Redwood Unconstrained Bond Class Class A: RAM 125 / Class F: Ram 126 November 2013 The Best Bond Fund Manager You Have Never Heard Of Bloomberg www.redwoodasset.com
Redwood Asset Management distributes unique, actively managed investment funds, focused on addressing specific client needs. Highlights: 2010: Launched Canada s first Emerging Markets fund focused on dividend investing, managed by Emerging Markets specialist, Somerset Capital Management LLP 2013: Brought to Canada an highly ranked unconstrained bond strategy to protect and grow capital in a rising interest rate environment managed by Reams Asset Management Inc. (A division of Scout Investments) Page 2
Why Invest in an Unconstrained Bond Fund? Flexibility to circumvent risks in the bond market High Yield is risky Emerging Market debt is rocky Floating Rate is expensive Not tied to an index Ability to go negative duration (profit from a rise in interest rates) Unconstrained funds have the ability to limit interest rate risk while adding alpha through diversification and access to a broad opportunity set. Forbes Page 3
Why is Unconstrained Important? Durations are at Historic Highs Market Durations, Years 8 7 6 5 Duration 4 3 2 1 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Barclays Agg MBS Corporate Source: Bloomberg, as of August 31, 2013 Page 4
Why is Unconstrained Important? Fixed Income Returns Will Be Muted in a Rising-Rate Environment Barclays U.S. Aggregate Bond Index Returns Under Different Interest Rate Scenarios* 3 2.67 2 1.50 1 0 (0.20) (1) Unchanged 10-Yr Yield 4% 10-Yr Yield 5% 10-Yr Yield *Based on Barclays U.S. Aggregate Bond Index annualized returns over a 3-year time horizon. This chart is for illustrative purposes only and is not indicative of investment results. Source: Reams Asset Management Page 5
Fixed Income Investments Can Still Deliver as Interest Rates Rise Many investors define risk as volatility or tracking error versus a benchmark. Reams defines risk as a permanent loss of principal or the inability to meet investment objectives. Mark Egan, CFA Lead Portfolio Manager Page 6
Reams Asset Management Inc. A division of Scout Investments About Reams: Unique absolute return-focused investment philosophy Proven track record managing institutional assets since 1981 Team approach to portfolio management Track record of managing an unconstrained bond strategy dating back to August 1998 Positive returns in every period of rising rates 2012 Morningstar Nominee: U.S. Fixed Income Manager of the Year Page 7
Reams Unconstrained Historic Weightings As of September 30, 2013 Page 8
Reams Unconstrained Historic Allocations As of September 30, 2013 Page 9
Redwood Unconstrained Bond Class Objective: To maximize risk-adjusted total returns by systematically pursing relative value opportunities throughout all sectors of the fixed income market. Strategy Highlights: Flexible mandate to circumvent risks in the bond market Ability to go negative duration (-3 years) Ability to hold large cash positions when risk/reward is not favourable Corporate Class for tax efficiency Portfolio has no leverage Page 5
Redwood Unconstrained Bond Class Performance Since Inception Month Performance Duration May 2013 +2.11% +1.3 June 2013 +0.59% +2.6 July 2013-2.09% +2.3 August 2013 +1.77% +2.0 September 2013 +0.10% -0.9 October 2013 +2.14-0.3 Page 6
Redwood Unconstrained Bond Class Structure: Terms Mutual Fund Corporation Management Fee Class A: 1.65% Class F: 0.90% Class A Service Fee: 0.75% Distribution: Monthly ($0.015) Fund Codes Class A: RAM 125 Class F: RAM 126 Page 7
Important Notice & Disclaimers Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. This information and investment themes are subject to change as market and other conditions warrant. It should not be assumed that any of the strategies, securities, sectors or industries mentioned was or will be profitable. Views expressed regarding a particular company, security, industry or market sector should not be considered an indication of trading intent of any investment funds managed by Any reference to a particular company is for illustrative purposes only and should not to be considered as investment advice or a recommendation to buy or sell nor should it be considered as an indication of how the portfolio of any investment fund managed by is or will be invested. The information should not be regarded by recipients as a substitute for the exercise of their own judgment. Please contact your own personal advisor on your particular circumstances. Needs based investing is a trademark of Page 13
Thank You For Your Consideration HEAD OFFICE Richmond Adelaide Centre 120 Adelaide Street West Suite 2400, P.O. Box 23 Toronto, Ontario M5H 1T1 T 416.368.8898 TF 1.877.313.7011 F 416-368-1608 E invest@redwoodasset.com CLIENT & DEALER SERVICES c/o Data Core Fund Services Canadian Pacific Tower 100 Wellington Street West Suite 2203, P. O. Box 231 Toronto Dominion Centre Toronto, ON M5K 1J3 T 416.848.6817 F 416.848.7782 www.redwoodasset.com Page 14