Walter Scott Investment Symposium Walter Scott & Partners Limited with Macquarie Professional Series

February 2011

The case for global equities for Australian investors

Royy Leckie Director

Why invest outside Australia? Why equities? Why y global? g oba Active versus passive?

MSCI World in Australian dollars Net dividends re-invested

5500 5000

Index L Level

4500 4000 3500 3000 2500 2000 Feb-98 Source: MSCI, Bloomberg

Feb-00

Feb-02

Feb-04

Feb-06

Feb-08

Feb-10

Australian/US dollar exchange rate 1.6

1.4

Inde ex level

12 1.2

1

0.8

0.6

0.4 Dec-71 Source: Bloomberg

Dec-77

Dec-83

Dec-89

Dec-95

Dec-01

Dec-07

Total annualised equity returns – MSCI indices 31 December 1999 to 31 December 2010 Net dividends re-invested

World

US

Europe p

Japan p

Australia

Local Currency

0%

0%

0%

-4%

7%

Australian Dollar

-3%

-4%

-2%

-6%

7%

Source: MSCI, Bloomberg

Price and earnings Cyclically adjusted P/E ratio for S&P 500 1881 to December 2010 50

2000 40

1929 30

1901

1966

20

10

0 1881 1888 1895 1903 1910 1917 1925 1932 1939 1947 1954 1961 1969 1976 1983 1991 1998 2005 Source: Robert Shiller

World returns in Australian dollars

1900-2010

2000-2010

%

%

Real bond returns

2.6

2.0

Real equity total returns

6.3

-4.7

Real US bills returns

18 1.8

-2 9 -2.9

Real equity capital gains

2.1

-6.6

Income compounding effect

4.2

1.9

Source: Credit Suisse / London Business School: ‘Global Investment Returns Yearbook 2010’

S&P 500 index and earnings per share

1800

100

1600

90 80

S&P 500 Stoc ck Price Index x

1400

70 1200 60 1000 50 800 40 600 30 400

20

200

10

0 1980

0 1982

Source: Robert Shiller

1985

1987

1990

1992 Price

1995

1997

Year Earnings

2000

2002

2005

2007

2010

S&P Composite E Earnings per S Share

S&P 500 index and earnings per share

Themes Demographics Developing markets Trade ade Technology

Cyclically adjusted P/E and future returns US Shiller P/E and 10 year S&P 500 returns

45

-300%

40 -200% 35 -100% 100%

0%

20

100%

P/E P

25

15 200% 10 300% 5 0 1900

Source: Robert Shiller

400% 1910

1920

1930

1940

1950

1960

1970

1980

1990

2000

2010

% Price e Change

30

Global markets As of 31 December 2010

Market capitalisation

Source: Bloomberg

GDP

Stock picking Growth Profitability Financial a c a st strength e gt Valuation

Walter Scott composite performance (AUD) As of 31 December 2010 (estimated), annualised for periods greater than one year

Australian dollar

Quarter

One Year Three Years

Five Years

Walter Scott Global Equities

1.6

-1.8

-3.2

-0.2

MSCI World Walter Scott Global Equities ex Australia*

2.9 1.3

-1.9 -2.6

-9.6 -4.0

-4.2 -1.5

MSCI World ex Australia

2.9

-2.0

-9.8

-4.5

* Performance shown net of investment management fees

US dollar Walter Scott Global Equities MSCI World

Quarter One Year Three Years Five Years Ten Years Fifteen Years 7.4 9.0

12.4 11.8

2.0 -4.9

6.8 2.4

7.4 2.3

Walter Scott claims compliance with the Global Investment Performance Standards (GIPS®). Performance is shown gross of investment management fees unless otherwise stated; MSCI indices are shown on a total return, net dividends reinvested basis unless otherwise stated; past performance is not a guide to future performance.

Source: Walter Scott, MSCI

10.5 5.5

MSCI indices

MSCI Indices 1999 to 2000 US$ Total return net dividends re re-invested invested

MSCI Indices 1989 to 1999 US$ Total return net dividends re re-invested invested 1000

1000

100

100

10

10 1999 1999

1989

1990

1991

World

Source: MSCI

1992

1993

EAFE

1994

1995

Europe

1996

USA

1997

1998

Japan

2000

2001

2002

World

2003 EAFE

2004 Europe

2005

2006 USA

2007 Japan

2008

2009

The case for global equities for Australian investors Long-term historic equity returns are a good guide to the future Greater opportunities overseas Stock Stoc se selection ect o versus e sus indices d ces

Finding opportunities in a global investment universe Christel Brodie Des Armstrong Yuanli Chen Ian Howie

Chaired by Roy Leckie

L Loreal l

Overview World leader in cosmetics with focused portfolio of brands Diversified group: four main distribution channels and The Body Shop Professional Products (hair salons)

Consumer Active cosmetics Products 7.0 p per cent* (pharmacies) (mass retailers)

Luxuryproducts Products Consumer Active Cosmetics The Body The Body Shop Luxury products Shop p cent* 23.3 per ycent* p per cent* products p stores) 48.9 p Luxury (department (pharmacies) 4.1per 23.3 per cent* (mass retailers)

Source: L’Oreal Group

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Overview  Additional diversification: 130 countries  Strong balance sheet and high profitability  Numerous growth drivers including ageing population emerging markets male market

Market growth and cosmetic sales

New markets as a percentage of total cosmetics sales

Source: L’Oreal

Growth drivers Growth driver - example : male cosmetics

KERASTASE CAPITAL FORCE

Source: L’Oreal

L’OREAL L OREAL PARIS - MEN EXPERT HYDRA ENERGETIC EYES DEODORANTS

GARNIER MEN (India, Asia)

BIOTHERM FORCE SUPREME RE-BUILDER

EOG resources

Overview  Independent oil and gas exploration and production company  Focused on driving profitable organic growth at the ‘drill bit’  Forefront of technology (seismic analysis, drilling techniques)  First mover advantage (e.g. shale gas)  Excellent portfolio of gas and oil assets  Strong balance sheet  Consistent C i t t managementt team t

Shale gas in relation to value What is shale gas?

Source: EIA

Shift from gas to oil EOG’s shift towards oil

2012

TODAY

2012(e)

Today

2007

OIL 40%

Revenue

Revenue GAS 60%

OIL 75% GAS 25%

$69/bb

$91/bb $41/bb

Value

Value $27/bb

Gas to oil conversion at 6:1 based on Hendry Hub at $4.70/Mcf Source: Walter Scott, EOG

Is the past prologue?  Change in strategy but not focus on driving growth at the ‘drill bit’ 10 per cent annual production growth out to 2012  Shift in production mix should improve profitability Oil and natural gas liquids are higher margin than natural gas  Excellent inventory of oil and liquid assets 1.5 billion barrels of oil equivalent in potential reserves  First mover advantage remains C Competitive i i advantage d iin id identifying if i lland d suitable i bl ffor d development l

A h Amphenol l

Overview Global leader in interconnect technology

78 year history, listed on NYSE Second largest g interconnect company p y in the world High technology interconnect solutions Leading positions in diverse markets Broad global capability Extensive presence in low cost areas Experienced, entrepreneurial management

Market capabilities Diversified end markets  Global capabilities  Development engineering Harsh Environment

 End-to-end system simulation  Environmental and performance testing Power Management

Source: Amphenol

High Speed Bandwidth

Radio Frequency

Amphenol  Industry leading growth for over a decade  Industry leading operating profit margins in all business cycles  High returns on invested capital and R&D spending

Net sales ($US m) EPS ($US) 10 Year CAGR Sales 8% EPS 11% >2X Industry Growth

 Successful acquisition program in consolidating industry  Strong cash flow generation

2000

Source: Amphenol

(1) Excludes expenses related to early extinguishment of debt (2) Excludes losses related to flood (3) Adjusted for stock split effective March 2007

2009

Mobile Devices

Mobile Infra

Growth business

Diversity

Global

Low Cost

Mil/Aero o

Entrepreneurial Organization

Industrial

Auto

Technology

B Broad --band

IT / D Data

Complementary Acquisitions

Source: Amphenol

CNOOC

Overview  Largest Chinese offshore oil and gas exploration and production company  Strong production growth  Attractive exploration potential  "Farm in" right to all Chinese offshore discoveries  Balance sheet strength supports international acquisitions

Source: CNOOC

Keyence

Overview  World leader in sensors for production lines

 First to market

 Fabless business model

 Overseas markets still to be conquered

 Research and development focus

 Rock solid balance sheet

3-axis fiber laser marker Source: Keyence

Safety laser scanner

High-speed 2D measuring instrument

Q&A

Disclaimer Investments in the Walter Scott Global Equity Fund (ARSN 112 828 136) and Walter Scott Global Equity Fund (Hedged) (ARSN 129 574 447) (“Funds”) are offered by Macquarie Investment Management Limited ABN 66 002 867 003 AFSL No. 237492 (“MIML”). In deciding whether to acquire or continue to hold an investment in the Funds, investors should consider the current Product Disclosure Statement (PDS) which is available from us. Applications can only be made on the application form contained in the current PDS PDS. The information in this presentation is provided for the use of asset consultants, research companies and licensed financial advisers only. This information must not be passed on to retail clients for the purposes of recommending an investment in the Fund or any other financial product or class of products. Investments in the Funds are not deposits with or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL) or of any other Macquarie Group company and are subject to investment risk, including possible delays in repayment and loss of income or principal invested. Neither MBL nor any other member company of the Macquarie Group guarantees the performance of the Funds or the repayment of capital from the Funds or any particular rate of return. Except for MBL, any Macquarie entity referred to in this presentation is not an authorised deposit-taking institution for the purpose of the Banking Act 1959 (Cth). That entity’s obligations do not represent deposits or other liabilities of MBL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of that entity, unless noted otherwise. Past performance is not a reliable indicator of future performance. You should not base your decision to invest solely upon past performance information. ®M ®Macquarie i Professional P f i lS Series i iis a registered i t d ttrademark d k off M Macquarie i B Bank k Li Limited. it d * Finalist 2010. Winner 2007, 2008, 2009: International Equities - Developed Markets . Standard & Poor’s Information Services (Australia) Pty Ltd (ABN: 17 096 167 556, Australian Financial Services Licence Number: 258896) (“Standard & Poor’s) Fund Awards are determined using proprietary methodologies. Fund Awards and ratings are solely statements of opinion and do not represent purchase,, hold,, or sell anyy securities or make anyy other investment decisions. Ratings g are subject j to change. g For recommendations to p the latest ratings information please visit www.standardandpoors.com.au.

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Appendix 1. DEFINITION OF FIRM 1 Walter Scott & Partners Limited (“Walter Scott”) is an investment management firm authorised and regulated in the United Kingdom by the Financial Services Authority in the conduct of investment business. Walter Scott is a wholly-owned subsidiary of The Bank of New York Mellon Corporation. Walter Scott is responsible for portfolios managed on behalf of pension plans, endowments and similar institutional investors. Total assets under management were US$32.1 billion as at 31 December 2009. 2 EXPLANATORY NOTES 2. 2.1 Explanatory Notes Composite figures in this presentation are extracted from one or more of the composites reports prepared by Walter Scott in compliance with the Global Investment Performance Standards (GIPS). The effective date of compliance of the Firm with the GIPS standards is 1 January 1994. The firm’s Global, EAFE, Europe and Pacific Rim composites were first created in 1989. A complete list and description of composites is available on request. 2.2 Calculation Methodology Details specific to performance and composite calculations are set out below. Composites, which are expressed in US$ terms or other currencies as indicated, comprise all fee-paying, fully discretionary portfolios managed by Walter Scott within each investment strategy. Policies for valuing portfolios, calculating performance, and preparing compliant presentations are available on request. (a) Unless otherwise stated stated, performance results are calculated gross of investment management fees. The fee schedule is detailed below. Performance results net of fees are available on request. (b) Performance results are calculated on a total return basis and include all portfolio income, unrealised and realised capital gains, contributions and withdrawals and are geometrically linked. Cash and cash equivalents are included in total portfolio assets and in the return calculations. Trade date accounting is used for valuations. For periods less than one year, rates of return are not annualised. (c) The composite shown is an aggregation of funds representing a similar investment strategy. Composites are size-weighted using beginning of period values to weight portfolio returns. There is no minimum asset size below which portfolios are excluded from a composite. Accounts are included in a composite beginning with the first full month of performance and until the month immediately prior to termination of an account. (d) The Walter Scott US composite/representative return series consisted of a single US equity portfolio from April 2000 until November 2003 and from January 2007 has consisted of one or more US equity portfolios. GIPS compliance is claimed for these periods. Prior to April 2000 and between November 2003 and January 2007 the return data is the US equity performance (excluding cash) from a global portfolio. These returns are presented as supplementary and are verified as fairly stated by independent accountants, KPMG.

((e)) Annualised A li d return t represents t th the llevell annuall rate t which, hi h if earned d each h year iin a multiple-year period, would produce the actual cumulative rate of return over the whole period and is presented gross of fees. (f) Composites are net of trading expenses, administrative fees and withholding taxes on dividends and interest. Withholding taxes vary depending upon the country of investment but range between 0% and 30%. Benchmark returns are net of withholding taxes on dividends. ( ) The (g) Th dispersion di i off annuall returns t iis measured db by th the range b between t th the hi highest h t and lowest performing portfolios in the composite. Past rates of return are not indicative of future rates of return and other calculation methods may produce different results. 2.3 Compliance Statement Communication of performance figures reflected in this document must be on a oneon-one basis, b i private i t and d off a confidential fid ti l nature. t Th They may nott b be di disseminated i t d tto the public in any print, electronic or other medium, including a web-site or any database of general circulation. The following disclosures must be provided in writing when onwardly communicating these performance figures. 1) Performance figures do not reflect the deduction of investment advisory fees. 2) Returns will be reduced by investment advisory fees and any other expenses that may be incurred in the management of an account.

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Appendix 3. IMPORTANT INFORMATION 3 3.1 Walter Scott’s Investment Approach This presentation contains certain statements based on Walter Scott’s experience and expectations about the markets in which it invests its portfolios and about the methods by which it causes its portfolios to be invested in those markets. Those statements are not guaranties of future performance and are subject to many risks, uncertainties and assumptions that are difficult to predict. The information in this presentation is subject t change to h and dW Walter lt Scott S tt has h no obligation bli ti tto revise i or update d t any statement t t t herein h i for any reason. The opinions expressed in this presentation are those of Walter Scott and should not be construed as investment advice. In addition the information should not be construed as a recommendation to buy or sell a security. 3.2 Portfolio Holdings and Allocations To derive ten largest holdings, characteristics, economic sector weightings, country weightings i hti and d portfolio tf li h holdings ldi ffor presentation t ti purposes, th the portfolio tf li manager h has identified a representative institutional account to be used as a proxy for this strategy. This portfolio data should not be relied upon as a complete listing of the portfolio’s holdings (or top holdings) as information on particular holdings may be withheld. Portfolio holdings are subject to change without notice and may not represent current or future portfolio composition. The portfolio date is ‘as of’ the date indicated.

33 D 3.3 Definitions fi iti Beta = Portfolio Beta and is the measure of the sensitivity of rates of return to changes in the market return. R² = The R-Squared of a portfolio relative to the market and indicates the proportion of a security’s total variance explained by variations in the market. 3.4 Third Party Sources Some information contained herein has been obtained from third third-party part sources so rces that are believed to be reliable, but the information has not been independently verified by Walter Scott. Walter Scott makes no representations as to the accuracy or the completeness of such information and has no obligation to revise or update any statement herein for any reason. 3.5 Performance Statement Past performance is not a guide to future returns and the objective mentioned may not be reached. The value of investments and the income from them can fall as well as rise and investors may not get back the original amount invested. The value of overseas securities will be influenced by fluctuations in exchange rates. This presentation may not be used for the purpose of an offer or solicitation in any jurisdiction or in any circumstances in which such offer or solicitation is unlawful or not authorised.

The information provided in this document should not be considered a recommendation to purchase or sell any particular security. There is no assurance that any securities discussed herein will remain in an account’s portfolio at the time this report is received or that securities sold have not been repurchased. The securities discussed do not represent an account’s entire portfolio and in the aggregate may represent only a small percentage of an account’s portfolio holdings. It should h ld nott be b assumed d th thatt any off the th securities iti ttransactions ti or h holdings ldi di discussed d were or will prove to be profitable, or that the investment recommendations or decisions Walter Scott make in the future will be profitable or will equal the investment performance of the securities discussed herein. The allocation distribution and actual percentages may vary from time to time. The types of investments presented in the allocation chart will not always have the same comparable risks and ret returns. rns The act actual al performance of the portfolio will ill depend on the Investment Manager’s ability to identify and access appropriate investments, and balance assets to maximise return while minimising its risk. The actual investments in the portfolio may or may not be the same or in the same proportion as those shown above.

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Appendix 3.6 Performance Indices Comparisons to the indices have limitations because the volatility and material characteristics of the indices represented in this presentation may be materially different from that of the portfolio managed by the Investment Manager. Because of these differences, investors should carefully consider these limitations when evaluating the performance in comparison to benchmark data as provided herein. Where referencing MSCI or any other index performance figures: no party involved in or related l d to compiling, ili computing i or creating i the h iindex d d data makes k any express or implied warranties or representations with respect to such data (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of such data. Without limiting any of the foregoing, in no event shall an index provider, any of its affiliates or any third party involved in or related to compiling, computing or creating the data have any liability for any direct, di t iindirect, di t special, i l punitive, iti consequential ti l or any other th d damages (i (including l di lost profits) even if notified of the possibility of such damages. No further distribution or dissemination of the index data is permitted without the provider’s express written consent. The indices do not incur expenses, are not available for investment and include reinvestment of dividends.

37B 3.7 Benchmark h kD Definitions fi iti MSCI World The MSCI World index is a free float-adjusted market capitalisation weighted index that is designed to measure equity market performance of developed markets. As of August 2010, the MSCI World index consisted of the following 24 developed market country indices: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, N Norway, P Portugal, t l Si Singapore, S Spain, i S Sweden, d S Switzerland, it l d th the U United it d Ki Kingdom d and d the United States.

MSCI Europe The MSCI Europe index is a free float-adjusted market capitalisation weighted index that is designed to measure the equity market performance of developed markets in Europe. As of June 2007, the MSCI Europe index consisted of the following 16 developed market country indices: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom MSCI USA The MSCI Europe index is a free float-adjusted market capitalisation weighted index that is designed to measure the equity market performance of the US market. MSCI Emerging Markets The MSCI Europe index is a free float-adjusted float adjusted market capitalisation weighted index that is designed to measure the equity market performance of emerging markets. As of June 2009 the MSCI Emerging Markets index consisted of the following 22 emerging market indices: Brazil, Chile, China, Columbia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand and Turkey. MSCI Pacific The MSCI Europe index is a free float-adjusted market capitalisation weighted index that is designd to measure the equity market performance of developed markets in the Pacific region. As of June 2007, the MSCI Pacific index consisted of the following five developed market countries: Australia, Hong Kong, Japan, New Zealand and Singapore.

MSCI EAFE (Europe, Australasia, Far East The MSCI EAFE index is a free float-adjusted market capitalisation index that is designed to measure the equity market performance of developed markets, excluding the US and Canada. As of August 2010 the MSCI EAFE index consisted of the f ll i 22 developed following d l d market k t country t indices: i di A Australia, t li A Austria, ti B Belgium, l i D Denmark, k Finland, France, Germany, Greece, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the United Kingdom.

41