-1.93% RHENMAN GLOBAL OPPORTUNITIES L/S. June 2018 RHEPA.COM. Monthly update RC1 (SEK)

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1 June 2018 RHENMAN GLOBAL OPPORTUNITIES L/S RC1 (SEK) -1.93% A global long/short equity fund able to invest in all sectors around the world. Fundamental portfolio management by a portfolio manager with almost 30 years experience of the finance sector. The portfolio team supported by the renowned Advisory Board. Monthly update June was yet another month marked by political events. Expectations that President Trump s various moves on trade tariffs would be resolved through negotiation were confounded. Instead, the tone was sharpened and the United States announced additional tariffs that were even more far reaching than previous ones. This had a major impact on the countries and sectors that could be potentially affected. Investors reacted in particular to the threat of tariffs on cars and auto components as well as substantial additional tariffs on China. Concerns over developments in Europe also continued. Most events were interpreted negatively, from the political situation in Italy and Angela Merkel s possibly weakened position in Germany to the continued sluggish Brexit process. But something that did not attract attention was Emmanuel Macron s apparent ability to enforce his plans to reform the French railways following months of strikes, despite the fact that this success plays a major role in the reform efforts of one of the EU s largest economies. Developments in the oil market represented another area that became the focus of attention this month. The assumption that oil prices would remain subdued amid large surpluses quickly transformed into a fear that higher demand and production disruptions would drive up prices to levels that were damaging to the economy. This explains the great interest in the OPEC meeting in Vienna and President Trump s pressure on Saudi Arabia to increase production levels. In view of these developments, global stock market performance was surprisingly calm and world indices closed with only marginal changes. However, the differences were larger between sectors and regions. Among the worst performers were industrial companies (as a sector) and China (as a country), while defensive sectors such as consumer staples and healthcare companies made gains. FUND PERFORMANCE Measured in its main share class RC1 (SEK), the fund decreased by 1.9 percent. Healthcare companies and consumer staples were the main positive contributors, while consumer discretionaries and banks dragged down returns. Both the fund s long and short positions lowered performance by about 1 percent. The month s strongest contributor was Ericsson, one of the fund s few Nordic holdings. Its share price rose following the release of the latest Ericsson Mobility Report, which revised the company s forecast for the number of mobile IoT connections upwards to 3.5 billion by 2023 almost a doubling from the November 2017 forecast. In addition, the company announced that all major operators in North America would offer 5G as early as the end of 2018 or during Several investment banks raised their price targets for Ericsson during the month. Another stock that had a positive impact on the fund s performance was the brewery conglomerate Anheuser Busch. The share price rose following new data from Continued on the next page Rhenman & Partners Asset Management AB is under the supervision of The Swedish Financial Supervisory Authority (Finansinspektionen) as of February RHEPA.COM

2 Nielsen on global beer consumption. Among other factors, good weather helped to push up volumes, affecting the overall industry positively. In several markets, AB InBev also managed to increase its market share. The company s sales volumes in the UK rose by 17.5 percent, compared with market expectations of 14.1 percent. In France, too, AB InBev strengthened its position by increasing volumes by 18.2 percent compared with market expectations of 14.4 percent. Another positive contributor was the fund s stake in Walt Disney, the entertainment giant. It seems more and more likely that the company will win its bidding war with Comcast over the right to buy 21st Century Fox and its IP portfolio. In addition, Disney s new animated film Incredibles 2 had a record-breaking opening weekend and grossed 183 million US dollars. It had the eighth-biggest opening weekend of all time for a cinema release and the strongest opening ever for an animated film. Of the stocks that contributed negatively to the fund s performance, the short position in Tesla was the one with the greatest impact. Its share price rose sharply on news that the company s CEO, Elon Musk, once again declared that the company would reach its production targets for the mass-market car Model 3. Over the past year, production targets have been lowered or postponed so often that the target Musk now claimed was attainable before the end of the month was not expected by analysts until next year in line with Musk s previous statements. This is certainly a much lower level of production than was originally expected. Nonetheless, it was still a positive surprise for investors, who had become used to the idea of having to wait much longer to reach this production rate (5,000 vehicles per week). The fund s position in Chinese car manufacturer Great Wall Motor also had a negative impact on returns. Its share price declined following a report by the China Automobile Dealers Association which revealed low sales figures in May and a disappointing forecast for June. The Chinese holidays in May did not boost sales as much as hoped for. Chinese consumers seem to be in a wait-and-see mode in anticipation of the new tariff policy for imported cars scheduled for July 1. Even the short position in streaming giant Netflix contributed negatively to the fund in June. The stock continued to rise on momentum despite the lack of positive company news. It seems increasingly clear that Netflix s market-leading position in entertainment streaming is set to face fiercer competition in the coming years with a bigger budget for HBO and new competing services from Disney and other players. Netflix s market capitalization now tops Disney s by a decent margin. The stock s momentum likely stems from two phenomena: how news of strong performance spreads among private investors, and how easy it is to understand the product s appeal. The stock has performed incredibly well, enticing private investors to jump on the bandwagon. At the same time, analysts are raising their price targets as the stock continues to climb. FORECAST The first few weeks of January saw a generally positive equity market worldwide. Subsequently, however, the first half of 2018 was marked by relatively strong performance in the United States in general and by US growth stocks in particular, while most other markets remained flat or even decreased. This has led to major valuation differences and shares in IT and some consumer discretionaries, with Amazon leading the pack, have reached historically high levels, while much of the rest of the world has otherwise seen valuations on their stock markets diminish. This performance trend can largely be explained by a number of uncertainties: The future of free trade in the wake of President Trump s increasingly tough stance on tariff issues The future of Europe in an increasingly difficult political environment where growth is becoming questioned Growth in many so-called emerging markets, where not only the tariff threat looms but both the dollar and energy prices are rising. Yet investors show interest in growth stocks in this momentumdriven market, where stocks that have already performed well continue to do so. This interest has led to increased flows to the United States (where IT accounts for 25 percent of total market capitalization) at the expense of Europe (where IT represents 5 percent) and many other countries. As always, we have respect for the opportunities and the concerns that have made their mark on the performance of different markets so far this year. On the other hand, we are of the firm opinion that the valuation differences we have seen are untenable in the longer term. Thus, we maintain a fundamentally positive attitude towards the sectors that benefit from a continued stable economic climate, including industrial companies, banks and energy companies. Our view is that the profit outlook is good for these sectors, which together with gradually lower valuations should create the potential for higher share prices. Fund characteristics KIID AND PROSPECTUS (WEBPAGE) RhenmanPartnersFund/ INVESTABLE CURRENCIES Euro (EUR)/Swedish Krona (SEK) RETURN TARGET Annualised net returns of +7-8 % over time LEGAL STRUCTURE AIF/FCP (Fonds Commun de Placement) under Part II of the Luxembourg Law on Investment Funds PORTFOLIO MANAGER Rhenman & Partners Asset Management AB HEAD OF INVESTMENT TEAM Staffan Knafve AIFM/MANAGEMENT COMPANY SEB Fund Services S.A. PRIME BROKER Skandinaviska Enskilda Banken AB (publ) DEPOSITARY AND PAYING AGENT Skandinaviska Enskilda Banken S.A. AUDITOR PricewaterhouseCoopers (PwC) SUBSCRIPTION/REDEMPTION Monthly MINIMUM TOP UP No minimum NOTICE PERIOD 3 working days HURDLE RATE Euribor 90D (high-water mark) 2

3 FUND PERFORMANCE - RC1 (SEK) NAV Aug-16 Nov-16 Feb-17 May-17 Aug-17 Nov-17 Feb -18 May-18 JUNE 2018 SHARE CLASS NAV 1 MONTHLY RETURN 1 YTD SINCE INCEPTION 1 RC1 (SEK) % -7.64% -0.25% RC9 (SEK) % -7.04% 2.00% IC1 (EUR) % % % 3 mån Euribor (EUR) % -0.11% -0.53% SHARE CLASS CHARACTERISTICS INSTITUTIONAL SHARE CLASSES ONLY INSTITUTIONAL INVESTORS MINIMUM INVESTMENT MGT. FEE PERF. FEE ISIN NO. BLOOMBERG TICKER LIPPER REUTERS TELEKURS IC1 (EUR) % 20 % LU RGLOPC1 LX IC1 (SEK) % 20 % LU RGLOPI1 LX SHARE CLASS CHARACTERISTICS RETAIL SHARE CLASSES ALSO OPEN TO INSTUTIONAL INVESTORS MINIMUM INVESTMENT MGT. FEE PERF. FEE ISIN NO. BLOOMBERG TICKER LIPPER REUTERS TELEKURS RC1 (SEK) % 20 % LU RGLOPR1 LX RC9 (SEK) % 20 % LU RGLOPR9 LX Administrative fees are charged in addition to the fees above. Further information is available in the KIID as well as the prospectus (part B, B14-18). Note: 1) Please find launch date information on page 4. 3

4 PORTFOLIO CONSTRUCTION 2 CURRENCY EXPOSURE 3 PYRAMID LEVEL POSITION SIZE NO. High conviction 3 %-10 % 15 Core holdings 1 %-3 % 20 Fractional positions 0.5 %-1 % 0 Candidate holdings 0 %-0.5 % 0 USD 46 % EUR 15 % CHF 10 % JPY 10 % Other 9 % SEK 9 % RISK (RC1 SEK) EXPOSURE 6 AUM 7 LARGEST LONG POSITIONS Value at risk % Long 98 % Fund: 1 Exxon Mobil Corp Standard Deviation % Short 7 % EUR 10m 2 Nestle SA Reg Sharpe Ratio Gross 105 % USD 11m 3 Chevron Corp Net 90 % Total: EUR 646m 4 Telefon AB LM Ericsson B 5 JPMorgan Chase & Co Notes: 2) As a percentage of the market value of the long and short positions (excluding cash positions). 3) The AUM is adjusted for fund inflow at month end. 4) For holdings at month end (95% conf. int. 250 days history). 5) Standard deviation and Sharpe ratio are annualized. 6) The exposure is not adjusted for net fund flow at month end. 7) Number of long equity positions (excluding any ETFs). HISTORICAL RETURNS AND NAVS RC1 (SEK) NAV YEAR JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC RC1 (SEK) PERFORMANCE %, NET OF FEES RC9 (SEK) NAV YEAR JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC RC9 (SEK) PERFORMANCE %, NET OF FEES IC1 (EUR) NAV IC1 (EUR) PERFORMANCE %, NET OF FEES

5 ABOUT RHENMAN & PARTNERS Rhenman & Partners Asset Management, founded in 2008, is a Stockholm-based investment manager focusing on two niche funds administered by SEB Fund Services S.A.: Rhenman Healthcare Equity L/S, founded in 2009, and Rhenman Global Opportunities L/S, founded in Assets under management amount to approximately EUR 600m. Investment Teams of both Funds are in their investment processes supported by renowned Advisory Boards, including professors and experts with many years of market experience and extensive networks around the world. Legal Disclaimer Rhenman Global Opportunities L/S. The Fund is not an investment fund as defined in the European Union directives relating to undertakings for collective investment in transferable securities (UCITS). Legal information regarding Fund is contained in the Prospectus and the KIID. available at Rhenman & Partners Asset Management AB (Rhenman & Partners) webpage: the-fund/prospectus/. This material has been prepared by Rhenman & Partners for professional and non-professional investors. Rhenman & Partners when preparing this information has not taken into account any one customer s particular investment objectives, financial resources or other relevant circumstances and the opinions and recommendations herein are not intended to represent recommendations of particular investments to particular customers. This material is for informational purposes only and should not be construed as an offer or solicitation to sell or buy units the Fund. Investors is strongly recommended to get professional advice as to whether investment in the Fund is appropriate having regard to their particular investment needs, objectives and financial circumstances, before investing. All securities transactions involve risks, which include (among others) the risk of adverse or unanticipated market, financial or political developments and, in international transactions, currency risk. There can be no assurance that an investment in the Fund will achieve profits or avoid incurring substantial losses. There is a high degree of risk inherent in investments and they may not be suitable for all eligible investors. It is possible that an investor may lose some or all of its investment. The past is not necessarily a guide to the future performance of an investment. The value of investments may fall as well as rise and investors may not get back the amount invested. Changes in rates of foreign exchange may cause the value of investments to go up or down. Before making an investment decision, an investor and/or its adviser should (i) consider the suitability of investments in the Fund with respect to its investment objectives and personal situation and (ii) consider factors such as its personal net worth, income, age, risk tolerance and liquidity needs. 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Subscribe to our monthly newsletter at RHEPA.COM CONTACT DETAILS: Rhenman & Partners Asset Management AB Strandvägen 5A Stockholm, Sweden Tel info@rhepa.com SWEDISH INVESTORS: Anders Grelsson Swedish Investor Relations Mob anders@rhepa.com INTERNATIONAL INVESTORS (NON SWEDISH): Carl Grevelius Head of Investor Relations Tel carl@rhepa.com