1 q13 emtr china equity 0513

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1 q13 emtr china equity 0513

  1. 1. Wells Fargo Asset Management and Wells Capital Management are trade names of the investment management servicesprovided by certain subsidiaries of Wells Fargo & Company and marketed by Wells Fargo Securities International Limited.Wells Fargo Securities International Limited is authorised and regulated by the U.K. Financial Services Authority.Emerging Markets Equity Total Return
  2. 2. Wells Fargo Asset Management Delivering investment success to a diverse mix of clients with adistinctive focus on dynamic client partnerships - we identify clientchallenges, develop innovative solutions and execute tailoredinvestment strategies. Solutions leverage 35+ specialized and autonomous investmentteams, spanning all major asset classes, organized strategically andsupported by independent risk management. Clients include institutions (e.g. retirement plans, corporations,insurance companies, endowments and foundations, sovereignwealth funds and central banks), financial advisors, and individualinvestors worldwide.AUM USD 452BCEO Mike Niedermeyer, CFATeam Members Over 1,600InvestmentProfessionals500+Investment Teams 35+Headquarters San Francisco, CA 22nd largest U.S.-based asset manager1 39th largest global asset manager2 Wells Fargo Advantage Funds is 11thlargest U.S. mutual fund company3Note: All figures as of 3/31/131 2012 Institutional Investor, pro-forma rank based on assets as of12/31/112 2012 P&I Towers Watson Global 500 Survey, pro-forma rank based onassets as of 12/31/113 Strategic Insight, as of 03/31/13Business SnapshotWFAM Assets as of March 31, 2013
  3. 3. EQUITY FIXED INCOMEALTERNATIVE/MULTI STRATEGYWells Capital Management($342B)By Geography By GeographyCurrencyIncome-orientedLiability-drivenU.S.GlobalGlobal ex-U.S.Emerging MarketsU.S.GlobalGlobal ex-USEmerging MarketsBy Market Cap By DurationAll CapLarge CapMid CapSMID CapSmall CapMoney MarketShortIntermediateLongBy Style By SectorCoreGrowthValueUnconstrained/specialtyGovernmentInvestment Grade CreditMortgageMunicipalHigh Yield/Bank LoansThe Rock Creek Group4($7B)Multi-Manager Emerging Markets (localmanagers)Hedge Fund of FundsGolden Capital Management5($6B)Quantitative Global EquityPeregrine Capital Management($2B)U.S. Small Cap EquityNelson Capital Management($1B)U.S. SRI/ESG EquityECM Asset Management($9B)Multi Asset Class Credit Alternative Credit StrategiesOverland Advisors4($1B)Multi-strategy Relative ValueHedge FundGalliard Capital Management($85B)Stable Value & IntermediateFixed IncomeWFAM Investment Capabilities wellsfargoassetmanagement.com4 Wells Fargo owns a minority stake in The Rock Creek Group and Overland Advisors.5 Wells Fargo owns a majority stake in Golden Capital Management.
  4. 4. Emerging Markets Equity Total Returnwww.wellscap.comFirst Quarter 2013WELLS CAPITAL MANAGEMENT® is a registered service mark of Wells Capital Management, Inc.Wells Capital Management is the trade name of the investment management services provided by certain subsidiaries of Wells Fargo & Company and marketed by WellsFargo Securities International Limited and Wells Capital Management, Inc. Wells Fargo Securities International Limited is authorised and regulated by Financial ConductAuthority within the U.K.
  5. 5. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 5Table of ContentsI. OverviewII. Investment Philosophy and ProcessIII. Emerging Markets Equity Total Return Performance and Portfolio CharacteristicsIV. China Equity Strategy Performance and Portfolio CharacteristicsV. Addendum
  6. 6. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 6Overview
  7. 7. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 7Wells Capital Management (“WellsCap”) is aleading institutional investment managementfirm with the strength and resources of ourparent, Wells Fargo Bank, N.A.Wells Capital ManagementAutonomous Investment Teams Preserve agility and focus Consistently generate alpha Have freedom from the distractions of running a businessDynamic Client Relationships We listen, inform, and analyze We customize solutions as appropriate We are consultative to meet clients’ evolving needsIndependent Risk Management Instills a culture of accountability for performance Facilitates a detailed understanding of portfolio risk Impels portfolio managers to deliver results consistentwith client expectationsFocused on three key principles that allow us to exceed our clients’ expectationsWe believe skillful, autonomous investmentboutiques are successful with the support ofindependent risk management.We are committed to delivering superiorinvestment service to our clients withexpertise in all traditional asset classes.
  8. 8. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 8Breadth of Investment Management ExpertiseBy Sector1 AUM (USD B)Equity 71Fixed Income2 67Blend 6Short Duration3 61By Client Type AUM (USD B) Assets (%)Corporate 57 17Foundation/Endowment/Non-Profit 12 3Public/Government 17 5Sovereign Wealth Fund/Central Bank 5 2Union 2 1Sub-Advisory4 110 54Other 6 1WellsCap Assets Under ManagementAs of March 31, 2013 – Diversified Client and Asset Base in excess of USD 342B1 Total firm assets under management are in excess of USD 342B. The charts above exclude USD 137B in Money Market Mutual Funds and other WellsFargo Affiliated Money Market Accounts. Assets under management, excluding Money Market Mutual Funds and other Wells Fargo Affiliated MoneyMarket accounts total USD 205B.2 Includes accounts with durations over 1-5 year benchmarks.3 Includes accounts with durations up to 1-5 year benchmarks, excluding Money Market Funds.4 Sub-Advisory consists of USD 85B in long-term funds sub-advised for Wells Fargo and USD 25B in external sub-advisory funds.U.S. Fixed Income2(30%)Blend(3%)U.S. Equity(28%)Short Duration3(30%)Non-U.S. Equity(6%)Non-U.S. Fixed Income2(3%)
  9. 9. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 9Emerging Markets Equity Income Each security in the portfolio has a dividend yield greater than the index Primary focus of the portfolio is income, but not at the expense of growthEmerging Markets Equity Total Return Each security pays a dividend and the dividend yield of the portfolio is greater than the yield of the index A portion of the portfolio is focused on growth in addition to incomeStrategy Profiles
  10. 10. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 10WellsCap Emerging Markets Equity TeamNote: CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.Anthony CraggSenior Portfolio Manager AsiaAlison ShimadaAssociate Portfolio Manager,and Product Specialist EMEAResearch AnalystsPortfolio ManagersElaine TseSenior Analyst AsiaSvetlana SilvermanSenior Analyst EMEAJack CloonanTrader Latin America & AsiaSteven C. ConnollySenior Trader EMEAInternational Equity Traders – 24 Hour Regional CoverageClayton CarlinTrader AsiaPeter FetterTrader Latin America & AsiaConnie Ou, CFAAnalyst Asia & Latin AmericaSergio TorresSenior Analyst Latin AmericaYuan Yiu TsaiAssociate Analyst Asia
  11. 11. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 11WellsCap Emerging Markets Equity TeamDepth of Regional Skills and ExperienceResearch Team Countries Lived in Language Fluency Coverage EducationJoinedTeamInvestmentExperienceAnthony Cragg U.S., U.K., Hong Kong,Japan, SingaporeEnglish Asia  BA Christ Church College, Oxford MA Christ Church College, Oxford2006 32 yearsAlison Shimada U.S., Japan, Malaysia English, Japanese EMEA  BA University of California Berkeley MBA Harvard Business School2005 27 yearsElaine Tse U.S, Hong Kong,TaiwanEnglish, Mandarin,Cantonese, SpanishAsia  BA & BS University of Pennsylvania MBA Harvard Business School2000 22 yearsSergio Torres U.S., Mexico English, Spanish Latin America  BA Universidad Panamericana 2012 18 yearsSvetlana Silverman U.S., Kazakhstan,Russia, UkraineEnglish, Russian EMEA  MS D. Mendeleev University ofChemical Technology of Russia MBA University of San Francisco2006 15 yearsConnie Ou, CFA U.S., China English, Mandarin,CantoneseAsia,Latin America BA Sun Yat-Sen University MBA University of San Francisco2004 10 yearsYuan Yiu Tsai U.S., Singapore, Taiwan English, Mandarin Asia  BS Duke University MS University of Pennsylvania2012 5 yearsNote: CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.
  12. 12. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 12Investment Philosophy and Process
  13. 13. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 13Investment PhilosophyObservations In emerging markets, dividend-paying companies exist across a wide range of sectors and countries Unlike in developed markets, these companies offer long-term growth potential along with current incomeWe believe Emerging markets require a fundamental approach to final stock selection for best alpha generation Sector and country rotation offers substantial opportunity and growth prospects given the inefficient natureof emerging markets Dividend yield is a leading indicator for good companies with attributes we seek: strong business models,attractive growth prospects, sustainable cash flow generation, strong financial profiles and minorityshareholder friendly management
  14. 14. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 14High Yield Versus Low Yield Emerging Market StocksSource: FactSetNote: Data as of 12/31/2012. High Yield is defined as the group of securities in the top half of the MSCI-EM index as measured bydividend yield. Low yield is defined as the group of securities in the bottom half of the MSCI-EM index as measured by dividend yield.Within the emerging markets, high dividend yielding stocks tend to outperform lowdividend yielding stocks over the full market cycle.$50$100$150$200$250$30012/2004 12/2005 12/2006 12/2007 12/2008 12/2009 12/2010 12/2011 12/2012MSCI Emerging Markets Return DecompositionGrowth of $100 (2005 - 2012)High YieldLow YieldTotal
  15. 15. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 15Competitive Advantages Research focus on management’s attitude towards cash is indicator of good companies Risk management embedded throughout process with clear sell policy as it relates to yield Total portfolio yield lowers return volatility, positions strategy as strong compliment to high beta peers
  16. 16. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 16Investment Process OverviewIdea Generation Macroeconomicand FundamentalAnalysisPortfolioConstructionActionable Items
  17. 17. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 17Idea Generation300 – 400 companies for additional researchEmerging Markets Equity universe (2,500-3,000 companies)Quantitative ScreensDividend Yield ScreenEM Total Return: DY > 0(2500 companies)EME Income: DY > Index DY(500-900 companies)Market Cap > US$200M(300-500 companies)Trading LiquidityQualitative SourcesCompany Management andLocal ExpertiseIndustry Conferences,ExpertsCompetitors, CustomersMacro Views
  18. 18. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 18Macroeconomic ViewsMacroeconomic AnalysisCountry Geopolitical framework GDP growth Inflation Consumption Currency Underlying risksSector Structural change Capacity expansion Supply/demand Global growth Sector headwinds Analysts understand this Macroeconomic View when identifying good companies 20% of stock selection can come from this macroeconomic research
  19. 19. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 19Fundamental AnalysisMacroeconomic ViewsCompetitive Positioning Business model strengths,catalysts Supply chain, operational risks Global sector growth andpositioning Management quality andexpectationsValuation Spreadsheet Industry-specific metrics: P/E,P/B, Sum of parts, DCF model Growth prospects Price targets Upside/downside scenariosCompany Management Face-to-face meetings oron-sites Attitude towardshareholders, dividends Approach to cash Each analyst’s Actionable Items incorporate these four inputs, including macroeconomic analysisActionable Items
  20. 20. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 20Actionable ItemsDecision-Making Process Organized meeting schedule Efficient communication and ongoing dialog outside of meeting schedule for best turnaround timeAnalyst ResearchDeliverables Company meeting notes Financial models Valuation spreadsheet Recommendation report withstock rating 1-5, target price Summary of all ratings andtarget prices Regional meeting notes withmacro updateTeam Collaboration Weekly team and regionalmeetings Discuss company events Macroeconomic outlook Valuation questions Actionable items and newrecommendationsBuy/Sell Decisions Analysts make stockrecommendations Analysts and PMs discussinvestment case PMs consult on every decision Lead PM has ultimate authority
  21. 21. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 21Portfolio ConstructionPortfolio Construction Guidelines Benchmark is MSCI Emerging Markets Net Index All holdings pay a dividend yield Emerging Markets Equity Income – all holdings pay a dividend yield greater than index Emerging Markets Equity Total Return – portfolio dividend yield greater than index 80 – 120 holdings Position limit 10%, typically 1-3% Sector weights Emerging Markets Equity Income – 50% maximum Emerging Markets Equity Total Return – 40% maximum Country weights limited to 30% Regional weights unconstrained Cash limit 10%, typically 5%
  22. 22. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 22Risk ManagementRisk is managed throughout Fundamental Research and Portfolio ConstructionSell Discipline Stock reaches price target (dividend yield decline) Elimination of dividend; Deterioration in company fundamentals, dividend policy, yield Idea replacement Sector/country allocation changes Change in risk parameters Reevaluate when stock price declines by 20% from purchase pricePortfolio Monitoring Justify active risk exposures at stock and sector levels Guard against unintended risk exposures
  23. 23. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 23Risk Management Macroeconomic outlook Risk reward target price Stock rating 1-5 Diversification guidelines Individual position limits Cash balance limit Sector constraintsFundamental ResearchPortfolio Construction 24/7 trading Back up portfoliomanagers Automated alerts forpotential guidelineviolation Automated daily tradereport Counterparty riskmonitorTrade ExecutionPortfolio Construction Daily portfolio holdingreport Weekly performanceattribution Monthly portfolio updates Semi-annual, annualreports Quarterly client callsPerformanceEvaluation Daily Office of CIOrisk communication Monthly firmmanagement reviews Quarterly seniormanagement review Barra analysis Projected trackingerror, betaRisk ManagementOversightTeam FirmStrong Risk Management Controls
  24. 24. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 24Emerging Markets Equity Total ReturnPerformance and Portfolio
  25. 25. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 25Investment ResultsAnnualized ReturnsAs of March 31, 2013All returns greater than one year are annualized. Note: The GIPS compliant presentation can be found at the end of this presentation.1.9%8.9%4.3%11.9%12.8%1.6%7.7%4.2%10.7%11.5%-1.6%2.0%-3.6%3.3%3.8%-5.0%0.0%5.0%10.0%15.0%3 Month 1 Year 2 Year 3 Year Since Inception (1/1/10)Emerging Markets Equity Total Return Composite (Gross)Emerging Markets Equity Total Return Composite (Net)MSCI Emerging Markets Net Index
  26. 26. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 26*This information is based on a representative account within the Emerging Markets Equity Total Return Composite. The representative account has beenselected by meeting the following criteria: 1) the account is in the Emerging Markets Equity Total Return Composite, 2) Wells Capital Management representsthat the holdings, characteristics and risk profile are representative of the strategy/style of the Emerging Markets Equity Total Return Composite. Any changes tothe representative account must be approved by the director of investment risk management. Source: FactSetPortfolio CharacteristicsRelative Regional and Country WeightsAs of March 31, 2013OverweightUnderweight0.7%0.7%0.7%-2.4%0.9%0.8%-1.4%-5% -4% -3% -2% -1% 0% 1% 2% 3% 4% 5%PanamaNorwayAustraliaMiddle East/AfricaEmerging EuropeLatin AmericaTotal AsiaEmerging MarketsEquity Total Return*MSCI EMNet Index DifferenceBrazil 12.8 12.7 0.1Chile 4.9 2.0 2.9Colombia 0.6 1.2 -0.6Mexico 4.1 5.6 -1.5Peru 0.5 0.6 -0.1Latin America 22.9 22.1 0.8China 15.6 12.6 3.0Hong Kong 6.3 5.5 0.8India 2.2 6.6 -4.4Indonesia 2.2 3.0 -0.8Malaysia 4.7 3.5 1.2Philippines 4.8 1.1 3.7Singapore 2.4 0.0 2.4South Korea 6.0 14.8 -8.8Taiwan 10.2 10.7 -0.5Thailand 4.7 2.7 2.0Total Asia 59.1 60.5 -1.4Czech Republic 0.0 0.2 -0.2Hungary 0.0 0.2 -0.2Poland 1.6 1.5 0.1Russia 6.7 5.9 0.8Turkey 2.5 2.1 0.4Emerging Europe 10.8 9.9 0.9Egypt 0.0 0.3 -0.3Morocco 0.0 0.1 -0.1South Africa 5.1 7.1 -2.0Middle East/Africa 5.1 7.5 -2.4Australia 0.7 0.0 0.7Panama 0.7 0.0 0.7Norway 0.7 0.0 0.7
  27. 27. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 27Portfolio CharacteristicsCharacteristicsPortfolio Characteristics Portfolio*MSCI EMNet IndexPrice/Earnings (1Yr. Forecasted) 10.6x 10.7xEPS Growth (1 Yr. Forecasted) (%) 14.1 15.3Dividend Yield (%) 3.8 2.7Number of Countries 22 22Number of Holdings (ex-cash) 108 823Weighted Average Market Cap ($B) 41.6 45.9Market Cap Profile (%)$0 - $2 Billion 20.9 2.4$2 - $5 Billion 20.1 13.1$5 - $10 Billion 9.5 15.8$10 - $15 Billion 11.4 12.6$15+ Billion 38.1 56.1*This information is based on a representative account within the Emerging Markets Equity Total Return Composite. The representative account has beenselected by meeting the following criteria: 1) the account is in the Emerging Markets Equity Total Return Composite, 2) Wells Capital Management representsthat the holdings, characteristics and risk profile are representative of the strategy/style of the Emerging Markets Equity Total Return Composite. Any changes tothe representative account must be approved by the director of investment risk management.1Top ten holdings are based on market value of the representative account and not necessarily held in all client portfolios. The information shown is not intendedto be, nor should it be construed to be, a recommendation to buy or sell an individual security. Past performance is not indicative of future results. A list of allholdings from the prior one-year period is available upon request.Source: Bank of New York Mellon Corporation, FactSet and BloombergSector DistributionTop Ten Equity Holdings1Company CountryTrailingDiv. YieldPortfolio*Weight (%)Industrial & Commercial Bank of China Ltd. China 5.3 2.0SK Telecom Co. Ltd. Korea 5.2 2.0China Construction Bank Corp. China 5.1 1.9Taiwan Semiconductor Manufacturing Co. Ltd. Taiwan 3.0 1.7Lukoil Holdings ADS Russia 3.9 1.5Itau Unibanco Holding SA Pref Brazil 3.2 1.5Powszechny Zaklad Ubezpieczen S.A. Poland 5.6 1.5Transmissora Alianca de Energia Eletrica SA Unit Brazil 4.2 1.5United Microelectronics Corp. ADS Taiwan 4.5 1.5Sberbank Rossia Russia 4.5 1.429.1%16.6%10.6% 9.8% 9.1% 8.9% 6.5% 4.3% 3.9% 1.1%27.7%7.5%12.0%7.7% 10.7%13.8%6.5% 9.1%3.6%1.4%0.0%20.0%40.0%FinancialsTelecommunicationServicesEnergyConsumerDiscretionaryMaterialsInformationTechnologyIndustrialsConsumerStaplesUtilitiesHealthCarePortfolio* MSCI EM Net IndexAs of March 31, 2013
  28. 28. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 28China Equity StrategyPerformance and Portfolio
  29. 29. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 29China Equity Investment Philosophy and ObjectivePhilosophyWe believe that China is in the early stages of a structural shift towards an economy thatcan be supported by domestic consumption and that will move up the value chain toproduce higher value-added goods and services.ObjectiveThe investment objective of the strategy is to achieve long term capital appreciationthrough investing in the strong and sustainable growth of the Chinese economy.We identify high quality, high return companies with significant operations, productionactivities, investments and or assets in China.
  30. 30. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 30China Equity Investment ProcessInvestment Process Overview – Four StepsChina EquityPortfolio(60-120 securities)Initial Screening China stock universe:500 companies Macroeconomicanalysis Identify China relatedinvestment themesand subthemes IPOs Trading liquidityFundamentalCompany Analysis 200-250 Companies Viability of businessmodel Growth prospects Financial forecasts Corporate governance Company meetings/visits Channel checks Appraisal of intrinsicvalue Market perception/expectationPortfolioConstruction Conviction level Expected return Risk and reward Diversification InvestmentguidelinesMonitoring & SellDecisions Sell disciplines Deterioration incompanyfundamentals Stocks reaching orexceeding intrinsicvalue Idea replacement Sector allocationchanges Change in riskparameters
  31. 31. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 31Investment ResultsChina Equity StrategyPeriods Ending March 31, 20130.5%12.5%-1.5%9.0%4.7%-2.2%17.2%16.0%-2.4%7.8%-2.6%3.6%6.6%-3.6%-4.5%-10.0%0.0%10.0%20.0%3 Months 1 Year 2 Years 3 Years Since Inception(4/1/09)China Equity Strategy (Gross) China Equity Strategy (Net) MSCI China (Net) IndexAll returns greater than one year are annualized. Note: The GIPS compliant presentation can be found at the end of this presentation.
  32. 32. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 32Country Allocations – China Equity Strategy*This information is based on a representative account within the China Equity Strategy Composite. The representative account has been selected by meeting thefollowing criteria: 1) the account is in the China Equity Strategy Composite, 2) Wells Capital Management represents that the holdings, characteristics and riskprofile are representative of the strategy/style of the China Equity Strategy Composite. Any changes to the representative account must be approved by thedirector of investment risk management. Source: FactSetUnderweight OverweightPercentage Overweight or Underweightvs. MSCI China Gross IndexAs of March 31, 2013China EquityStrategy*MSCI China(Net) Index DifferenceChina 70.3 69.6 0.7Hong Kong 27.1 30.4 -3.3Taiwan 2.6 0.0 2.6
  33. 33. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 33Sector AllocationAs of March 31, 2013Portfolio ProfileChina Equity Strategy* MSCI China (Net) Index Difference (%)Financials 26.8 40.1 -13.3Industrials 19.7 6.2 13.5Energy 12.3 17.0 -4.7Consumer Discretionary 8.6 4.9 3.7Information Technology 6.4 6.2 0.2Health Care 6.4 0.9 5.5Utilities 6.2 3.6 2.6Materials 6.0 4.2 1.8Telecommunication Services 5.3 11.4 -6.1Consumer Staples 2.2 5.4 -3.2*This information is based on a representative account within the China Equity Strategy Composite. The representative account has been selected by meetingthe following criteria: 1) the account is in the China Equity Strategy Composite, 2) Wells Capital Management represents that the holdings, characteristics andrisk profile are representative of the strategy/style of the China Equity Strategy Composite. Any changes to the representative account must be approved by thedirector of investment risk management.Source: The Bank of New York Mellon Corporation
  34. 34. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 34Portfolio Profile*This information is based on a representative account within the China Equity Strategy Composite. The representative account has been selected by meetingthe following criteria: 1) the account is in the China Equity Strategy Composite, 2) Wells Capital Management represents that the holdings, characteristics andrisk profile are representative of the strategy/style of the China Equity Strategy Composite. Any changes to the representative account must be approved by thedirector of investment risk management. Top ten holdings are based on market value of the representative account and not necessarily held in all clientportfolios. The information shown is not intended to be, nor should it be construed to be, a recommendation to buy or sell an individual security. Pastperformance is not indicative of future results. A list of all holdings from the prior one-year period is available upon request.Top Ten Equity Holdings*As of March 31, 2013DescriptionIndustrial & Commercial Bank of China Ltd. Commercial BanksChina Construction Bank Corp. Commercial BanksPetroChina Co. Ltd. Oil Gas & Consumable FuelsChina Mobile Ltd. Wireless Telecommunication ServicesCNOOC Ltd. Oil Gas & Consumable FuelsChina Resources Power Holdings Co. Ltd. Independent Power Producers & Energy TradersChina Life Insurance Co. Ltd. (China) InsuranceCosco Pacific Ltd. Transportation InfrastructureChina Petroleum & Chemical Corp. Oil Gas & Consumable FuelsAir China Ltd. Airlines
  35. 35. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 35Portfolio ProfilePortfolio CharacteristicsAs of March 31, 20131This information is based on a representative account within the China Equity Strategy Composite. The representative account has been selected by meetingthe following criteria: 1) the account is in the China Equity Strategy Composite, 2) Wells Capital Management represents that the holdings, characteristics andrisk profile are representative of the strategy/style of the China Equity Strategy Composite. Any changes to the representative account must be approved by thedirector of investment risk management.Source: The Bank of New York Mellon Corporation and FactSetChina Equity Strategy1 MSCI China (Net) IndexValuationPrice/Earnings (1 Yr. Forecasted) 10.1x 9.3xEPS Growth (1 Yr. Forecasted) 14.4% 12.9%Dividend Yield 2.7% 3.0%ConstructionWeighted Average Market Cap $67.7B $93.4BCapitalization Profile< $5 Billion 62.1 61.7$5 - $10 Billion 12.1 10.5$10 - $15 Billion 7.0 6.8>$15 Billion 42.3 44.4Countries 3 2Holdings (ex-cash) 79 139
  36. 36. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 36Addendum
  37. 37. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 37WellsCap Emerging MarketsEquity Income Stock selection incorporates both dividend yieldas well as growth opportunities that supportdividend growth 90 – 120 holdings All cap strategy Well diversified by sector, country, and region Yield provides for more consistent absoluteperformance; Higher tracking error but morecompetitive information ratioTraditional Emerging MarketEquity Competitors Stock selection often focuses on market growthand earnings growth 80-100 holdings on average Mostly all cap strategies Many strategies are diversified by sector,country, and regionTraditional Emerging Market Equity Strategies vs. EME Income
  38. 38. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 38Why Invest in an Emerging Markets Equity Income Strategy? Allows investor to participate in up markets and also provides downside protection;Offers attractive future dividends along with solid market appreciation Offers some of the highest dividend yielding stocks making them particularly attractive relativeto other equities Can incorporate good growth potential unlike dividend paying companies in developed markets EME Income Team has a proven track record; Our outlook remains positive and the prospectsfor economic recovery are greater
  39. 39. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 39Investment TeamAnthony L.T. CraggManaging Director and Senior Portfolio Manager, Emerging Markets and Asia Pacific EquitiesAnthony Cragg is the lead portfolio manager of the Emerging Markets and Asia Pacific Equities teams at Wells Capital Management.Anthony has more than 30 years of experience in international equity investing, which includes both the developed and emerging markets.He joined Wells Capital Management in 2005 with the asset acquisition of Strong Financial. Anthony joined Strong Capital in 1993 and wasinstrumental in developing Strong Capitals international investment capabilities. Prior to this, he helped establish Dillon, Read InternationalAsset Management. Anthony began his investment career in 1980 at Gartmore, Ltd., as an international investment manager, where histenure included assignments in London, Hong Kong, and Tokyo. Anthony earned a bachelors and masters degree in English literature fromChrist Church College at Oxford University.Alison ShimadaAssociate Portfolio Manager and Product Specialist, Emerging Markets EquityAlison Shimada is an associate portfolio manager and product specialist of the Emerging Markets team. She served as a senior analystcovering the EMEA (Eastern Europe, Middle East and Africa) region for three years at Wells Capital Management. She joined Wells CapitalManagement in October 2003 after serving as an investment officer of the University of California Regents-Office of the Treasurer. Shebegan her responsibilities at Wells Capital Management as the head of equity research for the developed markets (EAFE) internationalequity team and a senior investment analyst for Japan and Australia/New Zealand. Her investment career began in 1985 and she has servedas a portfolio manager specializing in Malaysian equities at Commerce Asset Fund Managers and as senior equity analyst covering Japanesesecurities at Fidelity Investments Japan. Alison received her bachelor’s degree in political economies of industrial societies from theUniversity of California at Berkeley. She earned a masters degree in business administration from Harvard Business School.
  40. 40. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 40Investment Team (continued)Elaine TseSenior Research AnalystAs part of the Emerging Markets Equity team, Elaine Tse is a senior analyst responsible for North Asia. Elaine began her investment career in1990 and joined the team after working for Fidelity Investments Management, LTD in Hong Kong, where she was an investment analyst. Prior toFidelity, Elaine was a consultant at The Boston Consulting Group, Inc. in Hong Kong. Elaine earned bachelor’s degrees in communications andeconomics from the University of Pennsylvania. In addition, she earned a master’s degree in business administration from Harvard BusinessSchool. Elaine is fluent in Mandarin and Cantonese and is proficient in Spanish.Svetlana SilvermanSenior Research AnalystSvetlana Silverman is a senior research analyst for the Emerging Markets Equity team at Wells Capital Management. She is responsible forcovering EMEA (Emerging Europe, Middle East and Africa) region and has been with the firm since 2006. Svetlana began her investmentcareer in 1997 at Robertson Stephens, a boutique investment bank, followed by equity research experience at RCM, a company of Allianz GlobalInvestors. Prior to joining WellsCap she also briefly worked as a financial analyst at Wells Fargo Bank. She earned a master’s degree inchemical engineering from D. Mendeleev University of Chemical Technology of Russia in Moscow, Russia and a master’s degree in businessadministration from the University of San Francisco. She is a native Russian speaker.Sergio TorresSenior Research AnalystSergio Torres is a senior research analyst for the Emerging Markets Equity team at Wells Capital Management, where he covers Latin America.He joined WellsCap in 2012 from JP Morgan Chase where he served as a senior analyst covering oil and gas firms in Latin America. Earlier,Sergio served as a senior associate analyst specializing in oil and gas firms in Latin America and EMEA for Bear Stearns and as an associateanalyst responsible for Latin American industrials and construction firms at Goldman Sachs. He has been in the investment industry since 1994.Sergio earned a bachelor’s degree in economics from Universidad Panamericana. Sergio has complete Level I of the CFA program and is fluentin Spanish.Connie Ou, CFAAnalystConnie Ou joined the Emerging Markets Equity team as an analyst in 2004. Prior to this, she worked with the Wells Capital Managementstrategic planning group. Connie holds a bachelor’s degree in international finance from Sun Yat-sen University in China and a master’s degreein business administration–finance from the University of San Francisco, graduating Beta Gamma Sigma. Connie is fluent in Mandarin andCantonese and has earned the right to use the CFA designation.
  41. 41. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 41Investment Team (continued)Yuan Yiu TsaiAssociate AnalystYuan Yiu is an associate analyst on the Emerging Markets team at Wells Capital Management. He covers India and ASEAN and is based inSingapore. Yuan Yiu joined WellsCap in 2012 from Nomura Securities where he served in a similar role since 2008. He began his investmentcareer in 2007 as a management associate at Citigroup. Yuan Yiu earned a bachelor’s degree in biomedical engineering and electricalengineering from Duke University. He earned a master’s degree in systems engineering from the University of Pennsylvania.Steven C. ConnollySenior TraderSteve Connolly is a senior trader for international equity securities at Wells Capital Management. He joined WellsCap from EvergreenInvestments, where he began his investment industry career in 1995. Earlier, he served as a compliance analyst for Scudder Investments and asa fund accountant for State Street Bank. He earned a bachelor’s degree in business administration and economics from the University of NewHampshire, Durham. Steve has completed Level I of the CFA program and is a member of the Boston Security Traders Association.Clayton CarlinTraderClay Carlin is a trader for international equity securities at Wells Capital Management. He joined WellsCap from Evergreen Investments, wherehe began his investment industry career in 1999. Prior to his current role, he served as a global settlements specialist and as a dealer servicesrepresentative for the firm. Clay earned a bachelor’s degree in history from the University of Scranton in Pennsylvania. He is a member of theBoston Security Traders Association.Jack CloonanTraderJack Cloonan is a trader on the International Equity team at Wells Capital Management. He joined WellsCap from Evergreen Investments,where he began in 1998 as an assistant vice president of Investment Operations. He began his investment industry career in 1995 as an officerwith State Street. He earned a bachelor’s degree in marketing and entrepreneurial studies from Babson College, Wellesley, MA.Peter FetterTraderPeter Fetter is a trader for international equity securities at Wells Capital Management. He joined WellsCap from Evergreen Investments, wherehe served in a similar role since 2007. Earlier, he served as a senior international trader for Columbia Wanger Asset Management and as aninternational trader for Driehaus Capital Management. He began his investment industry career in 1998 as a trading assistant for MFSInvestment Management. Peter earned a bachelor’s degree in finance from Villanova University.
  42. 42. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 42This document is for your information only and is not an offer to sell, or a solicitation of an offer to buy, the securities or instrumentsnamed or described in this document. Interested parties are advised to contact the entity with which they deal, or the entity that providedthis document to them, if they desire further information. The information in this document has been obtained or derived from sourcesbelieved by Wells Capital Management to be reliable, but Wells Capital Management does not represent that this information is accurate orcomplete. Any opinions or estimates contained in this document represent the judgment of Wells Capital Management, at this time, andare subject to change without notice. Wells Capital Management and its affiliates may from time to time provide advice with respect to,acquire, hold, or sell a position in, the securities or instruments named or described in this document.Wells Capital Management is the trade name of the investment management services provided by certain subsidiaries of WellsFargo & Company and marketed by Wells Fargo Securities International Limited and Wells Capital Management, Inc. WellsFargo Securities International Limited is authorised and regulated by the Financial Conduct Authority within the U.K.Wells Capital Management provides investment advisory services to institutional clients. The rules contained under the Financial Servicesand Markets Act 2000 concerning the protection of Retail Clients does not apply, nor will the Financial Services Compensation Scheme beavailable.For the purposes of Section 21, U.K. Financial Services and Markets Act 2000 (the “Act”), the content of this communication has beenapproved by Wells Fargo Securities International Limited, a regulated person under the Act.Disclaimer
  43. 43. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 43Primary Index: MSCI Emerging Markets Net Index1. Wells Capital Management (“WellsCap”) claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. WellsCap has beenindependently verified for the periods from January 1, 1997 through December 31, 2012. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-widebasis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. The Emerging Markets Equity Total Return Composite has been examined for the periodsfrom January 1, 2011 through December 31, 2012. The verification and performance examination reports are available upon request.2. WellsCap is a registered investment adviser and a wholly owned subsidiary of Wells Fargo Bank, N.A. Since the firm’s creation in 1996, the firm has acquired a number of investment teams and/or assets through mergers andacquisitions. These include assets and/or investment teams from Norwest Investment Management Inc., Sutter Advisors, LLC, Montgomery Asset Management, Benson Associates, Strong Financial Corporation, EvergreenInvestments, First International Advisors, LLC, Metropolitan West Capital Management, LLC and EverKey Global Partners. In all cases, the investment teams involved in each acquisition and merger remain autonomous teamswithin WellsCap.3. The Emerging Markets Equity Total Return Composite (“Composite”), previously named the Emerging Markets Income and Growth Equity Composite, includes all discretionary accounts managed in this style. The strategyinvests in stocks with a sustainable high dividend yield backed by strong company financials and fundamentals. Accounts also may invest a portion of its holdings in stocks with a lower yield than that of the reference benchmark anda higher growth profile. The manager selects stocks for an account in order to maximize the potential dividend yield of the overall portfolio while maintaining a controlled level of risk. Investment results are measured versus theMSCI Emerging Markets (Net) Index. Prior to January 1, 2013, the Composite was measured versus the MSCI Emerging Markets (Gross) Index. The benchmark was changed in 2013 for all periods, to reflect a benchmark withmore relevant tax withholding status of securities. The MSCI Emerging Markets (Net) Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. TheComposite was created in February 2010. The Composite inception date is January 1, 2010.4. Composite returns are net of transaction costs and non-reclaimable withholding taxes, if any, are expressed in US dollars, and reflect the reinvestment of dividends and other earnings. A model fee is utilized for the net compositereturns, which is the maximum annual advisory fee based upon the fee schedule in effect during each respective performance period. Any changes to the fee schedule are reflected in the calculation of the net composite returnsbeginning with the period in which the fee schedule is revised. Actual fees may vary depending on, among other things, the applicable fee schedule and portfolio size. WellsCap’s fee schedules are available upon request and may alsobe found in Part 2 of Form ADV. The published fee schedule for this strategy is 1.10% for the first $50mm, 0.90% for the next $50mm, 0.85% for the next $100mm and 0.70% over $200mm. Additional information regardingWellsCap’s policies for valuing accounts, calculating performance and preparing compliant presentations are available upon request.5. Internal dispersion is the equal weighted standard deviation of the annual gross returns of all accounts included in the composite for the entire year. For years where there are 5 or fewer accounts in the composite for the entire year,dispersion is not presented as it is not a meaningful statistical calculation. The three-year annualized standard deviation measures the variability of the gross composite returns and the index returns over the preceding 36-month timeperiod. The notation “n/a” (not available) will appear for periods, if any, where 36 monthly returns are not available for the composite and/or the index.6. Index returns are provided to represent the investment environment existing during the time periods shown and are not covered by the report of independent verifiers..The MSCI Emerging Markets (Net) Index consists of thefollowing 21 emerging market country indices: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan,Thailand, and Turkey. For comparison purposes, the index is fully invested, which includes the reinvestment of income. The returns for the index do not include any transaction costs, management fees or other costs..7. Actual performance results may differ from composite returns, depending on the size of the account, investment guidelines and/or restrictions, inception date and other factors. Past performance is not indicative of future results. Aswith any investment vehicle, there is always the potential for gains as well as the possibility of losses. Our registration as an Investment Adviser does not imply any level of skill or training. For a complete list of WellsCap compositedescriptions, please see https://www.wellscap.com/about/business_risk_compliance.html.GIPS® Compliant PresentationEmerging Markets Equity Total Return Composite Performance SummaryPeriodGross AnnualReturn (%)Net AnnualReturn (%)Primary IndexReturn (%)Comp 3 YrStd. Dev.Primary Index3 Yr Std DevInternalDispersionNumber ofAccountsCompositeAssets ($-mm)Total FirmAssets ($-mm)2012 21.6 20.3 18.2 17.79 21.50 N.A. 3 170.1 332,1542011 -7.0 -8.0 -18.4 N.A. N.A. N.A. 1 14.2 330,8552010 28.2 26.8 18.9 N.A. N.A. N.A. 1 17.7 365,552
  44. 44. Emerging Markets Equity Income-Focused Strategies – First Quarter 2013 44Primary Index: MSCI China (Net) IndexIP = Period from April 1, 2009 (Inception) through December 31, 2009.1. Wells Capital Management (“WellsCap”) claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. WellsCap has beenindependently verified for the periods from January 1, 1997 through December 31, 2012. The verification reports are available upon request. Verification assesses whether (1) the firm has complied with all the composite constructionrequirements 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 ofany specific composite presentation.2. WellsCap is a registered investment adviser and a wholly owned subsidiary of Wells Fargo Bank, N.A. Since the firm’s creation in 1996, the firm has acquired a number of investment teams and/or assets through mergers andacquisitions. These include assets and/or investment teams from Norwest Investment Management Inc., Sutter Advisors, LLC, Montgomery Asset Management, Benson Associates, Strong Financial Corporation, EvergreenInvestments, First International Advisors, LLC, Metropolitan West Capital Management, LLC and EverKey Global Partners. In all cases, the investment teams involved in each acquisition and merger remain autonomous teams withinWellsCap.3. The China Equity Strategy Composite (“Composite”) includes all discretionary accounts over $5 million managed in this style. The strategy aims to capitalize on the rising global strength of both the domestic and export sectors ofChina. By investing in Chinese stocks, the strategy is able to leverage the tremendous potential of the Chinese economy as it develops. As with a general emerging market portfolio, a stock selection strategy will consist of companieswith promising business models, well-run operations, solid management, strong financials and attractive valuations. Investment results are measured versus the MSCI China (Net) Index. Prior to January 1, 2013, the Composite wasmeasured versus the MSCI China (Gross) Index. The benchmark was changed in 2013 for all periods, to reflect a benchmark with more relevant tax withholding status of securities. The Composite was created in May 2009. TheComposite inception date is April 1, 2009.4. Composite returns are net of transaction costs and non-reclaimable withholding taxes, if any, are expressed in US dollars, and reflect the reinvestment of dividends and other earnings. A model fee is utilized for the net compositereturns, which is the maximum annual advisory fee based upon the fee schedule in effect during each respective performance period. Any changes to the fee schedule are reflected in the calculation of the net composite returnsbeginning with the period in which the fee schedule is revised. Actual fees may vary depending on, among other things, the applicable fee schedule and portfolio size. WellsCap’s fee schedules are available upon request and may alsobe found in Part 2 of Form ADV. The published fee schedule for this strategy is 1.10% for the first $50mm, 0.90% for the next $50mm, 0.85% for the next $100mm and 0.70% over $200mm. Additional information regardingWellsCap’s policies for valuing accounts, calculating performance and preparing compliant presentations are available upon request.5. Internal dispersion is the equal weighted standard deviation of the annual gross returns of all accounts included in the composite for the entire year. For years where there are 5 or fewer accounts in the composite for the entire year,dispersion is not presented as it is not a meaningful statistical calculation. The three-year annualized standard deviation measures the variability of the gross composite returns and the index returns over the preceding 36-month timeperiod. The notation “n/a” (not available) will appear for periods, if any, where 36 monthly returns are not available for the composite and/or the index.6. Index returns are provided to represent the investment environment existing during the time periods shown and are not covered by the report of independent verifiers. The MSCI China (Net) Index is a free float-adjusted marketcapitalization–weighted index of Chinese equities that includes China-affiliated corporations and H shares listed on the Hong Kong Exchange, and B shares listed on the Shanghai and Shenzhen exchanges. For comparison purposes,both indices are fully invested, which includes the reinvestment of income. The returns for the indices do not include any transaction costs, management fees or other costs.7. Actual performance results may differ from composite returns, depending on the size of the account, investment guidelines and/or restrictions, inception date and other factors. Past performance is not indicative of future results. Aswith any investment vehicle, there is always the potential for gains as well as the possibility of losses. Our registration as an Investment Adviser does not imply any level of skill or training. For a complete list of WellsCap compositedescriptions, please see https://www.wellscap.com/about/business_risk_compliance.html.GIPS® Compliant PresentationChina Equity Strategy Composite Performance SummaryPeriodGross AnnualReturn (%)Net AnnualReturn (%)Primary IndexReturn (%)Comp 3 YrStd. Dev.Primary Index3 Yr Std DevInternalDispersionNumber ofAccountsCompositeAssets ($-mm)Total FirmAssets ($-mm)2012 25.0 23.6 22.7 20.60 21.92 N.A. 1 21.3 332,1542011 -19.5 -20.4 -18.4 N.A. N.A. N.A. 1 17.2 330,8552010 16.0 14.7 4.6 N.A. N.A. N.A. 1 21.7 365,5522009 (IP) 65.5 64.2 60.2 N.A. N.A. N.A. 1 18.1 363,451
  45. 45. DisclosureINSTITUTIONAL INVESTOR USE ONLY – NOT FOR USE WITH THE RETAIL PUBLICWells Fargo Asset Management is a trade name utilized by the asset management businesses of Wells Fargo & Company.Certain investments are distributed by Wells Fargo Funds Distributor, LLC, Member FINRA/SIPC. Wells Fargo FundsDistributor, LLC is a subsidiary of Wells Fargo & Company.This document is for your information only and is not an offer to sell, or a solicitation of an offer to buy, the securities orinstruments named or described in this document. Interested parties are advised to contact the entity with which they deal, or theentity that provided this document to them, if they desire further information. The information in this document has been obtainedor derived from sources believed by Wells Capital Management to be reliable, but Wells Capital Management does not representthat this information is accurate or complete. Any opinions or estimates contained in this document represent the judgment ofWells Capital Management, at this time, and are subject to change without notice. Wells Capital Management and its affiliatesmay from time to time provide advice with respect to, acquire, hold, or sell a position in, the securities or instruments named ordescribed in this document.Wells Capital Management is the trade name of the investment management services provided by certain subsidiaries ofWells Fargo & Company and marketed by Wells Fargo Securities International Limited and Wells Capital Management,Inc. Wells Fargo Securities International Limited is authorised and regulated by the Financial Conduct Authority withinthe U.K.Wells Capital Management provides investment advisory services to institutional clients. The rules contained under the FinancialServices and Markets Act 2000 concerning the protection of Retail Clients does not apply, nor will the Financial ServicesCompensation Scheme be available.For the purposes of Section 21, U.K. Financial Services and Markets Act 2000 (the “Act”), the content of this communication hasbeen approved by Wells Fargo Securities International Limited, a regulated person under the Act.NOT FDIC INSURED – NO BANK GUARANTEE – MAY LOSEVALUE

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