CORONATION GLOBAL EMERGING MARKETS EQUITY STRATEGY

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1 INSTITUTIONAL 31 INVESTMENT OBJECTIVE Access to what we believe are the best investment opportunities in Global Emerging Markets Aims to deliver capital growth through a focused equity portfolio Objective to outperform MSCI Emerging Markets Index over a 3-5 year period INVESTMENT APPROACH The Strategy is constructed on a clean-slate basis and therefore has no reference to a benchmark. Portfolio construction is from the bottom-up, with a focus on holding those shares which offer the most attractive risk adjusted upside to fair values relative to current market prices. In calculating fair values through our proprietary research, we place the emphasis on normalised earnings using a long-term time horizon (5 years+), rather than focusing on news flow and current earnings. We have a valuation-driven approach and strive to buy shares that are trading well below what we believe the business is worth. STRATEGY STRUCTURE The Strategy invests in equity securities of companies based in emerging markets or in companies that derive a significant portion of their business from emerging economies. Total AUM in Strategy: US$ 4.40 billion TOP TEN EQUITY HOLDINGS Naspers Ltd (South Africa) Kroton Educacional SA (Brazil) Baidu Inc (China) Yes Bank Ltd (India) JD.com Inc Adr (China) Tata Motors Ltd (India) Axis Bank Ltd (India) Heineken NV (Netherlands) Ctrip.com International-Adr (China) Brilliance China Auto (China) % of Strategy 5.3% 4.7% 4.6% 3.9% 3.6% 3.5% 3.3% 3.3% GROWTH OF A US$100,000,000 INVESTMENT Benchmark: MSCI Emerging Markets Index COMPOSITE PERFORMANCE FOR VARIOUS PERIODS (GROSS OF FEES) Since Launch (cumulative) Since Launch (p.a.) Latest 7 years (p.a.) Latest 5 years (p.a.) Latest 3 years (p.a.) Latest 1 year Year to date Latest 1 month * Launch Date: 14 July 2008 Strategy Benchmark Outperformance 43.8% -1.1% 4.8% -0.1% 13.0% 8.5% -0.3% -3.8% -4.0% -4.2% % 6.4% 5.7% 17.5% 13.2% -20.7% -14.7% -6.2% -1.8% 17.1% -2.3% 29.6% 18.6% -13.2% -18.2% 14.8% 19.2% 90.9% 79.0% 44.9% 4.4% 3.5% 0.2% -2.3% 0.7% 4.2% -6.0% -4.4% 19.4% 10.9% -4.4% 11.9% SECTORAL EXPOSURE GEOGRAPHIC EXPOSURE 1.3% 1.0% 2.0% 15.2% 16.6% 22.1% 41.8% Consumer Discretionary 41.8% Financials 22.1% Information Technology 16.6% Consumer Staples 15.2% Health Care 2.0% Industrials 1.0% Cash 1.3% Total: 100.0% 1.3% 0.7% 0.8% 0.9% 1.0% 1.1% 1.4% 1.5% 1.9% 2.1% 2.9% 3.1% 10.1% China 21.0% India 18.1% 21.0% Brazil 17.9% South Africa 10.1% Russian Federation Netherlands United States Indonesia 3.1% Germany 2.9% Peru 2.1% Belgium 1.9% Sweden 1.5% United Kingdom 1.4% Hong Kong 1.1% Mexico 1.0% 18.1% Philippines 17.9% Turkey 0.9% 0.8% Taiwan 0.7% Cash 1.3% Total: 100.0% SOUTH AFRICA Tel: Fax: [email protected] UNITED KINGDOM Tel Fax [email protected]

2 INSTITUTIONAL 31 PORTFOLIO MANAGERS Gavin Joubert BBusSc, CA(SA), CFA Head of Coronation s Global Emerging Markets investment unit, Gavin has 17 years experience as an investment analyst and portfolio manager. He joined Coronation in 1999 and currently co-manages the Global Emerging Markets strategy. Suhail Suleman BBusSc, CFA Suhail is a portfolio manager within the Global Emerging Markets (GEM) investment unit. He joined Coronation in 2007 and has more than 14 years investment experience. Please contact Coronation for further information Brian Thomas Lead Fund Manager: International Tel: [email protected] Gus Robertson Fund Manager: International Tel: [email protected] The information contained herein is not approved for use by the public and must be read together with our Disclaimer that contains important information. If you are in possession of a physical copy of this document and you are unable to access our Disclaimer online, kindly contact us at [email protected] and a copy will be sent to you via . SOUTH AFRICA Tel: Fax: [email protected] UNITED KINGDOM Tel Fax [email protected]

3 Review for the quarter The fund appreciated by 6.4% during the first quarter of the year compared to the 5.7% increase in the index. In terms of positive contributors, the three largest contributors over the quarter were all Brazilian companies: Kroton up 34.9% in USD with a positive 1.2% attribution; BB Seguridade up 39.9% in USD with a 0.9% attribution; and Itausa up 37.5% in USD with a 0.7% attribution. Credicorp (the largest bank in Peru) also contributed (up 34.2% in USD with a 0.5% attribution) as did Yes Bank (a top 5 Indian private bank) which was up 18.9% with a 0.5% attribution. In terms of notable detractors over the period, JD.com (no.2 e-commerce retailer in China) declined by 17.8% with a -1.1% attribution and Brilliance China Automotive (BMW JV in China) declined by 17.7% with a -0.9% attribution. Having launched in July 2008, the fund is now approaching its 8-year track record and over this period has outperformed the market by per annum. Over the past 7 years, the fund has outperformed the market by 4.4% per annum and over the past 5 years by 3.5% per annum. During the quarter we reduced a number of the fund s Brazilian holdings as a result of sharp share price appreciation, which was driven partly by increased prospects for President Rousseff s impeachment and a resultant change in government. The fund s overall Brazilian exposure, however, still remains high at 17.9% of fund (down from 19.3% of fund at 31 December) as we believe the country still offers some of the most compelling risk-adjusted investment opportunities in emerging markets today. Given its size in the portfolio taken together with the current above-average risks, we continue to spend a large part of our time on Brazil (we have been on three trips to the country in the past four months). As a key part of this process, we continually reassess the long-term earnings streams (and hence fair values) of all the Brazilian holdings in the fund, and in this regard the weighted average upside to these holdings is just under 100% today. We are of course well aware that Brazil is in a deep recession, and is experiencing difficult and uncertain economic and political times (this is factual, with ongoing headlines in this regard). However, in our view not all Brazilian companies are equal, asset prices are depressed, and valuations are attractive due to Brazil being loathed by investors. We make investment decisions based on what we believe a business will earn over the next several years and not based on current macro news flow or the next one year of earnings. This is simply because we believe that the true value of a business is made up of its earnings over the next several years (and indeed into perpetuity), and not just the next year of earnings. In our view, many market participants tend to value businesses on the next one year of earnings (T1 earnings x PE) and in doing so extrapolate current experience (be it good or bad) into perpetuity. In contrast, our long-term approach often gives us a totally different answer as to whether a stock may be attractive or not. In this regard, based on the long-term earnings prospects for the fund s Brazilian holdings, there is very good value to be found in Brazil in our view. In summary, we believe the magnitude of the upside compensates one for the risks - if there was only 30% upside to the fund s Brazilian holdings (as opposed to the c.100% upside), we would have very little invested in Brazil. Other meaningful sells during the quarter included our continued reduction of the fund s Russian exposure as two selected holdings (X5 Retail and Mail.ru) moved closer to our fair values for the respective businesses. As a result, the fund s Russian exposure reduced from 6.5% of fund as at 31 December to 5.1% of fund as at the end of March. The sharp sell-off in South African equities following the dismissal of the finance minister in December has started to open up a few selected opportunities in South Africa, and we bought new positions in two South African companies: Aspen and Old Mutual. Aspen is a globally diversified generic pharmaceutical company run by Stephen Saad, who in our view is one of the most impressive CEOs in the country, and who importantly still owns a 12% stake in the company which he founded. The business has favourable long-term positive drivers (increasing generic use), is defensive, generates high returns (ROE of c. 20%) and is very cash generative. The sharp sell-off in the share price over the past year (from R400 to R240) enabled us to buy a stake in this very good asset at around 15x forward earnings, which we believe is an attractive entry point. Old Mutual is a diversified financial services company with interests in asset management, wealth management, insurance and banking spanning South Africa, Africa, the UK and the US with around 60% of the value of the business sitting in emerging markets, primarily South Africa. We like most of the group s underlying assets, which in our view are being undervalued by the market. In addition to fundamental undervaluation, we believe the restructuring of the business announced recently by the new CEO (whom we have met with twice recently to understand his thinking about what can be done in terms of restructuring/unbundling) will add a lot of value. The two new purchases mentioned above, and continued small buying of Discovery (South Africa s no. 1 health insurer) resulted in the fund s South African

4 exposure increasing from 7.9% of fund at the beginning of the year to 10.2% of fund at the end of March. Most of the South African holdings do, however, have substantial businesses outside of the country, which means that the 10.2% South African exposure is not entirely reflective of reality. In this regard, the underlying look through South African exposure is actually less than 3% at the overall portfolio level. We also added to the fund s Indian banking exposure through a new position in Housing Development Finance Corporation (HDFC). We have followed HDFC for a number of years (we undertook the initial detailed research and resultant research report on the company almost three years ago). While we have always liked the asset, we have never owned it due to valuation. Over the past few years the value of the business has continued to grow at a strong pace, but recent months saw a decline in its share price, driven by concerns over slower short-term growth, which brought the share into buying range. The share price decline also coincided with our meeting with three senior executives of the company on two separate trips to India in February, which reinforced our positive view on the long-term prospects for the business and on the quality of the very experienced and conservative management team. In addition to the three senior executives we met with recently, we have also met with the CEO a number of times over the years. Collectively, the management team of HDFC is one of the most impressive we have come across in emerging markets. Average tenure of the senior management team at the company is 30 years. HDFC s main business is that of mortgage lending, which makes up approximately 70% of our valuation. The company was founded in 1977 as the first specialist mortgage lender (loans against predominantly residential property) in India. Today they have a 30% share of this market. In addition to the mortgage business, it also has banking interests (a 21.6% stake in HDFC Bank, which makes up 20% of our valuation) as well as life insurance and asset management interests (both JVs with Standard Life and together making up approximately 10% of our valuation). The long-term track record of HDFC is exemplary - over the past 15 years the company has produced EPS growth of 20.8% per annum, DPS growth of 19.4% per annum and average ROEs of 24.2%. Very importantly for a bank, their credit control has also been outstanding: cumulative write-offs since their founding in 1977 (i.e. total write-offs over this almost 40-year period divided by total loans granted over this same period) has been under four basis points. This bad debts experience reflects both the conservatism of management and the strength of the bank s credit granting process. While we believe that it will be more difficult to replicate 20% per annum earnings growth over the next 15 years (the bank is just so much bigger now and competitive intensity has increased somewhat over the years), the long-term fundamentals for the business remain excellent in our view. From a financial services point of view (including mortgage penetration, as illustrated in the graph below), India is one of the least penetrated emerging markets. It has a large young population (60% of the population are under 30 years of age and most are not home owners yet) and urbanisation is still only 30%. Under Prime Minister Modi, India is also one of the few emerging markets that is (slowly) implementing reforms to stimulate growth. The country is a net importer of commodities (including oil) and as such, unlike a number of other emerging markets, is a beneficiary of declining commodity prices. The implied valuation on HDFC s mortgage business (stripping out our values for the stakes in HDFC Bank, the insurance and asset management businesses) is currently around 14x forward earnings, which we believe is very attractive for an asset of this quality.

5 China remains the fund s largest country exposure (21.3% of fund). A large part of this exposure is invested in the Chinese internet sector where we find the long-term structural drivers very compelling. The fund has significant positions in Baidu (the no.1 search engine in China), JD.com (the no.2 e-commerce retailer in China), Ctrip (the no.1 online travel company), and the no.1 gaming/social network company Tencent (held indirectly through Naspers). We also bought a position in Netease (the no.2 gaming company) during the quarter. Besides the internet holdings, the fund s other meaningful position in China is Brilliance China Automotive, the only BMW joint venture in China. India, now the second largest country exposure, makes up 18.1% of the fund. The three main areas of investment in India are the private banks Yes Bank, Axis Bank and HDFC (together 9.1% of fund); the IT services companies (5.2% of fund invested in Cognizant, Tata Consultancy Services and HCL); and the owner of Jaguar LandRover, Tata Motors (4.0% of fund). Brazil represents the third largest country exposure at 17.9% of fund of which the main areas of exposure include private education (6.9% of fund invested in the no.1 and no.2 education companies, Kroton and Estacio) and financials (4.7% of fund in total invested in the no.1 insurer BB Seguridade and largest and best run private bank, Itau). Other meaningful industry exposures in the fund include a 5.4% holding in the global brewers Heineken and AB Inbev, both of which earn over half of their earnings from emerging markets. The fund also has a 4.8% investment in the Russian food retailers (of which the no.1 and no.2 operators Magnit and X5 Retail make up the bulk of the exposure). During the quarter we undertook research trips to Brazil (two trips) and India (also two trips), and the next three months will see visits to China, Mexico, Russia, Turkey as well as a third trip to India where recent investor disillusionment is starting to make some stocks potentially more interesting. Overall we continue to find very good selected value in emerging markets. In this regard, the weighted average upside of the fund at time of writing is 75%, which is far north of the 5-year average of around 50%.