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PSG Platform Update Coronation funds in PSG Solutions

PSG Platform Update Coronation funds in PSG Solutions. Christo Lineveldt May 2012. Asset allocation view. Global stocks preferred Even after the good quarter we find many stocks with healthy balance sheets and attractive dividend yields Avoid global bonds Yields not compensating for risk

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PSG Platform Update Coronation funds in PSG Solutions

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  1. PSG Platform UpdateCoronation funds in PSG Solutions Christo Lineveldt May 2012

  2. Asset allocation view • Global stocks preferred • Even after the good quarter we find many stocks with healthy balance sheets and attractive dividend yields • Avoid global bonds • Yields not compensating for risk • Global property offering opportunities • 5-9% dividend yields in Europe, Asia and Australia • SA Equities now pretty fully priced • Caution warranted. The global crisis is not resolved

  3. Domestic equities • Quality stocks fully priced • Some value opportunities among lower quality businesses • Foreign buying has driven retailers too high • now on high earnings base and high rating • Certain commodity stocks offering value • Sasol, Anglo American, Mondi 2

  4. Summary of Fixed Interest view • Duration – prefer a shorter position • Inflation above target for the year but starting to roll over • Bond supply a problem without foreign buyers, but WGBI inclusion a big benefit • Corporate credit – maintaining exposure • Continue to see good value in selected high quality corporate credit in this low rate environment • Inflation linked bonds • Reduce govt ILB’s to 0%, but continue to see value in a number of the corporate ILB’s • Property • Neutral on the asset class as a whole, but value in certain counters • Offshore • Proven diversification benefits • Very little cash • Short rates lower for longer but big position in floaters as the next move in rates likely to be up 3

  5. Domestic Flagship Income & Growth Solutions Meeting our clients’ key investment needs Risk Profile Investment Objective Exposure to Growth Assets 3 Years → 11.1% Return (Annualised Return) Coro Top 20 Long-term Growth (Equity Only) 100% 17.0% 8.6% Coro Balanced Plus Avg 70% Max 85% Reg 28 Long-term Growth (Multi-asset) 10.5% Coro Capital Plus 8.5% Avg 50% Max 60% Reg 28  Average exposure to growth assets through the cycle (5 years) The exposure will fluctuate as valuations change Income & Growth (Multi-asset) 6.8% 10.1 % Coro Balanced Defensive Avg 35% Max 40% Reg 28 4.1% 9.1% Coro Strategic Income Avg 15% Max 25% (0% normal shares) Reg 28 Income (Multi-asset) 2.3% Risk (Annualised Standard Deviation) 5 Year Performance & Risk as at 30 April 2012 for a lump sum investment with income distributions reinvested. Growth Assets are defined as domestic/foreign equities, listed property & commodities. 4

  6. Domestic Flagship Funds Consistent top quartile returns Source: Morningstar as at 30 April 2012.

  7. Coronation Strategic Income Our value proposition Why invest in the Coronation Strategic Income Fund? • The fund has outperformed cash by 2.6% per annum since launch. • The fund has delivered top quartile returns over 3 years, 5 years & since launch • The fund is actively managed by one of the most experienced fixed interest teams in South Africa, backed by the research of Coronation’s global investment team • We have reduced our fees to make provision for a lower yielding environment: • Initial fees = 0% • Annual management fees = 0.85%, of which 0.40% is passed back to the investor through the various platforms. The effective annual management fee for this actively managed fund is therefore only 0.45% (similar to money market funds) Source: Morningstar, 31 March 2012.

  8. Coronation Strategic Income Meet the portfolio managers • MARK LE ROUX, BCom As head of fixed interest investments Mark is responsible for the fixed interest investment process and portfolio management functions for both institutional and retail portfolios. Before joining Coronation in August 2005 he was with Decillion where he was integral in the development of, and responsible for the management of, South Africa’s first fixed interest hedge fund, the Granite Fixed Income Hedge Fund. Mark has 20 years’ experience in managing traditional fixed interest portfolios (both institutional and unit trust assets) as well as hedge funds, having worked with OMAM, African Harvest and Decillion. TANIA MIGLIETTA, BBusSc (Finance), CFA Tania joined Coronation in 2002 as a member of the fixed interest team with specific responsibility for the management of all money market and income funds. She is a member of the Coronation Credit Committee and manages the Coronation Global Cash Fund (institutional investors only). She also co-manages the Coronation Strategic Income and Coronation Preference Share Funds.

  9. Performance Strategic Income Fundperiods ending 30 April 2012 * Since Inception – July 2001 8

  10. Coronation Strategic IncomePerformance since launch R320 993 R291 924 R256 955 R245 477 Performance quoted from Morningstar as at 31 March 2012 for a lump sum investment with income distributions reinvested

  11. Coronation Strategic IncomeOutperforming the bond market ... at substantially lower risk Performance quoted from Morningstar as at 31 March 2012 for a lump sum investment with income distributions reinvested

  12. Why are we well positioned? • Inflation linked bonds • Foreign assets provide diversification (currency as well as assets) • Floating rate assets • Hedging fixed rate risk with swaps 11

  13. Coronation Capital Plus Our value proposition Why invest in the Coronation Capital Plus Fund? This fund has delivered solid inflation-beating returns at substantially lower than market risk, outperforming inflation by more than 8% p.a. since the launch of the fund in July 2001. We are as serious about capital protection as we are about beating inflation. The fund’s annual management fee will be discounted to 0.75% if the fund produces a negative return over any 12-month period We were the first manager, starting in 1999, to manage absolute return mandates in SA One of Coronation’s founding members and ex CIO, Louis Stassen, started our absolute franchise in 1999 and he continues to manage our absolute funds, including the Coronation Capital Plus Fund A consistent top performer (1st Quartile) in the Targeted Absolute & Real Return category over 3 years, 5 years, 10 years & since launch Performance fee cap recently reduced from 1.50% to 1.00% (which decreases the maximum fee from 2.75% to 2.25%) Source: Morningstar, 31 March 2012

  14. Coronation Capital Plus Fund Meet the Portfolio Managers • LOUIS STASSEN, BSc, BCom (Hons), CFA Louis is a founder member and former CIO of Coronation. He is a senior portfolio manager within the investment team responsible for the Absolute Investments unit which he established in 1999. He has more than 20 years' industry experience and has worked in the investment teams of Allan Gray, Syfrets Managed Assets and Standard Bank in London. • HENK GROENEWALD, B.Eng (E&E), CFA Henk joined Coronation as an equity analyst in January 2005. Prior to this, he spent two years as a trainee equity analyst with Allan Gray and three years as an electrical engineer at Sasol. Henk co-manages the Coronation Resources Fund and the Absolute range of funds. • DUANE CABLE, Bcom (Hons), CA (SA), CFA Duane joined Coronation in July 2006 as an investment analyst focusing on the resources sector. After completing his articles with KPMG in 2002, he spent time in audit and business advisory in the Cayman Islands, as well as mergers and acquisition consulting in New York. His research responsibilities include paper and packaging, gold, steel and various companies within the industrial sector. Duane is the co-manager of the Coronation Resources Fund and was appointed co-manager of the Absolute range of funds in January 2012.

  15. Coronation Capital PlusBull market returns Performance quoted from Morningstar as at 29 February 2012 for a lump sum investment with income distributions reinvested

  16. Coronation Capital PlusBear market returns Performance quoted from Morningstar as at 29 February 2012 for a lump sum investment with income distributions reinvested

  17. Coronation Capital PlusPerformance since launch R431 170 R359 916 R234 984 Performance quoted from Morningstar as at 31 March 2012 for a lump sum investment with income distributions reinvested.

  18. Coronation Capital PlusRolling 1 Year Returns Performance quoted from Morningstar as at 31 March 2012 for a lump sum investment with income distributions reinvested.

  19. Coronation Balanced Plus Our value proposition Why invest in the Coronation Balanced Plus Fund? Launched in April 1996, this fund has delivered top quartile returns over all meaningful periods: 1st Quartile performer since launch and over 3, 5, 10 & 15 year periods. The fund has outperformed the equity market1 since launch at substantially less than market risk Represents Coronation’s best investment views within a balanced mandate and our Chief Investment Officer, Karl Leinberger, manages this fund along with Quinton Ivan, our Head of Research. Perfect solution for long-term investors saving for retirement in retirement funding vehicles (RA’s and Preservation Funds) Source: Morningstar, 31 March 2012. 1FTSE/JSE All Share

  20. Coronation Balanced Plus Meet the portfolio managers Karl Leinberger BBusSc, CA (SA), CFAKarl is chief investment officer and a member of the executive committee. He joined Coronation in 2000 as an equity analyst, was made head of research in 2005 and appointed CIO in 2008. Karl currently co-manages the Coronation Equity and Balanced Plus Funds as well as the Houseview portfolios. Quinton Ivan BBusSc, BCom (Hons), CA(SA), CFA Quinton joined the Coronation investment team as an equity analyst in April 2005. He currently analyses retail, construction and pharmaceutical stocks and co-manages the Coronation Equity, Balanced Plus and Industrial Funds as well as the Houseview portfolios. Prior to joining, he spent two years at KPMG as a senior manager in the financial services division after completing his articles at the company.

  21. Coronation Balanced Plus Performance since launch R1 098 172 R830 827 R719 629 Performance quoted from Morningstar as at 31 March 2012 for a lump sum investment with income distributions reinvested.

  22. Meaningful performance period % 1ste Quartile over a 10 year period Balanced Funds – Domestic AA Pru Variable Equity 1 year performance periods are meaningless Even the top managers sometimes drop out of the 1st quartile over meaningful performance periods, i.e. 3 and 5 years

  23. Coronation Top 20 Our value proposition Why invest in the Coronation Top 20 Fund? A unique South African equity fund that follows a focused investment strategy by investing in no more than 20 large cap shares selected from the top 50 stocks by market cap. This fund represents a concentrated implementation of Coronation’s best South African listed equity views Contrary to some popular views on active versus passive investing, this fund has outperformed the FTSE/JSE Top 40 by more than 6% p.a. at lower than market risk. This is the ideal portfolio for investors requiring an actively managed quality long-term equity portfolio Consistent 1st quartile performance across all broad-based domestic equity1 funds over 3 years, 5 years, 10 years & since launch in October 2000. Source: Morningstar, 31 March 2012. 1Broad-based domestic equity includes General Equity, Large Cap, Value & Growth sectors.

  24. Coronation Top 20 FundMeet the portfolio managers Neville Chester BCom, CA (SA), CFA Neville has 13 years’ investment experience with significant knowledge of the financial sector. He started his career as a research analyst within the financial services team at OMAM analysing banks and co-managing the financial fund. He joined Coronation in August 2000 and in 2001 started managing segregated portfolios. Neville is responsible for the management of aggressive equity portfolios, the Coronation Market Plus Fund (which he has managed since launch in June 2001) and co-manages the Coronation Top 20 Fund. Pallavi Ambekar CA (SA), CFA Pallavi joined Coronation in January 2003 as a trainee research analyst after completing her articles with KPMG. She is a senior research analyst, responsible for analysing the telecommunications companies, British American Tobacco, Richemont, Massmart as well as the hotel and leisure sector. She co-managed the Coronation Industrial Fund in 2006 and was recently appointed co-manager of the Coronation Top 20 Fund.

  25. Coronation Top 20Exceptional long term wealth creation R1 012 043 R579 655 R522 671 Performance quoted from Morningstar as at 31 March 2012 for a lump sum investment with income distributions reinvested

  26. Coronation Top 20Risk/Return Scatterplot Performance quoted from Morningstar as at 31 March for a lump sum investment with income distributions reinvested

  27. Questions?

  28. Coronation Asset Management is an Authorised Financial Service Provider. The content of this presentation and any information provided may be of a general nature and may not be based on any analysis of the investment objectives, financial situation or particular needs of the client. (as defined in the Financial Advisory Intermediary Services Act) As a result, there may be limitations as to the appropriateness of any information given. It is therefore recommended that the client first obtain the appropriate legal, tax, investment or other professional advice and formulate an appropriate investment strategy that would suit the risk profile of the client prior to acting upon such information and to consider whether any recommendation is appropriate considering the client’s own objectives and particular needs. Any opinions, statements and any information made, whether written, oral or implied are expressed in good faith. Disclaimer 27

  29. Thank you

  30. Coronation Funds in PSG Solutions Portfolio positionings

  31. Fund asset allocation Fund duration = 1.26 hedged Fund yield = 7.43% 30

  32. Asset allocation history 31

  33. Fund asset allocation Corporate bonds 32

  34. Fund asset allocation Property 33

  35. Fund asset allocation Offshore 34

  36. Coronation Capital Plus Asset Allocation History Max exposure to growth assets reduced to 60% Growth Assets are defined as domestic/foreign equities, listed property & commodities (excl Gold). Asset Allocation at as 31 March 2012.

  37. Coronation Capital Plus Portfolio Positioning Growth Assets are defined as domestic/foreign equities, listed property & commodities. Asset Allocation at as 31 March 2012. *Including effect of foreign currency hedge against foreign assets.

  38. Coronation Capital Plus Portfolio Positioning Growth Assets Growth Assets are defined as domestic/foreign equities, listed property & commodities. Asset Allocation at as 31 March 2012. Holdings as at 31 March 2012.

  39. Coronation Capital Plus Portfolio Positioning Income Assets Growth Assets are defined as domestic/foreign equities, listed property & commodities. Asset Allocation at as 31 March 2012. Holdings as at 31 March 2012. *Including effect of foreign currency hedge against foreign assets.

  40. Coronation Balanced Plus Asset Allocation History 85% Max exposure to growth assets Growth Assets are defined as domestic/foreign equities, listed property & commodities. Asset Allocation as at 31 March 2012.

  41. Coronation Balanced Plus Portfolio Positioning Reg. 28 Compliant Growth Assets are defined as domestic/foreign equities, listed property & commodities. Asset Allocation as at 31 March 2012.

  42. Coronation Balanced Plus Portfolio Positioning Growth Assets Growth Assets are defined as domestic/foreign equities, listed property & commodities. Asset Allocation as at 31 March 2012. Holdings as at 31 March 2012.

  43. Coronation Balanced Plus Portfolio Positioning Income Assets Growth Assets are defined as domestic/foreign equities, listed property & commodities. Asset Allocation as at 31 March 2012. Holdings as at 31 March 2012.

  44. Coronation Top 20Equity Sector Allocation Sector Allocation as at 31 March 2012

  45. Coronation Top 20Top equity holdings Sector Allocation as at 31 March 2012. Top 10 equity holdings as at 31 March 2012.

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