EMERGING MARKETS ALL CAP EQUITY USD STRATEGY PROFILE Q3 2018 FOR INSTITUTIONAL INVESTORS ONLY. NOT FOR DISTRIBUTION TO RETAIL INVESTORS.
STRATEGY PROFILE Q3 2018 EMERGING MARKETS ALL CAP EQUITY USD SEPTEMBER 2018 INCEPTION: June 1, 2018 BENCHMARK: MSCI EM IMI Index STRATEGY ASSETS: US$ 563 million PORTFOLIO MANAGEMENT TEAM: Arup Datta, MBA, CFA Lead Portfolio Manager Industry Start: 1992 Firm Start: 2017 STRATEGY OVERVIEW We seek to provide long-term capital appreciation by applying a quantitative, bottom-up stock selection investment process, based on fundamental insights, to a broad emerging market universe. Focus on Stock Selection Core focus that aims to add value across a variety of market conditions, both growth and value Nimble incorporating daily changes in stock alpha rankings Daily rebalancing & trading, predictive transaction cost modelling, focus on capacity Mid and small cap focus APPROACH INVESTMENT PROCESS Nicholas Tham, MA, CFA Portfolio Manager Industry Start: 2009 Firm Start: 2017 Denis Suvorov, MBA, CFA Portfolio Manager Industry Start: 2001 Firm Start: 2018 Haijie Chen, PhD, CFA Associate Portfolio Manager Industry Start: 2011 Firm Start: 2018 Bottom-up, quantitative stock selection process applied to a broad investable universe of over 5,000 securities from 24 emerging markets countries and a select number of frontier countries. Stocks are analyzed through a region/sector relative model framework. Individual stock weights are assigned based upon sub-factors, which are grouped into the three aggregate factors, Value, Revisions, and Quality. Value: focuses on value metrics, consisting of cash flow, dividend, book, revenue and earnings based sub-factors. Revisions: focuses on analyst revisions in forecasts. Quality: incorporates sub-factors based upon capital allocation, operating efficiency and the application of accounting principles. Contextual modeling is utilized to further refine the weights of factors assigned to stocks. The priority in executing the investment process is to remain nimble in seeking to generate alpha for clients. To retain this advantage, the team uses a proprietary transaction cost model, rebalances daily and maintains a strict focus on capacity. Universe Stock selection Portfolio construction Implementation Proprietary data warehouse Investable universe of 5,000 securities Emerging Markets Select Frontier Markets Bottom-up Region and sector relative Alpha Factors Contextual Return Forecast Constraint-based optimization Proprietary risk models PM review Transaction cost estimates Pre/Post trade analysis Capacity limits CIO/Compliance review Investing involves risk. Please read the important disclosures under Important Notes which contain more information about the significance and the limitations of the information on this page.
EMERGING MARKETS ALL CAP EQUITY USD Mackenzie Emerging Markets All Cap Equity (Gross) Mackenzie Emerging Markets All Cap Equity (Net) MSCI EM IMI Index SECTOR ALLOCATION (%) COMPOSITE PERFORMANCE (US$) Information Technology COMPOUND ANNUAL RETURNS (%) Financials 2 Materials Consumer Discretionary 0 Energy Telecommunication Serv. Industrials -2-4 -1.9-2.1-1.5 Consumer Staples Health Care Real Estate Utilities -6-8 3 Months 6 Months 1 Year 2 Years 3 Years 4 Years 5 Years -7.1-7.4-5.8 Since Inception Cash & Equivalents 0 5 10 15 20 25 30 CALENDAR YEAR RETURNS (%) GEOGRAPHIC ALLOCATION (%) China South Korea Taiwan India Brazil Russia South Africa Thailand Mexico Hong Kong Indonesia Turkey Malaysia Singapore Colombia Argentina Qatar Philippines Other Cash & Equivalents 0 5 10 15 20 25 30 WEIGHTINGS RELATIVE TO BENCHMARK (%) OVERWEIGHT PORTFOLIO RELATIVE CNOOC Ltd 2.34% +1.74% Gazprom PJSC 2.15% +1.70% Uni-President Enterprises Corp 1.90% +1.69% Ping An Insurance Group Co of China Ltd 2.61% +1.67% Tata Consultancy Services Ltd 2.14% +1.66% UNDERWEIGHT PORTFOLIO RELATIVE Tencent Holdings Ltd 0.00% -4.04% Taiwan Semiconductor Manufacturing Co Ltd 0.26% -3.37% Alibaba Group Holding Ltd 0.00% -3.26% Samsung Electronics Co Ltd 0.91% -3.04% Naspers Ltd 0.00% -1.62% Past performance does not guarantee or indicate future results. Mackenzie Portfolio Analytics Group is responsible for calculating performance information. 35 30 25 20 15 10 5 0 2017 2016 2015 TOP TEN HOLDINGS (%) China Construction Bank Corp 3.0% Baidu Inc 2.6% Ping An Insurance Group Co of China Ltd 2.6% CNOOC Ltd 2.3% Gazprom PJSC 2.2% Tata Consultancy Services Ltd 2.1% SK Hynix Inc 2.1% KB Financial Group Inc 1.9% Uni-President Enterprises Corp 1.9% China Mobile Ltd 1.9% Total: 22.6% Cash & Equivalents 1.6% CHARACTERISTICS 2014 2013 PORTFOLIO BENCHMARK Forward Price/Earnings 8.6 11.0 Price/Tangible Book 1.4 1.8 Price/Cash Flow 5.4 6.8 Price/Sales 0.9 1.2 % Net Earnings Revisions (3MO) NA NA % Net Sales Revisions (3MO) NA NA Predicted Beta NA NA Dividend Yield 4.0 2.7 Turnover (1 year to September) 144.3 NA Median Market Cap (US$ millions) 5,965 438 Weighted Market Cap (US$ millions) 44,789 43,395 Standard Dev. (3-yr Trailing) N/A N/A Alpha (3-yr Trailing) N/A N/A Beta (3-yr Trailing) N/A N/A Sharpe Ratio (3-yr Trailing) N/A N/A Tracking Error (3-yr Trailing) N/A N/A Information Ratio (3-yr Trailing) N/A N/A 2012 2011 2010 2009 2008 DATA AS OF SEPTEMBER 30, 2018
IMPORTANT NOTES The information expressed herein is as of September 30, 2018 and is subject to change without notice. The contents of this document are provided for illustrative and marketing purposes and do not constitute specific advice regarding your personal investment situation or provide specific individual advice about investment, insurance, financial, legal, accounting, tax or similar matters. Certain information contained in this document is obtained from third parties. Mackenzie Investments believes such information to be accurate and reliable as at the date hereof, however, we cannot guarantee that it is accurate or complete or current at all times. The information provided is subject to change without notice and Mackenzie Investments cannot be held liable for any loss arising from any use of or reliance on the information contained in this document. No portion of this communication may be reproduced or distributed to anyone without the express permission of Mackenzie Investments. Investing involves risk. The sector and geographic allocations, top-ten portfolio holdings and other portfolio characteristics shown, except information under Composite Performance (in U.S. dollars), reflect the portfolio characteristics of a representative account. Actual client portfolios, however, may differ as a result of account size, client-imposed investment restrictions, the timing of client investments and market, economic and individual company considerations. The portfolio holdings shown do not represent all of the securities purchased, sold or recommended and in the aggregate may represent only a small percentage of portfolio holdings. You should not assume that an investment in any of the above securities was or will be profitable. The information expressed herein does not constitute a recommendation or solicitation to buy or sell any particular security. Past performance does not guarantee or indicate future results. Information under Composite Performance (in U.S. dollars) reflects the performance of the Mackenzie Emerging Markets All Cap Composite, and does not necessarily reflect the performance that any particular account investing in the same or similar securities may have had during the period. The performance of other accounts is likely to differ from the performance shown for a variety of reasons, including, but not limited to: differences in market conditions, portfolio turnover and in the number, types, availability and diversity of securities that can be purchased; economies of scale, regulations and other factors applicable to the management of large separate accounts and mutual funds; client-imposed investment restrictions; the timing of client investments and withdrawals; the deduction of taxes; tax considerations; and other factors. Gross performance results do not reflect the deduction of management fees and other custodial fees. Including these fees and expenses would reduce the returns shown. Net performance results reflect the deduction of the maximum standard fee of 0.85% charged to institutional clients without taking into account breakpoints, calculated daily and invoiced quarterly, as well as the transaction costs and certain other fees and expenses, including certain taxes, described in the Investment Management Agreement. Certain clients could pay different fees which would result in different net performance returns. Net performance results also do not include the deduction of custodial fees, which will reduce the returns shown. Both gross and net performance returns assume the reinvestment of dividends, interest, and realized and unrealized capital gains and losses. Index returns do not reflect transaction costs or the deduction of other fees and expenses and it is not possible to invest directly in an index. The Mackenzie Emerging Markets All Cap Composite contains fully discretionary, Emerging Markets All Cap accounts. New accounts are included in the Composite beginning with the first full month under management after they have been fully invested. Although client accounts comprising the Mackenzie Emerging Markets All Cap Composite are managed in Canadian dollars, the performance information shown above was converted from Canadian dollars and is expressed in U.S. dollars. The performance of an account managed in U.S. dollars may differ. Returns were converted at the end of each month based on the 4:00 PM spot rate on the last business day of the month as reported by StatPro to our system vendor CGI StarSource. COMPLIANCE STATEMENT Mackenzie Investments claims compliance with the Global Investment Performance Standards (GIPS ) and has prepared and presented this report in compliance with the GIPS standards. Mackenzie Investments has been independently verified for the periods January 1, 2008 through December 31, 2017. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm's policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. The verification report is available upon request. Verification does not ensure the accuracy of any specific composite presentation. FIRM OVERVIEW Mackenzie Financial Corporation ( Mackenzie Investments ) provides investment management and related services through multiple distribution channels. Assets under management as at September 30, 2018 were US$ 100.1 billion. We provide our investment management expertise through mutual funds, pooled funds, segregated accounts, and separate accounts for retail and institutional investors. Mackenzie Investments is dedicated to generating consistently superior long-term investment returns for its clients. The Firm is a member of the IGM Financial Inc. (TSX:IGM) group of companies. On October 19th, 2017, the investment management functions of Investors Group and Mackenzie Investments joined together to form a single global investment management organization to support both companies resulting in the 2017 increase in total firm assets. As part of this new investment management organization, Investors Group Inc. became part of Mackenzie Investments in order to effectively serve both Investors Group and Mackenzie Investments clients. There has been no change of ownership impact to the two firm s mutual parent, IGM Financial. This strategy is managed by Mackenzie Investments Corporation, a wholly owned subsidiary of Mackenzie Financial Corporation. COMPOSITE DESCRIPTION The Emerging Markets All Cap Composite seeks to provide long-term capital appreciation and outperform its benchmark (MSCI EM IMI Index). The strategy applies a quantitative, bottom-up stock selection investment process, based on fundamental insights, to emerging and selected frontier markets across all-cap stocks. The investment process focuses on a succinct, high conviction set of factors, which are applied within the context of a region/sector/industry relative model. The composite was created on June 1, 2018.
IMPORTANT NOTES (cont d) BENCHMARK DESCRIPTION The MSCI Emerging Markets Investable Market Index is a free float adjusted, market capitalization weighted index that is designed to measure the large, mid and small cap equity market performance of emerging markets. It consists of 24 emerging market country indices. REPORTING CURRENCY Valuations and composite performance are reported in U.S. dollars. The composite includes Canadian dollar portfolios that have been converted to U.S. dollars. LIST OF COMPOSITES A complete list of composite descriptions is available to prospective clients upon request. Please contact Carol De Veau at cdeveau@mackenzieinvestments.com. Mackenzie Financial Corporation 2018. All rights reserved. For Institutional Use Only. This material does not constitute an offer to sell, or a solicitation of an offer to buy, any type of securities. 230528 10/18 INVESTMENTS 180 Queen Street West, Toronto, Ontario M5V 3K1 T 416 967-2380 F 416 922-3435 E cdeveau@mackenzieinvestments.com mackenzieinvestments.com