Midlincoln Fund Atlas

April 2018 Fund Research

Bloomberg: RUSE:RM

Focus: Russia ITI Funds RTS Equity ETF -

Asset Class: Equity The Optimal Way to access Russian equity markets

Type of fund: UCITS ETF ITI Funds is a European ETF provider specializing in Emerging Markets.

The first 2 UCITS ETFs provide exposure to Russian equity and fixed income markets. Underlying Index: RTS Index These 2 exchange funds (ETFs) were successfully launched on the London Stock Exchange (LSE) to growing International investor demand, and on the Moscow (Moex) Domiciliation: Luxembourg Exchange for local investors The ITI Funds RTS Equity ETF offers the most diversified, liquid and efficient physical Registration Body: CSSF exposure to Russian financial markets.

Fund Administrator: Edmond de The ETF physically replicates the free-float, cap-weighted RTS Index (46 equities), and Rothschild which is Russia’s oldest and most widely used equity index for securities traded on the

Custodian: Moscow Exchange. Edmond de Rothschild ITI Funds RTS Equity ETF Management Company: Fuchs Key Benefits: Asset Management • Diversified exposure to Russian equity markets Investment Manager: • Physical replication to 46 largest and most liquid Russian equities Da Vinci Capital Mgmt. • Low cost access to local Russian securities Vs peers or Active Managers • USD/RUB denominated Index Owner: S&P • Local / Euroclear settlement

Replication: Physical • Listing on the Moscow (MOEX) and London Stock Exchange (lSE) which offers global liquidity ETF Components: All 46 stocks of RTS Index RTS Index

3000 Listing: Irish Stock Exchange

2500 Investment Grade Admission to trading: LSE, Moex Putin anounces 3rd term 2000 Ruble Free Mechel NAV Currency: USD Oil price rally Georgia WTO Entry 1500 Euroclear Putin's 4th Lehman NAV Frequency: Daily 1000 Oil price Election 2008 Crisis Sanctions Dividend Distribution: Annual Khodorkovsky Arrest Ukraine 500 1998 Crisis Sochi Putin Elected Coup Minsk Treaty Olympics TER %: 0.65 0 Restart

1999 1996 1997 1998 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Auditor: 1995 KPMG Source: Midlincoln Research

The RTS Equity Index…

ITI Funds selected to replicate the RTS Index as:

It is the longest standing Index in the Russian Equity Market RTS is the broadest benchmark diversified across 13 industries The Index is composed of the 46 most liquid/ largest capitalized companies in Russia The index timely reflects on capital markets activity on the Russian markets and includes almost all sizeable Russian IPOs while the peers don’t Free float information, liquidity assessment, and corporate actions have been far timelier and transparent RTS Index includes local shares whereas other Russian benchmarks include GDRs and ADRs that frequently trade with premium to locals

Investment Summary

The Russian market is ideal for index ETF. It has been anything but unexciting since its inception. For most of the years since inception, it makes the ranks of being the best equity market globally. RTS index is full of value names trading on low multiples and offering chunky dividends. Yet it is offering exposure to Russian growth sectors in infrastructure, consumer, financials and IT. For most of the times RTS index is driven by flows. Well diversified ETF will be a robust tool to follow Russian politics, oil price, emerging market risk or related flow trades.

How RTS Index Changed From inception

RTS Sectors in 2018 Number of Stocks By Sector 1995

Utilities; 5 Consumer Discretion Utilities; 3 ary; 3 Telecoms; 4 Consumer Staples; 3

Telecoms; Energy; Energy; 7 1 Materials; 11 10

Materials; 1 Informatio

n Industirals ; 1 Technolog y; 1 I