Vontobel Fund - Emerging Markets Equity B USD LU

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1 Vontobel Fund - Emerging Markets B Page 1 of 9 Morningstar Category Global Emerging Markets Category Index MSCI EM NR Total Assets 5, Mil Current Yield % Inception Date 03/11/92 Domicile/ Currency LUX/ Morningstar Rating QQQQ Style Map Giant Large Mid Small K 10K Performance 31/01/18 Growth of 10,000 Annualized Value Ret % Fund 14, Category 11, Index 12, Full Manager Change Partial Manager Change Deep Value People Value Blend Growth High Growth Micro Matthew Benkendorf 03/16 Total Named Managers 1 Morningstar Pillars Process p. 2-3 Performance p. 4 People p. 5 Parent p. 6 Price p. 7 Neutral Neutral Negative & ) & & * ) & & ) ( ( 3K Morningstar Rating QQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQ QQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQ QQQQQQQQQQQQQQQQQQQQQQQQ QQQQQQQQ QQ Quartile Rank in Category Percentile Rank in Category % Total Return /- Category /- Index Process Style Box Asset Allocation Stock Bond Cash Other Supersectors m Cyclical w Sensitive x Defensive Price TER/OGC Analyst View Francesco Paganelli, Analyst Maintaining the same approach. The conduct of Morningstar's analysts is governed by Morningstar's Code of Ethics, Securities Trading and Disclosure Policy, and Morningstar Manager Research Integrity Policy. For informaton regarding conflicts of interest, please click Morningstar evaluates mutual funds based on five key pillars, which its analysts believe lead to funds that are more likely to outperform over the long term on a risk-adjusted basis. Analyst Rating Spectrum Œ Á The for Funds is a forward-looking analysis of a fund. Morningstar has identified five key areas crucial to predicting the future success of a fund: People, Parent, Process, Performance, and Price. The pillars are used in determining the for a fund. s are assigned on a five-tier scale running from Gold to Negative. The top three ratings, Gold, Silver, and Bronze, all indicate that our analysts think highly of a fund; the difference between them corresponds to differences in the level of analyst conviction in a fund s ability to outperform its benchmark and peers through time, within the context of the level of risk taken over the long term (defined as a full market cycle or at least five years). Neutral represents funds in which our analysts don t have a strong positive or negative conviction over the long term (defined as a full market cycle or at least five years) and Negative represents funds that possess at least one flaw that our analysts believe is likely to significantly hamper future performance over the long term (defined as a full market cycle or at least five years). Past performance of a security may or may not be sustained in future and is no indication of future performance. For detailed information about the Morningstar Analyst Rating for Funds, please visit 30 Mar, 2017 One year after the departure of its manager, Vontobel Emerging Markets s team remains intact and it continues to pursue the same time-tested strategy. Thus, despite the unappealing cost, the fund retains its Morningstar Analyst Rating of Bronze. This fund s longtime manager, Rajiv Jain, stepped down in early March 2016 and left Vontobel Asset Management a few months later to start his own firm. Taking over was Matthew Benkendorf, who is quite familiar with the strategy and the team here. He had worked with Jain as an analyst and portfolio manager at Vontobel on several funds for 17 years, and was a named comanager on Vontobel Global in Benkendorf also replaced Jain as CIO and signed a 10-year contract with a five-year noncompete agreement. All of the analysts--a team of about 15--stayed in place as well, signed to new contracts of lesser duration. A new hire was added to replace Jain. The fund posted an outstanding record under Jain s leadership, using a growth-oriented strategy that was nonetheless cautious, wanting steady growers that dominated a niche or industry and could withstand tough times. The approach typically limited losses during downturns, as shown most noticeably in 2011 and The fund's trailing five- and 10-year returns through Feb. 28, 2017, each top the Diversified Emerging- Markets Morningstar Category average and the MSCI Emerging Markets Index by healthy margins. That s in spite of a weak showing over the past 12 months. This could raise concerns, given that it covers the time after Jain's departure. But the fund stayed true to its approach. Most of the damage occurred late in 2016 after the U.S. election results led investors to favour cyclical fare over this fund's favoured consumer goods firms, and India's market--a longtime heavy overweighting here--was hit by its demonetisation scheme. Thus, although Jain's departure was certainly a loss, this fund's other strengths remain. It is worth noting, though, that a reduction in the fund s fees would help.

2 Vontobel Fund - Emerging Markets B Page 2 of 9 Process: Approach Morningstar Category Category Index Index Proxy Global Emerging Markets MSCI EM NR ishares MSCI Emerging Markets ETF The strategy has stayed intact. Process Pillar Style 31/01/18 Holdings-Based Style Map Deep Value Value Blend Growth High Growth Style Box Factors Giant Large Mid Small Micro Fund Centroid: Weighted average of equity holdings Zone: 75% of fund equity holdings Category Average Index Proxy Market Cap Fund 3-Yr Avg Category Proxy Giant/Large Mid Small/Micro Avg Market Cap Bil Value Measures Fund 3-Yr Avg Category Proxy Price/Prospect. Earnings Price/Book Price/Sales Price/Cash Flow Dividend Yield Growth Measures Fund 3-Yr Avg Category Proxy Long-Term Earnings % Historical Earnings % Sales % Cash Flow % Book-Value % Mar, 2017 Former longtime manager Rajiv Jain selected companies individually, with macro factors taken into consideration, and his successor Matthew Benkendorf has kept the strategy intact. Stock, sector, and country weightings differ markedly from those of the indexes and other emerging-markets funds, with much higher-thanaverage stakes in India and below-average China and Korea weightings typical. Very high levels of consumer goods stocks, notably tobacco and beverages, have also been common. The fund typically owns companies and often has stakes of 4% to 8% of assets in the top picks. It looks for growing stocks--the fund consistently lands in the large-growth corner of the Morningstar Style Box--but is cautious when evaluating companies. The focus is on high-quality companies with steady, dependable growth and barriers to entry, and management that has made sound Asset Allocation 31/01/18 Current Allocation 3-Year Average Net Assets % Fund 3-Yr Avg Category Proxy Fixed Income Cash Other Regional Exposure 31/01/18 Market Type % Fund 3-Yr Avg Category Proxy Developed Emerging Top 5 Countries % Fund 3-Yr Avg Category Proxy India Brazil China Mexico Indonesia Key Ratios 31/01/18 Fund 3-Yr Avg Category Proxy Net Margin % ROA % Debt/Total Capital % ROE % decisions. The team here dislikes high debt levels but will accept moderate levels, while trying to steer clear of any questionable or aggressive accounting practices. Valuation plays a role in decision-making, though the fund's valuation measures tend to be higher than the category averages. In emerging markets, private companies focused on the domestic market are preferred over state-owned global players. The fund has relatively low turnover rates. Overall, the fund gets a Positive Process Pillar rating. Sectors 31/01/18 Sector Delta Defensive Sensitive Cyclical Fund Index Larger sector concentrations versus the index move the investment to the corner of the triangle corresponding to that equity Super Sector. Sectors Fund 3-Yr Avg Category Proxy xdefensive sconsumer Defensive dhealthcare futilities wsensitive icommunication Serv oenergy pindustrials atechnology mcyclical rbasic Materials tconsumer Cyclical yfinancial Services ureal Estate Economic Moat 31/01/18 Fund 3-Yr Avg Category Proxy Wide Moat Narrow Moat No Moat Coverage Ratio

3 Vontobel Fund - Emerging Markets B Page 3 of 9 Process: Portfolio Morningstar Category Category Index Index Proxy Global Emerging Markets MSCI EM NR ishares MSCI Emerging Markets ETF No index-hugging here. Process Pillar Similarity to Index Proxy 31/10/17 30 Mar, 2017 In most respects, this portfolio hasn't undergone notable changes since the departure of longtime manager Rajiv Jain just over a year ago, though the holdings haven't been static, either. The current managers still favour steady growers with a dominant market position and have a huge overweight in the consumer defensive area, with tobacco and beverage companies especially prominent here. At year-end 2016, the fund had 40% of assets in that sector, more than three times the 10% level of the Emerging-Markets Morningstar Category average. (The MSCI Emerging Markets Index's stake is only 7%.) The fund's top holding remains British American Tobacco BAT and number four is another tobacco firm, ITC of India; they take up more than 10% of assets combined. Lead manager Matthew Benkendorf acknowledges that many consumer-goods firms have risen in price but argues that their benefits--such as the ability to withstand recessions- -still gives them appeal. But Internet companies are also favourites, with Alibaba BABA, Tencent,and NetEase all in the top 15. The fund still has a much larger stake in India than the typical rival and the index, with about 20% of assets in that market versus 10% for the category average and 8% for the benchmark. The fund's India stake has fallen over the past year; Benkendorf says some assets were shifted to the abovenamed Chinese Internet names. As usual, the fund is fully invested, with no cash stake. Index Proxy Overlap Proxy Fund Circle size represents number of holdings. Number of Holdings Fund 53 Index Proxy 850 Fund Overlap With Index Proxy Holdings Overlap 35 Asset Overlap 19.0% Largest Common Holdings Fund % Proxy % Alibaba Group Holding Ltd ADR Housing Development Finance Corp Ltd Tencent Holdings Ltd Taiwan Semiconductor Manufacturing Co Ltd NetEase Inc ADR Largest Distinct Holdings Fund % HDFC Bank Ltd 5.23 Ambev SA ADR 4.51 Unilever NV DR 3.13 Fomento Economico Mexicano SAB de CV ADR 3.05 Heineken NV 2.92 Portfolio Holdings 31/10/17 Previous Portfolio Date Holdings Bond Holdings Other Holdings Assets in Top 10 Holdings Turnover Ratio (Reported) 30/09/ % Top 10 Holdings Country Assets % Assets % Proxy % 31/10/17 30/09/17 31/10/17 Alibaba Group Holding Ltd ADR CHN /14 <1 Wide t Consumer Cyclical T HDFC Bank Ltd IND /03 6 y Financial Services T Ambev SA ADR BRA /08 2 Wide s Consumer Defensive Housing Development Finance Corp Ltd IND /04 2 y Financial Services T Tencent Holdings Ltd CHN /14 <1 Wide a Technology T Taiwan Semiconductor Manufacturing Co Ltd TWN /15 <1 Narrow a Technology Y Unilever NV DR NLD /15 <1 Wide s Consumer Defensive T NetEase Inc ADR CHN /13 <1 Narrow a Technology Y Fomento Economico Mexicano SAB de CV ADR MEX /10 3 Narrow s Consumer Defensive T Heineken NV NLD /15 2 Narrow s Consumer Defensive Change since previous portfolio: T Increase Y Decrease R New First Bought Days Trading Economic Moat Sector 1-Yr Total New Holdings Largest Purchases % Assets Sector Bank Rakyat Indonesia (Persero) Tbk 0.63 y Class B Bharti Infratel Ltd 0.26 i Eliminated Holdings Largest Sales % Assets Sector Hindustan Unilever Ltd 0.32 s Largest Position Changes Current % Prior % T Taiwan Semiconductor Manufacturing Co Ltd T PT Telekomunikasi Indonesia (Persero) Tbk Class B T Hong Kong Exchanges and Clearing Ltd T Remgro Ltd R Bank Rakyat Indonesia (Persero) Tbk Class B

4 Vontobel Fund - Emerging Markets B Page 4 of 9 Morningstar Category Category Index Performance Global Emerging Markets MSCI EM NR Strong longer-term, not so hot more recently. Performance Pillar Neutral 30 Mar, 2017 This fund had an excellent record during the tenure of former manager Rajiv Jain, who stepped down on March 7, 2016, after more than 10 years at the helm. That's relevant as his successors have kept the strategy intact. Even after a subpar showing over the past 12 months, the fund's five- and 10-year returns through Feb. 28, 2017, beat the MSCI Emerging Markets Index and the Emerging-Markets Morningstar Category average by impressive margins. A key reason has been the fund s tendency to limit losses when emerging markets stumble. Of course, there's still emerging-markets risk here; the fund posted losses of more than 6% in 2013 and 2015 and dropped a cumulative 53.9% in the brutal bear market from late 2007 to early (All were milder losses than the category and index, though.) The fund's weak 12-month return could raise concerns, given that it covers the time after Jain's departure. But the fund stayed true to its approach. Most of the damage occurred late in 2016 after the U.S. election results led investors to favour cyclical fare over this fund's favoured consumer goods firms, and India's market--a longtime heavy overweighting here--was hit by its demonetisation scheme. That said, while current lead manager Matthew Benkendorf worked with Jain for 17 years and has kept the same approach, he does not have an independent record as lead manager of this fund. Therefore, its Performance Pillar rating is Neutral. Morningstar Rating and Risk 31/01/18 Period Morningstar Ret vs Cat Morningstar Risk vs Cat Morningstar Rating 3 Years Below Avg Low QQ 5 Years Avg Below Avg QQQ 10 Years Above Avg Low QQQQQ Overall Rating Risk Analysis 31/01/18 3-Year Return and Risk Analysis Total Return % QQQQ Fund Category Index & ) & & * ) & & ) ( ( History 31/01/18 12-Month Rolling Return % Fund Full Manager Change Partial Manager Change Quartile Rank in Cat Percentile Rank in Cat % Total Return /- Category /- Index Income Return Standard Deviation 3-Year Risk Measures Fund Category Index Standard Deviation Sharpe Ratio R-Squared Beta Alpha Maximum Drawdown Fund Category Index Max Drawdown (%) Peak Date 01/08 01/08 01/08 Valley Date 02/09 02/09 02/09 Max Drawdown (Months) Upside/Downside Fund Category Index Upside Capture Ratio Downside Capture Ratio Returns 31/01/18 Trailing Returns Total Investor Rank in Cat Cat Index 1 Year Years Years Years Tenure 03/ Inception 11/ Rolling-Returns Summary 58% Month Rolling Periods 146 Observations, 12 Years The shading and percentages correspond to how often the fund returns landed in each category quartile. Income and Capital Returns Return % Income Return Capital Return Year /18 Income Income % Rank in Cat Capital Capital % Rank in Cat /

5 Vontobel Fund - Emerging Markets B Page 5 of 9 Morningstar Category Category Index People Global Emerging Markets MSCI EM NR A year after its longtime leader's departure, the rest of the team remains in place. People Pillar Management Team 30 Mar, 2017 This fund s lead manager is Matthew Benkendorf, who took over on March 7, 2016, when former manager Rajiv Jain stepped down. Benkendorf was quite familiar with this strategy and team, having worked at Vontobel on this fund and others for 17 years. Benkendorf also succeeded Jain as CIO. He had been a comanager on Vontobel Global since 2008 (he is now lead manager) and remained lead manager on the US strategy run by the same team. After Jain's departure, Benkendorf was signed to a 10-year contract with a five-year noncompete agreement. No analysts from the team dedicated to this and other Vontobel international strategies departed along with Jain; one was added last year. Several analysts were promoted to comanager on different funds after Jain s departure, including, on this fund, Brian Bandsma (who has been on the team since 2002) and Jin Zheng (2005). Benkendorf says he plans to expand the team further. Benkendorf works out of Fort Lauderdale, Florida, having moved there in the second half of Most analysts are in the New York office, with two in Fort Lauderdale and a few elsewhere. The total is about 15 now. There have been few departures during the past decade. Overall, while Jain's departure was certainly a loss, the tenure of the team and their familiarity with the strategy merits a Positive rating for People. Experience and Asset Load Total AUM Bil in Funds Managed 20+ Number of Managers Longest Tenure Years Manager Retention Rate 5-Year % Average Manager Tenure 1.92 Years Advisor Subadvisor Vontobel Asset Management Inc Tenure Years Matthew Benkendorf 03/16 to Present Years on Managed Funds Years on Fund 21 1 Fund AUM Current Funds Managed 24, Mil 23 Largest Funds Managed Tenure Dates Role Fund Size Bil Investment Mil Tenure Index Virtus Vontobel Emerging Markets Opps03/16 to Present 1 of None Fd Vontobel Emerging Markets 03/16 to Present Lead Vontobel Global 03/16 to Present Lead Vontobel US 04/13 to Present Lead

6 Vontobel Fund - Emerging Markets B Page 6 of 9 Morningstar Category Category Index Parent Global Emerging Markets MSCI EM NR Vontobel has pockets of strengths, but some room for improvement. Parent Pillar Neutral 08 Mar, 2016 Vontobel Asset Management is a fully owned subsidiary of Vontobel Group, a Swiss private bank and asset manager. Its fund range covers all major asset classes, with a notable focus on its successful Global and Global Emerging Markets mandates, which gather most of the equity lineup s assets and have Assets By Region, By Domicile Bil been run by star manager Rajiv Jain for more than a decade. Jain suddenly resigned in March 2016 and was replaced by Matthew Benkendorf, who is now Vontobel s CIO. Jain s departure comes as a surprise as the New York-based equity group has otherwise shown a high level of staff retention over the years. We ll monitor any further instability and, in particular, the impact of Jain s exit on the emerging-markets strategy, which counted around 30 billion in assets under management globally as of In recent years, the firm has focused its efforts to diversify its Fund Family Details Europe (*) Breakdown product range, particularly on fixed-income and alternatives mandates. On average, Vontobel funds risk-adjusted performance is competitive over three, five, and 10 years. Staff incentives could be improved by formalizing a link to funds long-term results, but we appreciate that a portion of the bonus is deferred for three years and invested in the strategies offered by Vontobel. Finally, the quality of communication and transparency is high, while costs for retail share classes are generally in line with their respective Morningstar Category medians. Morningstar Rating Breakdown Americas 0.1 Europe & Africa 42.8 Asia & Australia 0.0 Rating Assets % Œ 18.1 ˇ Ø Not Rated 81.9 Rating Assets % QQQQQ 23.9 QQQQ 29.3 QQQ 16.7 QQ 4.5 Q 0.5 Not Rated 25.1 Asset Class Breakdown Europe (ex Money Mkt) Assets Bil Asset Class Assets Bil Assets % Fixed Income Allocation Convertibles Property Alternative Commodities Fund Family Details Europe Top Performing Funds Category Name Fund Size Mil Return % 3-Year Rank in Cat 3-Year Vontobel Fund - mtx Sustainable Asian Leaders Asia ex Japan (Ex-Japan) I Vontobel Fund - mtx Sustainable Emerging Global Emerging Markets 1, Markets Leaders I Variopartner SICAV - MIV Global Medtech Fund P1 CHF Sector Healthcare 1, Largest Funds Category Name Fund Size Mil Return % 3-Year Rank in Cat 3-Year Vontobel Fund - Emerging Markets B Global Emerging Markets 5, Vontobel Fund - Global A Global Large-Cap Growth 2, Vontobel Fund - EUR Corporate Bond Mid Yield A EUR EUR Corporate Bond 2, Recent Fund Launches Category Name Fund Size Mil Return % Inception Inception Date Vontobel Fund II - Vescore Artificial Intelligence /01/18 Multi Asset AI EUR Variopartner SICAV - Vontobel WM Efficient Eurozone Large-Cap /01/18 Index Europe G Variopartner SICAV - Vontobel WM Efficient Index Switzerland G Switzerland Large-Cap /01/18 (*) All data is based on Branding name and refers to funds domiciled in Europe.

7 Vontobel Fund - Emerging Markets B Page 7 of 9 Morningstar Category Category Index Price Global Emerging Markets MSCI EM NR The fund s fees continue to weigh negatively on our overall assessment TER/OGC Expense History TER/OGC Price Pillar Negative 30 Mar, 2017 The fund s 2.1% ongoing charges for the B share class remain relatively expensive, and rank in the category s second-most-expensive quintile. Given the scale of the strategy, we believe costs could be lower TER/OGC Net Assets Bil Net Flows Bil Expense Breakdown Ongoing charge Ongoing charge 15/02/ Selected Components Max Management Fee 1.65 Performance Fee Fee Level Fee Level Above Avg Fee Level Breakpoints 0.12 Peer Group Global Emerging Markets Retail Broad 4.00 High >2.32 Above Average Average Below Average Low <1.04 Fund 2.10 Peer Median 1.80 Share Class Information Share Class Identifier Morningstar Category TER/OGC Max Mgmt Fee Performance Fee Maximum Inital Charge Vontobel Emerging Markets Eq Global Emerging Markets A Vontobel Emerging Markets Eq B Global Emerging Markets Vontobel Emerging Markets Eq C Global Emerging Markets Vontobel Emerging Markets Eq S Global Emerging Markets Vontobel Emerging Markets Eq H Global Emerging Markets Hdg EUR Vontobel Emerging Markets Eq I Global Emerging Markets Vontobel Emerging Markets Eq HC Global Emerging Markets Hdg EUR Vontobel Emerging Markets Eq HI Global Emerging Markets Hdg EUR Vontobel Emerging Markets Eq H Global Emerging Markets Hdg CHF Vontobel Emerging Markets Eq HI Global Emerging Markets Hdg CHF Vontobel Emerging Markets Eq HS Global Emerging Markets Hdg CHF Vontobel Emerging Markets Eq I Global Emerging Markets GBP Vontobel Emerging Markets Eq N Global Emerging Markets Minimum Initial Inv Assets Bil

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Investors should consult a financial adviser regarding the suitability of any investment product, taking into account their specific investment objectives, financial situation or particular needs, before making any investment decisions. Negative Represents funds that possess at least one flaw that our analysts believe is likely to significantly hamper future performance, such as high fees or an unstable management team. Because of these faults, we believe these funds are inferior to most competitors and will likely underperform their relevant performance benchmark and/or peer group, within the context of the level of risk taken, over a full market cycle. Morningstar may also use two other designations in place of a rating: Under Review This designation means that a change that occurred with the fund or at the fund company requires further review to determine the impact on the rating. Not Ratable This designation is used only where we are providing a report on a new strategy or on a strategy where there are no relevant comparators, but where investors require information as to suitability. For more information about our Analyst Rating methodology please go to Morningstar Star Rating The Morningstar Star Rating is a proprietary data point that is quantitatively driven. Funds are rated from one to five stars based on how well the fund performed (after adjusting for risk and accounting for sales charges) in comparison to similar funds. Within each Morningstar Category, the top 10% of funds receive five-stars and the bottom 10% receives one-star. Funds are rated for up to three time periods three-, five-, and ten-years and these ratings are combined to produce an overall star rating, which is noted within the Report. Funds with less than three years of history are not rated. Morningstar Star Ratings are based entirely on a mathematical evaluation of past performance. Morningstar Star Ratings are in no way to be considered a buy or sell signal nor should be viewed as a statement of fact. -Related Data Points The Report lists the fund s top ten holdings as of the dated noted. For each underlying holding, a series of data points is provided including, where applicable, that security s Economic Moat as of the date noted. Economic Moat The concept of an economic moat plays a vital role in our equity analyst s qualitative assessment of a firm s long-term investment potential, but also in the actual calculation of its fair value estimate. An economic moat is a structural feature that allows a firm to sustain excess profits over a long period of time. We define economic profits as returns on invested capital (or ROIC) over and above our estimate of a firm s cost of capital, or weighted average cost of capital (or WACC). Without a moat, profits are more susceptible to competition. We have identified five sources of economic moats: intangible assets, switching costs, network effect, cost advantage, and efficient scale. Companies with a narrow moat are those we believe are more likely than not to achieve normalized excess returns for at least the next 10 years. Wide-moat companies are those in which we have very high confidence that excess returns will remain for 10 years, with excess returns more likely than not to remain for at least 20 years. The longer a firm generates economic profits, the higher its intrinsic value. We believe low-quality, no-moat companies will see their normalized returns gravitate toward the firm s cost of capital more quickly than companies with moats. For more information about methodology in analysing stocks, please go to For Recipients in Australia: This Report has been issued and distributed in Australia by Morningstar Australasia Pty Ltd (ABN: ; ASFL: ). Morningstar Australasia Pty Ltd is the provider of the general advice ( the Service ) and takes responsibility for the production of this report. The Service is provided through the research of investment products. To the extent the Report contains general advice it has been prepared without reference to an investor s objectives, financial situation or needs. Investors should consider the advice in light of these matters and, if applicable, the relevant Product Disclosure Statement before making any decision to invest. Refer to our Financial Services Guide (FSG) for more information at For Recipients in Hong Kong: The Report is distributed by Morningstar Investment Management Asia Limited, which is regulated by the Hong Kong Securities and Futures Commission to provide services to professional investors only. 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