Strong finish to 2017

For the month ending 31 December, 2017

Performance overview

The Morningstar^® Wide Moat Focus Index™ (Moat Index) followed its strong November with positive relative performance in December, topping the broad US markets as represented by the S&P 500 Index (-1.37% vs. -1.86%). The Moat Index finished the year ahead by roughly 1.2% (14.06% vs. 12.79%).

Performance attribution: Consumer discretionary shines

Consumer discretionary companies were the primary driver of strong performance for the Moat Index in December. While Express Scripts Holding Co (ESRX US, +14.51%) was the top performing index constituent in December, firms such as Lowe's Companies, Inc. (LOW US, +11.48%), Twenty-First Century Fox Inc. (FOXA US, +8.11%), and L Brands Inc. (LB US, +7.40%) helped consumer discretionary lead the way.

The consumer staples and information technology sectors were the two sectors to detract from index performance, but only slightly.

Tech firm Veeva Systems Inc. (VEEV US, -8.19%) was the worst performing stock in the Moat Index after issuing guidance below expectations. The firm provides client relationship management services to the pharmaceutical industry and Morningstar lowered its fair value estimate four dollars to $65 on 6^th December.

^{Source: VanEck, Morningstar.  Stock returns in US dollars all other returns in Australian dollars. Index returns are calculated to the last business day of the month and assume immediate reinvestment of all dividends and exclude costs associated with investing in MOAT. You cannot invest directly in an index. Past performance is not a reliable indicator of future performance of the indices or MOAT.}

^{Important Disclosures}

^{This commentary is not intended as a recommendation to buy or sell any of the named securities. Holdings will vary for MOAT and MOAT Index.}

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^{Investment in the US Fund may be subject to risks that include, among others, fluctuations in value due to market and economic conditions or factors relating to specific issuers. Medium capitalisation companies may be subject to elevated risks. The US Fund’s assets may be concentrated in a particular sector and may be subject to more risk than investments in a diverse group of sectors. The Morningstar® Wide Moat Focus Index™ was created and is maintained by Morningstar, Inc. Morningstar, Inc. does not sponsor, endorse, issue, sell, or promote the US Fund and bears no liability with respect to the US Fund or any security. Morningstar®, Morningstar Wide Moat Focus Index™ and Economic Moat™ are trademarks of Morningstar, Inc. and have been licensed for use by VanEck.}