47
FUND SELECTOR AFRICA November 2020 For Professional Clients only. Any views and opinions are those of the investment manager unless otherwise noted. Managed by
FUND SELECTOR AFRICA
November 2020
For Professional Clients only.
Any views and opinions are those of the investment manager unless otherwise noted.
Managed by
George DentClient Investment Manager
Ashley-Jane KitchenInvestment Analyst
Research in a pandemic
Learning outcomes
• Gain a better understanding of Walter Scott’s approach to global equity investing.
• Gain an understanding of how investment managers are adapting to the new work-from-home, zero travel reality.
• Gain insights into the current operating and trading environments for companies in and exposed to China and Taiwan.
• Gain a better understanding of how Covid-19 has impacted businesses in the semi-conductor, consumer and
industrials spaces.
GEORGE DENT
C L I E N T I N V E S T M E N T M A N A G E R
Walter Scott overview
5
Source: Walter Scott. As at 30 September 2020
GlobalLong-only, public
equity manager –
investing globally
1983Founded in 1983 and
based in Edinburgh,
Scotland
$81BNof AUM
21Deep, diverse team
of 21 investment
decision-makers
ConsistentConsistent application
of philosophy and
process
Key differentiators
Long term Proprietary research Team-based scrutiny
and challenge
Long Term Performance
Walter Scott Global Equities USD Composite Performance And Capture Ratios
6
Source: Walter Scott, MSCI. As at 30 September 2020. Performance calculated as total return, income reinvested, gross of fees, in GBP. Fees and charges apply and can have a materialeffect on the performance of your investment.
-100
100
-72
94
Down months for MSCI World (USD)
(92 months)
Up months for MSCI World (USD)
(148 months)
The two grey bars represent the aggregate return of the MSCI
World index (USD) in those months when it rose and those when it
fell, expressed as 100.
Walter Scott’s aggregate return of the portfolios comprising the
composite in those months is shown alongside, expressed as a
percentage of the index’s down and up performance.
Period Q3 1 yr 2 yrs 3 yrs 4 yrs 5 yrs 10 yrs 15 yrs 20 yrs 25 yrs 30 yrs
Walter Scott Global
Equities %8.4 14.0 10.3 13.4 14.5 14.4 11.5 9.7 8.9 10.6 10.8
MSCI World (ndr) % 7.9 10.4 6.0 7.7 10.3 10.5 9.4 6.6 5.0 6.9 7.8
100
600
1100
1600
2100
2600
3100
3600
4100
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
Walter Scott Global Equities Composite (USD) (gross of fees) MSCI World (ndr)
In-house research
We reinforce our rigorous desk-based analysis with research trips around the world
Activity 12 months to end September 2020
2 0 1 9
F E B R U A R Y
US: Texas & Georgia
O C T O B E R
US: Texas
23 MARCH
UK lockdown
S E P T E M B E R
China
Brazil, Colombia &
Mexico
N O V E M B E R
Portugal
Japan
Singapore, Vietnam &
Bangladesh
US: West Coast
2 0 2 0
D E C E M B E R
Spain
The Netherlands
J A N U A R Y
US: West Coast
Switzerland & Italy
Q 2 - Q 3
A U G U S T
Taiwan
(virtual trip)
Review of owned
companies to ensure
resilience
Project work
ASHLEY-JANE KITCHEN
I N V E S T M E N T A N A LY S T
Global perspective
9
22.8%Europe
55.2%North America 20.77%
Asia Pacific
Source: BNY Mellon Global Fund as at 9 June 2020
China
An important nation
10
Source: World Population Review
1.4BNpeople
18.6%of the total world
population
39XLarger land area than
the UK
China
An important nation
11
Source: World Population Review
1.4BNpeople
18.6%of the total world
population
39XLarger land area than
the UK
China
An important nation
12
Source: World Population Review
1.4BNpeople
18.6%of the total world
population
39XLarger land area than
the UK
B E I J I N G
(capital city)
H A N G Z H O U
S H A N G H A I
KONE
China is the world’s biggest market for new equipment
66%of all new equipment
>40%of the world’s current
escalators and elevators
Source: KONE meeting, September 2019. Information provide relating to specific stocks should not be considered a recommendation to buy or sell any particular security. Any examples discussed are given in the context of the theme being explored.
KONE
I N V E S T M E N T C A S E
• Strongly cash generative, KONE has established
its leading position through continued investment
in design technology with over 3,000 patents.
• KONE’s core activity is the manufacturing and
installation of elevator and escalators but almost
half its revenues come from services, including
maintenance and modernisation. The company
has over 500,000 customers, maintaining about
1,300,000 elevators and escalators across the
globe.
• Income from services has proven to be both
profitable and highly resilient rising every year
since 1995.
KONE began life in 1910 as a machine repair shop in Helsinki, Finland. It has since become a global leader in the
elevator and escalator industry. Urbanisation has fuelled construction and created demand around the world, which
KONE has met with innovative products and highly effective servicing
15
Source: Walter Scott, Bloomberg, KONE Annual Reports 2017, 2018 & 2019. As at 30 September 2020. This information should not be considered a recommendation to purchase or sell any security. There is no assurance that any securities
shown in this presentation will remain in a portfolio at the time you receive this information or that any securities sold have not been repurchased. It should not be assumed that any holdings referred to has been or will prove to be profitable or
that any investment decisions made in the future will be profitable
Financial Metrics
Year to December 2019
Revenues €10.0bn
Operating Profit €1.2bn
Return on Equity 29.3%
Operating Margin 11.9%
Debt/Equity 0.0%
Valuation (P/E NTM)
As at 30 September 202037.3x
H120 ResultsChange from
H119
Revenues -0.2%
Operating Income -1.7%
Net income -1.6%
Earnings per Share -2.6%
In conversation with companies
N O T E F R O M W A L T E R S C O T T M E E T I N G W I T H K O N E , 2 8 M A Y 2 0 2 0
Source: Walter Scott Kone meeting note, 28 May 2020
16
“China situation normalised now, North Europe
is reasonably good while South Europe is still
impacted badly. The situation varies by states in
the US.”
LVMH
The first store was opened by Louis himself in 1854 in Paris
Source: LVMH meeting, June 2019, Walter Scott
Information provide relating to specific stocks should not be considered a recommendation to buy or sell any particular security. Any examples
discussed are given in the context of the theme being explored.
I T T A K E S A N AV E R A G E
300-400S T E P S T O P R O D U C E
A S I N G L E B A G
AV E R A G E A G E O F
231Y E A R S F O R L V M H ’ S B I G G E S T F O U R
B R A N D S ( L O U I S V U I T T O N ,
M O E T A N D H E N N E S S E Y )
LVMH
I N V E S T M E N T C A S E
• Around 75 brands across wines & spirits, fashion &
leather goods, perfumes & cosmetics, watches &
jewellery, selective retail and other activities,
including hotels and travel.
• A market leader in the growth segment that is
global luxury, with stability in margins and
consistently high cash generation.
• Demonstrable track record in exceptional
marketing and brand management whilst also
achieving ongoing efficiencies with notable
investment in ensuring transparency across its
supply chain and sustainable practices.
LVMH is the world’s leading luxury goods group with a strong portfolio of many of the most famous and aspirational
luxury brands including Louis Vuitton, Fendi, Celine, Loewe, Guerlain, Benefit Cosmetics, Bulgari, Tag Heuer, Moët
& Chandon, Veuve Clicquot, Hennessy, DFS and Sephora
18
Source: Walter Scott, Bloomberg, LVMH Annual Reports 2017, 2018 & 2019. As at 30 September 2020. This information should not be considered a recommendation to purchase or sell any security. There is no assurance that any securities
shown in this presentation will remain in a portfolio at the time you receive this information or that any securities sold have not been repurchased. It should not be assumed that any holdings referred to has been or will prove to be profitable or that
any investment decisions made in the future will be profitable
Financial Metrics
Year to December 2019
Revenues €53.7bn
Operating Profit €11.3bn
Return on Equity 19.6%
Operating Margin 21.0%
Debt/Equity 104.5%
Valuation (P/E NTM)
As at 30 September 202032.0x
H120 ResultsChange from
H119
Revenues -26.7%
Operating Profit -71.1%
Net Income -84.0%
Earnings per Share -84.0%
In conversation with companies
— J E A N - J A C Q U E S G U I O N Y , C F O , Q 3 2 0 I N V E S T O R C A L L
Source: LVMH Q3 Investor call, 15 October 2020
19
“… what this complicated period has shown us is that there is a validity in
the vertical e-commerce season for all our brands …when people cannot go
into stores, they shop online. Yet we do not change our view that the best
way to sell our products is within stores. We are not trying to replace stores
with online sales but we welcome our customer to shop online if they feel
that way.”
Taiwan – A virtual research trip
20
Taiwan – A virtual research trip
21
22
Taipei
23
Images: ©Tobiasjo, © GoranQ, © Uschools
T A I P E I 1 0 1 S K Y S C R A P E R 2 2 8 N A T I O N A L P A R K ,
T A I P E I
N A T I O N A L P A L A C E M U S E U M ,
T A I P E I
24
Images: ©Ytwong, © Stockinasia, © FilippoBacci
M I A O K O U N I G H T M A R K E T ,
T A I W A N
R A O H E S T R E E T N I G H T M A R K E T ,
T A I P E I
T A I P E I S T R E E T F O O D
TSMC
Dominant position in industry focused on demand for smaller, faster and more energy efficient chips
Source: TSMC Annual Report 2019
Information provide relating to specific stocks should not be considered a recommendation to buy or sell any particular security. Any examples
discussed are given in the context of the theme being explored.
R E V E N U E B Y G E O G R A P H Y
US Asia-Pacific
EMEA Other markets
TSMC
I N V E S T M E N T C A S E
• TSMC is the dominant company in an industry
that enjoys significant secular tailwinds from
outsourcing and demand for smaller, faster and
more energy efficient chips.
• Design risk lies with the customers, while TSMC
benefits from and facilitates the adoption of new
technologies.
• Highly capital intensive business but highly cash
generative through the cycle.
• Although competition is intense, TSMC should
continue to maintain its dominant position, given
its scale, technological leadership,
manufacturing capabilities and well-developed
line of support services
The world's foremost semiconductor foundry, TSMC provides manufacturing technology and capacity to produce
semiconductor chips designed by its customers. Its customer base has undergone steady expansion as the global
trend towards outsourcing semiconductor manufacturing has gained momentum.
26
Source: Walter Scott, Bloomberg, TSMC Annual Reports 2017, 2018 & 2019. As at 30 September 2020. This information should not be considered a recommendation to purchase or sell any security. There is no assurance that any securities
shown in this presentation will remain in a portfolio at the time you receive this information or that any securities sold have not been repurchased. It should not be assumed that any holdings referred to has been or will prove to be profitable or that
any investment decisions made in the future will be profitable
Financial Metrics
Year to December 2019
Revenues TWD1,070.0bn
Operating Profit TWD373.2bn
Return on Equity 21.3%
Operating Margin 34.9%
Debt/Equity 0.0%
Valuation (P/E NTM)
As at 30 September 202022.4x
9m to Sep 20 Results Change from
9m to Sep 19
Revenues 29.9%
Operating Profit 64.9%
Net income 63.7%
Earnings per Share 63.7%
In conversation with companies
W E N D E L L H U A N G , V P & C F O , T S M C A P R I L & J U L Y Q 2 E A R N I N G S C A L L S
Source: TSMC April & Q2 2020 earnings calls
27
“While the impact of COVID-19 virus brings uncertainties in 2020, we have seen
our business holding up well so far. Thanks to our technology leadership. Looking
ahead, the multi-year megatrends of 5G-related and HPC applications are
expected to continue to drive strong demand for our advanced technologies in the
next several years … we will continue to prudently invest for our future growth.”
Summary
▪ Many of the leading companies have taken this time to continue to invest to ensure they emerge from this crisis as even
stronger businesses.
▪ Although travel is currently curtailed, we are finding alternative ways to try and replicate this part of the research process. We
look forward to getting back on the road when it’s safe to do so.
▪ It has been a challenge but we as a firm have risen to it
▪ The experience of companies has varied hugely but generally very impressed by the way our holdings have coped –
even/especially those that have found themselves in the eye of the storm
28
It’s tough out there
29
Negative Global Growth: 2020 Projected real GDP growth (annual percentage change)
Source: www.bloomberg.com/graphics/2020-us-bankruptcies-coronavirus/
-4.4%Global
-4.3%USA
-5.3%Japan
-6.0%Germany
1.9%China
Bankruptcy Timeline
March 2020 October 2020
Frontier
Communications
J.C.
Penny
Latam
Airlines
Chesapeake
Energy
Brooks
Brothers
Oasis
Petroleum
J Crew Hertz
April May June July August September
14 4 15 22 25 28 8 30
But is it reflected in markets?
Equity market recovery
30
Source: Bloomberg
A N T I C I PATI NG A V- S HA PE D R E C OV E RY I N GL OB A L GR OW T H?
60
70
80
90
100
110
120
130
140
Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20
Indices Performance (GDR)YTD 30 September 2020
Nasdaq Composite (gdr) S&P 500 (gdr) MSCI World (gdr)
Overview - Global Equity Strategy
Source: Walter Scott, MSCI. As at 30 September 2020
Energy2.7
Materials4.0
Industrials12.2
Consumer discretionary
11.2
Consumer staples10.1
Healthcare21.8
Financials2.4
Information technology
29.3
Utilities0.6
Communication services3.7
Liquidity2.1
R E G I O N%
S E C T O R%
UK5.1
Emerging Markets
4.3
United States51.2
Denmark2.5
Finland2.2
Switzerland8.1
France4.0
Germany2.3
Spain1.9
Japan8.5
Asia Pacific ex Japan
5.8
Canada2.1
Liquidity2.1
Distribution: By Sector And Region
W A L T E R S C O T T G L O B A L E Q U I T I E S C O M P O S I T E C A P T U R E
R A T I O S T W E N T Y Y E A R S T O 3 0 S E P T E M B E R 2 0 2 0
W A L T E R S C O T T G L O B A L E Q U I T I E S C O M P O S I T E V S M S C I W O R L D
R E C O R D O F O U T P E R F O R M A N C E3 1 D E C E M B E R 1 9 8 5 T O 3 0 S E P T E M B E R 2 0 2 0
Source: Walter Scott, MSCI. Capture ratios are calculated using returns in USD, gross of investment management fees.Walter Scott Global Equities Composite (gross of management fees) vs MSCI World (ndr) in USD. *A period
begins and ends as at each quarter end, since the inception of the composite. E.g. the first rolling 1 year period is from 31/12/85 to 31/12/86, the second is from 31/03/86 to 31/03/87. Fees and charges apply and can have a material
effect on the performance of your investment.
32
Rolling 1Year
Rolling 3Year
Rolling 5Year
Rolling 7Year
Rolling 10Year
% of Periods* Outperformed 63% 77% 83% 92% 99%
Number of Periods 136 128 120 112 100
Average Annualised RelativeReturn
3.1% 3.3% 3.3% 3.2% 3.4%
50%
60%
70%
80%
90%
100%% of Periods* Outperformed
-100
100
-72
94
Down months for MSCI World (ndr)
(92 months)
Up months for MSCI World (ndr)
(148 months)
The two green bars represent the aggregate return of the MSCI World (ndr) in those months
when it rose and those when it fell, expressed as 100.
Walter Scott’s aggregate return in those months is shown alongside, expressed as a
percentage of the index down and up performance.
BNY Mellon – Walter Scott strategy options
CONCE NT RAT E D GL OB AL
• Our highest conviction large cap names
• 25-30 stock portfolio
• 3.5% starting weights
• Founders fee available
Source: Walter Scott, MSCI. Global performance calculated as total return, based on net asset value, including charges, but excluding initial charge,
income reinvested gross of tax, expressed in share class currency. *Gross return reduced by a 0.75% management fee p.a. **Gross return reduced by a
0.75% management fee p.a. The impact of the initial charge, which may be up to 5%, can be material on the performance of your investment.
Performance figures including the initial charge are available upon request. 33
• One of our longest running strategies
• 40-60 stock portfolio
• 2% starting weights
• 10+ year track record, 30+ year strategy
G L O B A L
A L L WA LT E R S C OT T S T R AT E G I E S B E N E F I T F R O M :
A tried and tested philosophy and process
A focus on high quality growth businesses with a track record of resilience
A prudent ‘Scottish’ approach to valuations and risk management
The experience of Walter Scott’s entire 21 person research team
3 months 1 year 3 years 5 year 10 years
Global (net*) 8.2 13.2 12.6 13.5 10.6
Concentrated Global (net**) 9.8 19.3 12.8 - -
MSCI World 7.9 10.4 7.7 10.5 9.4
O N B E H A L F O F U S A L L ,
THANK YOU
A S H L E Y- J A N E K I T C H E N
I N V E S T M E N T A N A LY S T
Ashley-Jane is an investment analyst at Walter Scott, having
joined the firm in 2017. Prior to this she worked for Blackrock.
Ashley-Jane holds a BA (Hons) in Accounting and Finance from
Edinburgh Napier University and an MSc in Finance and
Investment from the University of Edinburgh. She is a CFA
charterholder.
G E O R G E D E N T
C L I E N T I N V E S T M E N T M A N A G E R
George is a client investment manager at Walter Scott, having joined
the firm in 2008 as an investment manager covering stocks in the US
and Europe. Prior to joining Walter Scott, George lived and worked
in China, before completing a traineeship as a private client fund
manager. George is a CFA charterholder and holds a BSc (Hons) in
Financial Economics from the University of St. Andrews.
CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.
Learning outcomes
• Gain a better understanding of Walter Scott’s approach to global equity investing.
• Gain an understanding of how investment managers are adapting to the new work-from-home, zero travel reality.
• Gain insights into the current operating and trading environments for companies in and exposed to China and Taiwan.
• Gain a better understanding of how COVID19 has impacted businesses in the semi-conductor, consumer and
industrials spaces.
IMPORTANT
INFORMATION
Appendix
1. DEFINITION OF FIRM
Walter Scott & Partners Limited (“Walter Scott”) is an investment management firm authorised and regulated in the United Kingdom by the Financial Conduct Authority in the conduct of investment business. Walter Scott is a non-
bank subsidiary of The Bank of New York Mellon Corporation. Walter Scott is responsible for portfolios managed on behalf of pension plans, endowments and similar institutional investors. Total assets under management were
US$81.0 billion as at 30 September 2020.
2. PRIVACY NOTICE
Personal information may be collected by Walter Scott following attendance at, or registration to attend, a Walter Scott, aff iliate or partner event and will be used solely for the purpose of facilitating the provision of investment
management services and managing business relationships. For more information about how Walter Scott collects, uses and shares personal information and an individual’s legal rights (including opt-out rights), please see the full
privacy notice which is available on the website:: www.walterscott.com/privacy-policy.
3. FIRM COMPOSITES
Walter Scott constructs composites of portfolios invested in equities.
Composites include all portfolios managed by Walter Scott where the company has full discretionary authority. No non-fee paying portfolios are included in the composites presented in this report. Portfolios where Walter Scott acts
in an advisory only role are excluded from composites.
Composite figures in this presentation are extracted from one or more of the composites reports prepared by Walter Scott in compliance with the Global Investment Performance Standards (GIPS). The effective date of compliance
of the Firm with GIPS standards is 1 January 1994.
Following a review of composites, Walter Scott performed a composite restructure with base currency no longer being a criterion used to differentiate composites. This resulted in certain changes to composite constituents to meet
the new, broader composite description. The creation date of composites involved in the restructure is 1 October 2019. Further details are available on request.
4. CALCULATION METHODOLOGY
Performance results are calculated on a total return time weighted basis and include all portfolio income, unrealised and realised capital gains, contributions and withdrawals and are geometrically linked. Cash and cash equivalents
are included in total portfolio assets and in the return calculations. Trade date accounting is used for valuations. For periods less than one year, rates of return are not annualised.
The composite shown is an aggregation of portfolios representing a similar investment strategy. Composites are size-weighted using beginning of period values to weight portfolio returns. Portfolios are included in a composite
beginning with the first full month of performance and until the month immediately prior to termination of an account.
Annualised return represents the level annual rate which, if earned each year in a multiple-year period, would produce the actual cumulative rate of return over the whole period.
5. FEES AND TRADING EXPENSES
Composites are net of trading expenses, administrative fees and non-reclaimable withholding taxes on dividends and interest. Benchmark returns are net of withholding taxes on dividends unless otherwise stated. Performance
results net of fees are available on request.
6. INTERNAL DISPERSION
The internal dispersion measure presented is the equal-weighted standard deviation of the annual returns of all the portfolios that were included in the composite for the entire period, but is not appropriate for less than five portfolios.
7. COMPOSITE CREATION DATE
The composite creation date is the date on which Walter Scott first grouped portfolios to create the composite.
8. MINIMUM PORTFOLIO VALUE
From 1 October 2014, a minimum asset level for inclusion in all composites has been set at US$2m or composite currency equivalent. Portfolios that have previously been below this level must maintain a market value greater than
US$2m for three consecutive month-ends prior to being included in the composite (from the following month). Similarly, if a portfolios market value has dropped below this threshold, the month-end market value must remain below
this level for three consecutive month-ends before being excluded from the next month
Appendix
9. STANDARD DEVIATION
The three-year annualised standard deviation measures the variability of the composite and the benchmark returns over the preceding 36-month period. The standard deviation is not presented when monthly returns were not
available throughout the full 36-month period.
10. EXCHANGE RATES
WM/Reuters Closing Spot rates (taken at 4pm London time) are used in portfolio and composite level return calculations. Prior to 1 October 2014, composite return calculations were based on custodian exchange rates at the
individual portfolio level. This created additional transient dispersion between the returns of portfolios which make up the composite. Benchmark data also uses the WM/Reuters Closing Spot rates.
11. LEVERAGE, DERIVATIVES AND SHORT POSITIONS
Walter Scott does not generally use derivatives, but American style currency options have been used occasionally for hedging purposes (most recently held in 2007). Walter Scott does not use leverage or short positions.
12. FIRM POLICIES
Policies for valuing portfolios, calculating performance, and preparing compliant presentations are available upon request.
13. BENCHMARK DEFINITIONS
Walter Scott compares its composites against the published MSCI indices as shown in this presentation. Further information on these indices can be found at: www.msci.com
14. COMPOSITE DESCRIPTIONS
Walter Scott applies the same investment philosophy and process across all portfolios, regardless of size, mandate type or base currency.
Walter Scott uses broad inclusion criteria for its composites. Some composites may contain portfolios that have ethical or other investment restrictions, and portfolios that are subject to different tax regimes. Although these mandate
differences can lead to some performance dispersion within composites, Walter Scott believes that its composite methodology accurately reflects the firm’s investment record. The returns for each composite are shown alongside the
relevant benchmark.
Walter Scott has been independently verified from 1 January 1994. Performance data for the full history of some composites has not been shown. This information is available on request.
A description of each composite included in this report follows. A full list of the firm’s composite descriptions is available on request.
Walter Scott Global Equities
This composite includes all global portfolios that are predominantly invested in large and mid-cap equities. Portfolios within the composite typically hold 40 to 60 stocks.
15. FEE SCHEDULE
Unless otherwise stated, returns are calculated gross of advisory fees, and include the reinvestment of dividends. The effect of advisory fees could be material. If the advisory fees were reflected, the performance shown would be
lower. As an example of the effect of investment advisory fees on the total value of an account, a three year compound return before the deduction of investment advisory fees of 14.75% would be 13.61% after investment advisory
fees of 1.00% per annum.
16. COMPLIANCE STATEMENT
Communication of performance figures reflected in this document must be on a one-on-one basis, private and of a confidential nature. They may not be disseminated to the public in any print, electronic or other medium, including a
web-site or any database of general circulation. The following disclosures must be provided in writing when onwardly communicating these performance figures.
Unless otherwise stated performance figures do not reflect the deduction of investment advisory fees.
Returns will be reduced by investment advisory fees and any other expenses that may be incurred in the management of an account.
Appendix
17. IMPORTANT INFORMATION
17.1 Walter Scott’s Investment Approach
This presentation contains certain statements based on Walter Scott’s experience and expectations about the markets in which it invests its portfolios and about the methods by which it causes its portfolios to be invested in those
markets. Those statements are not guaranties of future performance and are subject to many risks, uncertainties and assumptions that are difficult to predict. The information in this presentation is subject to change and Walter Scott
has no obligation to revise or update any statement herein for any reason. The opinions expressed in this presentation are those of Walter Scott and should not be construed as investment advice.
17.2 Portfolio Holdings and Allocations
To derive ten largest holdings, characteristics, economic sector weightings, country weightings and portfolio holdings for presentation purposes, Walter Scott has identified a representative institutional account to be used as a proxy
for this strategy.
Portfolio data should not be relied upon as a complete listing of the portfolio’s holdings (or top holdings) as information on particular holdings may be withheld. Portfolio holdings are subject to change without notice and may not
represent current or future portfolio composition. The portfolio date is ‘as of’ the date indicated.
The information provided in this document should not be considered a recommendation to purchase or sell any particular security. There is no assurance that any securities discussed herein will remain in a portfolio at the time this
report is received or that securities sold have not been repurchased. The securities discussed do not represent an entire portfolio and in the aggregate may represent only a small percentage of a portfolio holdings.
It should not be assumed that any of the securities transactions or holdings discussed were or will prove to be profitable, or that the investment recommendations or decisions Walter Scott make in the future will be profitable or will
equal the investment performance of the securities discussed herein.
The allocation distribution and actual percentages may vary from time to time. The types of investments presented in the allocation chart will not always have the same comparable risks and returns. The actual performance of the
portfolio will depend on Walter Scott’s ability to identify and access appropriate investments, and balance assets to maximise return while minimising its risk. The actual investments in the portfolio may or may not be the same or in
the same proportion as those shown above.
17.3 Third Party Sources
Some information contained herein has been obtained from third party sources that are believed to be reliable, but the information has not been independently verified by Walter Scott. Walter Scott makes no representations as to
the accuracy or the completeness of such information and has no obligation to revise or update any statement herein for any reason.
17.4 Performance Statement
Past performance is not a guide to future returns and returns may increase or decrease as a result of currency fluctuations. The objective mentioned may therefore not be reached. Many factors affect investment performance
including changes in market conditions, interest rates, currency fluctuations, exchange rates and in response to other economic, political, or financial developments. Investment return and principal value of an investment will
fluctuate, so that when an investment is sold, the amount returned may be less than that originally invested. This presentation does not represent and must not be construed as an offer or a solicitation of an offer to buy or sell
securities, commodities and/or any other financial instruments or products. This presentation may not be used for the purpose of an offer or solicitation in any jurisdiction or in any circumstances in which such offer or solicitation is
unlawful or not authorised.
17.5 Performance Indices
Comparisons to the indices have limitations because the volatility and material characteristics of the indices represented in this presentation may be materially different from that of the portfolio managed by Walter Scott. Because of
these differences, investors should carefully consider these limitations when evaluating the performance in comparison to benchmark data as provided herein. Where referencing MSCI or any other index performance figures:
The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of
the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be
taken as an indication or guarantee of any future performance analysis, forecast or prediction. The MSCI information is provided on an “as is” basis and the user of this information assumes the entire risk of any use made of this
information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the “MSCI Parties”) expressly disclaims all warranties (including, without
limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event
shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages. (www.msci.com)
Appendix
The term ‘sector’ in this document is a contraction of ‘GICS Sector’ unless explicitly noted otherwise.
The Global Industry Classification Standard (“GICS”) was developed by and is the exclusive property and a service mark of MSCI Inc. (“MSCI”) and Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. (“S&P”) and is
licensed for use by Walter Scott & Partners Limited. Neither MSCI, S&P nor any third party involved in making or compiling the GICS or any GICS classifications makes any express or implied warranties or representations with
respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability and fitness for a
particular purpose with respect to any of such standard or classification. Without limiting any of the foregoing, in no event shall MSCI, S&P, any of their affiliates or any third party involved in making or compiling the GICS or any
GICS classifications have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.
17.6 Benchmark Definitions
MSCI World
The MSCI World Index is a broad global equity benchmark that represents large and mid cap equity performance across 23 developed markets countries. With approximately 1,650 constituents, it covers around 85% of the free
float-adjusted market capitalisation in each country and MSCI World benchmark does not offer exposure to emerging markets. Further information can be found at www.msci.com
Walter Scott Global Equities Strategy Target Market Slide
Risk disclosures
Walter Scott Global Equities Strategy
• Past performance is not a guide to future performance.
• The value of investments can fall. Investors may not get back the amount invested. Income from investments may
vary and is not guaranteed.
• Objective/Performance Risk: There is no guarantee that the strategy will achieve its objectives.
• Currency Risk: This strategy invests in international markets which means it is exposed to changes in currency
rates which could affect the value of the portfolio.
• Derivatives Risk: Derivatives are highly sensitive to changes in the value of the asset from which their value is
derived. A small movement in the value of the underlying asset can cause a large movement in the value of the
derivative. This can increase the sizes of losses and gains, causing the value of your investment to fluctuate. When
using derivatives, the portfolio can lose significantly more than the amount it has invested in derivatives.
• Emerging Markets Risk: Emerging Markets have additional risks due to less-developed market practices.
• Counterparty Risk: The insolvency of any institutions providing services such as custody of assets or acting as a
counterparty to derivatives or other contractual arrangements, may expose the portfolio to financial loss
Walter Scott Global Equities Composite
As at June 2020
Walter Scott claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. Walter Scott has been independently verified for the periods 1 January 1994 through 31 December 2019. The verification report is available upon request.
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. Verification does not ensure the accuracy of any specific composite
presentation. Past performance is not a guide to future performance and returns may also increase or decrease as a result of currency fluctuations. Please refer to the appendix for important information and related performance disclosure in section 17.4.
Source: Walter Scott, MSCI.
44
Reporting Currency: US dollars
Gross of Management Fees
Creation Date: 1 October 2019
Inception Date: 1 January 1986
PeriodComposite
Return (%)
MSCI World
Return (ndr)
(%)
Composite
3 Yr Standard
Deviation (%)
Benchmark
3 Yr Standard
Deviation (%)
Composite
Internal
Dispersion (%)
No. of Portfolios
in Composite
at Period End
Composite
Assets
(Millions)
% of Total
Firm Assets
Q2 2020 16.7 19.4 14.6 16.0 0.3 98 40,568 54.9
Q1 2020 -16.9 -21.1 13.7 14.6 0.4 95 34,386 54.5
2019 31.2 27.7 11.3 11.1 0.7 96 42,134 56.7
2018 -0.8 -8.7 10.1 10.4 0.4 89 24,881 42.3
2017 26.6 22.4 9.6 10.2 0.9 91 27,600 41.5
2016 6.9 7.5 10.1 10.9 0.5 95 25,588 43.8
2015 1.4 -0.9 10.2 10.8 0.7 93 25,743 43.8
2014 3.8 4.9 9.7 10.2 0.5 99 32,704 47.9
2013 21.2 26.7 11.7 13.5 1.2 104 34,190 48.6
2012 19.2 15.8 14.7 16.7 0.6 96 26,061 45.4
2011 -2.3 -5.5 15.9 20.2 0.5 87 21,121 44.9
2010 12.4 11.8 19.8 23.7 0.6 74 18,086 40.1
2009 34.7 30.0 17.5 21.4 1.6 59 12,716 39.7
2008 -30.0 -40.7 15.6 17.0 0.9 55 8,453 40.4
2007 13.0 9.0 9.0 8.1 1.1 56 13,622 39.8
2006 16.4 20.1 9.3 7.6 0.8 47 9,473 30.6
Walter Scott Concentrated Global Equity Composite
As at September 2020
Source: Walter Scott (Strategy), MSCI (Index). Gross performance returns do not reflect the deduction of investment advisory fees which if applied would reduce returns but they do reflect the reinvestment of dividends and/or other earnings. Net performancereturns show the deduction of a representative advisory fee at 0.5% per annum and reflect the
reinvestment of dividends and/or other earnings. Further details of Investment advisor fees are described in Part 2 of our Form ADV. MSCI World is used as a comparative index for this strategy for illustrative purposes. The strategy does not aim to replicate the composition or performance of the comparative index. Walter Scott claims compliance with the
Global Investment Performance Standards (GIPS®).
45
Reporting Currency: US dollars
Gross of Management Fees
Inception Date: 31 December 2017
Returns in USD % YTD 2019 2018 2017
Walter Scott Concentrated Global Equities Composite, gross 9.3 33.4 -5.5 25.3
Walter Scott Concentrated Global Equities Composite, net 8.9 32.8 -5.9 24.7
MSCI World 7.2 5.1 2.8 2.3
Performance calculated as total return, income reinvested, gross of fees, in USD. Fees and charges apply and can have a material effect on the performance of your investment
Walter Scott Concentrated Global Equity Composite
As at September 2020
Source: Walter Scott (Strategy), MSCI (Index). Gross performance returns do not reflect the deduction of investment advisory fees which if applied would reduce returns but they do reflect the reinvestment of dividends and/or other earnings. Net performancereturns show the deduction of a representative advisory fee at 0.5% per annum and reflect the
reinvestment of dividends and/or other earnings. Further details of Investment advisor fees are described in Part 2 of our Form ADV. MSCI World is used as a comparative index for this strategy for illustrative purposes. The strategy does not aim to replicate the composition or performance of the comparative index. Walter Scott claims compliance with the
Global Investment Performance Standards (GIPS®).
46
Reporting Currency: US dollars
Gross of Management Fees
Inception Date: 31 December 2017
Returns in USD % 2019 2018 2017 2016 2015
Walter Scott Global Equities Composite, gross 31.2 -0.8 26.6 6.9 1.4
Walter Scott Global Equities Composite, net 30.3 -1.5 25.6 6.1 0.7
MSCI World 27.7 -8.7 22.4 7.5 -0.9
Performance calculated as total return, income reinvested, gross of fees, in USD. Fees and charges apply and can have a material effect on the performance of your investment
Important information
For Professional Clients only. This is a financial promotion and is not investment advice.
Portfolio holdings are subject to change, for information only and are not investment recommendations.
BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation and its subsidiaries.
Walter Scott & Partners Limited is authorised and regulated by the Financial Conduct Authority. Walter Scott & Partners Limited, One Charlotte Square, Edinburgh, UK, EH2 4DR. Registered in
Scotland No. 93685.
BNY Mellon Investment Management EMEA Limited (“IM EMEA”) is a licensed Financial Services Provider in South Africa, licence number 45073 (“the Licence”). A copy of the Licence is
available upon request. IM EMEA is authorised and regulated by the Financial Conduct Authority in the United Kingdom. Registered office: BNY Mellon Centre, 160 Queen Victoria Street,
London, EC4V 4LA. Registered in England no. 1118580. Under the terms of the Licence, IM EMEA is authorised to render intermediary services in respect of the following types of financial
products: (i) Shares; (ii) Money Market Instruments; (iii) Debentures and Securitised Debt; (iv) Bonds; (v) Derivative Instruments (excluding warrants); (vi) Collective Investment Schemes. These
financial products may be provided by IM EMEA or an entity associated with IM EMEA, including other entities within the BNY Mellon Group, as disclosed within this document. Fees payable for
the provision of the above financial products will be agreed prior to the conclusion of any transactions are undertaken.IM EMEA is not authorised to provide investment advice as defined under
FAIS and it has not undertaken an assessment of the suitability of the products in consideration of the specific circumstances of the recipient of this document. Any views or opinions expressed
should therefore not be considered as investment advice.IM EMEA has duly authorised the Mr Imad Abukhlal, Mr Ramzi El Tajoury, and Mr Adrian Gough as Authorised Representatives to
render Intermediary Services, as defined within the Financial Advisory and Intermediary Services Regulations 2002 (“FAIS”), on behalf of IM EMEA. All information provided to IM EMEA
pursuant to the above activities will not be made available to any third-parties without the prior consent of the party providing the information, except where IM EMEA is required to divulge such
information in accordance with applicable regulatory obligations, including provision of any reporting of suspicious transactions required in relation to actual or suspected money laundering
activities to the Financial Intelligence Centre Act (“FICA”). However, information may be shared with other companies within the BNY Mellon Group where this is necessary in provision of the
services and/or financial products envisaged.IM EMEA maintains and operates effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent
conflicts of interest from constituting or giving rise to a material risk of damage to the interests of the Client. Where the organisational or administrative arrangements implemented by IM EMEA
for the management of conflicts are assessed to ensure, with reasonable confidence, that risks of damage to the interests of clients will be prevented, IM EMEA will take steps to ensure that it is
able to act in the best interests of clients. A copy of the full Conflicts Policy is available to the Client on request. As a subsidiary of BNY Mellon, IM EMEA is covered by a group professional
indemnity insurance policy. Details are available on request. IM EMEA utilises the services of Compli-Serve SA (Pty) Ltd, a licensed Compliance Practice CO 194, to monitor compliance with its
obligations under FAIS. Any complaints concerning in relation to the services provided should be addressed to the Compliance Officer at the registered address of IM EMEA. In the event that a
complaint is not settled to the satisfaction of the complainant, it may be eligible for referral to the FAIS Ombud (www.faisombud.co.za): PO Box 74571, Lynwood Ridge 0040. Telephone: +27 (0)
12 470 9080. Fax: +27 (0) 12 348 3447. E-mail: [email protected].
Issued in the South Africa by BNY Mellon Investment Management EMEA Limited, BNY Mellon Centre, 160 Queen Victoria Street, London EC4V 4LA. Registered in England No. 1118580.
Authorised and regulated by the Financial Conduct Authority.
Document ID: 97054. EXP: 30/12/2020
