Harmony Portfolios · Page 4 of 13 global investment management | harmony portfolioss Portfolio commentary Portfolio Performance The Harmony Portfolios all posted gains in Q2 2019,

Harmony PortfoliosMulti-manager, multi-asset solutionsQ2 ended 28 June 2019

Page 2 of 13 global investment management | harmony portfolioss

Table of Contents

1. Portfolio objectives and overview 3

2. Portfolio commentary 4

3. Recent portfolio activity and positioning 6

4. Target portfolios 6

5. Harmony Portfolio and peer group performance 7

6. Market commentary 8

7. Market performance 11

8. Important notes 13

Page 3 of 13global investment management | harmony portfolios

The Harmony Portfolios are a long established range of globally diversified, multi-asset funds designed specifically to provide a cornerstone investment. The Harmony range consists of nine portfolios, each risk profiled and with a specific geographical and currency focus, housed in a Luxembourg UCITS structure with daily pricing and daily liquidity.

The full range includes:

• Momentum Harmony Asian Balanced• Momentum Harmony Asian Growth• Momentum Harmony Australian Dollar Growth• Momentum Harmony Europe Diversified• Momentum Harmony Sterling Balanced• Momentum Harmony Sterling Growth• Momentum Harmony US Dollar Balanced• Momentum Harmony US Dollar Growth• Momentum Harmony Cautious Income

As at the end of June 2019, assets under management across the nine Harmony Portfolios totalled USD 666.2 million.

The Harmony Portfolios investment philosophy is built on three core capabilities:

• Asset allocation• Investment selection• Portfolio construction

The asset allocation process is disciplined, robust and valuation driven, and builds portfolios with true diversification across a wide range of non-correlated assets. ‘Best of breed’ fund solutions are then used to construct each portfolio. We recognise that no investment house has a monopoly of skill in all disciplines: having an unconstrained choice allows us to choose the most appropriate investment managers for any particular asset class. We are objective and independent in our approach, with no incentive to utilise a specific provider in the underlying composition of the portfolios.

The Harmony Portfolios aim to create the best combination of investments to provide optimal returns relative to each of the nine mandates’ tolerance for risk.

The Harmony Portfolio range

The Portfolios are managed in London by a team of experienced investment professionals at Momentum Global Investment Management (MGIM), which has been offering investment management and advisory services to institutional and retail investors since 1998. The twelve strong multi-asset investment team have been responsible for the investment strategy and management of the Portfolios since their inception in 2004. Senior members of the investment team have been working together throughout most of this period.

Investors can be confident that their investments are being managed within a strictly regulated environment, and by a highly qualified and experienced team with significant resources across the globe. MGIM is wholly owned by Momentum Metropolitan Holdings Limited in South Africa, a listed company with a market capitalisation of $2bn and a strong capital position with total assets of $50bn. MGIM is authorised and regulated by the Financial Conduct Authority in the UK and is an authorised Financial Services Provider in South Africa in terms of the Financial Advisory and Intermediary Services Act 2002 (FAIS).

The Investment Manager


Portfolio commentaryPortfolio Performance

The Harmony Portfolios all posted gains in Q2 2019, of between 0.9% and 4.3% (in base currency terms and net of fees for the A share classes). Equity and bond markets mostly performed in line with each other across different countries and regions, delivering low to mid-single digit returns in most cases, so variations in returns across the Funds largely came down to the reporting currency and the regional focus of the underlying investments. The Australian equity market was a notable outperformer, while Asian and emerging market equities lagged.

For most Portfolios our active asset allocation tilts relative to our long term strategic positions made a small positive contribution to performance in aggregate but were more than offset by negative contributions from manager selection over the quarter. Indeed an interesting theme evident in the performance of underlying holdings was the continued divergence within equity markets, as higher growth businesses and sectors drove the market gains while the more cyclical and/or challenged areas were mostly flat or down. Investing in stocks in the latter category, where valuations are usually low and it often turns out that markets had been overly pessimistic, has for many decades been a successful long-term strategy but has not been working for several years now. We have a balanced exposure across a range of styles in the Portfolios, so although our value managers underperformed this was compensated for by strong performance from the likes of Granahan in the US Dollar Funds and Evenlode in the Sterling Funds, both of which returned 10% over the quarter.

On many measures this is the largest and most prolonged period of underperformance for value stocks in market history, which is at least to some extent related to the ultra-low interest rates that prevail around the world. We do not believe value as a style is ‘dead’ and instead think there is particularly strong return potential in many stocks, sectors and regions that are deemed to be value or low-growth, as well as greater potential for downside protection in the event of unforeseen surprises for markets. In contrast, most high-growth stocks are on high valuations which will look vulnerable in the event of any disappointment in the growth outlook or if the market environment changes substantially.

Performance versus respective peer group averages has been good. The Funds generally protected capital well during the last quarter of 2018, when markets fell sharply, then kept pace in the rebound that ensued in 2019. This supports our belief that many multi-asset managers are finding this market environment challenging – ultimately much of the gains are being driven by a relatively narrow cohort of stocks / sectors, therefore any prudent, well diversified approach is likely to be slipping behind on a relative basis. Although performance has been below our targets over the last quarter and year, the Funds are mostly in line or ahead of targets over three years.

We made several changes to the underlying holdings of the portfolios during the quarter.

In April we sold our small positions in the F&C Global Equity Market Neutral Fund, one of five funds that we held as part of our liquid alternatives basket. We took the decision immediately after being notified of a significant departure from the investment team managing that fund. All of the Portfolios now have lower allocations to liquid alternative strategies across four remaining holdings.

The proceeds from those sales went towards increasing our exposure to two fixed income investment trusts during May and June. The first was the TwentyFour Income Fund, which was already held in the Cautious Income Portfolio but not elsewhere, which invests in European asset backed securities providing exposure to very diverse pools of loans and mortgages. Then in June we added to our holding in the Sequoia Economic Infrastructure Income fund which invests in debt instruments funding global infrastructure projects.

The two strategies provide different asset class exposures and so have distinct risk and return drivers, and indeed are run by different specialist management teams that are both based in London, but beyond that have some attractive characteristics in common. Both provide predominantly floating rate exposure, so are largely immune to the risk of future interest rate rises weighing on returns, and both are invested in more complex, niche areas of markets where there are higher yields on offer but also greater risks, so selecting the right, specialist investment team is critical. Also, the underlying investments are less liquid, but the closed ended investment trust structure mitigates most of that risk and ensures we do not suffer any liquidity mismatch within our Portfolios. Both strategies offer distribution yields of 6-7% in Sterling terms, or higher for US dollar-based portfolios where we are paid to hedge away the Sterling risk, which is particularly compelling in the current low yield environment. Consequently both trusts are usually priced at a premium to their underlying asset value, but we were able to invest below prevailing market prices by participating in new issuance windows.

Portfolio Changes


On the 16th January 2019 we launched a new Cautious Income Fund, representing the ninth strategy within the Harmony Portfolios range. Like the other Portfolios, the Cautious Income Fund is a multi-asset, multi-manager UCITS fund, but is designed specifically to be a lower risk strategy that will provide a stable income over the medium to long term as a core holding for investors.

The Fund is highly diversified across multiple asset classes and compared to other risk profiles there is a lower allocation to equities and higher allocations to fixed income and listed property and infrastructure; areas which generally offer higher yields and lower return volatility. Portfolio construction is unconstrained such that the Fund can be invested wherever the best opportunities lie, with no persistent country or regional biases, but any resulting currency risk is majority hedged back to the base currency.

Notably this is the first Fund within the Harmony Portfolios range to offer distributing share classes. The objective is to deliver a stable level of income of 3-4% p.a., through quarterly distributions, whilst at least maintaining the capital value. The Fund is available through various currency hedged share classes, denominated in dollars, sterling or euros. Distributing share classes will pay quarterly distributions, whilst accumulating share classes will effectively reinvest the income received from underlying investments, resulting in relatively higher NAVs for those classes.

Further information is available on the monthly fact sheets for the Cautious Income Portfolio.

Equity and bond markets have risen sharply this year, driven by the prospect of easier financial conditions, and valuations have become stretched in some areas, notably in fixed income. Yet the economic backdrop has deteriorated, corporate earnings are under pressure especially in sectors most exposed to manufacturing, and markets are largely discounting sizeable policy easing by central banks in coming months.

However, while trade and manufacturing have been weak, the key service sector has remained firm, employment has been strong and the consumer is generally in good shape. There are no signs of systemic financial problems and an ensuing liquidity crunch nor of capacity shortages, inflation and a sudden tightening of policy. With inflation subdued central banks have considerable flexibility in keeping policy ultra-loose for much longer, thereby extending this extraordinary cycle.

Furthermore, the extent of the falls in government bond yields and the impact on financial conditions and valuations of other markets should not be under-estimated: US bond yields have fallen by over 100bps since late 2018. This provides a strong underpinning to equities and other risk assets, offsetting the more challenging conditions faced by the corporate sector after last year’s benign backdrop.

Some consolidation is overdue and caution is warranted in the short term, but we believe that the cycle has further to run and any falls in markets will give rise to opportunities to add to risk assets. Market moves in the past year have once again illustrated the benefits of true diversification which will remain vital in the year ahead to withstand the inevitable bumps on the way through this extraordinary cycle. Our investment team continues to focus on building resilient portfolios with a wide variety of underlying return drivers, with equities at the core, supplemented by a wide range of diversifying asset classes such as fixed income, property, infrastructure, gold and liquid alternatives.

New Harmony Portfolios Cautious Income Fund

Looking Forward


Recent activity - YTD 2019

Target Portfolios

Cautious Balanced Diversified Growth

Equities 28% 38% 51.50% 61%

Fixed Income 45% 36% 24.25% 17.25%

Property / Infrastructure 14.50% 10% 10% 10%

Alternative 6% 8% 8% 5%

Commodities 0.00% 4.50% 4.50% 4.50%

Cash 6.50% 3.50% 1.75% 2.25%

These target weights are correct as at the time this report is published and are indicative of the managers’ medium term outlook for markets, which is driven principally by their assessment of relative valuation opportunities. Target weights are based on the Cautious Income, USD Balanced, Europe Diversified and USD Growth Funds respectively. Allocations may vary for the other Balanced and Growth Funds in the range.

Date Holding initiated/ Increased Holding sold/ Decreased Harmony Funds

February TM RWC UK Income Fund RWC Income Opportunities Fund Sterling Funds

March

Short maturity US Treasury bonds Developed market / emerging market equities and listed real estate All except Asian Funds

Short maturity US Treasury bonds (Aug 2020)Long maturity US Treasury bonds (Nov 2043)

Long maturity US Treasury bonds (Nov 2043)

All except Asian and AUD Funds

Asian Funds

April Cash F&C Global Equity Market Neutral Fund All Funds

May TwentyFour Income Fund Cash All, except Cautious

JuneSequoia Economic Infrastructure Income fund Short Duration US Treasury (2020) All except Growth Funds

Sequoia Economic Infrastructure Income fund Short Duration US Treasury (2020) All Growth Funds

Asset allocation decision Manager selection decision


Harmony Portfolio and peer group performancePerformance to 28 June 2019

Fund returns (local currency) 3 months 6 months 2018 2017 2016 3 years

(annualised)5 years

(annualised)

Balanced Portfolio 1.0% 7.8% -8.8% 14.7% 2.9% 4.0% 2.5%

Peer group median 1.9% 7.9% -10.5% 18.7% -1.3% 2.8% -0.9%

Growth Portfolio 0.9% 9.3% -10.6% 19.2% 3.8% 5.7% 1.5%

Peer group median 1.5% 7.9% -11.2% 20.6% -0.8% 3.5% -0.4%

MSCI World 3.6% 16.2% -9.4% 24.0% 7.9% 10.7% 6.2%

MSCI AC Asia Pacific ex Japan 0.7% 12.2% -13.9% 37.0% 6.8% 11.3% 4.2%


Peer group median 3.7% 9.2% -1.3% 7.5% 4.4% 5.6% 5.6%

MSCI World 5.1% 17.0% 1.2% 15.4% 9.0% 14.3% 13.3%

ASX All Ordinaries 7.8% 19.8% -3.5% 12.5% 11.6% 11.3% 9.0%

Diversified Portfolio 1.6% 10.2% -10.8% 5.0% 3.1% 2.5% 3.0%


MSCI World 2.2% 16.7% -4.8% 8.9% 11.1% 11.2% 10.1%

MSCI Europe ex UK 4.3% 17.3% -10.9% 11.4% 2.4% 7.2% 5.7%

GBP





MSCI World 6.1% 16.3% -3.8% 13.2% 28.7% 14.4% 12.6%

MSCI UK 3.3% 13.0% -8.8% 11.7% 19.2% 9.8% 5.8%

USD





MSCI World 3.6% 16.2% -9.4% 24.0% 7.9% 10.7% 6.2%

S&P 500 4.1% 18.2% -4.9% 21.1% 11.2% 12.8% 10.0%

Asi

a (in

USD

)A

UD

EU

R


Market commentary - Q2 2019

Despite a sell-off in May, the quarter ended with Wall Street reaching new all-time highs, pulling the MSCI World index of developed markets to new highs as well. For the quarter, the US and World markets returned 4.0%, taking the year to date returns to 18.0% and 17.0%, respectively. Figure 1.Developed equities posted positive returns over the second quarter, despite the sell-off in May.

Arguably the most dramatic moves were in bonds, where interest rate expectations have been repriced substantially lower in the face of weakening growth, falling inflation and rising deflationary fears. Yields on 10 year US Treasuries fell by 40 basis points (bps) in Q2 to 2.0%, taking the fall to 70bps this year, and other government bond markets followed. In many major countries yields have fallen to all-time lows: in Germany, 10 year yields are -40bps, for the first time dropping below the European Central Bank (ECB) deposit rate, with positive yields available only on maturities above 20 years. These are extraordinary moves given how low rates already were at the beginning of the year and have resulted in exceptional performance from bonds: global government bonds returned 3.5% in Q2 and 5.4% year to date, while in credit: corporate, high yield and emerging market bonds all produced good returns in Q2, and of 10% or more so far this year.

Figure 1: Developed equities posted positive returns over the second quarter, despite the sell-off in May

Source: Bloomberg, Momentum GIM.

In remarkably benign conditions, with nearly all asset classes up, it was notable that safe-haven assets also performed well, with gold up 9.0% in Q2 and the Japanese yen up by close to 3.0%. In part, this might reflect the deep uncertainty prevailing about the state of the global economy and geopolitics and in part the longer-term implications of the truly extraordinary conditions in bond markets, now with over $13tn of bonds trading at negative yields.

While Trump’s trade policies and unpredictability continue to unnerve trading partners and investors, it was unquestionably the shift to much more dovish positions by the Fed and the ECB which was the driving force behind

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-4.0%

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2.0%

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6.0%

01 Apr 15 Apr 29 Apr 13 May 27 May 10 Jun 24 Jun

Major equity market cumulative returns(local currency)

United States

United Kingdom

Continental Europe

Japan

Developed Markets

Emerging Markets


markets. The news flow on tariffs and trade was generally unhelpful; the deterioration in negotiations between the US and China, with Trump’s sudden announcement of additional tariffs on imports from China, followed by the threat of tariffs on Mexico for the explicit political purpose of curbing the flow of illegal immigrants, spooked markets briefly but this was far outweighed by the substantial policy shift by central banks.

In what amounted to a U-turn in policy, the ECB surprised markets by announcing its readiness to provide additional stimulus, including further cuts in policy interest rates, if a sustained return to their inflation target is threatened. Given that inflation in the eurozone has remained resolutely well below the ECB target of ‘close to 2%’ since the financial crisis and is currently hovering around 1%, the implications are clear. The ECB followed this up by extending its forward guidance, committing to keep rates unchanged until mid-2020, combined with a further round of cheap funding to banks and the possibility of restarting its Quantitative Easing (QE) programme, on hold since the beginning of the year.

At the same time the Fed, which has become progressively more dovish since calling an end to its tightening programme in December last year, took a further step towards policy easing in the face of rising evidence of slower growth. It shifted its interest rate, inflation and growth expectations lower, with Chairman Powell noting that ‘uncertainties about the outlook have increased’ and committing to ‘act as appropriate to sustain the expansion’. Markets priced in between 3 and 4 rate cuts over the next year, a dramatic change from expectations of little more than six months ago. Other central banks also eased policy: Australia cut rates and the Bank of England adopted a more dovish approach while warning of falling business and consumer confidence and the increasing threat of a no-deal Brexit.

Central banks are reacting to two critical developments. First, increasing evidence of a slowdown in growth, and second, a fall in inflation and perhaps, more importantly, inflation expectations. The slowdown in growth has to date been largely in manufacturing, with global trade hit by the US-China trade war and the key auto industry facing unprecedented disruption and falling sales. Manufacturing is in recession in Europe and slowing sharply elsewhere, and leading indicators point to a continuing tough environment. To date, the consumer and service sectors have held up well, but there have been signs recently that confidence is waning, increasing worries that a soft patch triggered by the downturn in manufacturing could become more widespread.

The drop-in inflation highlights the problem that central banks face. After a decade of ultra-loose policy inflation in most developed countries remains below central bank target rates. Indeed, inflation in the US, Europe and Japan has remained stubbornly below target rates throughout the post-crisis period despite the efforts of central banks to push it higher with unprecedented monetary largesse, and the spectre of deflation remains a worry in the Eurozone and Japan.

Figure 2: The yield on 10 Year government bonds across the eurozone continue to decline

Source: Bloomberg, Momentum GIM

-0.40%

-0.30%

-0.20%

-0.10%

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

01 Apr 15 Apr 29 Apr 13 May 27 May 10 Jun 24 Jun

Eurozone 10 Year Bond Yields

France Netherlands German Finland


Despite the strong returns this year, and the powerful support to valuations from low inflation and exceptionally low interest rates, uncertainty remains high. Aside from the slowdown in growth, the unfolding trade wars and the negative impact on corporate earnings, other concerns, each with the potential to damage confidence and growth and to disrupt markets, continue to worry investors.

With the demise of the disastrous premiership of Theresa May, the UK now has a new Prime Minister. Boris Johnson has stated his intent to fulfil Brexit and take the UK out of the EU by the deadline of 31st October, with or without a deal, which has increased the risk of a no deal exit materially and with it the prospect of some short-term disruption to trade between the UK and EU. Sterling is already reflecting this possibility, having slipped to a two year low against the dollar, but further weakness is likely as the ramifications of the change in leadership are fully absorbed. Sterling assets carry a sizeable Brexit discount and offer the possibility of a sharp rebound once the current uncertainty is lifted.

Elsewhere in Europe the Italian budget dispute with the EU reached a short-term compromise solution but leaves open substantial longer-term problems. Without great substance underlying it, the populist Italian government agreed to restrain its fiscal deficit to 2% of GDP, enabling the EU to back off from disciplinary action. The ensuing rally in Italian assets took bond yields down by 100bps and led to Italian equities and bonds were among the best performing assets in the quarter. Yet, with debt to GDP of 130% and an economy which has hardly grown since Italy joined the euro 20 years ago, this is a problem which has been kicked down the road and will come back to haunt investors in due course. A broader but related malaise in the Eurozone is reflected in the weak state of its banking industry. Share prices of banks across the Euro area fell sharply in recent weeks, taking the banking index back to its crisis lows in 2008/9.

The US-Iran dispute, which has been rumbling on since the US withdrew from the nuclear deal, deteriorated materially, with attacks on oil tankers in the Gulf, thought to be the work of Iran, and increasingly hard-line tactics by both Iran and the US. This supported the oil price, as did the extension of production curbs by Russia and Saudi Arabia but could not prevent some slippage in the price over the second quarter, after the sharp rise in the preceding quarter.

Some caution then is warranted in the short term. Equity and bond markets have risen sharply this year, driven by the prospect of easier financial conditions, and valuations have become stretched in some areas, notably in fixed income. Yet the economic backdrop has deteriorated, corporate earnings are under pressure especially in sectors most exposed to manufacturing, and markets are largely discounting sizeable policy easing by central banks in coming months.

However, while trade and manufacturing have been weak, the key service sector has remained firm, employment has been strong and the consumer is generally in good shape. There are no signs of systemic financial problems and an ensuing liquidity crunch nor of capacity shortages, inflation and a sudden tightening of policy. With inflation subdued central banks have considerable flexibility in keeping policy ultra-loose for much longer, thereby extending this extraordinary cycle.

Furthermore, the extent of the falls in government bond yields and the impact on financial conditions and valuations of other markets should not be under-estimated: US bond yields have fallen by over 100bps since late 2018. This provides a strong underpinning to equities and other risk assets, offsetting the more challenging conditions faced by the corporate sector after last year’s benign backdrop.

While some consolidation is overdue we, therefore, believe that the cycle has further to run and any falls in markets will give rise to opportunities to add to risk assets, while at all times maintaining careful diversification in portfolios to provide protection during inevitable shorter-term setbacks.

Source: Bloomberg, June 2019. Returns in US dollars unless otherwise stated.

Past performance is not indicative of future returns.


Market PerformanceTo 28 June 2019

Asset Class / Region Index Currency Quarter YTD 12 months

Developed Markets Equities

United States S&P 500 NR USD 4.1% 18.2% 9.8%

United Kingdom MSCI UK NR GBP 3.3% 13.0% 1.6%

Continental Europe MSCI Europe ex UK NR EUR 4.3% 17.3% 6.0%

Japan Topix TR JPY -2.4% 5.2% -8.2%

Asia Pacific (ex Japan) MSCI AC Asia Pacific ex Japan NR USD 0.7% 12.2% 0.8%

Global MSCI World NR USD 4.0% 17.0% 6.3%

Emerging Markets Equities

Emerging Europe MSCI EM Europe NR USD 11.7% 20.2% 15.6%

Emerging Asia MSCI EM Asia NR USD -1.2% 9.7% -2.3%

Emerging Latin America MSCI EM Latin America NR USD 4.4% 12.6% 18.4%

BRICs MSCI BRIC NR USD -0.2% 13.7% 3.3%

Global emerging markets MSCI Emerging Markets NR USD 0.6% 10.6% 1.2%

Bonds

US Treasuries JP Morgan United States Government Bond TR USD 3.1% 5.4% 7.5%

US Treasuries (inflation protected)

BBgBarc US Government Inflation Linked TR USD 3.0% 6.4% 4.9%

US Corporate (investment grade)

BBgBarc US Corporate Investment Grade TR USD 4.5% 9.9% 10.7%

US High Yield BBgBarc US High Yield 2% Issuer Cap TR USD 2.5% 9.9% 7.5%

UK Gilts JP Morgan UK Government Bond TR GBP 1.4% 5.0% 5.2%

UK Corporate (investment grade) ICE BofAML Sterling Non-Gilt TR GBP 2.0% 6.3% 6.0%

Euro Government Bonds ICE BofAML Euro Government TR EUR 3.4% 6.0% 6.5%

Euro Corporate (investment grade) BBgBarc Euro Aggregate Corporate TR EUR 2.2% 5.4% 4.8%

Euro High Yield BBgBarc European High Yield 3% Constrained TR EUR 2.4% 7.8% 5.6%

Japanese Government JP Morgan Japan Government Bond TR JPY 1.2% 2.9% 3.3%

Australian Government JP Morgan Australia GBI TR AUD 3.6% 7.8% 11.5%

Global Government Bonds JP Morgan Global GBI USD 3.5% 5.4% 5.7%

Global Bonds ICE BofAML Global Broad Market USD 3.4% 5.7% 6.0%

Global Convertible Bonds ICE BofAML Global Convertibles USD 3.2% 11.3% 4.4%

Emerging Market Bonds JP Morgan EMBI+ (Hard currency) USD 4.4% 10.8% 11.7%


To 28 June 2019

Asset Class / Region Index Currency Quarter YTD 12 months

Property

US Property Securities MSCI US REIT NR USD 2.3% -0.2% e 3.7%

Australian Property Securities S&P/ASX 200 A-REIT Index TR AUD 2.4% 16.7% 13.9%

Asia Property Securities S&P Asia Property 40 Index NR USD -2.2% 12.7% 9.8%

Global Property Securities S&P Global Property USD TR USD 0.4% 15.0% 7.9%

Currencies

Euro USD 1.4% -0.8% -2.7%

UK Pound Sterling USD -2.6% -0.5% -3.9%

Japanese Yen USD 2.7% 1.6% 2.6%

Australian Dollar USD -1.1% -0.4% -5.2%

South African Rand USD 2.9% 2.0% -2.6%

Commodities & Alternatives

Commodities RICI TR USD -1.3% 8.0% -7.2%

Agricultural Commodities RICI Agriculture TR USD 1.0% -0.8% -6.1%

Oil Brent Crude Oil USD -2.7% 23.7% -16.2%

Gold Gold Spot USD 9.1% 9.9% 12.5%

Hedge funds HFRX Global Hedge Fund USD 1.4% 4.1% -2.1%


Important notes

Momentum Global Investment Management is the trading name for Momentum Global Investment Management Limited. This document does not constitute an offer or solicitation to any person in any jurisdiction in which it is not authorised or permitted, or to anyone who would be an unlawful recipient, and is only intended for use by original recipients and addressees. The original recipient is solely responsible for any actions in further distributing this document, and should be satisfied in doing so that there is no breach of local legislation or regulation. The information is intended solely for use by our clients or prospective clients, and should not be reproduced or distributed except via original recipients acting as professional intermediaries. This document is not for distribution in the United States.

Prospective investors should inform themselves and if need be take appropriate advice regarding applicable legal, taxation and exchange control regulations in countries of their citizenship, residence or domicile which may be relevant to the acquisition, holding, transfer, redemption or disposal of any investments herein solicited.

Any opinions expressed herein are those at the date this material is issued. Data, models and other statistics are sourced from our own records, unless otherwise stated herein. Unless otherwise provided under UK law.

We caution that the value of investments, and the income derived, may fluctuate and it is possible that an investor may incur losses, including a loss of the principal invested. Past performance is not generally indicative of future performance. Investors whose reference currency differs from that in which the underlying assets are invested may be subject to exchange rate movements that alter the value of their investments.

Investment inherently involves an element of risk. It cannot be guaranteed that the performance of any fund mentioned henceforth will generate a return and there may be circumstances whereby no returns are generated or the principle invested is lost or eroded. As a result investors may not get back the original amount invested. Investors should ensure that they fully understand the risks associated with the Fund and should consider their own investment objectives and risk tolerance levels.

Prior to investing in a fund it is suggested that all potential investors read the prospectus and either Key Investor Information Document (KIID) or Key Financial Statement (KFS) in tandem with the offering documentation. Investors are advised to seek professional investment

advice before making any investment decisions.

This disclosure has not been reviewed by the Securities and Futures Commission (SFC) of Hong Kong.

Our investment mandates in alternative strategies and hedge funds permit us to invest in unregulated funds that may be highly volatile. Although alternative strategies funds will seek to follow a wide diversification policy, these funds may be subject to sudden and/or large falls in value. The illiquid nature of the underlying funds is such that alternative strategies funds deal infrequently and require longer notice periods for redemptions. These Investments are therefore not readily realisable. If an alternative strategies fund fails to perform, it may not be possible to realise the investment without further loss in value. These unregulated funds may engage in the short selling of securities or may use a greater degree of gearing than is permitted for regulated funds (including the ability to borrow for a leverage strategy). A relatively small price movement may result in a disproportionately large movement in the investment value. The purpose of gearing is to achieve higher returns associated with larger investment exposures, but has concomitant exposure to loss if positive performance is not achieved. Reliable information about the value of an investment in an alternative strategies fund may not be available (other than at the fund’s infrequent valuation points).

Under our multi-management arrangements, we selectively appoint underlying sub-investment managers and funds to actively manage underlying asset holdings in the pursuit of achieving mandated performance objectives. Annual investment management fees are payable both to the multi-manager and the manager of the underlying assets at rates contained in the offering documents of the relevant portfolios (and may involve performance fees where expressly indicated therein).

Momentum Global Investment Management Limited (Company Registration No. 3733094) registered office at The Rex Building, 62 Queen Street, London, EC4R 1EB. Momentum Global Investment Management Limited is authorised and regulated by the Financial Conduct Authority in the United Kingdom, and is an authorised Financial Services Provider pursuant to the Financial Advisory and Intermediary Services Act 37 of 2002 in South Africa.

© Momentum Global Investment Management Limited 2019

Momentum Global Investment Management Limited Momentum Global Investment Management Limited (Company Registration No. 3733094) has its registered office at

The Rex Building, 62 Queen Street, London, EC4R 1EB. Momentum Global Investment Management Limited is authorised and regulated by the Financial Conduct Authority in the United Kingdom, and is an authorised Financial

Services Provider pursuant to the Financial Advisory and Intermediary Services Act 37 of 2002 in South Africa.

For more information, please contact

Anastasiya VolodinaDistribution Servicese: [email protected] t: +44 (0)207 618 1806www.harmonyportfolios.com

Documents

Harmony Portfolios · Page 4 of 13 global investment management | harmony portfolioss Portfolio commentary Portfolio Performance The Harmony Portfolios all posted gains in Q2 2019,