Emerging Markets Equity

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Portfolio Managers

Don Smith, CFA

Rick Wetmore, CFA

Turner Emerging Markets Equity is an actively managed portfolio of about 60 -100 growth stocks with market capitalizations typically greater than $2 Billion that are focused on emerging markets.  .

Performance benchmark: MSCI Emerging Markets Index

Investment Objectives

To produce a total return after fees exceeding that of the MSCI Emerging Markets Index over a full market cycle.
 

Investment Philosophy

We believe earnings drive stock prices. We buy companies with strong earnings prospects and sell those with deteriorating prospects.

Investment Process

Turner’s Emerging Markets Equity strategy is designed to add value strictly through superior stock selection, based on the output of extensive, industry-focused fundamental research. The goal of our investment process is to identify candidates for investment that are growth companies with above-average earnings prospects.

Specifically, our industry analysts seek to identify:

• Companies benefiting from change:
  • Accelerating earnings
  • Improving expectations
  • High returns on capital
• Industry leaders:
  • Strong management
  • Sustainable earnings, margins and revenue growth
  • Compelling new products and services
  • Open-ended business opportunities
  • Market share gains

Our 25 Investment Team members are grouped into five sector research teams, and each analyst is responsible for researching specific industries within each market sector. Our investment professionals perform rigorous fundamental research using innovative, multidisciplinary methods to maintain an information edge, allowing them to capture investment opportunities in all market cycles. We believe the benefits of industry-specific research versus product- or capitalization-specific research are significant, as the same analysts maintain coverage of companies that may migrate from small cap to mid cap, or mid cap to large cap. Industry-specific research ensures that the same personnel follow a security through its lifecycle.

The heart of our stock selection process is fundamental analysis. Extensive, sector-focused analysis is undertaken by our industry experts to identify and quantify the critical factors driving growth. The goal of our research teams is to produce 360°analysis utilizing input from financials, competitors, suppliers, customers and independent research providers to determine if the companies followed will exceed, meet, or fall short of consensus earnings expectations. In addition, members of our Investment Team conducted over 3,300 meetings with domestic and international company management during 2011 in efforts to gain further insight into the dynamics behind a company’s growth prospects.

The lead portfolio managers collaborate directly with the industry analysts regarding the output of their research, and are ultimately responsible for security selection and for the individual weighting of each portfolio holding.

Important Disclosure

Turner Investments is an independent, employee-owned investment management firm providing a broad range of services. The Firm is a U.S. Securities and Exchange Commission registered investment advisor and is dedicated to the practice of professional investment management. Additional information regarding policies for calculating and reporting returns is available upon request. A copy of the verification report is available upon request. The composite includes all discretionary, fee-paying portfolios under management for at least one month, excluding portfolios with significant restrictions that invest in Turner’s Emerging Markets Equity strategy. A complete list and description of firm composites is available upon request. All returns are calculated and expressed in U.S. Dollars and reflect the reinvestment of dividends and other earnings. Gross of fee performance is calculated and presented before the application of management and custodial fees, but net of trading expenses. Net of fee performance is calculated based on the composite’s underlying accounts’ fee schedules. The fee for Turner’s Emerging Markets Equity strategy is 0.75% on the first $25 million and 0.50% on the balance for a minimum account size of $10 million. Turner, in its discretion, may accept lower minimum investment amounts and may agree to negotiate its fee. The dispersion of annual returns is measured by the market-weighted standard deviation of portfolio returns within the composite for the full year.

Total firm assets under management as of 12.31.11 were approximately $13.4 billion; 1.8% of those assets were non-discretionary. Firm assets for 1998 include $360 million from Solon Asset Management, acquired 1.5.98. Equity performance for calendar years 1999-2002 was marked by extraordinary market increases and decreases in the share prices of firms operating in various sectors of the overall market relative to normal historical equity market returns. Past performance is no guarantee of future results.

As with all investments, there are associated inherent risks. The risks associated with foreign investments are heightened when investing in emerging markets. The government and economies of emerging market countries feature greater instability than those of more developed countries. Such investments tend to fluctuate in price more widely and to be less liquid than other foreign investments. The risks associated with foreign investments are heightened when investing in emerging markets. The government and economies of emerging market countries feature greater instability than those of more developed countries. Such investments tend to fluctuate in price more widely and to be less liquid than other foreign investments.

Characteristics, holdings and sector weighting information are from a representative account, are subject to change, and should not be considered as recommendations. Cash consists of U.S. dollars and/or cash equivalents such as repurchase agreements, certificates of deposits or commercial paper. Alpha is a measurement of risk-adjusted performance against the relative benchmarks. Beta is the systematic risk of a portfolio and represents sensitivity to its benchmark. Sharpe ratio is a measurement of the risk-adjusted return that compares excess returns against standard deviation. Standard deviation is a measurement of dispersion of a set of data from its mean. Tracking error is the active risk of the portfolio and the annualized standard deviation of the excess returns between the portfolio and its benchmark. R-squared is a measurement of how much performance reflects the returns from the relevant market. Information ratio is the ratio of expected return to risk, as measured by standard deviation.

Forward earnings projections are not predictors of stock price or investment performance, and do not represent past performance. There is no guarantee that the forward earnings projections will accurately predict the actual earnings experience of any of the companies involved, and no guarantee that owning securities of companies with relatively high price-to-earnings ratios will cause the portfolio to outperform its benchmark or index. Down/Up market returns determine the period where the selected indexes’ returns were less than/greater than zero and calculates the corresponding composite’s compound total return. Capture % does not reflect actual composite returns. The same information, when charted over a different market cycle, will yield a different result and the results of other accounts will vary.

MSCI Emerging Markets Index is designed to measure equity market performance in global emerging markets. The Emerging Markets Index is a float-adjusted market capitalization index. As of May 2005, it consisted of indices in 26 emerging economies: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, Turkey and Venezuela. Indexes are unmanaged and cannot be invested in directly.