September 2018
Prosperously navigating unexpected events with great skill and agility 2
AGENDA Who We Are Investment Methodology Performance Current Opportunity and Investment pipeline – GAMING & ESPORTS Summary 3
WHO WE ARE PORTFOLIO MANAGEMENT EXPERIENCE TECHNOLOGY EXPERTISE • Unique insight • Portfolio Manager with 30 years of from entrepreneurs leading portfolio management experience international tech development across various asset classes at based on needs creation asset management companies (LGT, • Advisory Committee of tech leaders BLACK SWAN TAL, CIBC Asset Management), and who determine the global adoption a pension (British Petroleum) DEXTERITAS and success of new technologies (“BSD”) • Exceptional research team with a • Representation in all BSD-invested wide breadth of knowledge in tech sectors and sub-sectors, for research, finance, and engineering unrivalled expertise • Intense due diligence process for our stock selection process • Unique risk management overlay to minimize drawdowns and volatility 4
INVESTMENT METHODOLOGY IDEATION • BSD Investment Advisory Committee: seek out global growth themes and trends to overweight and underweight various subsectors PUBLIC COMPANIES • Experienced investment team sourcing trade ideas and discussing vital macro economical forces in play PORTFOLIO CONSTRUCTION • 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 IDEATION 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 SECTOR ASSESSMENT 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. COMPANY ANALYSIS • 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 5
PERFORMANCE GLOBAL TECH FUND MONTHLY PERFORMANCE SINCE INCEPTION Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD S&P 500 YTD 1.32% 0.35% 2.82% 4.55% 9.60% 2013 -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% 11.43% 2014 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% 0.47% 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% 9.50% 2016 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% 19.42% 2017 2.89% 0.63% -0.62% -1.57% 4.11% -1.63% 0.63% 1.72% 2018 6.17% 7.95% FUND RETURNS PERFORMANCE METRICS* October 1, 2013 to August 31, 2018 BSD gross vs BSD net vs Benchmark since inception 80.00% FUND S&P 500 BSD S&P 500 70.00% Return Since Inception 64.68% 72.53% 60.00% YTD Return 6.17% 7.95% 50.00% 60 Day Return -0.97% 4.65% 40.00% 20 Day Return 2.61% 1.62% 30.00% Daily Standard Dev. 0.71% 0.78% 20.00% Sharpe Ratio 0.86 0.89 Sortino Ratio 1.19 1.25 10.00% Correlation - 0.97 0.00% 10/1/2013 10/1/2014 10/1/2015 10/1/2016 10/1/2017 -10.00% BSD has outperformed our portfolio benchmark with lower risks through active diversification across various subsectors * 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. 6
PERFORMANCE HOW BSD COMPARES TO OTHER HEDGE FUNDS HEDGE FUND STRATEGIES* 2014 RETURN 2015 RETURN 2016 RETURN 2017 RETURN BSD Global Technology Hedge Fund 10.69% 10.16% -1.63% 24.99% Absolute Return 0.67% 2.86% 0.31% 3.91% Multi-Region 1.71% -1.19% 1.95% 6.58% Equal Weighted Strategies -0.56% -1.54% 3.78% 6.10% Relative Value Arbitrage -3.06% -3.10% 1.03% 4.28% Macro/CTA 5.09% -1.96% -2.93% 7.43% Fixed Income - Credit -1.86% -4.38% 4.97% 4.55% Global Hedge Fund -0.60% -3.64% 2.50% 8.04% Equity Hedge 1.37% -2.33% 5.49% 12.78% North America -4.13% -9.35% 4.14% 6.25% Emerging Markets Composite -8.03% -5.26% 6.77% 8.99% Market Directional 5.13% -8.58% 9.86% 4.68% Event Driven -4.06% -6.94% 10.50% 7.22% 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. 7
TOP 10 STRATEGIC TECH TRENDS FOR 2018-2020 8
CURRENT OPPORTUNITIES AND INVESTMENT PIPLINE GAMING • 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 9
GAMING VIDEO GAMING ECOSYSTEM Publishers Esports 2017 Total $122B +14.3% Users Distributors YoY Hardware 10 Source: Newzoo
GAMING 2017 TOP 15 COMPANIES BY GAME REVENUE $18.10 Bn Bn $10.50 $8.00 Bn Bn $7.10 Bn $6.50 Chinese Tencent Bn $5.60 is the clear leader in the space Bn $5.30 Bn $5.10 $3.60 Bn Bn $2.40 $2.27 Bn Bn $2.21 $2.09 Bn $1.94 Bn $1.91 Bn 11 Source: Newzoo
GAMING ESPORTS 2016-2021 ESPORTS GLOBAL REVENUE GROWTH Expected Revenue Growth +27.4% CAGR 2016-2021 Expected $1650M Revenue $1471M Growth +38.2% Revenue Growth YoY $1154M +33.0% YoY $906M $655M $493M 2016 2017 2018 2019 2020 2021 12 Source: Newzoo
GAMING ESPORTS 2018 ESPORTS GLOBAL REVENUE EXPECTATIONS 6% In 2018 China and North America 18% expected to generate 32% $509M 2018 Total $906M 56% of the global +38.2% esports revenue YoY 38% 13 Source: Newzoo
GAMING ESPORTS 2018 ESPORTS EXPECTED GLOBAL REVENUE STREAMS Merchandise & tickets $95.50 Video game +16.2 YoY streaming platforms: Game publisher 11% Fees Sponsorship $116.30 $359.40 13% +11.0 YoY 2018 Total +53.2 YoY 40% $906M +38.2% Fb.gg 18% YoY Media rights $160.70 +72.1 YoY 19% Advertising $173.80 14 Source: Newzoo +23.8 YoY
GAMING ESPORTS TOP ESPORTS ORGANAIZERS Riot and ESL combined, are responsible for more than half of these organizer hours. Beyondthesamit MLG League of Legends, developed and published by Riot Games, is easily the Riot Games 5% most popular and lucrative eSports 5% Starladder game out there. 9% 28% At the 2017 Season World Championship, the final competition of the 2017 League of Legends 573M competitive season, 24 teams received Valve 9% invitations to play for a prize pool of Total organizer $4,596,591 (the initial prize pool was $2,250,000, while the rest was fan hours contributions). Samsung Galaxy, a 10% South Korean team and member of KeSPA, took first place in the 23% Other competition and walked away with $1,723,721. SK Telecom T1 finished 11% second and won $620,539, while Royal Never Give Up and Team WE finished ESL in third and fourth to take home $321,761 apiece. Dreamhack 15 Source: Newzoo
GAMING ESPORTS ESPORTS GLOBAL AUDIENCE GROWTH Expected In 2018 Asia-Pacific will account for 52% of Esport Enthusiasts Revenue Growth +14.4% CAGR Esports enthusiasts 2016-2021 Occasional viewers Total Audience Total +13.8% Audience $307M +19.3% YoY $281M YoY $246M $215M $192M $160M $250M $216M $189M $165M $143M $121M 2016 2017 2018 2019 2020 2021 16 Source: Newzoo
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