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CORONATION GLOBAL MANAGED FUND Fund Information as at 30 April 2017 WHAT IS THE FUND’S OBJECTIVE? WHAT COSTS CAN I EXPECT TO PAY? Global Managed aims to maximise long-term investment growth by investing in a range of opportunities available in public asset markets from around the world. Our intent is to outperform an equity-biased benchmark over all five year periods. An annual fee of 1.50% is payable. All fees exclude VAT. Other costs that are incurred in the fund include administrative, trading, custody and audit charges. All performance information is disclosed after deducting all fees and other portfolio costs. We do not charge any fees to access or withdraw from the fund. WHAT DOES THE FUND INVEST IN? More detail is available on www.coronation.com. Global Managed will have a bias towards shares, but can invest in a variety of assets including listed property, bonds and cash. The fund primarily invests in developed economies (including the US, Europe and Japan) but is also mandated to invest in emerging markets. WHO ARE THE FUND MANAGERS? The intent is to keep the fund fully invested in foreign assets at all times. Its exposure will be in a variety of currencies, primarily the US dollar, British pound, euro and yen. LOUIS STASSEN NEIL PADOA BSc, BCom (Hons), CFA BEconSc (AcSci), FFA The fund may use exchange traded funds and other financial instruments (eg. derivatives) to implement specific investment views. GENERAL FUND INFORMATION IMPORTANT PORTFOLIO CHARACTERISTICS AND RISKS Fund Launch Date 1 March 2010 Class A Class Type Accumulation Fund Domicile Ireland Global Managed will only invest in assets we view as being attractively valued and that could offer strong long-term investment growth. The fund’s share selection is the result of rigorous international research conducted by Coronation’s investment team. Morningstar Fund Category USD – Aggressive Allocation Currency US Dollar Benchmark 60% MSCI All Country World Index and 40% Barclays Bond Aggregate While shares typically offer superior long-term returns, this comes with higher levels of risk and volatility. We have a disciplined approach to reducing risk, but shares can be volatile investments and may suffer capital losses over the short term. Global currency movements may intensify investment gains or declines. Investment Minimum US$15 000 Bloomberg CORGMFA ISIN IE00B3PR9321 SEDOL B3PR932 Global Managed aims to achieve the best possible long-term growth for investors. Consequently, it will have a sizeable exposure to shares, which typically offer the best returns over the long run. HOW LONG SHOULD INVESTORS REMAIN INVESTED? An investment term of more than five years is recommended. WHO SHOULD CONSIDER INVESTING IN THE FUND? Investors who are building wealth, and who seek a single international investment that will give them access to some of the best opportunities around the globe; require investment growth over the long term and accept the possibility of volatility and the risk of short-term losses; do not require an income from their investment. Client Service: 0800 22 11 77 Email: [email protected] Website: www.coronation.com Minimum Disclosure Document Page 1/4 CORONATION GLOBAL MANAGED FUND CLASS A as at 30 April 2017 Currency USD Fund size Launch date 01 March 2010 NAV Benchmark Composite: 60% MSCI All Country World Index & 40% Barclays Global Bond Aggregate Total Expense Ratio 1.55% (including a performance fee of 0.10%) Transaction Costs 0.20% Portfolio manager/s US$ 914.07 million 16.49 Louis Stassen and Neil Padoa PERFORMANCE AND RISK STATISTICS PORTFOLIO DETAIL GROWTH OF A $100,000 INVESTMENT ASSET ALLOCATION EXPOSURE Sector 30 Apr 2017 Equities Merger Arbitrage Property Commodities Bonds Cash RETURNS VS BENCHMARK 57.0% 2.0% 8.2% 1.9% 9.0% 21.9% TOP 10 HOLDINGS Fund Benchmark Active Return As at 31 Mar 2017 % of Fund 64.9% 59.5% 5.3% Alphabet Inc 2.7% Since Launch (annualised) 7.2% 6.7% 0.5% Amazon Com Inc 2.4% Latest 5 years (annualised) 7.1% 6.1% 1.0% Facebook Inc. 2.2% Latest 3 years (annualised) 3.8% 3.4% 0.3% Pershing Square Holdings 2.1% Latest 1 year 13.9% 8.0% 5.9% Blackstone Group 2.0% Charter Communication A 2.0% Year to date 9.2% 6.3% 2.9% Walgreen Co 2.0% L Brands Inc 1.8% KKR & Co. LP 1.8% Liberty Global CL A 1.8% Since Launch (unannualised) RISK STATISTICS SINCE LAUNCH RETURNS VS MSCI ACWI Fund 64.9% MSCI ACWI Since Launch (annualised) 7.2% 10.1% Latest 5 years (annualised) 7.1% 10.5% Latest 3 years (annualised) 3.8% 6.1% Latest 1 year 13.9% 15.1% Year to date 9.2% 8.6% Since Launch (unannualised) 99.4% Fund Benchmark Annualised Deviation Sharpe Ratio Maximum Gain Maximum Drawdown Positive Months 12.7% 0.56 21.7% (17.4)% 66.3% 8.9% 0.74 9.6% (11.1)% 59.3% Fund Date Range Highest annual return 22.7% Jul 2010 - Jun 2011 Lowest annual return (14.4%) Mar 2015 - Feb 2016 MONTHLY PERFORMANCE Fund 2017 Fund 2016 Fund 2015 Jan Feb Mar Apr 3.2% (6.9)% (1.5)% 2.6% 2.1% 4.9% 0.2% 8.5% (2.1)% 2.9% 1.0% 2.4% Issue date: 2017/05/09 Client Service: 0800 22 11 77 May 0.2% (0.9)% Jun (3.1)% (0.8)% Jul 5.7% (1.4)% Aug 1.0% (7.2)% Sep 0.5% (4.7)% Oct (1.7)% 7.8% Nov 1.0% (0.6)% Dec 1.0% (2.4)% YTD 9.2% 8.7% (7.0)% Please refer to page 4 of the Comprehensive Fact Sheet for important additional infomation, including change in cost disclosures. Email: [email protected] Website: www.coronation.com Minimum Disclosure Document Page 2/4 CORONATION GLOBAL MANAGED FUND Quarterly Portfolio Manager Commentary Please note that the commentary is for the retail class of the fund. All in all, the first quarter of 2017 was another good one for global asset performance. Although weakness in the US dollar somewhat flattered returns, almost every asset class delivered a positive return, with the exception of certain commodities. Gold reversed its position as the worst-performing asset class of the fourth quarter of 2016 to end at the top of the performance tables in the first quarter of 2017, rising 8.4%. This reflects heightened geopolitical concerns in various regions of the world, as well as a slightly more sanguine approach to what US President Donald Trump can or may do over the next few years. Global equities were amongst the global asset classes that did well, rising 6.9%, and thereby continuing its outperformance of bonds (as has been the case since the global low point in yields seen around the time of the Brexit vote). Within global equities, the best returns came from the technology sector, which rose 12%. Energy was the only sector that did not deliver positive performance, falling 5% on the back of lower oil prices. In the bond and equity markets, returns appear to have largely followed a pattern commensurate with asset risk. Therefore, the lower the credit rating, the better the return. This was illustrated by the fact that despite the US Federal Reserve (Fed) hiking interest rates in March, emerging market debt (in local currency) performed very strongly, producing a total return of 6.4%. Additionally, returns were further boosted by the strength in emerging market currencies, with the Mexican peso, Russian rouble, and Korean won rising between 8% and 10% against the US dollar over the quarter. Interestingly, despite a more hawkish Fed, US Treasury yields moved lower over the quarter, albeit only marginally. In the currency market, the clear trend over the quarter was that investors’ long-standing preference for the US dollar has declined, with the greenback underperforming every other major currency during the quarter. Global bonds returned 1.8% in US dollar terms over the quarter, but their 12-month lagging return remains negative 1.9% due to the significant correction following the outcome of the US election in the fourth quarter of 2016. Global listed property recovered somewhat after the sell-off experienced following the US election, although the asset class lagged equities by a significant margin. For the quarter, listed property returned 2.3%, marginally ahead of bonds. The asset class also performed slightly better than bonds over the last 12-months (up 1.9%), but much worse than equities (up 15.0%). Over three and five years, however, the returns from property and equities are very similar. The fund returned 6.2% over the three-month period, handsomely outperforming its benchmark return of 4.8%. As we have often argued before, this short-term performance is purely incidental, given the vagaries of financial markets over shorter periods of time. Our 12-month lagging return of 11.9% has been materially above the benchmark return of 8.0%. In fact, we are now ahead of the benchmark over all meaningful periods and the fund's annualised outperformance since inception stands at 0.3% p.a. This number puts the fund comfortably in the top quintile of global funds with a similar mandate. A very satisfying feature of the past quarter’s performance is that we have outperformed all the relevant benchmarks in the fund's respective asset class buckets. In hindsight, the fund's exposure to equities could have been higher, but within the asset class we comfortably outperformed the benchmark over both the quarter and the year. Our property holdings did well over the quarter, even though the 12-month numbers remain negative. Credit performed well over both the quarter and the year, and our gold holdings added significant alpha to the fund over the last quarter. Over the longer term, similar comments can be made about our stock/instrument selection within equity and credit, while the property holdings performed well relative to bonds. The only negative over the quarter came from a poor return in the merger arbitrage bucket, which was impacted by continued uncertainty around the Rite Aid deal. We are monitoring the developments closely, but remain convinced that the potential returns outweigh the risks, and have added to this position. Other notable contributors to the positive equity performance over the last year include Apollo, Estácio/Kroton (featured in previous commentaries), Amazon, and Charter Communications. We had two material detractors in Limited Brands and Tripadvisor. We will feature our investment thesis for Limited Brands at the end of this commentary. In the case of Tripadvisor, it was again a reminder about the importance of management and their ability to execute strategy that ultimately will be the largest determinant of success. At the time of investing in Tripadvisor, we also invested in Priceline, the online travel agency that owns powerful platforms like Booking.com. While TripAdvisor and Priceline operate in the same sector, and therefore benefit from the same strong secular drivers, Priceline’s focus on driving simplicity and customer value has allowed them to significantly outperform TripAdvisor over the last few quarters, thereby creating exceptional value for shareholders. TripAdvisor, on the other hand, has been trying to migrate its business model to include other services and changed value propositions for its customers, in the process losing focus and making some operational mistakes. We are watching them carefully to see if they can ultimately monetise the strong brand and content that they are known for. As equity markets continued to scale new heights, we have become more concerned about valuation levels. It is clear that markets have been giving Mr Trump the benefit of the doubt regarding his ability to reflate the economy and kick-start growth in the US, and ultimately across other regions of the world. We take a more sanguine approach in that we do not want to be paying for promises, especially coming from a volatile and inexperienced US administration. As such, we have bought more put options in the fund as protection against exogenous shocks. We have also reduced the equity exposure in the fund to around 57%, the lowest level since inception. The world remains an uncertain place, and while we embrace taking risk when we believe the odds are tilted in our favour, we have become a little more circumspect in this regard. We have started adding some exposure to US property stocks for the first time in a while. These stocks sold off significantly following the correction in long bond rates, and most of the retail REITs were punished during this quarter as investor concerns focused on the potential 'death' of the US mall (which we discuss in more detail in the section on Limited Brands below). While we concur that the internet will continue to gain market share at the expense of bricks and mortar retailers, our view differs from that of the market - in our opinion, the listed portfolios of US retail REITs comprise topquality malls which should remain relevant to their tenants even in a more challenged world. Investment case for Limited Brands Limited Brands is the owner of powerful brands like Victoria’s Secret and Bath & Body Works. When we initially bought the stock, the investment thesis focused on a continued opportunity in the US for Bath & Body Works and, what we regarded as an outsized opportunity for Victoria’s Secret in China. Since then, the competitive landscape (for Victoria’s Secret) has intensified in the US, and coupled with continued pressure on footfall in conventional retail malls, investors have essentially given up on the company in terms of its ability to compete in its home market. While short-term profits have been rebased downwards, we continued to add to our position, such that Limited Brands is now a top five position in the fund. We regard the brands as very powerful and relevant for future consumers, and still believe in the longer-term opportunity in China. In the meantime, we are comfortable paying a 14 to 15 price earnings multiple for the reduced profit base with continued strong cash generation. We expect our patience to be handsomely rewarded at some point in the future. Portfolio managers Louis Stassen and Neil Padoa as at 31 March 2017 The highlight of our equity returns over the last quarter was Softbank’s offer to acquire 100% of Fortress Investment Group (at the time a top five equity holding within the fund). The offer price represented a 60% premium to the undisturbed price, and while we think it still undervalues the stock by about between 20% and 30%, we recognised that the majority of the equity is held by management, who were supportive of the transaction and intended to stay on as part of the larger group. As such, even though we were a material minority shareholder, we could not influence the transaction outcome, and hence liquidated the position to invest the proceeds in other promising opportunities. We continue to believe that the alternative asset management sector offers interesting investment opportunities, and remain committed investors in stocks like Blackstone, Apollo, KKR and Carlyle. Client Service: 0800 22 11 77 Email: [email protected] Website: www.coronation.com Minimum Disclosure Document Page 3/4 CORONATION GLOBAL MANAGED FUND Important Information IMPORTANT INFORMATION THAT SHOULD BE CONSIDERED BEFORE INVESTING IN THE CORONATION GLOBAL MANAGED FUND The Global Managed Fund should be considered a medium- to long-term investment. The value of units may go down as well as up, and is therefore not guaranteed. Past performance is not necessarily an indication of future performance. The fund is mandated to invest up to 100% of its portfolio into foreign securities and may as a result be exposed to macroeconomic, settlement, political, tax, reporting or illiquidity risk factors that may be different to similar investments in the South African markets. Fluctuations or movements in exchange rates may cause the value of underlying investments to go up or down. Coronation reserves the right to close the fund to new investors if we deem it necessary to limit further inflows in order for it to be managed in accordance with its mandate. Unit trusts are allowed to engage in scrip lending and borrowing. Coronation Global Fund Managers (Ireland) Limited is authorised in Ireland and regulated by the Central Bank of Ireland. The fund is approved under Section 65 of the Collective Investment Schemes Control Act by the Financial Services Board of South Africa. Northern Trust Fiduciary Services has been appointed as the fund’s trustees (www.northerntrust.com; t: +353-1-542-2000), and its custodian is JP Morgan Administration Services (Ireland) Limited (www.jpmorgan.com; t: +353-1-612-4000). Coronation is a full member of the Association for Savings & Investment SA (ASISA). HOW ARE UNITS PRICED AND AT WHAT PRICE WILL MY TRANSACTION BE EXECUTED? Unit trusts are traded at ruling prices set on every business day. Fund valuations take place at approximately 17h00 each business day (Irish Time) and forward pricing is used. Instructions must reach Coronation before 12h00 (SA Time) one day prior to the dealing date. You can expect to receive withdrawal payouts three business days after the dealing day. Large investments or redemptions (exceeding 5% of fund value) may be subject to an anti-dilution levy to defray dealing costs and expenses. This levy, where applicable, is applied fully for the benefit of the fund. HOW WAS THE PERFORMANCE INFORMATION INCLUDED IN THIS FACT SHEET CALCULATED? Performance is calculated by Coronation as at the last day of the month for a lump sum investment using Class A NAV prices with income distributions reinvested. All underlying price and distribution data is sourced from Morningstar. Performance figures are quoted after the deduction of all costs (including manager fees and trading costs) incurred within the fund. Note that individual investor performance may differ as a result of the actual investment date, the date of reinvestment of distributions and dividend withholding tax, where applicable. Annualised performance figures represent the geometric average return earned by the fund over the given time period. Unannualised performance represents the total return earned by the fund over the given time period, expressed as a percentage. WHAT IS THE TOTAL EXPENSE RATIO (TER) AND TRANSACTION COSTS (TC)? TER is calculated as a percentage of the average net asset value of the portfolio incurred as charges, levies and fees in the management of the portfolio for a rolling 36-month period to the last quarter end (December, March, June and September) The TER charged by any underlying fund held as part of a fund’s portfolio is included in the TER figure, but trading and implementation costs incurred in managing the fund are excluded. A higher TER does not necessarily imply a poor return, nor does a low TER imply a good return. The current TER may not necessarily be an accurate indication of future TER's. Transaction costs are a necessary cost in managing a fund and impacts the fund’s return. They should not be considered in isolation as returns may be impacted by many other factors over time including market returns, the type of fund, the investment decisions of the investment manager and the TER. ADVICE AND PLATFORM COSTS Coronation does not provide financial advice. If you appoint an advisor, advice fees are contracted directly between you and the advisor. We will facilitate the collection of advice fees only upon receiving your instruction, up to a maximum of an initial fee of 3.00% and an ongoing fee of 1.00% per annum (where an initial advice fee of more than 1.50% is selected, the maximum annual advice fee that we will collect is 0.50%). Advice fees are usually collected through the redemption of units. You may cancel the instruction to facilitate the payment of advice fees at any time. Advisors will only share in Coronation fees subject to prior approval by and/or disclosure to the investor. A portion of Coronation’s annual management fee may be paid to administration platforms such as Linked Investment Service Providers (LISPs) as a payment for administration and distribution services. WHERE CAN I FIND ADDITIONAL INFORMATION? Additional information such as fund prices, brochures, application forms and a schedule of fund fees and charges is available on www.coronation.com. You will also find additional information on the considerations pertinent to investing in a fund denominated in a foreign currency and domiciled in an offshore jurisdiction. IMPORTANT INFORMATION REGARDING TERMS OF USE This document is for information purposes only and does not constitute or form part of any offer to issue or sell, or any solicitation of any offer to subscribe for or purchase any particular investment. Opinions expressed in this document may be changed without notice at any time after publication. We therefore disclaim any liability for any loss, liability, damage (whether direct or consequential) or expense of any nature whatsoever which may be suffered as a result of or which may be attributable, directly or indirectly, to the use of or reliance upon the information. Client Service: 0800 22 11 77 Email: [email protected] Website: www.coronation.com Minimum Disclosure Document Page 4/4