Next 11 Emerging Markets Fund Fund presentation

APRIL 2011

Next 11 Emerging Markets Presentation Overview

 What is this fund? – Next 11 Emerging Markets Fund, based on an original idea by Goldman Sachs in 2005  Reasons why? – Countries with low levels of debt to GDP should outperform countries with high levels of debt to GDP  Why we believe you should own this fund – Experienced management team, improved efficient frontier curve  Why we believe this asset class will outperform over the next 10 years – debt to GDP discussion, rising consumer class leading to possible re-rating  Addendum

Source: Castlestone Management

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Creation of the N-11 concept and its evolution

2010 2007

2005 Goldman Sachs introduced the concept of Next 11

2001 Goldman Sachs coins the term „BRIC‟

Source: *Goldman Sachs Global Economics Papers – GS Global Economic Website.

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Next 11 becomes more than an acronym – increased focus on these countries

Castlestone launches the Next 11 fund

What are the Next 11 Emerging Markets?

Turkey

Korea

Mexico

Vietnam

Iran Philippines

Pakistan

Nigeria Egypt

Indonesia Bangladesh

Geographically Diversified

Source: Goldman Sachs & Castlestone Management

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Population** The driving factor Vietnam

86.4

Turkey

Population in Millions**

75.2

South Korea

48.1

Philippines

85.9

Pakistan

164.6

Nigeria

137.2

Mexico

109.6

Iran

71.2

Indonesia

228.1

Egypt

76.9

Bangladesh

147.1

0

50

Source: *2009 IMF, 1999 nation master. ** The Economist Pocket World Figures 2010. Note: Past performance cannot be relied on as a guide to future performance.

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100

150

200

250

GDP per capita* Rising consumer class +695%

Vietnam

+350%

Turkey

+193%

South Korea +244%

Philippines

+470%

Pakistan

+686%

Nigeria

+174%

Mexico +570%

Iran

+346%

Egypt

$0

1999*

+505%

Indonesia

Bangladesh

+306%

$5,000

$10,000

Source: *2009 IMF, 1999 nation master. ** The Economist Pocket World Figures 2010. Note: Past performance cannot be relied on as a guide to future performance.

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2009*

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$15,000

$20,000

$25,000

$30,000

Next 11 Emerging Markets

The Fund  The fund is a long only Next 11 fund with actively managed exposure to Next 11 emerging market equities.*  This fund will not invest directly in Iran, but may obtain indirect exposure to the country via stock picking  FSA recognised and approved for distribution in the UK  Available in $USD, €EUR and £GBP  € EUR and £ GBP shares hedged against $ USD

* The fund may also invest in linked indices, ETFs and third party funds

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Next 11 Emerging Markets

The Objective The primary investment objective is to provide positive returns in a variety of market conditions by investing in the Next 11 countries ex Iran.

The Strategy The Next 11 Emerging Markets Fund can invest across equities linked to the economic development of the Next 11 emerging markets.

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Reasons why?

 The concept was introduced by Goldman Sachs in 2005 in a similar way that Goldman Sachs introduced BRIC in 2001 ─ The concept was based on determining countries with large populations that will challenge the G7 countries by 2050  Geographic diversification ─ Next 11 countries comprise less than 20% of the MSCI Emerging Markets Index ─ Next 11 countries are less economically and politically „interlinked‟ unlike the BRIC countries where China is dominant both economically and politically ─ Each country is predominantly domestically driven and therefore less affected by another N11 country – consider the image of a „string of pearls‟

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Reasons why?

 Next 11 Emerging Markets enhances your Emerging Markets portfolio return

2001 – 2011*

BRIC outperformed GEMs by 3.4% pa

2001 – 2011*

GEMs outperformed S&P by 15% pa

2001 – 2011*

Next 11 outperformed S&P by 21% pa

2001 – 2011*

Next 11 outperformed BRIC by 2.6% pa

2001 – 2011*

Next 11 outperformed GEMS by 6% pa

If a re-rating of the N11 markets were to occur, as it did with BRIC, the Next 11 Emerging Market Fund should significantly outperform GEM funds over the next decade

Source: *Bloomberg & Castlestone Management.

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Reasons why?

 We believe emerging markets will outperform developed markets over the next decade ─ Equity markets in countries with low levels of debt to GDP should outperform those with high levels of debt to GDP due to potential re-rating of equity p/e multiples: 

Infrastructure investment (roads, rail) leading to improved productivity



Reduced burden of an aging population on medical and pensions systems



Dynamic development of independence, privatisation, rights etc



Better healthcare/education systems with increased population growth



Increased integration with global economies



Higher degrees of corporate governance, regulatory oversight

Source: *Bloomberg & Castlestone Management.

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Improved Portfolio Efficiency

11% Portfolio A: Fixed Income, Equities, Commodities, Emerging Markets and Next 11 Portfolio B: Fixed Income, Equities, Commodities and Emerging Markets

10%

Portfolio C: Fixed Income, Equities and Commodities 9%

22% Weighting to Next 11 would have resulted in a total increase in annualised returns of 88% over portfolio C and of 12% over portfolio B, at the same level of risk

Annualised Return

8%

7%

6%

5%

4%

3%

2% 2%

3%

4%

5%

6%

7%

8%

9%

Standard Deviation Source: Bloomberg & Castlestone Management. Fixed Income: Merrill Lynch Global Government Bond Index, Equities: S&P 500 Price, Commodities: S&P GSCI TR, Emerging Markets: MSCI Emerging Markets, Next 11: BNP Core 8 Next 11 Index. October 2011 to February 2011.

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Where does this fit in you portfolio*

Emerging Market Equities

Next 11 30%

GEM or BRIC 70%

Note: *This is based on Castlestone Management‟s view of Portfolio Planning. This should not be construed as advice. In planning your portfolio, please seek professional planning advice .

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What are the Next 11 Emerging Markets?

• Infrastructure growth • Improved healthcare and education systems • Increased productivity = less burden on economy • By product of this is PRODUCTIVITY

• Outperformance of equity market in countries with low levels of debt to GDP

• Further global & domestic investment • Improved corporate governance • Potential P/E multiple expansion

• Increased urbanisation • More integration with global economies • Property ownership • Development of independence

• Rising consumer class • Increased GDP per capita

Source: *Goldman Sachs ,Bloomberg & Castlestone Management Note: Past performance cannot be relied on as a guide to future performance.

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GEM vs S&P 500 – last decade

600%

MSCI Emerging Markets Index

500%

S&P 500

400%

300%

200%

100%

0% Oct 2001

Oct 2002

Source: Bloomberg & Castlestone Management

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Oct 2003

Oct 2004

Oct 2005

Oct 2006

Oct 2007

Oct 2008

Oct 2009

Oct 2010

Next 11 vs S&P 500 – last decade

800%

700%

S&P 500 Next 11 Index

600%

500%

400%

300%

200%

100%

0% Oct 2001

Oct 2002

Source: Bloomberg & Castlestone Management

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Oct 2003

Oct 2004

Oct 2005

Oct 2006

Oct 2007

Oct 2008

Oct 2009

Oct 2010

How have the Next 11 performed

Index/Country

Annualised Return 2001 – 2010**

N-11

+22%

BRIC

+20%

Emerging Markets

+16%

S&P 500

+2%

Topix 500

+2%

EUROSTOXX 600

+6%

This is your opportunity to achieve ‘BRIC-like returns’ a second time around

Source: Bloomberg & Castlestone Management. *Date range: December 31 st 2010 to September 29th 2010. **Date range: September 2001 to June 2010. N-11: Next-11 Core 8 Index, BRIC: MSCI BRIC Index, Emerging Markets: MSCI Emerging Markets Index TR Note: Past performance cannot be relied on as a guide to future performance.

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Index Weightings – Emerging Market diversification*

MSCI Emerging Markets Index

Next 11 Emerging Markets (Indicative Weightings) MSCI

Country

Next 11

0%

Bangladesh

3%

16%

Brazil

0%

17%

China

0%

1%

Egypt

6%

7%

India

0%

2%

Indonesia

18%

0%

Iran

0%**

13%

Korea

10%

4%

Mexico

28%

0%

Nigeria

4%

0%

Pakistan

3%

0%

Philippines

7%

7%

Russia

0%

7%

South Africa

0%

11%

Taiwan

0%

2%

Turkey

17%

0%

Vietnam

4%

Source: Bloomberg & Castlestone Management. As of July 2011. *Indicative, **0% because no ability to invest directly at present Note: Past performance cannot be relied on as a guide to future performance.

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How have the Next 11 performed in 2010

Index/Country

2010

2011 YTD*

Index/Country

2010

2011 YTD*

RTS Standard (Russia)

+19.1%

+8.22%

DSE General (Bangladesh)

+82.8%

-25.64%

MSCI Emerging Markets

+16.4%

-1.45%

TEPIX (Iran)

+68.2%

+23.5%

Bombay SE500 (India)

+16.4%

-9.19%

JCI (Indonesia)

+46.1%

-2.60%

S&P 500

+12.8%

+4.14%

PSEi (Philippines)

+37.6%

-7.74%

FTSE 100

+9.0%

+0.30%

Karachi 100 (Pakistan)

+28.1%

-3.94%

EURO STOXX 600

+8.6%

+0.36%

ISE Nat 100 (Turkey)

+24.9%

-1.85%

MSCI BRIC

+7.3%

+0.23%

Kopsi (Korea)

+21.9%

+0.15%

Bovespa (Brazil)

+1.0%

-2.56%

Mexico ICP

+20.0%

-4.35%

Hang Seng China Ent Index (China - HK)

-0.8%

+2.23%

NSE All Share (Nigeria)

+18.9%

+1.15%

Nikkei 225

-3.0%

-6.77%

Egypt Hermes

+15.7%

-27.35%

CSI 300 (China - Local)

-12.5%

+5.31%

-2.0%

-5.55%

Ho Chi Minh (Vietnam)

Source: Bloomberg & Castlestone Management. *Date range: December 31 st 2010 to February 28th 2011 **Date range: September 2001 to June 2010. N-11: Next-11 Core 8 Index, BRIC: MSCI BRIC Index, Emerging Markets: MSCI Emerging Markets Index TR Note: Past performance cannot be relied on as a guide to future performance.

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Investment perspective – breaking down the Next 11

10% Leader

65% Core

20-25% Frontier

0-5% Proto

Korea

Mexico

Egypt

Bangladesh

Indonesia

Vietnam

Iran

Turkey

Pakistan

Philippines

Nigeria

Wide Range of Investment Profiles Universe Focused on Core Countries

Source: Castlestone Management. Note: Past performance cannot be relied on as a guide to future performance.

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Conclusion

 The concept was introduced by Goldman Sachs in 2005 as Goldman Sachs introduced BRIC in 2001 – second opportunity to achieve „BRIC-like returns‟  Geographic diversification within emerging markets – Next 11 is a complement to BRIC

 Next 11 Emerging Markets enhances your Emerging Markets portfolio return  We believe emerging market equities will outperform developed market equities over the next decade  Our belief is that a diversified emerging markets portfolio should include 20 - 30% allocation to Next 11 emerging markets

Source: Bloomberg & Castlestone Management

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Addendum

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Investment team

Claudio Oliveira Head of Trading

Dmitry Zhuk Emerging Markets Equity Analyst

Fanfan Li Emerging Markets Trader

Robert Hunt Investment Manager

Source: Castlestone Management.

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Claudio joined Castlestone Management in April 2007 to provide fundamental research and trading execution. Prior to joining Castlestone Management, Claudio worked for Deutsche Bank in New York for four years as an analyst within the credit risk department. Claudio has a BA in Economics with a minor in Mathematics from Rutgers University.

Dmitry joined Castlestone Management in February 2011 to take the position of an emerging markets equity analyst. He has a generalist sector focus and is tasked with providing fundamental bottom-up company research and assisting with top-down macro analysis. Prior to Castlestone, Dmitry spent four years as an equity research analyst at Citigroup in London where he covered emerging markets Telecom and Media sectors. Dmitry holds an Honours Masters degree in Economics from the University of Edinburgh, UK. Fanfan joined Castlestone in May 2011 as a junior trader. Prior to joining Castlestone, Fanfan worked as a dealer at London Capital Group for four years gaining experience trading in an array of asset classes as well as facilitating expansion into Chinese markets. Fanfan received an Honours Masters degree in International Securities from the University of Reading. Robert is a director and on the investment committee of a number of BVI public professional and private funds. Robert joined Castlestone Management in 2006 and has carried out a number of functions across the business, starting initially in the position as Research Analyst and progressing towards an investment management role. Prior to this Robert undertook experience as a Portfolio Assistant at Thesis Asset Management Plc during his university placement year. He received a BA (Hons) in Financial Services from Bournemouth University, UK.

Investment philosophy

Fundamental Bottom-up: Buying companies, not tickers or markets - first and foremost fundamental equity analysis But keen attention to macro for two reasons: 1. 2.

Most attractive risk/rewards where there is a bottom-up company, combined with an attractive thematic exposure Avoid companies with very pertinent macro risks that may not be priced in, regardless of other attractive attributes

Long term Investment Horizon Sector Generalist, but bias away from specialised areas (e.g. Biotech)- benefit of broad global and sector awareness/view, rather than being pigeonholed to find the best absolute value wherever possible

Not benchmark/tracking error constrained Contrarian mindset- avoiding “hot stocks”- biggest risk in owning individual equities is a reversal of sentiment towards a name.

Note: This is based on Castlestone Management‟s view of Portfolio Planning. All content is subject to change at the Portfolio Manager‟s discretion.

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Investment philosophy

Focus upon 5: Unknown Unloved Undervalued Under-researched Under owned

All apply to Next 11 countries

Above combined with strong attention to valuation- but interpretation includes both „value‟ (i.e. cheap assets) and „GARP‟ (i.e. cheap growth) Concentration: circa 30 names

Approach applied consistently throughout all prior employment

Note: This is based on Castlestone Management‟s view of Portfolio Planning. All content is subject to change at the Portfolio Manager‟s discretion.

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Approach to risk management

Long biased philosophy- value is captured through identifying attractive companies as longs Derivatives used for efficient portfolio management, not value capture- primarily at the index level using futures- absolute return mindset and incentive structure

Market exposure will vary over time: 1. 2.

Primarily to avoid systemic risks at times of volatility- links in with broader Castlestone expertise in Macro analysis Owning a specific company does not require owning the underlying market.

Currencies generally left un-hedged when PM is agnostic - but reviewed especially where country concentration is high

Note: This is based on Castlestone Management‟s view of Portfolio Planning. All content is subject to change at the Portfolio Manager‟s discretion.

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Investment process

Universe Demarcation • Market capitalisation • Average daily value traded

Quant / Qual Screens Quantitative • Cheap relative or absolute valuation • Out of favour with analysts • Insider buying • 52 week low Qualitative • Respond to newsflow, e.g. Uncertainty providing market mispricing • Inflection points – e.g. Change in management or incentives

Execution Traders handle execution shortterm variance from PM indicated weightings allowed based on market movements, available flows

Portfolio Management • Ongoing monitoring • Continual rebalancing

Portfolio Construction • Decide weighting • How to fund purchase • Risk management: hedge currencies or business exposure

Fundamental / Valuation Snapshot • Attractive outlook? • Catalyst for change? • Valuation relative to history / market / peers? • Likely to be ~50% upside • Upside >3x downside

• • • •

Porters Five Forces SWOT Competitor analysis Management calibre / incentives • Risk assessment

• If not cheap / attractive on quick and dirty look / valuation – likely not a buy

Decision • Buy? • Not a buy?

Watchlist • Review on news flow • Set price alert to review decision regardless of no news

Note: This is based on Castlestone Management‟s view of Portfolio Planning. All content is subject to change at the Portfolio Manager‟s discretion.

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Rigorous Analysis

Valuation • • • •

Absolute Relative Potential downside Margin of safety?

Corporate Overview

 Independently owned asset manager that providing investment management services based on foresight, appropriateness and with the aim of meeting long term investment objectives of its investors  Founded in 1996 by Angus Murray, a former President of Macquarie Bank USA Inc. and Co-Head of the International Equity Department of NatWest Markets USA  55 employees , 9 investment professionals – 4 commodity focused, 3 emerging markets focused  Over 400 partners around the world who understand and allocate to our funds; available via major life platforms

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Fund Focus & Awards

GLOBAL MACRO

COMMODITIES

“Index Constituent” Aliquot Gold Bullion March 2011

EMERGING MARKETS

“Index Constituent” Aliquot Gold Bullion October 2009

“Best International Sales Team” Castlestone Management Highly Commended May 2008

“European Performance Award” Porcupine Global Macro Plus Highly Commended May 2009

“Best Performing Global Macro Fund” Porcupine Global Macro Plus Finalist November 2007 & 2009

Source: Castlestone Management. Note: Morningstar rating refers to Aliquot Gold Bullion class A,C & Aliquot Precious Metals class D only. © [2010] Morningstar UK Limited. Overall rating as at 31/08/2010. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, completely or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

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Global Reach Offices & representation in strategic locations across five continents London, UK Investment Team Legal & Compliance Marketing Sales

New York, USA

Europe*

Hong Kong

Dubai* British Virgin Islands Fund Manager: BVI Funds Investment Team

Latin America*

South Africa

Singapore

Note: Shares in Castlestone Management funds may not be offered or sold directly or indirectly in the United States nor may be held for the account or benefit of any U.S. person as defined in regulation S under the United States securities act of 1933 (as amended). Any reoffer or resale of any such shares in the United States or to U.S. persons may constitute a violation of U.S. law. *Representative offices.

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Important information

This document is intended for and directed at investment professionals and is not intended for retail customer use. This document is not offering to sell any product. Any transaction requires our subsequent formal agreement which will be subject to internal approvals and binding transaction documents. Castlestone Management (“We”) will not be liable for any use you make of any information in this document. We are not your advisor or fiduciary. We are not recommending or making any representations as to suitability of any product or the tax, legal or accounting treatment of any product. We are not responsible for information stated to be obtained or derived from third party sources. All opinions are given as of the date hereof and are subject to change. We are not obliged to inform you of any such changes. Any simulated performance data and/or past performance data contained herein is not a reliable indicator of future performance. Income from investments may fluctuate and investors may not recoup the amount originally invested. Any forward-looking statements concerning the financial condition, results of operations and businesses of Castlestone Management expressed or implied, are based on management's current expectations and assumptions, which may change without notice, and are no guarantee of future results, performance or events This document is confidential. No part of it may be reproduced, distributed or transmitted without Castlestone Management‟s written permission. Neither this document nor any copy of it may be distributed, directly or indirectly, in the United States of America or its territories or possessions (the “United States” or to any US Person as defined in Regulation S under the United States Securities Act of 1933 (as amended). Any failure to comply with these restrictions may constitute a violation of United States securities law. This is not exhaustive; other regional-specific wording may apply. If in doubt, please consult with Castlestone Management‟s Legal and Compliance department. Castlestone Management Limited is authorized and regulated by the Financial Services Authority in the UK. Castlestone Management Limited is authorized by the Financial Services Board in South Africa. Castlestone Management Inc. is regulated by the British Virgin Islands Financial Services Commission. This scheme is not available for distribution in Singapore. This scheme has been entered into the List of Restricted Schemes by the Monetary Authority of Singapore under paragraph 2(3) of the Sixth Schedule to the Securities and Futures (Offers of Investments)(Collective Investment Schemes) Regulations 2009 for distribution to institutional and accredited investors. No invitation to the public in Hong Kong to buy or subscribe for any product is permitted to be made. You should consult your own attorney, business adviser and tax adviser as to legal, business, tax and related matters concerning any of the contents of this document. This document has not been delivered for registration to the Registrar of Companies in Hong Kong, its contents have not been reviewed by any regulatory authority in Hong Kong, nor has the product been authorised by the Securities and Futures Commission. Accordingly, this document must not be issued, circulated or distributed in Hong Kong other than (1) in circumstances which do not constitute it as a “prospectus” as defined in the Companies Ordinance (Cap.32) or which do not constitute an offer to the public within the meaning of that ordinance, or (2) to professional investors as defined in the Securities and Futures Ordinance (Cap.571) and the Securities and Futures (Professional Investor) Rules made thereunder. Unless permitted by the securities laws of Hong Kong, no person may issue in Hong Kong, or have in its possession for issue in Hong Kong, this document or any other advertisement, invitation or document relating to any products other than to a professional investor as defined in the Securities and Futures Ordinance (Cap.571) and the Securities and Futures (Professional Investor) Rules made thereunder.” April 2011: 21/04/11

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