June 2018 Prosperously navigating unexpected events with great - - PowerPoint PPT Presentation

June 2018

Prosperously navigating unexpected events with great skill and agility

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AGENDA

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Who We Are Investment Methodology Performance Top 10 Strategic Tech Trends for 2018-2020 Current Opportunity and Investment pipeline - GAMING Summary

WHO WE ARE

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BLACK SWAN DEXTERITAS (“BSD”)

TECHNOLOGY EXPERTISE

• Unique insight

from entrepreneurs leading international tech development based on needs creation

• Advisory Committee of tech leaders

who determine the global adoption and success of new technologies

• Representation in all BSD-invested

tech sectors and sub-sectors, for unrivalled expertise

• Portfolio Manager with 30 years of

portfolio management experience across various asset classes at asset management companies (LGT, TAL, CIBC Asset Management), and a pension (British Petroleum)

• Exceptional research team with a

wide breadth of knowledge in research, finance, and engineering

• Intense due diligence process for our

stock selection process

• Unique risk management overlay

to minimize drawdowns and volatility

PORTFOLIO MANAGEMENT EXPERIENCE

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INVESTMENT METHODOLOGY

SECTOR ASSESSMENT

• Life Cycle: Sectors in introduction and growth stages with

high Total Addressable Market (TAM)

• Competition: High barrier of entry with differentiated products

and services within the sector COMPANY ANALYSIS

• Business Model: Public ccompanies with high recurring revenue,

easily able to leverage network effects, strong negotiating power with suppliers and customers, and strong corporate governance

• Size: Target small (500M+) to large cap public companies with

established track record of executing the business.

• Growth: Public companies with high and/or consistent revenue

growth

• Valuation: Determine if opportunities exist based on our fair

value expectation of stocks versus current stock prices PORTFOLIO CONSTRUCTION

• Weightings: Determine % of portfolio allocated to holdings

based on risk-reward expectations

• Diversification: Well-diversified across 35 to 40 holdings to

maximize risk-adjusted returns

• Hedging: Utilize derivatives and fixed income products to

minimize drawdowns and generate alpha IDEATION

• BSD Investment Advisory Committee: seek out global

growth themes and trends to overweight and underweight various subsectors

• Experienced investment team sourcing trade ideas and

discussing vital macro economical forces in play

• Draw on sector experiences from members of the committee and

discuss emerging technology from the private and public space

• Deep dive into industry verticals to identify beneficiaries in other

primary, secondary, and tertiary markets

PORTFOLIO CONSTRUCTION

IDEATION SECTOR ASSESSMENT COMPANY ANALYSIS

PUBLIC COMPANIES

PERFORMANCE

PERFORMANCE METRICS* FUND RETURNS

FUND BENCHMARK ** Return Since Inception YTD Return 60 Day Return 20 Day Return Daily Standard Dev. Sharpe Ratio Sortino Ratio Correlation 57.11% 1.28%

• 1.28%
• 0.23%

0.72% 0.87 1.20 — 63.89% 1.41%

• 3.34%
• 3.09%

0.95% 0.74 1.03 0.96

** The benchmark is a blend of 50% Nasdaq Composite Index and 50% Russell 2000 Index. The blended index is chosen as the indices are generally followed as indicators of the performance of technology stocks and growth stocks, and our portfolio has approximately 50% of positions more correlated with the Nasdaq Composite Index, and 50% of positions more correlated with the Russell 2000 Index.

October 31, 2013 to April 30, 2018

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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD Benchmark YTD

• 2.08% 3.63% -2.07% -4.39% 2.38% 2.80% 2.21% 3.53% -1.64% 4.95% 2.89% -1.51% 10.69%

8.40% 2014 2013

GLOBAL TECH FUND MONTHLY PERFORMANCE SINCE INCEPTION

BSD has outperformed our portfolio benchmark with lower risks through active diversification across various subsectors

1.32% 0.35% 2.82% 4.55% 9.60% 0.53% 5.39% -0.16% 2.98% 0.90% -0.91% 0.43% -6.67% -1.48% 9.68% 0.63% -0.76% 10.16%

• 0.10%

2015

• 7.41% -2.78% 5.31% -0.02% 2.33% -0.29% 3.66% 0.65% 1.63% 0.38% -3.75% -0.71%
• 1.63% 13.95%

2016

• 42%
• 3%

36% 75% BSD Global Technology Hedge Fund Blend of 50% Nasdaq Composite Index and 50% Russell 2000 Index

4.97% 2.14% 2.99% 2.08% 3.85% -2.55% 2.68% 2.12% 0.51% 3.41% 0.11% -0.20% 24.49% 20.55% 2017 2.89% 0.63% -0.62% -1.57% 4.11% 2018 5.44% 7.11%

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HOW BSD COMPARES TO OTHER HEDGE FUNDS

HEDGE FUND STRATEGIES* 2014 RETURN 2015 RETURN 2016 RETURN 2017 RETURN

PERFORMANCE

BSD Global Technology Hedge Fund Absolute Return Multi-Region Equal Weighted Strategies Relative Value Arbitrage Macro/CTA Fixed Income - Credit Global Hedge Fund Equity Hedge North America Emerging Markets Composite Market Directional Event Driven 10.69% 0.67% 1.71%

• 0.56%
• 3.06%

5.09%

• 1.86%
• 0.60%

1.37%

• 4.13%
• 8.03%

5.13%

• 4.06%

Our outperformance relative to other funds are indicative of our core competency in generating outsized returns and navigating a challenging market environment

* Hedge fund index data is provided by Hedge Fund Research Index (HFRI) as of January 2018.

10.16% 2.86%

• 1.19%
• 1.54%
• 3.10%
• 1.96%
• 4.38%
• 3.64%
• 2.33%
• 9.35%
• 5.26%
• 8.58%
• 6.94%
• 1.63%

0.31% 1.95% 3.78% 1.03%

• 2.93%

4.97% 2.50% 5.49% 4.14% 6.77% 9.86% 10.50% 24.99% 3.91% 6.58% 6.10% 4.28% 7.43% 4.55% 8.04% 12.78% 6.25% 8.99% 4.68% 7.22%

TOP 10 STRATEGIC TECH TRENDS FOR 2018-2020

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CURRENT OPPORTUNITIES AND INVESTMENT PIPLINE

• DIGITALIZATION & ELECTRIFICATION

The automotive revenue pool will grow and diversify with new services potentially becoming a ~USD 1.5 Trillion market in 2030

• 5G DEPLOYMENT

The 5G market will grow to $1.23 Trillion by 2026, according to a new report by Ericsson announced at the Mobile World Congress

• DIGITAL TWINS

The digital twin market is expected to grow at a CAGR of 37.87%, to reach USD 15.66 Billion by 2023

• AUTOMATION & ROBOTIZATION

After growing at a compound rate of 17 per cent a year, the robot market will be worth $135 Billion by 2019, according to IDC

• OLED – Organic Light Emitting Diode

The OLED market is expected to be valued at USD 48.81 Billion by 2023, growing at a CAGR of

15.2% between 2017 and 2023

• GAMING

Gaming market to grow at a CAGR of +11.0% toward 2021 to reach $180.1 Billion

• HYPERCONVERGED INFRASTRUCTURE

The hyper-converged infrastructure market is expected to reach USD 12.6 Billion by 2022, at a CAGR of 43.59% between 2016 and 2022

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CURRENT OPPORTUNITIES AND INVESTMENT PIPLINE

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• Modern personal computers owe many advancements and innovations to the

game industry: sound cards, graphics cards and 3D graphic accelerators, faster CPUs, and dedicated co-processors like PhysX are a few of the more notable improvements.

• As of 2017, games industry generated $121.7 Billion in revenues worldwide,

and were the third-largest segment in the U.S. entertainment market, behind broadcast and cable TV.

• Gaming market to grow at a CAGR of +11.0% toward 2021 to reach $180.1

Billion

• Global Esports economy will reach $905.6 Million in 2018 as brand investment

grows by 48%

• The global Esports audience will reach 380 Million this year, made up of 165

million Esports Enthusiasts and 215 Million Occasional Viewers

• On its current trajectory, the Esports industry will reach $1.4 Billion by 2020

GAMING

GAMING

Publishers Distributors Hardware Users Esports

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Source: Newzoo

2017 Total

$122B

+14.3% YoY VIDEO GAMING ECOSYSTEM

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GAMING

Chinese Tencent is the clear leader in the space

Source: Newzoo

Bn Bn Bn Bn Bn $1.91 $1.94 $2.09 $2.21 $2.27 $2.40 $3.60 $5.10 $5.30 $5.60 $6.50 $7.10 $8.00 $10.50 $18.10 Bn Bn Bn Bn Bn Bn Bn Bn Bn Bn

2017 TOP 15 COMPANIES BY GAME REVENUE PUBLISHERS

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TOP 10 BEST-SELLING GAMES YEAR-TO-DATE

GAMING

1 Far Cry 5 Ubisoft 2 Monster Hunter: World Capcom 3 Dragon Ball: FighterZ Bandai Namco 4 Call of Duty: WWII Activision 5 Grand Theft Auto V TakeTwo Interactive 6 NBA 2K18 TakeTwo Interactive 7 PUBG Bluehole 8 Sea Of Thieves Microsoft 9 MLB 18: The Show Sony 10 Mario Kart 8 Nintendo

Source: Forbes

PUBLISHERS

Supercell

Key games: Clash Royale, Brawl Stars, Clash of Clans, HayDay, Boom Beach Structure: Majority owned by Chinese tech firm Tencent

Niantic

Key games: Pokemon GO, Ingress Structure: Independent (Investment from Google, Nintendo, The Pokémon Company and other investors)

Tencent

Key games: Honour of Kings, WeFire, Clash Royale Structure: Publicly listed

NetEase

Key games: Fantasy Westward Journey, Onmyoji, Ghost Structure: Publicly listed

Machine Zone

Key games: Game of War, Mobile Strike, Final Fantasy: A New Empire Structure: Privately held

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TOP MOBILE GAME PUBLISHERS

GAMING

Netmarble

Key games: Lineage 2: Revolution, Marvel Contest of Champions Structure: Privately held

King Digital Entertainment

Key games: Candy Crush Saga, Bubble Witch Saga 3, Hearthstone: Heroes of Warcraft (Blizzard) Structure: Acquired by Activision Blizzard

EA Mobile

Key games: Star Wars: Galaxy of Heroes, Madden NFL Mobile, FIFA Mobile Soccer Structure: Public

Mixi

Key games: Monster Strike Structure: Public

GungHo Online Entertainment

Key games: Puzzle & Dragons, Super Senso Structure: Public

PUBLISHERS

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2012-2021 GLOBAL GAMING MARKET

GAMING

$26.12 $29.07 $30.53 $31.65 $31.95 $32.86 $33.10 $33.42 $34.84 $34.22 $31.77 $29.84 $30.53 $29.79 $31.95 $32.86 $34.48 $36.46 $38.16 $39.62 $12.71 $17.60 $24.59 $31.65 $42.60 $55.98 $70.33 $82.03 $94.56 $106.26 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

PC Games Console Games Mobile Games

$70.60Bn $76.50Bn $84.80Bn $93.10Bn $106.50Bn $121.70Bn $137.90Bn $151.90Bn $165.90Bn $180.10Bn

CAGR 2012-2021 Total +11.0% Mobile +26.8% Console +11.0% PC +11.0%

Source: Newzoo

DISTRIBUTERS

TOP 10 COUNTRIES BY GAMING REVENUE

GAMING

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China $32,536 M

1 2

USA $25,426 M

3

Japan $14,048 M United Kingdom $4,238 M

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Germany $4,430 M

5 6

Republic of Korea $4,203 M

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France $2,977 M

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Canada $1,968 M

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Spain $1,918 M

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Italy $1,881 M

China generates one quarter of gaming revenue worldwide

Source: Newzoo

DISTRIBUTERS

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TOP VIDEO GAMES DIGITAL DISTRIBUTERS

GAMING

Source: Newzoo

DISTRIBUTERS

Steam Structure: Owned by Valve Corporation (Private) Xbox Live

Structure: Owned by Microsoft (Publicly listed)

PlayStation Store

Structure: Owned by Sony (Publicly listed)

Origin

Structure: Owned by Electronic Arts (Publicly listed)

Uplay

Structure: Owned by Ubisoft (Publicly listed)

Amazon.com

Structure: Publicly listed

GOG.com

Structure: Owned by CD Projekt (Private)

GamersGate

Structure: Privately held

Green Man Gaming

Structure: Privately held

Battle.net

Structure: Owned by Activision Blizzard (Publicly listed)

GameStop

Structure: Publicly listed

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GAMING

HARDWARWE HOW IS PLAYING

Mobile PC Console

Sony Play Station 2 is the best selling console ever – 138M units sold

iPhoneX Asus ROG Game Smartphone Xiaomi Black Shark Game Smartphone Razer Game Smartphone Sony PS4 Microsoft XBox One X Nintendo Switch Dell Alienware CyberPowerPC Gamer Xtreme HP Omen X Corsair One Pro

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2008-2017 UNIT SALES OF GAME CONSOLES

GAMING

Source: Newzoo

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Nintendo Microsoft Sony

HARDWARWE

24.51M 23.18M 23.19M 22.28M 19.88M 19.12M 20.84M 21.53M 20.15M 20.47M 11.16M 10.36M 13.53M 13.95M 10.69M 9.32M 10.51M 9.56M 8.76M 8.27M 53.56M 48.33M 37.81M 32.81M 23.83M 20.18M 13.9M 10.86M 8.75M 18.14M

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GPU & GAMING ACCESSORIES

GAMING

HARDWARWE

Discrete GPUs

Nvidia and AMD control nearly 100% of discrete GPU market Smartphones are also using GPUs, mostly Adreno GPUs from Qualcomm, PowerVR G PUs from Imagination Technologies and Mali GPUs from ARM Gaming accessories are representing

$5B-$10B

Market

Top 5 Best Gaming Gear Brands

Razer (Private) SteelSeries (Private) Logitech Microsoft Corsair (Private)

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2014-2021 NUMBER OF ACTIVE VIDEO GAMERS WORLDWIDE

GAMING

2014 2015 2016 2017 2018 2019 2020 2021

1,815M 1,958M 2,080M 2,210M 2,341M 2,471M 2,600M 2,725M

Source: Newzoo

USERS

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WHO IS PLAYING

GAMING

Source: Statista

Male

55%

Female

45%

Under 18 years old 18 to 35 years old 36 to 39 years old 50 years and older

29% 28% 20% 23%

USERS

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MAY 2018 MOST WATCHED GAMES ON TWITCH BY ESPORTS HOURS

GAMING

Source: Newzoo

ESPORTS

Esports hours consists of content from professionally organized esports competitions and does not include individual (pro-player) streams. This content combined with consumer content makes up the total hours watched.

RANK TITLE TOTAL HOURS ESPORTS HOURS 1 Dota 2 Valve Corporation (Private) 38.8M 17.9M 2 League of Legends Riot Games (Private) 81.2M 17.2M 3 Counter-Strike: Global Offensive Valve Corporation (Private) 26.1M 15.6M 4 Overwatch Activision Blizzard 30.9M 13.2M 5 Hearthstone Activision Blizzard 33.5M 5.0M 6 Tom Clancy's Rainbow Six: Siege Ubisoft 9.2M 2.3M 7 PLAYERUNKNOWN'S BATTLEGROUNDS Bluehole (Private) 43.8M 1.7M 8 StarCraft II Activision Blizzard 4.4M 1.5M 9 Street Fighter V Capcom 2.4M 1.2M 10 World of Warcraft Activision Blizzard 13.1M 1.1M

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MAY 2018 MOST WATCHED GAMES ON TWITCH BY TOTAL HOURS

GAMING

Source: Newzoo

ESPORTS

Esports hours consists of content from professionally organized esports competitions and does not include individual (pro-player) streams. This content combined with consumer content makes up the total hours watched.

RANK TITLE TOTAL HOURS ESPORTS HOURS 1 Fortnite Epic Games (Private) 142.3M 0.4M 2 League of Legends Riot Games (Private) 81.2M 17.2M 3 PLAYERUNKNOWN'S BATTLEGROUNDS Bluehole (Private) 43.4M 1.2M 4 Dota 2 Valve Corporation (Private) 38.8M 17.9M 5 Hearthstone Activision Blizzard 33.5M 5.0M 6 Overwatch Activision Blizzard 30.9M 13.2M 7 Counter-Strike: Global Offensive Valve Corporation (Private) 26.1M 15.6M 8 World of Warcraft Activision Blizzard 13.1M 1.1M 9 Grand Theft Auto V Take-Two Interactive 11.4M 0.0M 10 Detroit: Become Human Quantic Dream SA (Private) 9.2M 0.0M

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2016-2021 ESPORTS GLOBAL REVENUE GROWTH

GAMING

2016 2017 2018 2019 2020 2021

$1650M $493M $655M $906M $1154M $1471M

Revenue Growth

+33.0%

YoY

Expected Revenue Growth

+38.2%

YoY

Expected Revenue Growth

+27.4%

CAGR 2016-2021

Source: Newzoo

ESPORTS

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2018 ESPORTS GLOBAL REVENUE EXPECTATIONS

GAMING 2018 Total

$906M

+38.2% YoY

18% 6% 38% 32%

In 2018 China and North America expected to generate

$509M

56%

• f the global

esports revenue

Source: Newzoo

ESPORTS

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2018 ESPORTS EXPECTED GLOBAL REVENUE STREAMS

GAMING

Source: Newzoo

Game publisher Fees

$116.30

+11.0 YoY Merchandise & tickets

$95.50

+16.2 YoY Advertising

$173.80

+23.8 YoY

2018 Total

$906M

+38.2% YoY

Media rights

$160.70

+72.1 YoY Sponsorship

$359.40

+53.2 YoY

13% 11% 40% 18% 19%

ESPORTS Video game streaming platforms:

Fb.gg

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TOP ESPORTS ORGANAIZERS

GAMING

573M

Total organizer hours

11% 9% 28% 23%

Riot and ESL combined, are responsible for more than half of these organizer hours.

Source: Newzoo

ESPORTS

Riot Games ESL Dreamhack Valve Starladder

9%

MLG

5%

Beyondthesamit

5%

Other

10%

League of Legends, developed and published by Riot Games, is easily the most popular and lucrative eSports game out there. At the 2017 Season World Championship, the final competition of the 2017 League of Legends competitive season, 24 teams received invitations to play for a prize pool of $4,596,591 (the initial prize pool was $2,250,000, while the rest was fan contributions). Samsung Galaxy, a South Korean team and member of KeSPA, took first place in the competition and walked away with $1,723,721. SK Telecom T1 finished second and won $620,539, while Royal Never Give Up and Team WE finished in third and fourth to take home $321,761 apiece.

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ESPORTS GLOBAL AUDIENCE GROWTH

GAMING

Source: Newzoo

2016 2017 2018 2019 2020 2021

Esports enthusiasts Occasional viewers $160M $121M $192M $143M $215M $165M $246M $189M $281M $216M $307M $250M

Total Audience

+19.3%

YoY

Expected Revenue Growth

+14.4%

CAGR 2016-2021

Total Audience

+13.8%

YoY

In 2018 Asia-Pacific will account for 52% of Esport Enthusiasts ESPORTS

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SUMMARY

• We bring unique, proven strengths
• Principal with 30 years of portfolio management experience
• Dynamic stock selection methodology
• Disciplined risk management process
• Our expertise in technology is unparalleled
• Team consisting of seasoned entrepreneurs that have co-founded billion dollar companies
• Global networks of advisors and analysts examining tech vendors and tech end-users
• Significant out-performance in risk-adjusted returns
• The BSD Global Tech Hedge Fund returned 65.23% since inception versus our

benchmark** return of 75.95%

• Exhibited ~73% of the benchmark volatility as of May 31, 2018
• Hedging strategy acts as an “insurance policy” in anticipation of adverse market events,

by limiting drawdowns and often generating alpha

* Management fees and expenses may be associated with investments. Investment funds are not guaranteed, their values change frequently and past performance may not be

• repeated. The indicated rate of return is the historical compounded total return including changes in share value and reinvestment of all dividends.

** The benchmark is a blend of 50% Nasdaq Composite Index and 50% Russell 2000 Index. The blended index is chosen as the indices are generally followed as indicators of the performance of technology stocks and growth stocks, and our portfolio has approximately 50% of positions more correlated with the Nasdaq Composite Index, and 50% of positions more correlated with the Russell 2000 Index.