Rwc

Microsoft PowerPoint - 12.05 Enhanced Income Presentation Citywire.ppt [Compatibility Mode] May 2012Enhancing Income & Total Returns in a Low Growth World2Demand for Income has never been higher…. 1 2010-based projects for 2011 to 2056. Source: Office for National Statistics0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 UK 2 Year Base Rates UK 10 Year Barclays Capital IG Corporate Bond Index UK 30 Year UK RPI FTSE 350 Dividend Yield RWC Enhanced Income Fund Y i e l d ( % ) 3 Whilst supply of income has never been lower… Source: Bloomberg4Decomposition of equity returns Source: GMO, August 2010, RWC Estimates -10% -5% 0% 5% 10% 15% 20% 1871 - 2009 1982 - 2000 2000 - 2009 2011 - 2020 Estimate The Importance of Dividends (S&P 500) Dividend Yield Change in Real Dividends Change in Valuation • Equity returns are a function of 1. Dividend Yield 2. Growth in Income 3. Change in Valuation Dividend yield likely to be majority of total returns in next decade1. Dividend Yield 0 1 2 3 4 5 6 7 8 9 1 9 7 6 1 9 7 8 1 9 8 0 1 9 8 2 1 9 8 4 1 9 8 6 1 9 8 8 1 9 9 0 1 9 9 2 1 9 9 4 1 9 9 6 1 9 9 8 2 0 0 0 2 0 0 2 2 0 0 4 2 0 0 6 2 0 0 8 2 0 1 0 US Dividend Yield UK Dividend Yield 5 • Dividend yield for UK and US markets is below long run average Source: Bloomberg2. Growth - End of the Debt Super Cycle implies below trend growth • For thirty years, consumers, corporates and governments lived beyond their means – the debt supercycle • This had profound implications for all asset prices (equity, bonds, houses etc) • The next decade is likely to be a period of deleveraging. • This will likely mean lower growth, higher unemployment and greater volatility • In an environment of deleveraging and low growth, compounding income could once again be a superior strategy 6 0 50 100 150 200 250 300 350 400 1 9 1 6 1 9 2 1 1 9 2 6 1 9 3 1 1 9 3 6 1 9 4 1 1 9 4 6 1 9 5 1 1 9 5 6 1 9 6 1 1 9 6 6 1 9 7 1 1 9 7 6 1 9 8 1 1 9 8 6 1 9 9 1 1 9 9 6 2 0 0 1 2 0 0 6 Households Corporates Financials GSEs Government US Total Debt as % of GDP Source:, Federal Resrve 2010 0 10 20 30 40 50 60 70 80 90 100 1870 1890 1910 1930 1950 1970 1990 2010 R e a l E P S S&P 500 Real Earnings05 10 15 20 25 30 35 40 45 50 1860 1880 1900 1920 1940 1960 1980 2000 2020 P r i c e - E a r n i n g s R a t i o ( C A P E ) Year 1901 1966 2000 Price-Earnings Ratio 1981 1921 1929 22.22 3. Valuation remains high 7 Source: Robert Shiller, 2012 Historically adjusted price to earnings ratio of S&P 500 index• Equities priced for c.5% p.a. nominal returns 8 This methodology has been a powerful predictor of future returns Source: Hussman Funds, 2012Funds focus is on Lowly Valued, High Quality, Income Paying Equities 9 Source: Bloomberg, Consensus Estimates, February 2012. 10 year corporate bond yields where available. Fund Holdings Free Cash Flow Yield Dividend Yield Potential Dividend Growth Corporate Bond Yield Deutsche Telekom 15% 7.9% 7% 3.6% Legal and General 11% 5.0% 6% N/A Pfizer 11% 4.2% 7% 2.6% Vodafone 10% 7.8% 2% 2.9% Merck 10% 4.4% 6% 3.8% Next 9% 3.2% 6% 4.7% RWC Enhanced Income Average 10% 5.0% 5% N/A Not Held Diageo 4.6% 2.9% Nestle 3.8% 3.7% Weir Group 3.3% 1.6% United Utilities 3.0% 5.3% += Fund has potential to exceed market returns as function of • Higher starting dividend yield • Dividend growth • Lower starting valuationRWC Enhanced Income Fund 10 • UK equity income fund targeting 7% yield using covered call overlay • Additional income source expands investable universe • Call overlay reduces volatility and improves risk adjusted returns Objective • To produce 7% yield and grow income on a consistent basis – with greater income stability • Deliver attractive real and absolute total returns over time • Out perform market indices but with lower volatility over a market cycle • Incorporate elements of capital protectionRWC Enhanced Income 11 • Capital GrowthStock Portfolio • 4% to 5% Annual Income StreamStock Dividends • 2% to 3% Annual Income StreamCall Option Premium 7% Income Distribution Lower volatility, Enhanced IncomeCapital stability and growth • Willingness to hold cash • Taking advantage of fall in share prices to buy higher yielding stocks • Ability to apply measures of downside protection • Use index put options to reduce drawdown in weak markets • Combined with well covered dividends this has the result of • Enhanced income distributions • Relative stability of income distributions • Reduced unit price volatility • Long-term income growth 12 Income stream stabilityYear 1 £1 £10 £100 £1,000 Q1 Q2 Q3 Q4 Unit Price Distribution Year 2 £1 £10 £100 £1,000 Q1 Q2 Q3 Q4 Unit Price Distribution Year 3 £1 £10 £100 £1,000 Q1 Q2 Q3 Q4 Unit Price Distribution Year 3 Q1 Q2 Q3 Q4 Total Unit Price £98 £105 £115 £120 Distribution £ 1.72 £ 1.84 £ 2.01 £ 2.10 £ 7.67 Yield 1.75% 1.75% 1.75% 1.75% 7.00% Year 2 Q1 Q2 Q3 Q4 Total Unit Price £70 £90 £95 £92 Distribution £ 1.23 £ 1.58 £ 1.66 £ 1.61 £ 6.07 Yield 1.75% 1.75% 1.75% 1.75% 7.00% Year 1 Q1 Q2 Q3 Q4 Total Unit Price £100 £80 £130 £90 Distribution £ 1.75 £ 1.40 £ 2.28 £ 1.58 £ 7.00 Yield 1.75% 1.75% 1.75% 1.75% 7.00% Distribution and Yield Example 13 Enhanced Equity Income This is NOT a Bond • Stable income stream dependent on 1. Company dividends (well covered /cash compounders) 2. Capital stability and growth (focus on reducing capital volatility/deploying cash) 3. Covered call overlay strategy (additional source of income)-5% 0% 5% 10% 15% 20% Industry volumes BAT volume Sales Operating prof its EPS Dividend Share price A n n u a l i s e d G r o w t h Declining industry Market share growth Price/mix improvements Margin improvement Share count reduction Increased payout ratio Valuation re-rating 14 Source: RWC, 2010, company report and accounts Growth Rates for BAT 2001 to 2010 Cash generation (not Sales Growth) Drives Value Creation 1% p.a. volume growth 17% p.a. increase in share price • Strong cash generation, good use of cash and low starting valuation lead to attractive total returns for shareholdersLowly valued cash compounder - GlaxoSmithKline 15 • Since 2000 earnings and dividends +7% p.a. whilst the shares have fallen • Investors concerned by patent expiries, falling R+D productivity and a tougher regulatory environment • Nevertheless profits are forecast to grow and management are focused on growing the dividend • Shares priced at 11x 2012 earnings; 5.2% dividend yield Source: Bloomberg, company report and accounts 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0 160.0 180.0 1 9 9 1 1 9 9 2 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 e 2 0 1 3 e 2 0 1 4 e 2 0 1 5 e 2 0 1 6 e EPS (LHS) DPS (RHS) P/E (RHS) Share Price rebased (RHS)Lowly valued cash compounder - Microsoft 16 Source: Bloomberg, company report and accounts 0 10 20 30 40 50 60 70 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 e 2 0 1 3 e 2 0 1 4 e EPS DPS Price Price/Earnings • World’s largest software company; Windows >90% of growing PC market, “Office” products > 90% market share • Over last ten years sales and earnings have grown at 11% p.a. • Company has retired 25% stock in this period and has net cash $50bn on balance sheet • Cash adjusted price earnings ratio < 9xLowly valued cash compounder - Next 17 Source: Bloomberg, company report and accounts • Strong cash generation (coupled with shareholder friendly management) has enabled company to buy back half of shares in issue • Since 2000 sales growth of 6% p.a., earnings per share +15% p.a. and total return for shareholders +14% p.a. • Shares priced at under 12x earnings today 0 500 1000 1500 2000 2500 3000 3500 4000 0.0 50.0 100.0 150.0 200.0 250.0 300.0 350.0 1 9 9 2 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 e 2 0 1 3 e 2 0 1 4 e EPS (LHS) DPS (LHS) Revenue (m) (RHS) Share Price (p) (RHS)How the Strategy Works • Fund sells 3 month call options on each stock in the portfolio • Strike price of call options is set above the level of individual stock price at the start of the quarter • This has the effect of a cap on the growth of each stock at the end of the 3 months • Fund receives option premium from selling the call options, which is applied to enhance income for investors • Current underlying portfolio dividend yield of 4.4% enhanced to 7% Example: Vodafone option Vodafone share price 150p Option Price 1% = 1.5p 3 month option Strike level 173p = c. 115% 18 Covered call-overlay strategySummary 19 • Demand for income has never been higher whilst supply has never been lower • Equities offer c.5% returns but with significant volatility • We are focused on the high quality, cash compounders which remain under valued • Call over-writing can further help to meet income requirements • Focus on providing long-term income growth with reduced income volatility • Fund offers combination of low volatility and attractive returnsAppendix 20RWC Income – How we invest 21 We look for Why ? History of high returns on capital Low starting valuation Strong indicator of good future returns Attractive dividends Dividend have made up > 50% total equity returns Good cash generation Sensible use of cash flow drives value creation Shareholder friendly management Strong balance sheet Protects against an unforeseen deterioration in business conditions Stable businesses Low starting valuation – strong indicator of good future returns 22 Source: Empirical Research Partners 1 Large cap stocks. 2 Std. Error of Net Operating Earnings Growth over five years 3 Large cap stocks (ex financials & utilities) annualised rates of return 1965 – August 2010 Factor Return SpreadBest & Worst Quintile Price-to-Book Value 4.2% Net Debt-to-Capital 1.3% ROIC 0.4% Earnings Stability2 0.0% Annualised Nominal Monthly Returns3 Quality factor Quintile 1 – 4 Average Worst Quintile Difference ROIC 15.2% 8.2% 7.0% Net Debt-to-Capital 14.6% 11.3% 3.3% Earnings Stability2 15.1% 9.6% 5.5% Relative Returns1 for the One Year Holding Periods 1955 – May 2010 Quality factors within cheapest Price-to-Book Quintile Valuation still matters Buying ‘good’ companies that are fully priced does not add value • Within the subset of cheap companies, differentiating by quality improves returns‘Expensive defensives’ carry valuation risk Latest Relative Multiples (percentile, relative to all data since 1973) Industry Group Dividend Yield Price to Sales Price to Book Price/Earnings Average Insurance 2 - 1 15 1 Technology 2 5 1 34 2 Food Retail 45 1 42 85 29 Consumer Durables 97 96 95 84 96 Food, Beverage and Tobacco 97 100 100 99 99 Source: Morgan Stanley, Jan 2012, MSCI Europe. Corporate Reports, Empirical Research Partners Analysis. 1 Capitalization-weighted data, relative to the developed markets universe.23 1 = Lowest Valuation 100 = Highest Valuation Developed Markets - Consumer Staples Relative Free Cash Flow Yields1 (1987 to Mid-November 2011) -3 -2 -1 0 1 2 3 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Average Higher Yields; Consumer Staples Less Expensive Lower Yields; Consumer Staples More ExpensiveAre tobacco company returns as safe as you think? 24 0 5 10 15 20 25 30 35 40 45 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8 2 0 1 9 2 0 2 0 2 0 2 1 2 0 2 2 2 0 2 3 BATS CFROI, % CFROI implied by current share price Source: Credit Suisse Holt, February 2012 CFROI = Cash Flow Return on InvestmentYear 2010 2011 2012 2013 2014 2015 Cash from operations 3246 3265 3225 3989 4203 4761 Capital expenditure -3007 -3714 -3991 -4427 -4641 -5047 Free cash flow 239 -449 -766 -438 -438 -286 Dividend paid -688 -1229 -1378 -1455 -1537 -1623 Change in net debt -449 -1678 -2144 -1893 -1975 -1909 Net debt (cash) 22139 23817 25961 27854 29829 31738 Source: Morgan Stanley estimates at February 2011 Utility Companies don’t generate cash and pay uncovered dividends • Regulated to only make returns in line with cost of capital • Poor cash generation • Highly levered balance sheet • Dividends not covered by free cash flow Example: National Grid 2526 Asian growth stories carry earnings AND valuation risk 0 5 10 15 20 25 0.0 0.2 0.4 0.6 0.8 1.0 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 Aggreko EPS (LHS) Price (RHS) Are these earnings sustainable? Source: Bloomberg5% 9% 6% 4% 17% 8% 1% 16% 4% 4% 8% 0% 12% 3% 27 Cash Telecoms Deutsche Telecom 2% KPN 2% Vodafone 5% Pharmaceuticals Astra Zeneca 4% Eli Lilly 2% GlaxoSmithKline 6% Merck & Co 2% Pfizer 2% Industrials Smiths Group 3% Energy BP 4% Royal Dutch Shell 4% Retailers Next 4% Insurance Legal and General 5% Old Mutual 4% RSA Insurance 4% Standard Life 4% Other Financials Close Brothers 2% Provident 2% Technology Logica 3% Microsoft 3% HP 2% Source: RWC, March 2012. Positions less than 2% excluded Current Portfolio Breakdown – RWC Enhanced Income Fund Media Daily Mail & General Trust 3% Reed Elsevier 2% Food & Beverage Unilever 4% Swaptions Food Retailers Tesco 4% Support Services 1.5p premium 1.5p premium Strike 115% => 173p VOD price increases 30% 23p End value 150p+23p+1.5p = 174.5p Return above the strike forfeited 195p – 173p = 22p22p Return up to the strike retained 173p – 150p = 23p 28 0 25 50 75 Day 1 Sell option 3 months later End result 150p 150p 165p 150p Buy VOD for 150p Sell Option for 1% =>1.5p premium 1.5p premium Strike 115% => 173p VOD price increases 10% 15p End value 150p+15p+1.5p = 166.5p 0 25 50 75 Day 1 Sell option 3 months later End result 150p 150p 150p Buy VOD for 150p Sell Option for 1% =>1.5p premium 1.5p premiumStrike 115% => 173p VOD price remains at 150p End value 150p+ 0+1.5p = 151.5p150p 0 25 50 75 Day 1 Sell option 3 months later End result 150p 150p 135p 135p Buy VOD for 150p Sell Option for 1% =>1.5p premium 1.5p premium Strike 115% => 173p VOD price drops 10% End value 150p-15p+1.5p = 136.5p • Scenario 2 gently rising market • Scenario 3 flat market • Scenario 4 declining market • Scenario 1 strongly rising market How the call-overlay strategy worksOption Trade Update • The Fund delivered a 7.5% yield for 2011 • Eleven trades were positive contributors to total return, one breakeven trade in 2011 – adding c. 1.8% to TR • Table 1. details the income stream • Implied volatility trending down from autumn highs • 5 active counterparties, 2 substitute counterparties 29 Strike Levels Capped Retention Rate** Stocks Covered Roll 1 111.8% 5 24% 23 Roll 2 112.4% 3 49% 22 Roll 3 112.1% 4 75% 23 Roll 4 111.6% 2 56% 27 Roll 5 110.9% 6 0% 24 Roll 6 111.3% 5 62% 22 Roll 7 109.3% 4 44% 24 Roll 8 110.6% 0 100% 24 Roll 9 111.6% 1 98% 21 Roll 10 110.4% 0 99% 24 Roll 11 117.7% 4 33% 23 Roll 12 117.7% 5 50% 19 Roll 13 113.6% 4 -12% 20 Roll 14 111.0% 2 66% 18 Roll 15 112.6% 7 -252% 22 Roll 16 110.9% 6 56% 23 Roll 17 108.2% 22 Roll 18 107.4% 25 Roll 19 108.7% 23 5 10 15 20 25 30 35 18 months 12 months 6 months 3 months 1 months Current Single Stock Average iVol FTSE 100 iVol Table 1: Fund Distributions Table 2: Overlay trade record since launch Chart 1: Average Implied Volatility *The Yield is calculated as the summation of quarterly percentage distributions. The historic yield is equal to 7.6%. **The Retention Rate is the % of initial premium received retained against the payout on the expiry of the option contracts Date Unit Price (B Share Class) Distribution (£) Yield % Dec-10 95.5 1.45 1.45% Mar-11 94.4 1.75 1.83% Jun-11 95.0 2.02 2.14% Sep-11 81.9 1.66 1.75% Dec-11 84.5 1.48 1.71% Mar-12 87.7 1.50 1.78% Yield* 7.5% Historic Yield* 7.6% How the call-overlay strategy works1 year % 3 years % 5 years % Schroder Income Fund +62.4 +10.4 +51.7 FTSE All Share +52.3 -0.7 +41.3 Sector average +45.9 -10.7 +24.5 Rank 7/83 1/73 1/63 Quartile 1 1 1 Historical Investment Performance Source: Lipper Hindsight, bid to bid, net income reinvested, as at 31/03/2010 * November 2005 1 year % 3 years % Since Launch* % Schroder Income Maximiser Fund +54.3 +9.2 +32.1 FTSE All Share +52.3 -0.7 +25.3 Sector Average +45.9 -10.7 +14.5 Rank 14/83 3/73 6/63 Quartile 1 1 1 30Equity Income and Value: portfolio management team Nick Purves – portfolio manager • Joined RWC Partners in August 2010 to launch specialist value and income franchise • 16 years at Schroders – senior portfolio manager • Manager of Schroder Income Fund since 2003 and Schroder Income Maximiser Fund since launch in 2005 • Schroder Income Fund ranked 1st (out of 57) in its sector during period under management • Schroder Income Fund: Morningstar five star rated, OBSR AA rated, Winner of Moneywise fund awards 2009 UK Equity Income and Equity Income and Growth • Schroder Income Maximiser: Morningstar five star rated, OBSR A rated, Winner of Lipper Fund Awards 2010 UK Equity Income, Winner of Trustnet 2009 UK Equity Income • Manager of St James’s Place Equity Income Fund since 2001 • UK Institutional Specialist Value Fund Manager • Total of £5bn under management • Qualified as Chartered Accountant in 1993 with KPMG • Graduated from Bristol University in 1989 31Equity Income and Value: portfolio management team Ian Lance – portfolio manager • Joined RWC Partners in August 2010 to launch specialist value and income franchise • 22 years experience • Joined Schroders in 2007 • Manager of Schroder Income Fund and Schroder Income Maximiser Fund • Schroder Income Fund ranked first in the sector during period managed • Schroder Income Fund: Morningstar five star rated, OBSR AA rated, Winner of Moneywise fund awards 2009 UK Equity Income and Equity Income and Growth • Schroder Income Maximiser: Morningstar five star rated, OBSR A rated, Winner of Lipper Fund Awards 2010 UK Equity Income, Winner of Trustnet 2009 UK Equity Income • UK Institutional Specialist Value Fund Manager • £5bn under management • Previously Head of European Equities and Director of Research at Citigroup Asset Management and Head of Global Research at Gartmore • Graduated from Loughborough University in 1988 32Equity Income and Value: portfolio management team John Teahan – portfolio manager • Joined RWC Partners in September 2010 • Joined Schroders in 2003 • Employed as Fund Manager managing structured investment funds in the Multi Asset and Structured Investments department • Specialized in trading and managing derivative securities for a range of structured funds • Co-managed the Schroder Income Maximiser from launch in 2005 to May 2009 • Co-managed the Schroder European Dividend Maximiser and Schroder Global Dividend Maximiser funds • Previously worked as a performance and risk analyst for Bank of Ireland Asset Management UK • Investment career commenced in 2000 • Chartered Financial Analyst (CFA) Charterholder. Member of UK Society of Investment Professionals (UKSIP). • Graduated from Trinity College Dublin with a BA (Hons.) Economics and Politics in 2000, attained MA from Trinity College in 2009 33This document contains information relating to RWC Partners Limited and RWC Asset Management LLP (collectively, “RWC Partners”), each of which is authorised and regulated in the United Kingdom by the Financial Services Authority (“FSA”), and services provided by them and may also contain information relating to certain products managed or advised by RWC Partners (“RWC Funds”). RWC Partners 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 Partners 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 Partners are available only for and this document is directed only at, persons that qualify as Professional Clients or Eligible Counterparties under rules of the FSA. 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 Partners 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 FSA. 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 Partners 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 Partners, reliable and accurate at the date hereof, but is subject to change without notice. In producing this document, RWC Partners 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, Simplified Prospectus and latest Annual and Interim Reports for more information. A United Kingdom investor may not have the right (otherwise provided under the FSA 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. Shareholders 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. 34