O C T O B E R 2 0 1 3

The European Opportunity: Exploiting the valuation and earnings

anomalies in European Equities

For Professional Investors and Advisers Only

Contents

RWC Europe Absolute Alpha Fund

SECTION 1: THE EUROPEAN OPPORTUNITY

Introduction 4

Strategy performance and market analysis 6

European macro data has now positively inflected 7

Stronger Eurozone growth to come 8

Earnings surprises being driven by revenues as the economy improves 9

European equities starting to outperform the US? 10

European equities to benefit from stabilising growth and low valuations 11

Why European equity long / short? 12

Re-rating of equities vs. corporate bonds to accelerate 13

Value and Growth: catalysts for value evident 14

Valuation spreads between and within sectors 15

European corporates have low gearing and pay out ratios 16

Fund positioning 17

Conclusion 18

SECTION 2: BACKGROUND & PROCESS

Introduction to RWC 20

RWC Europe Absolute Alpha – approach and differentiators 21

Portfolio Manager 22

Large, experienced team 23

The power of compounding – strategy performance over 10 years 24

Return profile - positive skew with limited drawdowns over 10 years 25

Monthly performance of strategy 26

Performance of RWC Europe Absolute Alpha Fund 27

Graph of RWC Samsara 28

Alpha generation 29

Short and long book alpha 30

Top down investment approach 31

Fundamental bottom up approach 32

Portfolio construction 33

Risk management 34

High alpha long only funds historically managed by Ajay Gambhir 35

O C T O B E R 2 0 1 3

SECTION 1: THE EUROPEAN OPPORTUNITY

RWC Europe Absolute Alpha

RWC

| RWC 4

Introduction (1)

Our view on European equities?

• European economic data has positively inflected and surprise index rising in Europe. GDP growth turned positive in Q2, and

macro data in Europe generally began to positively surprise from July onwards, whilst the US is losing its potential to positively

surprise

• Stronger Eurozone growth to come. Leading indicators suggest positive momentum to continue in the second half of 2013 and

early 2014. We think GDP growth could accelerate to c. 2% early next year, driving positive revenues and earnings surprises in

Europe

• European equities have started to outperform US equities but significant catch-up still to come. Europe has outperformed the

US by 3% since June but underperformed by 10% in the first half of 2013 and is at a 40% valuation discount (based on cyclically-

adjusted PE)

• Investor allocations to European equities are lagging, despite stabilising growth and low valuations. The gap between

perceptions of US and European equity valuations is almost as high as in September 2012, when it was the highest in over 11 years,

and suggests the potential for significant outperformance of Europe vs. US to come

Why equity long/short?

• Valuation spreads within the European market at extreme levels

• Opportunity for arbitrage within the European market is compelling (between sectors and within sectors) as valuation spreads are at multi-

decade highs and much higher than in the US. The arbitrage opportunity within the European equity market is similar to 2001-2006

• Stock correlation is falling

• 2012 was a good year for sector bets but not for stock-pickers – since late-2012 the trends have reversed and we have returned to a more

normal environment, which is more conducive for stock-picking

• Differentiating between winners vs. losers

• Middling economic growth means mixed earnings prospects which makes it easier to play long vs. short. This is what we have now.

• We have begun to see growth stocks with overly optimistic consensus forecasts and expensive valuations de-rate, benefiting our short book,

despite the improving economic picture

RWC

| RWC 5

Introduction (2)

What are the market risks?

• US debt ceiling, German constitutional court ruling, China, EM currency crisis worsening, Middle East conflict

How are we positioned?

• There are strong alpha opportunities on both the long and short books, with the Fund focused on stock-picking to exploit the

embedded market anomalies

• Short book 55% more expensive than long book on PE and nearly 40% on dividend yield

• Long book: focus on

1. ‘self-help’ and operational restructuring

2. strong returns of capital from strong balance sheets

• Short book: focus on

1. companies near peak margins and suffering from over-capacity, including failing growth

2. expensive defensives

• Net long: Media (digital growth accelerating, corporate spend on A&P resilient, cheap growth), Food Retailers (gross margin

improvement, reduced capex spend), Oil Majors (very cheap, cash flow positively inflecting), Insurance (cheap, improving pricing

power), Telecoms (declining regulatory risk, low expectations)

• Net short: Engineering (declining operating leverage), Construction (decelerating growth, high PE ratios), Chemicals (peak margins,

overcapacity), Food & Beverage (decelerating growth, high PEs)

• Scope to move up gross exposure, currently 145%; net exposure 37%, can move opportunistically

RWC

| RWC 6

Strategy performance and market analysis

Source: RWC

• Sectors which have worked in recent months:

− Long book - Media, Travel & Leisure and Insurance

− Short book - Construction, Oil Services and Support

Services

• Long book:

− a number of companies reported results which were

better than the excessively low consensus

expectations (e.g. National Express, J Sainsbury)

− losers in the early part of the year also reversed

(e.g. Debenhams)

• Short book:

− a number of profit warnings were anticipated (e.g.

Sulzer, CRH)

− as we anticipated, the de-rating of selected growth

stocks (those with overly optimistic consensus

forecasts and expensive valuations for delivered

growth) also helped performance (e.g. Holcim,

Brenntag)

• No meaningful losers but some stocks still to perform

(e.g. Oil & Gas and Telcos)

Market has become more respectful of valuation, benefiting both the long and short books

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Strategy EUR

RWC

| RWC 7

European macro data has now positively inflected

Note: the surprise index represents the weighted historical standard deviations of data surprises

Source: Citigroup, Bloomberg, RWC

• On the last call, held on 9th Sept, we said that the

European economic surprise index had troughed

and this proved to be the case. Economic releases

in Europe began to beat expectations from July and

the quantum of the beats has increased since as

confidence has improved

• We believe positive surprises in Europe will

continue. Expectations in Europe remain low

following several years of weak macro data

• By contrast, US economic activity is losing its

potential to surprise. The US surprise indicator has

peaked and is starting to decline

• Concerns around the debt ceiling and Fed tapering

could also weigh on US economic releases in the

coming months. However, this may be a positive for

the markets as bad economic data could push out

the start of Fed tapering

Trend in economic releases looking better in Europe than in the US

Eurozone economic surprise index rising

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RWC

| RWC 8

Stronger Eurozone growth to come

Note: left-hand scale shows Real M1 deflated by consumer prices, advanced by 3 quarters; right-hand scale shows real GDP (yoy % change)

Source: Eurostat, ECB, Berenberg

• GDP troughed in Q412 and growth turned positive

in Q213 (qoq)

• Eurozone growth is starting to benefit from the

accommodative monetary policy of the ECB

(which impacts the real economy with a lag) and

less intense deficit reduction

• Borrowing costs for Italian and Spanish SMEs

have fallen to 2 year lows, as tail risk subsides

• Inventory destocking slowing, meaning less of a

headwind for growth. Unemployment increases

also slowing, suggesting an inflection point to

come soon

• Real money supply has accelerated upwards

implying strong Eurozone growth to come. Lead

indicators, such as PMIs, also point to increasing

momentum in H2 2013 and early 2014

• We think GDP growth could accelerate to c. 2%

early next year, before dropping back again in Q2

2014

GDP growth to accelerate and provide positive momentum for earnings

Real money supply implies strong Eurozone growth to come

RWC

| RWC 9

Earnings surprises being driven by revenues as the economy improves

Note: net positive surprise calculated as % of releases with positive surprises less % negative surprises

Source: UBS, Bloomberg

• Q113 was the weakest quarter since Q411 for

revenue surprises. However, the economic recovery

in Europe has led to a rebound in revenues in Q2 and

companies are reporting stabilisation or better-than-

expected revenues in Europe.

• This suggests earnings are being driven less by cost-

cutting and more by an increase in demand

• Sectors providing positive surprises in Q2 included

Financials, Media and Autos. Sectors surprising

negatively include Materials, Energy and Transport

• We expect the positive momentum to continue and

increase as the economy continues to improve in H2

2013 and early 2014

• An improving macro environment could lead to

improved confidence and spending and therefore a

virtuous circle

Improving macro data being reflected in positive earnings surprises

Revenue surprises driving earnings surprises in Europe

RWC

| RWC 10

European equities starting to outperform the US?

Source: Bloomberg

• European equities have underperformed the US by

35% in the last three years

• European equities underperformed the US by 10%

in the first half of 2013. This seems extreme as even

in 2011, the crisis year, Europe only underperformed

the US by 9%, and that was in a full year

• Europe has marginally outperformed the US so far in

the second half of 2013, however the elastic band

still remains very stretched

• Money could also be allocated from emerging

market debt into Europe

• The Fund is focused on European equities to benefit

from this

European equities to outperform the US as the stretched elastic band snaps backs

European equities have significantly underperformed the US

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European equities 40% cheaper than

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RWC

| RWC 11

European equities to benefit from stabilising growth and low valuations

• Investor allocation to European equities is lagging

growth expectations despite low valuations

• The initial move up in markets this year was

funded by cash on the sidelines. The switch from

bonds to equities still looms

• Views on US and European equity valuations are

also highly divergent, with 56% of global investors

perceiving the US as being overvalued and 39%

perceiving Europe as being undervalued

• The gap between perceptions of US and

European equity valuations is almost as high as in

September 2012, when it was the highest in over

11 years.

• This suggests expectations in the US have got

ahead of themselves and that as we enter a period

of valuation normalisation, then there is significant

scope for European outperformance on a

sustained basis, as in 2005 and Q4 2012

Valuations and investors’ positioning suggests Europe to outperform

Source: Bank of America Merrill Lynch

EU equity allocations to catch up with growth expectations

Views on equity valuations at extreme levels

RWC

| RWC 12

Why European equity long/short? Exploiting the valuation / earnings anomalies created over the last 5 years and two financial crises

Valuation spreads within Europe at extreme levels leading to arbitrage opportunities long vs. short

• Valuation spreads between European sectors and stocks (as opposed to relative to other markets) are at multi-decade highs –

spreads are still higher in 70% of sectors than in 2007 at the start of the financial crisis, and spreads between sectors have almost

doubled over the same period

• Spreads between sectors are much higher than in the US – for example, since the start of the Greek crisis in 2010 valuation spreads

between sectors has increased by 60% in Europe but fallen by 48% in the US

• The European market is cheap with expensive stocks in it, providing many more anomalies to avail ourselves of. European valuation

spreads are at the same level as late 2001 which heralded the start of a strong 5-year stock-picking period

Stock correlation is falling leading to more long vs. short share price divergences

• 2012 was a good year for sector bets but not for stock picking as lower correlation was mainly driven by reducing correlation between

sectors rather than within sectors

• In the last 12 months correlation within sectors has fallen by 28%, whilst correlation between sectors has fallen by less, at 6%,

meaning a return to a more normal environment which is more conducive for stock-picking

Differentiating between stock winners and losers

• Growth has picked up recently but Europe is generally in a slower economic environment and will be for the next couple of years due

to deleveraging. Slower economic growth in Emerging Markets also impacts European stocks with overseas exposure

• In the same way as a rising tide lifts all boats, a strong economic environment makes it difficult to short and a very weak economic

environment makes it difficult to be long. Middling economic growth makes it easier to play long vs. short. This is what we have now.

• The middling economic environment will result in mixed earnings prospects, helping to distinguish between winners and losers. We

have begun to see growth stocks with overly optimistic consensus forecasts and expensive valuations de-rate, benefiting our short

book, despite the improving economic picture

Buying the market would be worthwhile if the market was 'uniformly' cheap, but it is not, and if the economy was ‘uniformly’ strong, but it is not

RWC

| RWC 13

Re-rating of equities vs. corporate bonds to accelerate

Source: RWC, Bloomberg

• European equity valuations are at attractive levels

relative to corporate bonds and the re-rating of equities

is set to accelerate

• The gap between the earnings yield of the Bloomberg

500 index (7.0%) and the yield on the BBB€ 10 year

corporate bond yield (3.4%) is falling, reflecting the

re-rating of equities versus corporate bonds

• The gap between earnings yields and corporate bond

yields is 69% higher in Europe (3.63%) than it is in the

US (2.15%), where equity yields are lower and

corporate bond yields are higher. This suggests the

potential for significant further re-rating of European

equities

Bloomberg Europe 500 earnings yield minus BBB € 10 year corporate bond yield

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RWC

| RWC 14

Value and Growth: Catalysts for Value Evident

Source: Bank of America Merrill Lynch

• Value has ticked up. It hasn’t regained much ground

from the past several years of under-performance,

and is still cheap to growth on a relative basis.

• Catalysts for value:

− Tail risk reduction e.g. ECB’s Outright Monetary

Transactions programme

− Money no longer coming out of European

equities. This allows value gaps to close.

− Inflation expectations stabilising. Less debate

over deflation and reflation

• Valuation dislocations still exist and valuation

dispersions remain high so the opportunity to benefit

from a value bias is still significant

European Value vs. Growth Relative Performance

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Reason for crowding in growth, proven and unproven, less evident

RWC

| RWC 15

Valuation spreads between and within sectors

Source: Bank of America Merrill Lynch and UBS

• European sector valuation spreads the highest in 30 years excl.

tech bubble (which heralded from 2000 period of profitable

equity long/short investing). See value vs. growth chart; value

outperformed growth when spreads last this wide

• European valuation spread between sectors higher than US.

Since 2010 spreads diverging between Europe and US

• Valuation spreads between stocks higher for 70% of sectors vs

2007 levels. As tail risks reduce stock returns will be driven by

relative value

…..this medium to long term valuation arbitrage is still there between and within sectors

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2012 Intra-sector Valuation spread minus 2007 spread

RWC

| RWC 16

European corporates have low gearing and pay out ratios

Source: UBS

• Given where current estimates are, gearing in Europe

will fall in 2013 to the lowest level in a decade at 35%

• Balance sheets are now leaner and more supportive of

dividends

• The current European dividend payout ratio of 50% is

below the long run average which suggests that

dividends are better cushioned from earnings volatility

Pan-European net debt to equity (%)

MSCI Europe dividend payout ratio

RWC

| RWC 17

Fund Positioning

Structural Opportunities

• Valuation has worked mildly so far in our favour, as has anticipating earnings movements. The market is being driven less by perceptions of

growth and the short book has benefited where growth has disappointed

• Value as a style has not driven stock movements much so we think there is still more to go for. We are positioned for this – average PE for

the long/short books are 10.5x/16.2x and average dividend yield is 4.1%/3.0%

• There are strong alpha opportunities on both the long and short books, with the Fund focused on stock-picking to exploit the embedded

market anomalies

Major Long Opportunities

• Restructuring of cost bases - e.g. Delhaize mentioned before, also National Express, UPM Kymmene and Havas

• Strong balance sheets / potential for capital returns - e.g. Rexam, Teliasonera

Major Short Opportunities

• Peak margins / over-capacity, including failing growth – e.g. Chemicals, Engineering

• Expensive defensives – e.g. Food & Beverage

Exposures

• Net long: Media (digital growth accelerating, corporate spend on A&P resilient, cheap growth), Food Retailers (gross margin improvement,

reduced capex spend), Oil Majors (very cheap, cash flow positively inflecting), Insurance (cheap, improving pricing power),Telecoms

(declining regulatory risk, low expectations)

• Net short: Engineering (declining operating leverage), Construction (decelerating growth, high PE ratios), Chemicals (peak margins,

overcapacity), Food & Beverage (decelerating growth, high PEs)

• Gross exposure 135% with scope to rise; net exposure 37% and will move opportunistically

RWC

| RWC 18

Conclusion

• Economic macro data has now positively inflected in Europe and is set to drive earnings momentum

• Monetary, Fiscal and Political volatility in Europe all markedly reduced

• European equities to outperform the US following years of underperformance

• Allocations to European equities remain low despite stabilising growth and low valuations

• Buying the market rather than equity long/short would be worthwhile if the market was 'uniformly' cheap and

the economy was sustainably strong……but it is not

• The European opportunity today is about exploiting the valuation and earnings anomalies that have been

created over the last 5 years and two financial crises

SECTION 2: BACKGROUND & PROCESS

RWC Europe Absolute Alpha

RWC is an active investment manager

• Independent and owner managed since its foundation in 2000 and

centered around skill-based, active fund management.

• Experienced and trusted portfolio managers accomplish the best

results when they are free from artificial restrictions. Our portfolio

managers take full accountability for investment decisions, having no

house investment style.

• Our clients – we invest on behalf of both intermediaries and

institutions that look to us to grow the real value of their assets without

exposing them to undue risks.

Focus on longevity and stability

• Employee ownership generates a level of stability and

professionalism essential to the ongoing strength of a fund

management business.

• Strong focus on performance and a solid risk management culture

lies at the heart of our business which is built around highly-talented

portfolio managers.

• An unconstrained approach to investing means that our portfolio

managers can express their views without hindrance or artificial

restrictions. We offer fund management expertise with a strong focus

on liquidity.

• Matching fund capacity with the investment approach ensures long-

term success of our investment processes.

RWC Introduction to RWC

| RWC 20

RWC

| RWC 21

RWC Europe Absolute Alpha Fund – approach and differentiators

• Insight into the company lifecycle presents long and short opportunities

• Anticipating change through focus on the evolution of sales, margins and balance sheet indicators; and

• Understanding of key business drivers/catalysts

• Value bias combines with disciplined exit and entry points

• European equity long/short strategy (>95% European stocks, multi-cap)

• 75% fundamental bottom up / 25% top down (tactical and strategic);

• Net range -20% to c.60% (avg c. 35%); gross range 140% to c.225% (avg c. 185%)

• 11% annualised return over 10 years, no large annual drawdowns, very positive skew to monthly returns, low correlation to other

fundamental managers

• Differentiators:-

1) Strong short book alpha (uncrowded ideas through lifecycle financial approach)

2) Disciplined entry and exit points based on valuation 'ceilings' and 'floors' (improving risk adjusted returns)

3) Avoidance of binary bets and common themes (eg long commodities/ short financials, emerging market proxies)

4) Stronger focus on financial metrics than mainstream fundamental managers (portfolio manager's corporate finance background)

5) Low correlation to other fundamental managers

RWC

| RWC 22

Portfolio Manager - corporate finance background underpins valuation discipline & financial approach

Ajay Gambhir

Portfolio Manager & Partner

10 years Portfolio Manager European Equity Long/Short (same strategy throughout)

• RWC Samsara, 2007 – present, RWC Europe Absolute Alpha, 2010 - present

• JPMorgan European Equity Long/Short, 2003-2007, launched and managed, Winner of Eurohedge Award for Best European

Hedge Fund 2006 (<$500m)

15 years managing high alpha equity mandates

• Launched and managed $6.5bn high alpha long only funds, JPMorgan Asset Management (joined end 1997)

• Top decile performance, Lipper award for Best Fund Manager 2007, Investment Week Best Fund Manager 2006 UK Equity

• Managed portfolios through Russian crisis, TMT bubble, global financial crisis, Eurozone crisis and bull markets

7 years global corporate finance

• NM Rothschild & Sons, 1991 - 1997

• Manager responsible for projects in Eastern Europe, South Africa & Asia Pacific

• Focus on value crystallisation and restructuring

Masters Degree from University of Cambridge, graduated 1990; MA (Hons) Electrical and Information

Sciences; CFA Charterholder

RWC

| RWC 23

Large, experienced team – with a robust process-orientated framework

Ajay Gambhir

Steve Robertson Luke Vose Nick Daniel Sunjay Gambhir

• Ajay accountable for performance and decision-making

• Analysts empowered to remove risk if Ajay unavailable

• Generalist approach reinforces uncrowded ideas, heightening alpha

• Idea generation from i) portfolio manager or analysts and ii) screens

• Analysts have strong background in consultancy/accountancy/investment banking, working in a strong process-orientated framework

Shivesh Haulkhory

Donogh McAlonan Azlan Ali

Execution & Analytics

Julien Moeller Victor Erch

Analysts (contracted) increase analytical resource

Portfolio Manager & Analyst:

Analysts:

RWC

| RWC 24

The power of compounding – strategy performance over 10 years (since inception)

Source: RWC / Bloomberg. Data shown is for the period September 2003 – end August 2013 , net of fees. Data is not included for the period December 2006-February 2007 as it is not available and the period March 2007 – August 2007

has not been included as Ajay Gambhir was not running a fund during this period. The life of the “Strategy” refers to the whole of this period excluding December 2006-August 2007. From launch until January 2005 Ajay Gambhir was co-

fund manager.

Equity index used is MSCI Europe Index (TR). Past performance is not a guide to the future. The price of investments and the income from them may fall as well as rise and investors may not get back the full amount invested

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Performance of Strategy Since Inception Versus Equity Index and Hedge Index

Cumulative Gambhir long / short Strategy Cumulative MSCI Europe TR Index EUR (monthly) Cumulative CSFB Tremont L/S Equity EUR (monthly)

Relates to period when

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in between companies

RWC

| RWC 25

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Strategy - Distribution of Monthly Returns

Return profile - positive skew with limited drawdowns

Source: RWC / Bloomberg. Data shown is for the period September 2003 – end August 2013 , net of fees. Data is not included for the period December 2006-February 2007 as it is not available and the period March 2007 – August 2007

has not been included as Ajay Gambhir was not running a fund during this period. The life of the “Strategy” refers to the whole of this period excluding December 2006-August 2007. From launch until January 2005 Ajay Gambhir was co-

fund manager.

Equity index used is MSCI Europe Index (TR).

Past performance is not a guide to the future. The price of investments and the income from them may fall as well as rise and investors may not get back the full amount invested

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RWC

| RWC 26

Monthly performance of strategy over 10 years (net, since inception)

Source: RWC / Bloomberg. Data shown is for the period September 2003 – end August 2013, net of fees. Data is not included for the period December 2006-February 2007 as it is not available and the period March 2007 – August 2007

has not been included as Ajay Gambhir was not running a fund during this period. The life of the “Strategy” refers to the whole of this period excluding December 2006-August 2007. From launch until January 2005 Ajay Gambhir was

co-fund manager.

Equity index used is MSCI Europe Index (TR).

Past performance is not a guide to the future. The price of investments and the income from them may fall as well as rise and investors may not get back the full amount invested

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD

2003 JPM EDLS - - - - - - - - - 1.6% 0.5% -0.7% 1.4%

MSCI Europe - - - - - - - - - 6.9% 1.1% 2.9% 11.1%

2004 JPM EDLS 5.3% 0.2% -2.3% -0.1% -0.2% 0.6% 0.8% 1.6% 3.9% -0.6% 1.7% 0.7% 12.1%

MSCI Europe 2.7% 2.9% -2.0% 1.8% -0.2% -1.7% -0.8% 1.8% 1.9% 1.2% 2.7% 1.9% 12.7%

2005 JPM EDLS 4.5% 4.3% 0.5% 0.0% 3.1% 4.9% 1.6% 0.2% 2.7% -0.5% 3.5% 2.9% 31.4%

MSCI Europe 2.3% 3.1% -0.4% -1.7% 5.1% 3.5% 3.3% 0.3% 4.5% -2.5% 3.3% 3.5% 26.8%

2006 JPM EDLS 5.8% 4.7% 5.1% 1.5% 0.1% 1.8% 1.6% 0.2% 2.5% 5.0% 0.4% 3.8% 37.4%

MSCI Europe 3.5% 1.9% 2.4% 1.1% -4.4% 0.8% 1.7% 2.9% 1.9% 3.5% -0.2% 3.8% 20.3%

2007 JPM / RWC -0.1% 0.1% n/a n/a n/a n/a n/a n/a 0.4% 3.5% 0.1% 1.5% 5.5%

MSCI Europe 2.1% -2.0% n/a n/a n/a n/a n/a n/a 4.2% 2.9% -4.6% -1.4% 1.0%

2008 RWC Samsara -1.6% -0.2% -1.1% 2.4% 0.4% -0.8% -1.7% -1.3% -5.6% -0.7% 0.8% 1.7% -7.7%

MSCI Europe -11.5% -0.9% -3.7% 6.5% 0.9% -9.9% -1.9% 1.8% -11.0% -12.8% -6.9% -3.9% -43.2%

2009 RWC Samsara 1.7% 2.3% -0.9% 3.2% 0.4% -3.7% 0.9% 5.5% 2.3% -3.8% 1.0% -0.5% 8.2%

MSCI Europe -3.5% -9.3% 2.3% 14.4% 5.2% -1.0% 9.3% 5.1% 2.7% -2.1% 1.2% 6.2% 32.6%

2010 RWC Samsara -1.0% 0.5% 2.7% -0.4% -2.9% -0.1% 4.8% 0.4% 2.4% 2.7% -0.9% 2.9% 11.3%

MSCI Europe -2.9% -0.2% 7.5% -0.8% -4.6% -0.5% 5.0% -1.2% 3.4% 2.5% -1.6% 5.2% 8.8%

2011 RWC Samsara 4.0% -0.1% -1.1% 4.5% 0.2% 1.4% -2.0% -7.2% -1.2% 4.4% -3.4% 0.3% -0.8%

MSCI Europe 1.7% 2.6% -3.4% 3.4% 0.0% -2.7% -2.5% -10.2% -4.4% 7.8% -1.0% 2.1% -7.5%

2012 RWC Samsara 1.9% 0.1% 0.5% -3.2% -2.0% 2.2% 1.7% 0.0% 0.1% 0.6% -0.2% 1.3% 3.0%

MSCI Europe 3.8% 4.1% -0.1% -1.6% -5.9% 5.2% 4.2% 2.0% 0.9% 0.7% 2.3% 1.4% 18.0%

2013 RWC Samsara 4.7% -0.5% 1.3% 0.7% 2.1% 0.5% 4.6% 0.2% 14.1%

MSCI Europe 2.8% 1.0% 1.7% 1.7% 2.1% -5.1% 5.2% -0.5% 9.0%

% of up-months

% of down-months Total Return Annualised Return

Annualised Volatility Sharpe Ratio

Strategy 70% 30% 180.2% 11.6% 8.1% 1.19

Equity Index 61% 39% 67.9% 5.7% 14.8% n/a

RWC

| RWC 27

Performance of Europe Absolute Alpha Fund (net of fees)

Source: RWC / Bloomberg. Data shown is for the period 29th July 2010 – end August 2013, net of fees.

Equity index used is MSCI Europe Index (TR).

Correlation calculated using month end figures.

Past performance is not a guide to the future. The price of investments and the income from them may fall as well as rise and investors may not get back the full amount invested

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD

2010 RWC EAA - - - - - - -0.5% 0.1% 2.4% 2.7% -0.9% 2.7% 6.6%

MSCI Europe - - - - - - -0.7% -1.2% 3.4% 2.5% -1.3% 5.2% 7.6%

2011 RWC EAA 4.0% 0.0% -1.0% 4.4% 0.0% 1.4% -2.1% -6.9% -1.1% 4.2% -3.2% 0.3% -0.7%

MSCI Europe 1.7% 2.6% -3.4% 3.4% 0.0% -2.7% -2.5% -10.2% -4.4% 7.8% -1.0% 2.1% -7.5%

2012 RWC EAA 1.9% 0.1% 0.5% -3.3% -1.9% 2.2% 1.8% 0.0% 0.1% 0.6% -0.1% 1.4% 3.4%

MSCI Europe 3.8% 4.1% -0.1% -1.6% -5.9% 5.2% 4.2% 2.0% 0.9% 0.7% 2.3% 1.4% 18.0%

2013 RWC EAA 4.5% -0.6% 1.3% 0.2% 2.0% 0.6% 4.6% 0.2% 13.4%

MSCI Europe 2.8% 1.0% 1.7% 1.7% 2.1% -5.1% 5.2% -0.5% 9.0%

% of up-months % of down-

months Total Return

Annualised Volatility

Sharpe Ratio Correlation

RWC EAA 66% 34% 24.0% 9.1% 0.7 0.77

Equity Index 61% 39% 28.2% 12.2% n/a n/a

RWC

| RWC 28

Graph of RWC Samsara performance relative to equity and hedge indices

Source: RWC. Data shown is for the period 16th September 2007 – end August 2013 , net of fees.

Past performance is not a guide to the future. The price of investments and the income from them may fall as well as rise and investors may not get back the full amount invested

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

Aug-07 Feb-08 Aug-08 Feb-09 Aug-09 Feb-10 Aug-10 Feb-11 Aug-11 Feb-12 Aug-12 Feb-13 Aug-13

Cum

ula

tive R

etu

rn

RWC Samsara Performance Since Inception Versus Equity Index and Hedge Index

Cumulative RWC Samsara EUR Cumulative MSCI Europe TR Index EUR Cumulative CSFB Tremont L/S Equity EUR

RWC

| RWC 29

Alpha generation – reinforces absolute return, raises risk-adjusted returns

Source: RWC / Bloomberg.

Data shown is for the period September 2007 – end August 2013

Past performance is not a guide to the future. The price of investments and the income from them may fall as well as rise and investors may not get back the full amount invested.

*Please note that this analysis uses average exposures that reflect the average of the exposures at the previous month-end post flows and the current month end figures pre-flows.

-40%

-30%

-20%

-10%

0%

10%

20%

30%S

ep-0

7

Dec-0

7

Ma

r-08

Jun

-08

Se

p-0

8

Dec-0

8

Ma

r-09

Jun

-09

Se

p-0

9

Dec-0

9

Ma

r-10

Jun

-10

Se

p-1

0

Dec-1

0

Ma

r-11

Jun

-11

Se

p-1

1

Dec-1

1

Ma

r-12

Jun

-12

Se

p-1

2

Dec-1

2

Ma

r-13

Jun

-13

Samsara Long-Book and Short-Book Performance Relative to MSCI Europe TR

Long-Book Rel Return Short-Book Rel Return

-10%

0%

10%

20%

30%

40%

50%

60%

70%

Se

p-0

7

Dec-0

7

Ma

r-08

Jun

-08

Se

p-0

8

Dec-0

8

Ma

r-09

Jun

-09

Se

p-0

9

Dec-0

9

Ma

r-10

Jun

-10

Se

p-1

0

Dec-1

0

Ma

r-11

Jun

-11

Se

p-1

1

Dec-1

1

Ma

r-12

Jun

-12

Se

p-1

2

Dec-1

2

Ma

r-13

Jun

-13

Samsara Alpha

Samsara (Class A) Long+Short Alpha

RWC

| RWC 30

Short and long book alpha – both positive

Source: RWC / Bloomberg.

Data shown is for the period September 2007 – end August 2013

Past performance is not a guide to the future. The price of investments and the income from them may fall as well as rise and investors may not get back the full amount invested.

*Please note that this analysis uses average exposures that reflect the average of the exposures at the previous month-end post flows and the current month end figures pre-flows.

• Short book and long book alpha both

positive, compensate one another

• Strong short book alpha (particularly

from anticipating profit warnings)

• If value as a style performs long book

alpha gains traction

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Se

p-0

7

Dec-0

7

Ma

r-08

Jun

-08

Se

p-0

8

Dec-0

8

Ma

r-09

Jun

-09

Se

p-0

9

Dec-0

9

Ma

r-10

Jun

-10

Se

p-1

0

Dec-1

0

Ma

r-11

Jun

-11

Se

p-1

1

Dec-1

1

Ma

r-12

Jun

-12

Se

p-1

2

Dec-1

2

Ma

r-13

Jun

-13

Samsara Long & Short Book Alpha

Samsara (Class A) Long-Book Alpha Short-Book Alpha

RWC

| RWC 31

Top down investment approach – pragmatic perspective

Strategic

• European equities valuation:

• vs. other asset classes

• vs. history

• vs. other regions

Top Down Signals

Tactical

• Cross asset signals: fixed income, currencies, CDS and commodities

• Economic indicators: surprise and lead indicators

• Market positioning: options picture, cash levels, flows, investor surveys

Philosophy

• Pragmatism: markets can stay irrational longer than anyone can remain solvent

• One year strategic view on market direction

• Tactical signals 'steer' exposures around strategic view

• Top down dovetails with bottom up through net and sector exposures

RWC

| RWC 32

Fundamental bottom up approach - strong process-oriented framework

SHORT

Negative change

• Returns vulnerable

• Overvaluation

LONG

Positive change

• Operational challenges but fortunes turning

• Undervaluation

• Long and short book are profit centres, single stock short book

• Europe Absolute Alpha: anticipating change with focus on evolution of sales, margins and balance sheet

indicators

• Value bias with disciplined exit and entry points

• Two tranches of ideas:

• 'Lifecycle change' - uncrowded ideas

• 'Value and Growth' avoiding binary bets, crowded themes (e.g. long commodities/short financials)

LONG

Under-recognised growth & undervalued assets

• Scope for re-rating

• Sales or margin change expected

SHORT

Negative growth (franchise erosion)

• Challenged business where valuation still full

• Technological, legal or regulatory headwinds

Framework for Target Opportunities

Lif

e C

ycle

C

han

ge

Valu

e &

G

row

th

RWC

| RWC 33

Portfolio construction – focus on drivers of return

• Position sizing

• Based on conviction and liquidity

• Results in fund scalability

• Maximises return opportunity

• Primarily single stock short book to drive alpha and absolute

return

• Gross and net exposure used to preserve capital and maximise

return

• Performance driven by:-

• Valuation bias

• Focus on exit points as well as entry points on stocks

• Hit rate in anticipating change (e.g. profit warnings and earnings

surprises)

• Portfolio can be seen as portfolio of ‘types of situation’. Alpha

edge is skill in repeating these situations. Capital deployed

effectively.

Typical Exposure

Long / short ratio Less than 2:1

Gross Range 140% - 225%

Net Range -20% - +60% (av 35%)

No of Long Positions 60-75

No of Short Positions 60-75

Largest / Average Long Position 5% / 1.75%

Largest / Average Short Position 3% / 1.25%

RWC

| RWC 34

Risk management - sophisticated risk analysis and pragmatic mindset

• Daily risk analysis focuses on two dimensions:-

• scenario/sensitivity analysis to external factors (eg oil

price, USD, sovereign yields) and stress events (eg Asian

crisis)

• volatility/correlation analysis (eg VAR, predicted portfolio

volatility, sector correlations)

• Non-thematic style avoids single factor exposure and

correlation with other managers

• Futures, index swaps and long put option index positions

• to manage portfolio risk

• ……when required and for speed

• Stop losses:-

• at stock level used to preserve capital

• not formulaic to avoid 'whipsaw' risk

Risk Response Risk Analysis

RWC

| RWC 35

High alpha long only funds historically managed by Ajay Gambhir

JPM UK Dynamic

• $1.2bn (February 2007)

• AAA rated by Forsyth-OBSR

• AA rated by Standard & Poor’s

• S&P 5 stars

• Over 5 years up until 31.12.06 the fund returned 107.1% net of fees compared to 49.9% for the FTSE-All Share benchmark, placing it in the top

10 funds out of 214 in its peer group

JPM Europe Dynamic (ex UK)

• $362m (February 2007)

• AAA rated by Forsyth-OBSR

• AA rated by Standard & Poor’s

• Since inception up until 31.12.06 the fund returned 94% compared to the FTSE W.Europe benchmark return of 64.3%, placing it 2nd out of 89

funds in its peer group

JPM Europe Dynamic

• $2.08bn (February 2007)

• AA rated by Standard & Poor’s

• S&P 5 stars

• Over 5 years up until 31.12.06 the fund returned 79.3% compared to the FTSE W.Europe benchmark return of 35.1%, placing it 10th out of 235

funds in its peer group

Please contact us if you have any general questions

or would like to discuss any of our strategies.

RWC

60 Petty France, London, SW1H 9EU

Tel: +44 20 7227 6000

Fax: +44 20 7227 6003

Email: invest@rwcpartners.com

Web: www.rwcpartners.com

RWC Contact

| RWC 36

RWC Risk Warnings & Disclaimers

This document contains information relating to RWC Partners Limited, RWC Focus Asset Management Limited and RWC Asset Management LLP (collectively, “RWC”), each of which is authorised and regulated in the United

Kingdom by the Financial Conduct Authority (“FCA”), and services provided by them and may also contain information relating to certain products managed or advised by RWC (“RWC Funds”).

RWC may act as investment manager or adviser, or otherwise provide services, to more than one product pursuing a similar investment strategy or focus to the product detailed in this document. RWC seeks to minimise any

conflicts of interest, and endeavours to act at all times in accordance with its legal and regulatory obligations as well as its own policies and codes of conduct.

The services provided by RWC are available only for and this document is directed only at, persons that qualify as Professional Clients or Eligible Counterparties under rules of the FCA. It is not intended for distribution to and

should not be relied on by any person who would qualify as a Retail Client.

In addition, although certain sub-funds of RWC Funds SICAV are recognised schemes for the purposes of Section 264 of the Financial Services and Markets Act 2000 of the United Kingdom (“FSMA”), all other RWC Funds are

unregulated collective investment schemes for the purposes the FSMA, the promotion of which either in or from the United Kingdom is restricted by law. Accordingly, this document is issued and approved by RWC Limited for

communication by RWC Partners only to, and is directed only at, persons reasonably believed by it to be of a kind to whom it may communicate financial promotions relating to unregulated collective investment schemes by virtue

of the Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions) Order 2001, as amended (the “Order”), or the Conduct of Business Rules of the FCA. Such persons include: (i)

persons outside the United Kingdom; (ii) persons having professional experience of participating in unregulated collective investment schemes; and (iii) high net worth bodies corporate, partnerships, unincorporated associations,

trusts, etc. falling within Article 22 of the Order. Any unregulated collective investment schemes described herein are available only to such persons, and persons of any other description may not rely on the information in this

document.

Where this document is received outside the United Kingdom, it is the responsibility of every person reading this document to satisfy himself as to the full observance of the laws of any relevant country, including obtaining any

government or other consent which may be required or observing any other formality which needs to be observed in that country. Nothing in this document constitutes an offer or solicitation by anyone in any jurisdiction in which

such an offer is not authorised or to any person to whom it is unlawful to make such an offer or solicitation. Interests in RWC Funds are available only in jurisdictions where their promotion and sale are permitted.

No person receiving this document may further distribute it, or copies of it, to any other person or publish any of its contents, in whole or in part, for any purpose.

This document is provided for informational purposes only. The information contained in it is subject to updating, completion, modification and amendment. RWC does not accept any liability (whether direct or indirect) arising from

the reliance on or other use of the information contained in it. The information set out in this document is to the reasonable belief of RWC, reliable and accurate at the date hereof, but is subject to change without notice. In

producing this document, RWC may have relied on information obtained from third parties and no representation or guarantee is made hereby with respect to the accuracy or completeness of such information. Performance

figures and data analysis within this document are shown and calculated net of fees and expenses and represent the reinvestment of dividends and income. Market index information shown within this document is included to

show relative market performance for the periods indicated and not as standards of comparison. Such broadly based indices are unmanaged and differ in numerous respects from the portfolio composition of RWC Funds.

This document does not constitute offer or solicitation to anyone in any jurisdiction of or to acquire interests in any RWC Fund. Investment in any RWC Fund should be considered high risk. Past performance is not a reliable

indicator of future results and may not be repeated. The value of investments in RWC Funds and the income from them may fall as well as rise and may be subject to sudden and substantial falls. Changes in rates of exchange

may cause the value of such investments to fluctuate. An investor may not be able to get back the amount invested and the loss on realisation may be very high and could result in a substantial or complete loss of the investment.

In addition, an investor who realises their investment in RWC Funds after a short period may not realise the amount originally invested as a result of charges made on the issue and/or redemption of such investment. The value of

such interests for the purposes of purchases may differ from their value for the purpose of redemptions. No representations or warranties of any kind are intended or should be inferred with respect to the economic return from, or

the tax consequences of, an investment in RWC Funds. Current tax levels and reliefs may change. Depending on individual circumstances, this may affect investment returns. There is no guarantee that the securities referred to in

this document will be held by RWC Funds in the future. Nothing in this document constitutes advice on the merits of buying or selling a particular investment. This document does not constitute investment, legal or tax advice.

This document expresses no views as to the suitability or appropriateness of the RWC Funds or any other investments described herein to the individual circumstances of any recipient. Potential investors in the RWC Funds

should refer to the latest relevant Full Prospectus, KIID and latest Annual and Interim Reports for more information.

A United Kingdom investor may not have the right (otherwise provided under the FCA Handbook of Rules and Guidance) to cancel any agreement constituted by acceptance by or on behalf of an RWC Fund of an application for

interests in an RWC Fund. In addition, most if not all of the protections provided by the United Kingdom regulatory structure will not apply to investments in an RWC Fund. Investors in an RWC Fund will not receive compensation

under the Financial Services Compensation Scheme in the United Kingdom in the event that the fund is unable or likely to be unable to satisfy claims against it.

This document is issued by RWC Partners Limited, a company registered in England and Wales (No. 03517613) with its registered address at 60 Petty France, London SW1H 9EU.

. | RWC 37