Advisory Board Presentation Fall 2015 December 7, 2015 All figures - PowerPoint PPT Presentation

Advisory Board Presentation Fall 2015 December 7, 2015 All figures shown in $CAD millions except share price or otherwise noted

Agenda  Fund Overview  Macro Analysis  Historical Performance  Investment Decisions  Learning and Growth  Appendices 2

Fund Overview

Fall 2015 SAF Investment Fund Team Fall 2015 Spring 2012 Fall 2013 Spring 2014 Fall 2014 Spring 2015 Portfolio Analytics & Inception Course Credit & New Analyst Faculty Discussions Quarterly EPS New Screen Enter into U.S. Program & Assigned Marks Estimates . Team Picture L-R (Back): Mary Kate Gleason, Lena Ji, Evelyn Huang, Yushu Yang, Balakumar Thevakumar, Jack Zhou, Rocken Wong, Bojan Joncevski L-R (Middle): Annie Shi, Joy Yang, Ameer Dharamshi, Cherrie Shi, John Youn, Kam Dhaliwal, Michael Kam, Sami Ahmed, Faizan Suddiqui L-R (Front): Jiacheng Fan, Judy Dong, Katherine Chan, Sanjukta Sengupta, Sean Bak, Arthur Pok Chan, Sean Zheng, Harsh Shah, Salman Ahmed, Michael Blake 4

Team Structure Faculty Andrew Ecclestone (Financial & Materials), Craig Geoffrey (Energy, Utilities & Healthcare), Frank Hayes (TMT), Ranjini Jha (Consumer & Industrials) Senior PMs Bojan Joncevski (CEO), Michael Blake (CIO) TMT Consumers Healthcare Energy PM : Sean Zheng PM : Harsh Shah PM : Sean Zheng PM : Rocken Wong Senior Analysts: Michael Senior Analysts : Faizan Senior Analysts : John Youn Senior Analysts : Katherine Kam Siddiqui, Jiacheng Fan, Chan, Evelyn Huang Sanjukta Sengupta Junior Analyst : Jack Zhou Junior Analyst : Balakumar, Junior Analyst : Lena Ji Junior Analyst : Ameer Dharamshi Thevakumar Financials Materials Utilities Industrials PM : Arthur Pok Chan PM : Oliver Chan PM : Rocken Wong PM : Sean Bak Senior Analyst : Sami Ahmed Senior Analyst: Yushu Yang Senior Analysts : Judy Dong, Senior Analysts : n.a. Salman Ahmed Junior Analyst : Cherrie Shi Junior Analysts : n.a. Junior Analysts : Mary Kate Junior Analyst : Joy Yang Gleason, Annie Shi Senior Analysts: Kam Dhaliwal Portfolio Analytics 5

Overview “To provide students with an investment management experience in an institutional setting. Specifically, it will provide Purpose students hands-on-training in equity valuation and portfolio management with guidance from industry experts and with supervision by finance faculty.” “To generate long-term growth of the Fund’s assets. The Fund Objective will invest in a broadly diversified portfolio of Canadian and U.S. equities that may provide capital gains and / or income.” 70% S&P/TSX Total Return Index and 30% S&P 500 Total Benchmark Return Index 1 1 Weight will change according to the portfolio allocation for the period 6

Investment Philosophy Restrictions Constraints Canadian & U.S. Cash & Equiv Weight 0-15% Asset Class Equities Total Securities 10-25 Market Capitalization Above $300 mm Sector Weight 25% Debt Rating Greater than B Maximum Stock Weight 10% Maximum U.S. Weight Proposed: no Maximum restriction Less than 5% of average daily Ownership of Shares trading volume over 10-day period 7

Investment Process  Break down industries and further divide into sectors or sub-sectors 1  Faculty led screen for Canadian and US companies that have been Levered Free Cash Flow positive since 2008 and a market capitalization greater than 300 CADmm* 2  Remove any stocks within the universe that do not meet the Fund’s restrictions 3  Select and apply relevant industry metrics for each stock & rank all stocks to select the top four 4  Select one stock from the top four and conduct detailed research to determine the recommendation (“Buy”, “Sell”, or “Hold”) 5 *New to the Fall 2015 term 8

Selling Discipline  We will review our holdings if… Material change in the business or in the industry Fundamental Valuation Reached 12-month target price Exceed 25% capital gain from the time of purchase or Price Exceed 15% capital loss from the time of purchase Movement or Exceed 25% decline in price from the highest price attained since initial purchase 9

Macroeconomic Overview & Outlook

Canada Macroeconomic Overview 10 yr. Housing Index (Calgary vs. GTA) 10 Yr. Unemployment Rate 10.0% 175 9.0% 150 8.0% 125 7.0% 100 6.0% Total Canada Calgary GTA 5.0% 75 Dec-06 Jul-08 Mar-10 Nov-11 Jun-13 Feb-15 Dec-06 Jul-08 Mar-10 Nov-11 Jun-13 Feb-15 Recent Themes  New Liberal government led by Justin Trudeau Weak CAD hasn’t shown a strong benefit to Canadian economy   Weak GDP growth projections putting pressure to lower interest rates  Overall mixed outlook on Canada Source: Stats Canada and Canadian Real Estate Association 11 Date Extracted: December 4, 2015

U.S. Macroeconomic Overview  Leading indicators suggest U.S. Economy gaining traction  Overall bullish outlook on the U.S. 10 Yr. Unemployment Rate 10 Yr. Housing Starts in thousand units 2,000 12.0% 1,500 8.0% 1,000 4.0% 500 0.0% 0 Dec-06 Jul-08 Mar-10 Nov-11 Jun-13 Feb-15 Dec-06 Jul-08 Mar-10 Nov-11 Jun-13 Feb-15 10 Yr. Inflation Rate 10 Yr. Consumer Confidence Index 6.0% 102 4.0% 100 2.0% 0.0% 98 (2.0%) (4.0%) 96 Dec-06 Jul-08 Mar-10 Nov-11 Jun-13 Feb-15 Dec-06 Jul-08 Mar-10 Nov-11 Jun-13 Feb-15 Source: Federal Reserve Bank of St. Louis Economic Research, 12 Date Extracted: December 4, 2015

Macroeconomic Outlook by Theme / Sector Key Theme / Sector Interest Rates: Mixed Energy Outlook: UW Materials Outlook: UW  Canada:  No change in oil prices  Bearish outlook on base  Stability or reduction in expected in the short- metals due to concerns over overnight rate intermediate term softening Chinese growth / No expected increase in demand  long-term rates  Upward pressure from decline in capex, pressure on high-  No upside expected from  U.S.: cost producers Gold due to resiliency of USD  Expected Fed Funds Rate hike Downward pressure from   No significant expected global growth expectations, increase in long-term OPEC politics, prospects of rates alternative oil extraction & alternative fuel sources, sanguineness about geopolitical risk

Macroeconomic Outlook by Theme / Sector (cont’d) Key Theme / Sector Consumer Staples: Mixed Technology: Mixed  Canada (OW):  Too small in Canada  Defensive sector, better potential for outperformance during periods of slow  No signs of overvaluation growth  U.S. (OW):  Opposite of Canada Telecom: UW Consumer Disc.: Mixed  Source of upside not evident:  Canada (UW):  Oligopoly benefits already in place  High personal debt, housing bubble  Uncertain regulatory environment fears, province differences Saturation risk of high speed internet /   U.S. (OW): smartphone services  Improvement in labour market, household debt low 14

Macroeconomic Outlook by Theme / Sector (cont’d) Key Theme / Sector Healthcare: OW Industrials: Mixed  Too small in Canada  Too broad to determine overall weighting (related to all sectors)  Drug innovation, growing middle class globally, consolidation in the industry  Obamacare controversies, public scrutiny of high drug prices Utilities: Mixed Financials: Mixed  Reaching historical valuation peaks (no issue  Interest rate outlook supports movement to given interest rate outlook) equities (benefits asset managers)  Heavy regulation limits upside / downside from an operations perspective  Housing bubble concerns, energy pricing decline and flat net interest margins may pose concerns for some Canadian financials 15

Portfolio Weights (End of Term) Spring 2015 Fall 2015 Industrials Industrials * Materials Materials Health Care Health Care Technology Technology Utilities Utilities Consumer Staples Consumer Staples Energy Energy Consumer Disc. Consumer Disc. Telecom Telecom Financials Financials -20% -10% 0% 10% -20% -10% 0% 10% Target : Target : Mixed Target : Target weight Target weight not achieved achieved yet Underweight or Neutral Overweight * Will be underweight once Goldcorp is sold in January 16

Historical Performance

Portfolio Returns Including Cash Net Asset Value Including Cash 15.00 14.00 13.93 13.00 12.00 11.70 11.00 10.00 9.00 Jul-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Fund NAV Benchmark Total Returns Fund NAV NAV Return Benchmark Relative Return 10.33 18.64% 20.79% -2.15% Fiscal Year '13 12.26 3.75% 9.55% -5.79% Fiscal Year '14 12.72 7.89% 5.32% 2.57% Winter '15 11.56 -9.12% -4.43% -4.69% Spring '15 11.70 1.21% 0.80% 0.42% Fall ’15 11.70 17.00% 39.30% -22.30% Since Inception Note: all figures in C$ unless otherwise specified. 18

Portfolio Returns Excluding Cash Net Asset Value Excluding Cash 15.00 14.00 13.93 13.00 12.30 12.00 11.00 10.00 9.00 Jul-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Fund NAV - excl cash Benchmark Total Returns Fund NAV NAV Return Benchmark Relative Return 12.26 24.69% 20.79% 3.90% Fiscal Year '13 12.72 4.20% 9.55% -5.34% Fiscal Year '14 13.63 9.21% 5.32% 3.90% Winter '15 12.13 -11.01% -4.43% -6.58% Spring '15 12.30 1.40% 0.80% 0.61% Fall ’15 12.30 23.00% 39.30% -16.30% Since Inception Note: all figures in C$ unless otherwise specified. 19