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Market Update Q3 2015

Message from the Chief Investment Officer

We saw headlines dominated this quarter by news about weakness in the Chinese economy and the timing of a Federal Reserve interest rate increase. In addition to other market news, these factors contributed to significant market volatility, particularly in August. As the negative sentiment within equity markets outweighed the positive, we also saw markets trend lower, resulting in relatively lower results for MD portfolios for the quarter. Fixed income investments in portfolios helped to moderate the short-term effects of market volatility and helped validate the importance of our long-term perspective on portfolio construction.

We continue to monitor market activity on your behalf with a view to effectively managing risks to your portfolios. Our ongoing insight and discipline help us to build and maintain portfolios that are appropriate for the time horizon you have established with your advisor. Taking this longer-term approach allows MD investors to weather periods of market volatility, a common definition of short-term investment risk.

The recent volatility also highlights the importance of maintaining a diversified portfolio that incorporates different asset classes, industry sectors and regions. As the Macroeconomic Overview and Outlook illustrates, there is significant divergence in investment returns and expectations among geographic areas and between asset classes. MD’s Investment Management and Strategy team monitors these conditions to support our asset allocation strategy. This results in purposeful portfolio construction that allocates to a variety of investments, with a view to managing your exposure to market risk in any one industry or asset class.

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