Saraselect Invested with Conviction in Swiss Quality

SaraSelect Invested with conviction in Swiss quality

Conference call: update on developments

Zug, 24 March 2020 Agenda

Unique Approach

Investment Philosophy

Focus Small Caps

Investment Process

Our Value Added

Outlook / Conclusion

VV Vermögensverwaltung AG

▪ Invested in global market leaders, in high quality Swiss small and mid caps

▪ We favour entrepreneurial lead approaches to management lead ones

▪ Distinct stock picking – we have learned to say NO

▪ Preference for B2B against B2C

▪ Vast experience – fund exists since 1996

▪ Amongst the leaders in our industry – assets of CHF ~600 mn

We invest with conviction in Swiss quality

Period 31.01.1996 – 20.03.2020

1'600 1110.7 1'500 1'400 1'300 1'200 1'100 1'000 900 800 700 600 500 400 300 200 100 0 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Source: VV AG, Bloomberg / 20.03.2020

Nespresso renews contract with Dätwyler Belimo technology in the world’s highest building

140 million dollar deal Sika: Building Envelope Solutions for all Tesla signs 3-year-contract with Bossard! type of Buildings fff

Success = ƒ(entrepreneurs, passion, culture, focus, time, courage, innovation, responsible anchor shareholder, not too many short-term oriented financial shareholders)

This will automatically lead to better products, high market shares and pricing power

High correlation of marketshare development and reported margins

The understanding of competitive forces within an industry allows better decisions

Source: VV AG, VAT, Michael Porter’s “five forces” / 03.03.2020

Communi cation

Environ- Mobility ment & Energy

Mega Trends

Urbani- Aging & zation Lifestyle

Security & Regulation

Speaking of mega trends there’s no way around involving Swiss companies

Average yearly return SPISMC Index from 31 January 1996 to 30 June 2019 12.0%

9.6% 10.0%

8.0%

6.0% 5.2%

4.0% 2.2% 2.0%

0.0%

-2.0%

-2.7% -4.0% average performance without best 30 days without best 59 days = 1% without best 117 days = 2%

Performance is done in very short periods, missing them leads to much lower results

Source: VV AG, Bloomberg / 30.06.2019

80% 200% 180% 60% 160%

40% 140% 120% 20% 100% 80% 0% 60% -20% 40% 20% -40% 0% -60% -20%

SaraSelect rolling 12 month performance SaraSelect rolling 7 year performance SaraSelect yearly average performance 10.11% SaraSelect yearly average performance 10.11%

With 7 years investment horizon no loss is incurred

Source: VV AG, Bloomberg / 31.12.2019

We define quality as follows:

Sound Management Trustworthy and entrepreneurial spirit

Attractive Business Model Leading products in several lucrative business markets

Free Cash Flows High level of internal financing

High equity ratio, moderate debt level, assets of good Strong Balance Sheet quality

In many cases, small caps meet these requirements particularly well

We try to avoid the following sectors:

Venture Erratic business model, lack ability of internal financing (Bio- & Hitech)

Lack of visibility and predictability of income streams, Banks principle-agent problem, regulatory risks

Unattractive business model, large and risky bond Insurance Companies portfolios especially in times of low interest rates

Political and regulatory risks, questionable expansion Utilities abroad, high level of dependency on energy trading

Usually represents a separate asset class, which we do Real Estate not duplicate

Reasons for Switzerland’s high innovative capacity:

• Sizeable industrial sector • Over 320’000 small and medium enterprises (>99% of all companies) create innovation pressure • Innovation stimulated by tax reliefs • State-of-the-art educational system

State-of-the-art infrastructure, outstanding education and an attractive business environment ensure a high level of competitiveness.

Source: VV AG, www.globalinnovationindex.org 2019

Period 01.02.1996 – 29.02.2020

1400

1200

1000

800

600

400

200

0 31.01.1996 29.01.1999 31.01.2002 31.01.2005 31.01.2008 31.01.2011 31.01.2014 31.01.2017 31.01.2020 Small Cap Index Mid Cap Index SMI Total Return (Perf. 10.39% p.a.) (Perf. 9.05% p.a.) (Perf. 7.27% p.a.) (Vol. 9.03% p.a.) (Vol. 12.03% p.a.) (Vol. 9.71% p.a.)

In the long run, small caps outperform large caps by over 3% yearly and mid caps by over 1%.

Source: VV AG, Bloomberg / 29.02.2020

Small - SaraSelect Index Performance Position ▪ The larger our positions, Mid (Weighting) (Weighting) YTD the higher the degree of ALSO Holding AG M 8.88% 0.34% -19.58% Bachem Holding AG S 7.98% 0.30% 8.91% our long-term conviction. Sika AG L 7.57% 0.00% -20.84% Belimo Holding AG M 7.17% 1.16% -19.89% ▪ We must not invest more LEM Holding SA M 6.19% 0.29% -31.18% than 10% of our fund Daetwyler Holding AG M 5.24% 0.47% -13.82% assets in a single Bell Food Group AG S 4.97% 0.18% -13.17% Logitech International SA M 4.95% 2.60% -6.59% company. Furthermore, Interroll Holding AG M 4.44% 0.43% -30.48% the fund is not allowed to Chocoladefabriken Lindt & Spru M 4.13% 3.01% -3.53% hold more than 10% of the Bossard Holding AG M 3.94% 0.27% -42.90% voting rights of a company. Bobst Group SA M 3.18% 0.13% -27.99% CPH Chemie & Papier Holding AG S 3.16% 0.07% -24.24% Gurit Holding AG S 3.07% 0.18% -31.46% Huber + Suhner AG M 2.91% 0.39% -34.64% Total Top 15 77.78% 9.84%

Small Caps are particularly innovative and are therefore prominent holdings in our portfolio

Source: VV AG, Bloomberg / 20.03.2020

Segment allocation Relative sector weights SaraSelect vs Benchmark

100% Industrials 25.5%

89.1% 80% Technology 8.8% Consumer Goods -1.7% 60% 63.9% 62.1% Health Care -5.1%

Basic Materials 2.7% 40% Consumer Services -2.0% 33.9% 30.3% 20% Financials -27.1%

10.9% Telecommunication -0.4% 0% SMIM Mid Caps Small Caps Utilities -0.8%

SaraSelect P CHF SPI Small & Mid Cap Index -30% -15% 0% 15% 30%

Rather small companies with a strong industrial footprint offer solutions for megatrends leading to structural growth from which they benefit.

Source: VV AG, Bloomberg / 20.03.2020

Balance sheet quality Valuations

60% 30

50% 53% 25 25.7 46% 22.9 40% 44% 20

30% 15 16.2 15.0 20% 25% 10

10% 5 5.1 3.9 2.6 2.4 0% 0 Equity in % of assets Intangible assets in % of equity P/E 2020 EV/EBITDA Price/Book Dividend yield 2020 value (%) SaraSelect Small & Mid Cap Index SaraSelect P CHF SPI Small & Mid Cap Index

35% discount for twice as solid balance sheets

Source: VV AG, Bloomberg / 20.03.2020

900 1'600

800 1'400

1'200 700 10-year local FX sales CAGR 11% 1'000 600 800 500 600 400 400

300 200

200 0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Revenues in mn CHF Revenues at constant FX Market cap in mn CHF (rhs)

The real value added is becoming visible in constant currencies, this explain nicely the actual valuation and market perception. Source: VV AG, Interroll 2019

YTD 1M 1 yr 3 yr 5 yr 10 yr since inception Fund -23.47% -14.81% -13.19% -2.56 % p.a. 7.84 % p.a. 8.3 % p.a. 8.8 % p.a. Index -25.37% -18.62% -14.38% -1.41 % p.a. 3.71 % p.a. 6.75 % p.a. 8.35 % p.a.

1'600 60% 1'400 40% 1'200 20% 1'000

800 0% 600 -20% 400 200 -40%

0 -60% 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 SaraSelect P CHF (NAV Div.adj.) SaraSelect P CHF SPI Small & Mid Cap Index

Quelle: VV AG, Bloomberg / 20.03.2020

Smaller companies are more innovative, the RISK-OFF mode will fade away again

Quelle: VV AG, Bloomberg / 29 February 2020

Temporarily some hefty corrections

Source: Bloomberg / VV AG / 20.03.2020

Period: February

SaraSelect CHF: -6.03 (net return) SPI Small & Mid Cap Index: -8.08%

Rel. Weight Rel. Weight TOP SaraSelect vs. BM Abs. Performance Rel. Contribution FLOP SaraSelect vs. BM Abs. Performance Rel. Contribution JULIUS BAER GROUP LTD -3.62% -16.75% 0.61% ORELL FUESSLI HOLDING AG-REG 1.47% -12.28% -0.18% ALSO HOLDING AG-REG 8.58% 5.46% 0.43% LOGITECH INTERNATIONAL-REG 1.36% -14.51% -0.20% TEMENOS AG - REG -3.53% -11.96% 0.42% BOSSARD HOLDING AG-REG A 4.13% -6.07% -0.25% SCHINDLER HOLDING-PART CERT -2.89% -13.99% 0.41% BOBST GROUP SA-REG 3.02% -9.35% -0.28% BALOISE HOLDING AG - REG -2.78% -11.13% 0.31% HUBER + SUHNER AG-REG 2.89% -10.69% -0.31% ADECCO GROUP AG-REG -3.17% -9.38% 0.30% BACHEM HOLDING AG-REG B 6.42% -4.63% -0.31% KUEHNE + NAGEL INTL AG-REG -2.97% -9.90% 0.29% INTERROLL HOLDING AG-REG 4.01% -8.70% -0.34% CHOCOLADEFABRIKEN LINDT-REG -3.33% -6.90% 0.23% BELIMO HOLDING AG-REG 5.55% -6.80% -0.38% SONOVA HOLDING AG-REG -4.58% -4.96% 0.23% DAETWYLER HOLDING AG-BR 4.00% -11.61% -0.47% SCHINDLER HOLDING AG-REG -1.53% -13.67% 0.21% LEM HOLDING SA-REG 6.55% -13.97% -0.95%

YTD

SaraSelect CHF: -23.24% (net return) SPI Small & Mid Cap Index: -25.37%

Rel. Weight Abs. Performance Rel. Contribution Rel. Weight Abs. Performance Rel. Contribution TOP SaraSelect vs. BM YTD 2020 YTD 2020 FLOP SaraSelect vs. BM YTD 2020 YTD 2020 JULIUS BAER GROUP LTD -3.54% -43.44% +1.61% BOBST GROUP SA-REG +3.03% -27.99% -0.83% STRAUMANN HOLDING AG-REG -3.70% -37.92% +1.49% PHOENIX MECANO AG-BR +2.83% -29.78% -0.87% ADECCO GROUP AG-REG -3.15% -43.20% +1.44% HUBER + SUHNER AG-REG +2.88% -34.64% -1.03% SONOVA HOLDING AG-REG -4.41% -27.99% +1.32% BELIMO HOLDING AG-REG +5.49% -19.89% -1.04% TEMENOS AG - REG -3.43% -32.64% +1.14% GURIT HOLDING AG-BR +3.32% -31.46% -1.10% BALOISE HOLDING AG - REG -2.74% -35.66% +1.01% INTERROLL HOLDING AG-REG +4.08% -30.48% -1.26% HELVETIA HOLDING AG-REG -1.53% -47.08% +0.78% SIKA AG-REG +7.48% +0.00% -1.58% DUFRY AG-REG -0.89% -71.90% +0.75% ALSO HOLDING AG-REG +8.57% -19.58% -1.73% KUEHNE + NAGEL INTL AG-REG -3.07% -22.06% +0.65% BOSSARD HOLDING AG-REG A +4.25% -42.90% -2.03% SWISS PRIME SITE-REG -3.16% -16.44% +0.58% LEM HOLDING SA-REG +6.64% -31.18% -2.15%

Short-term disappointments lead to profit taking – RISK-OFF

Quelle: VV AG, Bloomberg / 20 March 2020

Relative ytd-Performance 2019 5.0% 0.0% -5.0% -10.0% -15.0% Jan Feb Mär Apr Mai Jun Jul Aug Sep Okt Nov Dez

Relative ytd-Performance 2020 5.0%

0.0%

-5.0%

-10.0% 3.1.20 10.1.20 17.1.20 24.1.20 31.1.20 7.2.20 14.2.20 21.2.20 28.2.20 6.3.20 13.3.20 20.3.20

Quelle: VV AG, Bloomberg / 20 March 2020

Global Purchasing Manager Index (PMI Manufacturing + Servicing)

Feb 20 Jan 20 Dec 19 Nov 19 Oct 19 Sep 19 Aug 19 Jul 19 Jun 19 May 19 Apr 19 Mar 19 Feb 19 Global 50.4 50.1 50.3 49.9 49.8 49.5 49.3 49.4 49.8 50.4 50.5 50.6 50.7 Switzerland 47.8 48.8 48.5 48.9 44.9 47.4 45.2 48.6 49.0 49.1 50.7 54.3 53.9 Euro zone 49.1 47.9 46.3 46.9 45.9 45.7 47.0 46.5 47.6 47.7 47.9 47.5 49.3 Germany 47.8 45.3 43.7 44.1 42.1 41.7 43.5 43.2 45.0 44.3 44.4 44.1 47.6 France 49.7 51.1 50.4 51.7 50.7 50.1 51.1 49.7 51.9 50.6 50.0 49.7 51.5 Italy 48.9 46.2 47.6 47.7 47.8 48.7 48.5 48.4 49.7 49.1 47.4 47.7 47.8 UK 51.9 50.0 47.5 48.9 49.6 48.3 47.4 48.0 48.0 49.4 53.1 55.1 52.1 USA 50.9 47.8 48.1 48.5 48.2 48.8 51.3 51.6 52.3 53.4 54.6 54.1 55.5 Japan 47.6 48.8 48.4 48.9 48.4 48.9 49.3 49.4 49.3 49.8 50.2 49.2 48.9 China 35.7 50.0 50.2 50.2 49.3 49.8 49.5 49.7 49.4 49.4 50.1 50.5 49.2

Feb 20 Jan 20 Dec 19 Nov 19 Oct 19 Sep 19 Aug 19 Jul 19 Jun 19 May 19 Apr 19 Mar 19 Feb 19 Global 47.1 52.7 52.0 51.6 51.0 51.4 51.7 52.5 51.9 51.6 52.7 53.7 53.3 Switzerland 51.9 57.3 51.3 52.6 54.5 55.8 54.9 48.9 53.7 56.1 61.8 54.4 55.7 Euro zone 52.6 52.5 52.8 51.9 52.2 51.6 53.5 53.2 53.6 52.9 52.8 53.3 52.8 Germany 52.5 54.2 52.9 51.7 51.6 51.4 54.8 54.5 55.8 55.4 55.7 55.4 55.3 France 52.5 51.0 52.4 52.2 52.9 51.1 53.4 52.6 52.9 51.5 50.5 49.1 50.2 Italy 52.1 51.4 51.1 50.4 52.2 51.4 50.6 51.7 50.5 50.0 50.4 53.1 50.4 UK 53.2 53.9 50.0 49.3 50.0 49.5 50.6 51.4 50.2 51.0 50.4 48.9 51.3 USA 49.4 53.4 52.8 51.6 50.6 50.9 50.7 53.0 51.5 50.9 53.0 55.3 56.0 Japan 46.8 51.0 49.4 50.3 49.7 52.8 53.3 51.8 51.9 51.7 51.8 52.0 52.3 China 26.5 51.8 52.5 53.5 51.1 51.3 52.1 51.6 52.0 52.7 54.5 54.4 51.1

Source: VV AG, Bloomberg / 02.03.2020

10yr Swiss Government Bond -0.351% 0.50% 1.00% 1.68% 2.00% 3.00% P/E SPI +/- P/E SPI +/- P/E SPI +/- P/E SPI +/- P/E SPI +/- P/E SPI +/- 13.00% 7.9 9'335 -8% 7.4 8'746 -14% 7.1 8'434 -17% 6.8 8'042 -21% 6.7 7'872 -23% 6.3 7'380 -27% 12.00% 8.6 10'136 0% 8.0 9'446 -7% 7.7 9'083 -11% 7.3 8'630 -15% 7.1 8'434 -17% 6.7 7'872 -23% 11.95% 8.6 10'180 0% 8.0 9'484 -7% 7.7 9'118 -10% 7.3 8'661 -15% 7.2 8'464 -17% 6.7 7'898 -22% 10.00% 10.4 12'237 20% 9.5 11'245 11% 9.1 10'734 6% 8.6 10'107 -1% 8.3 9'840 -3% 7.7 9'083 -11% 8.00% 13.1 15'437 52% 11.8 13'891 37% 11.1 13'119 29% 10.3 12'195 20% 10.0 11'807 16% 9.1 10'734 6% 6.00% 17.7 20'902 106% 15.4 18'165 79% 14.3 16'868 66% 13.0 15'370 51% 12.5 14'759 45% 11.1 13'119 29% 3.68% 30.0 35'458 249% 23.9 28'241 178% 21.4 25'224 148% 18.6 22'015 117% 17.6 20'784 104% 15.0 17'673 74% 3.00% 37.8 44'573 338% 28.6 33'736 232% 25.0 29'519 190% 21.4 25'217 148% 20.0 23'615 132% 16.7 19'679 94%

Risk premium Risk 2.50% 46.5 54'944 440% 33.3 39'358 287% 28.6 33'736 232% 23.9 28'232 178% 22.2 26'239 158% 18.2 21'468 111% 2.00% 60.6 71'604 604% 40.0 47'230 365% 33.3 39'358 287% 27.2 32'065 215% 25.0 29'519 190% 20.0 23'615 132% 1.50% 87.0 102'763 911% 50.0 59'037 481% 40.0 47'230 365% 31.4 37'103 265% 28.6 33'736 232% 22.2 26'239 158% 0.75% 250.6 295'926 2811% 80.0 94'460 829% 57.1 67'471 564% 41.1 48'543 377% 36.4 42'936 322% 26.7 31'487 210% 0.25% -990.1 -1'169'056 -11599% 133.3 157'433 1449% 80.0 94'460 829% 51.8 61'104 501% 44.4 52'478 416% 30.8 36'331 257%

today ltr average

*Risk premium = equity yield (Reverse P/E ratio) ./. bond yield

The earnings will have to be slightly adapted, depending on the final impact of corona

Source: VV AG, Bloomberg / 20.03.2020

Net interest spending rising to 6.3% of GDP Budget deficit to rise to 8.7% of GDP

Interest rate have to stay low short-term and will eventually dramatically increase

Source: Congressional Budget Office: «The 2019 Long-term Budget Outlook» / VV AG

State Street Institutional Confidence Index 2005 - 2019 150 Euphoria 140

130

120

110

100

60 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

USA Europe

No exuberance visible in the equity markets yet

Source: VV AG, Bloomberg / 29.02.2020

SPI and 10y Swiss Government Yield (3 year, normalized standard deviation)

4 14'000

ignal s

12'000

SELL Equity

- 2 < 10'000

0 8'000

6'000

-2 >

- 4'000

signal signal -4 2'000

Jan 2005 Jan 2007 Jan 2009 Jan 2011 Jan 2013 Jan 2015 Jan 2017 Jan 2019

Equity BUY

Norm. SD 10y Swiss Gov. SPI Index (rhs)

Still a long way to go for the Swiss equity market

Source: VV AG, Bloomberg / 20.03.2020

Swiss stocks Yearly total returns (average 7.83 % p.a.)

100'000

-34% -42.3% 10'000

-46.5% 1'000 -37.5%

100 -41.3% 1925 1935 1945 1955 1965 1975 1985 1995 2005 2015

The average performance is at an attractive long-term 7.8% p.a. but negative years happen regularly

Source: Pictet / VV AG; log scale

Sectors with low barriers to entry should be avoided systematically

Source: Bloomberg / VV AG / 20.03.2020

High resilience during the financial crisis Long-term structural growth success story

800 20.0% 30000.0 17.0% 700 19.0% 25000.0 18.0% 15.0% 600 17.0% 20000.0 13.0% 500 16.0% 400 15.0% 15000.0 11.0% 300 14.0% 10000.0 9.0% 13.0% 200 12.0% 7.0% 5000.0 100 11.0%

5.0% 0 10.0% 0.0

2006 2007 2008 2009 2010 2011 2012 2013 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

EBITDA (rhs) EBITDA margin (lhs) Sales (rhs) EBITDA margin (lhs)

Unlucky categorizations lead to misperceptions

Source: VV AG, Bloomberg / 22.01.2020

Structural growth intact Pent-up demand as in 2009 ?

5-6mn yearly produced cars, actual low levels seen in the past with corresponding rebounds

Source: VV AG, Bloomberg / 29.02.2020

▪ Global Covid-19 spread, impact and length will be decisive

▪ After China now Europe and the US affected as well – sentiment deteriorating

▪ Many roadshows, general assemblies, events canceled – alternative platforms

▪ Chinese factories are ramping up again, logistics still a big problem

▪ Central bank reactions show negative potential on the credit side (junk burst)

▪ Next weeks will be decisive, mid-term many structural trends intact

▪ “ThereIsNoAlternative” more stringent than before

Structural trends will reemerge, as soon as “dust settles”

▪ Swiss culture and mindset enable market leaders

▪ Alignment of interests with management is crucial

▪ Exclude dangerous business models – say NO

▪ High barriers to entry protect companies

▪ B2B is more stable than B2C

▪ Structural growth outweights cyclical growth

SaraSelect offers you immediate access to a portfolio of well-positioned market-leaders enabling structural growth and mega-trends

VV Vermögensverwaltung AG Lauriedstrasse 7 • Postfach 7837 • CH-6302 Zug T + 41 41 720 47 90 • F +41 41 720 47 91 [email protected] • www.vv-ag.ch

While VV Vermögensverwaltung AG has made every effort to ensure that the information on this document is correct at the time of publication, VV Vermögensverwaltung AG can make no representation or warranty (including liability to third parties) either expressly or by implication as to the accuracy, reliability or completeness of the said information. If it’s not stated explicitly otherwise, all figures are unchecked.

Past performance does not guarantee future returns. The performance shown does not take account of any commissions and costs charged when subscribing and redeeming units. The performance figures include all costs charged to the fund (net performance). The performance calculation is based on net asset values (NAV) with dividends reinvested. Additional commissions, costs and taxes on the level of the investor affect the performance negatively. The bank and/or the fund's broker may receive or pay a one-off and/or recurring commission in connection with this product, the amount of which will be communicated to you upon request. Furthermore, investments in foreign currencies include a foreign exchange risk which may increase or decrease the return due to currency fluctuations.

Persons domiciled in the USA or US nationals are not permitted to hold shares in SaraSelect, and units in SaraSelect may not be publicly sold, offered or issued to anyone residing in the USA or to US nationals. This publication is intended only for investors in Switzerland.

The prospectus including management regulations of the Fund, the simplified prospectuses as well as the annual and semi-annual reports are available free of charge from the custodian bank (Bank J. Safra Sarasin Ltd, Elisabethenstrasse 62, P.O. Box, CH-4002 Basel, Switzerland) or the fund manager (JSS Investmentfonds Ltd, Wallstrasse 9, CH-4002 Basel, Switzerland).