant U.S. Fund (since inception), Franklin Bissett Canadian Balanced Fund (2011) and Franklin Bissett Canadian All Cap Balanced Fund (2013). In June 2017, Mr. Aitken was appointed chief investment officer of Developed Markets Equity Franklin Local Asset Management. In this role, Mr. Aitken oversees developed market equity LAMs including Australia, Europe and the UK and the respective heads for each report directly to him. Past duties have included responsibility for Franklin Bissett s domestic small and microcap equity programs. In 2000, Mr. Aitken was named vice president, portfolio manager and in 2002 he was named vice president, director of equity research. Previous to joining Franklin Bissett, Mr. Aitken was an officer for a senior Canadian energy firm. Prior to that, he was employed with a Canadian chartered bank in a corporate lending role. Mr. Aitken holds a bachelor of commerce from the University of Alberta and an MBA from the University of British Columbia. He is a Chartered Financial Analyst (CFA) charterholder. CFA and Chartered Financial Analyst are trademarks owned by CFA Institute. 40

41 Biography Timothy W. Caulfield, CFA Vice President, Director of Equity Research Franklin Bissett Investment Management Calgary, Alberta, Canada Tim Caulfield is the director of equity research at Franklin Bissett Investment Management and is co-lead manager of the Franklin Bissett Canadian Equity Program (2011), Franklin Bissett Canadian Equity Fund (2011), Franklin Bissett Monthly Income and Growth Fund (since inception) and Franklin Liberty Risk Managed Canadian Equity ETF (since inception). Mr. Caulfield s analyst responsibilities include coverage of the financials sector. Mr. Caulfield has been employing Franklin Bissett Investment Management s Growth at a Reasonable Price investment approach since joining the organization in Mr. Caulfield was named vice president, Canadian equities, in 2008 and assumed the role of director of equity research in Prior to joining Franklin Bissett Investment Management, Mr. Caulfield worked as sell-side research analyst and assistant director of research at a boutique firm. Mr. Caulfield holds a bachelor of commerce degree, with honors, from the University of British Columbia. He is a Chartered Financial Analyst (CFA) charterholder. CFA and Chartered Financial Analyst are trademarks owned by CFA Institute. 41

42 Biography Les E. Stelmach, CFA Senior Vice President, Portfolio Manager Franklin Bissett Investment Management Calgary, Alberta, Canada Les Stelmach is a senior vice president and portfolio manager at Franklin Bissett Investment Management. He is co-manager of Franklin Bissett Energy Corporate Class (2011), Franklin Bissett Canadian Dividend Fund (2012) and Franklin Bissett Dividend Income Fund (2012). Mr. Stelmach s analyst responsibilities include coverage of the energy sector. Past duties have included responsibility for research coverage for various high yield equity securities, including equities within the healthcare, industrial, and utility sectors. In 2006, Mr. Stelmach joined Franklin Bissett as an income trust analyst. In 2009 he was named vice president and portfolio manager. Prior to joining Franklin Bissett, Mr. Stelmach was employed by BMO Nesbitt Burns (now BMO Capital Markets) for six years, most recently as a vice president and research analyst specializing in the royalty and income trust sector. Mr. Stelmach holds a bachelor of commerce degree in finance, with distinction, from the University of Alberta. He is a Chartered Financial Analyst (CFA) charterholder. CFA and Chartered Financial Analyst are trademarks owned by CFA Institute. 42

43 Biography Ryan Crowther, CFA Vice President, Portfolio Manager Franklin Bissett Investment Management Calgary, Alberta, Canada Ryan Crowther is a vice president, portfolio manager at Franklin Bissett Investment Management and has been with the organization since Mr. Crowther shares co-lead manager responsibilities of the Franklin Bissett Canadian Dividend Strategies (2011), including Franklin Bissett Dividend Income Fund (2011), and Franklin Bissett Canadian Dividend Fund (2011). Mr. Crowther s analyst responsibilities include coverage of the materials sector. Mr. Crowther joined Franklin Bissett in 2008 as an equity analyst and was appointed to his current position in June His previous research responsibilities have included equity research coverage for the materials, energy infrastructure, utilities and retail sectors. Prior to joining Franklin Bissett, Mr. Crowther was a research associate and analyst at an investment boutique from 2002 to 2007, with coverage of companies in the industrials and materials sectors, among others. From 1999 to 2002, Mr. Crowther played a business development role in a Vancouver-based internet services provider, and was a founding partner of a domain registration company. Mr. Crowther holds a bachelor of commerce from the University of British Columbia. He is a Chartered Financial Analyst (CFA) charterholder. CFA and Chartered Financial Analyst are trademarks owned by CFA Institute. 43

44 Biography Tom O Gorman, CFA Senior Vice President, Director of Franklin Bissett Fixed Income Franklin Bissett Investment Management Calgary, Alberta, Canada Tom O Gorman is a senior vice president, director of fixed income at Franklin Bissett Investment Management and has been with the organization since Mr. O Gorman shares co-lead responsibilities of Franklin Bissett Income Strategy Development and Implementation, including Franklin Bissett Core Plus Bond Fund (2010), Franklin Bissett Canadian Balanced Fund (2011), Franklin Bissett Canadian Bond Fund (2012), Franklin Bissett Canadian All Cap Balanced Fund (2013) and Franklin Bissett Monthly Income and Growth Fund (since inception). Prior to joining Franklin Bissett, Mr. O Gorman spent 20 years managing U.S. and Canadian fixed income. He spent 10 years with Prudential Financial as an analyst and was the head of portfolio management for Munich Re in NYC for 10 years, overseeing a $30 billion portfolio of Canadian and U.S. fixed income assets. Mr. O Gorman studied at Berklee College of Music, holds a bachelor s in business administration from William Paterson University and an MBA from Rutgers University. He is a Chartered Financial Analyst (CFA) charterholder. CFA and Chartered Financial Analyst are trademarks owned by CFA Institute. 44

45 Biography Darcy Briggs, CFA, CPA, CGA, FRM Senior Vice President, Portfolio Manager Franklin Bissett Investment Management Calgary, Alberta, Canada Darcy Briggs is a senior vice president, portfolio manager with Franklin Bissett Investment Management and has been with the organization since Mr. Briggs shares co-lead responsibilities of Franklin Bissett Income Strategy Development and Implementation, including Franklin Bissett Canadian Short Term Bond Fund (2009), Franklin Bissett Corporate Bond Fund (2012), Franklin Bissett Canadian Bond Fund (since inception), Franklin Bissett Canadian All Cap Balanced Fund (2013), Franklin Bissett Core Plus Bond Fund (2015), Franklin Bissett Canadian Government Bond Fund (since inception), Franklin Bissett Monthly Income and Growth Fund (since inception) and Franklin Liberty Canadian Investment Grade Corporate ETF (since inception). Mr. Briggs has held various positions within Franklin Bissett s fixed income programs including lead manager of Franklin Bissett s separately managed and private client fixed income programs. Over the course of his career, Mr. Briggs worked as an equity analyst and as an accountant/analyst in the derivatives division of a large global insurance company. He spent eight years with a regional investment dealer assuming responsibilities in trading supervision, operations, and corporate finance, ending his tenure as vice president, finance and interim chief financial officer. Prior to joining Franklin Bissett, he was a private client portfolio manager with a Canadian chartered bank. Mr. Briggs holds a bachelor s of commerce with distinction from the University of Saskatchewan. He is a Chartered Financial Analyst (CFA) charterholder. Mr. Briggs also holds Chartered Professional Accountant (CPA), Certified General Accountant (CGA), Financial Risk Manager (FRM), Canadian Investment Manager (CIM), Fellow of the Canadian Securities Institute (FCSI) and Derivative Market Specialist (DMS) designations. CFA and Chartered Financial Analyst are trademarks owned by CFA Institute. 45