Rwc

Change provides opportunity for Equity Long Short

October 2011

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Introduction to RWC Partners

• RWC Partners is an independent investment firm• Focus is exclusively on high-alpha asset management to institutions, professional investors and intermediaries• Business is built around highly-talented portfolio managers, an intense focus on performance and a strong risk

management culture

• Majority of equity in RWC Partners is owned by personnel – the balance is owned by Schroders• 7 investment teams

• European Equity• Equity Income & Value • Global Growth Equity• UK Equity• US Equity• Global Convertible Bonds• Absolute Return Bond & Currency

• 65 personnel of which nearly half are investment professionals• Product focus: UCITS & non-UCITS high alpha & absolute return funds

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Introduction to RWC Global Growth Absolute Alpha Fund

• A global equity, absolute return strategy – highly liquid, low market exposure• Annual unlevered return of 9% over 5 years

• Average net exposure of 19% during the period

• Annualised volatility of 7.96% / Sharpe ratio of 0.7

• Priya Kodeeswaran is a highly experienced global long/short portfolio manager• Most recently he was a portfolio manager on the Cheyne Value Fund

• Ex-colleagues from Cheyne have personally supported the launch and Cheyne voluntarily released the track record

• The Investment Strategy is differentiated in three primary ways; • Focus on change and innovation within companies and industries

• Bottom-up Estimate Dispersion as a key idea generation tool

• Global focus, taking advantage of regional dislocations

Source: January 2004 – May 2009, Cheyne Capital (Note: Returns shown for the period between January 2004 and May 2009 reflect the profit and loss earned on the gross market value of that book on a monthly basis generated by the capital book managed by Priya at Cheyne Capital during that time. The data, which was supplied by the Executive Committee of Cheyne Capital, does not make provision for any performance fees or other implied leverage.)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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Dec-03 Apr-04 Aug-04 Dec-04 Apr-05 Aug-05 Dec-05 Apr-06 Aug-06 Dec-06 Apr-07 Aug-07 Dec-07 Apr-08 Aug-08 Dec-08 Apr-09

Performance of Strategy against various indices

Performance of Strategy Nasdaq Dow Jones

Historic Performance of Strategy

4Source: January 2004 – May 2009, Cheyne Capital (Note: Returns shown for the period between January 2004 and May 2009 reflect the profit and loss earned on the gross market value of that book on a monthly basis generated by the capital book managed by Priya at Cheyne Capital during that time. The data, which was supplied by the Executive Committee of Cheyne Capital, does not make provision for any performance fees or other implied leverage.)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

Performance of Strategy against various indices

Cumulative Alpha of Historical Strategy

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Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09

Source: January 2004 – May 2009, Cheyne Capital (Note: Returns shown for the period between January 2004 and May 2009 reflect the profit and loss earned on the gross market value of that book on a monthly basis generated by the capital book managed by Priya at Cheyne Capital during that time. The data, which was supplied by the Executive Committee of Cheyne Capital, does not make provision for any performance fees or other implied leverage.)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 - Returns

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

2004 GGF 5.7% 0.3% -1.2% -1.1% -2.0% -1.0% 0.9% 1.8% 5.6% 3.3% -1.7% 2.5% 13.5%

2005 GGF 4.9% -0.8% -0.6% 0.4% 0.3% 4.3% 5.2% 1.7% 0.8% -2.1% 1.1% 2.7% 19.1%

2006 GGF 1.7% -0.6% 1.3% 2.8% -3.7% -3.5% 1.9% 1.5% 1.5% -0.9% 3.9% -1.1% 4.5%

2007 GGF 1.9% 0.3% 0.5% 1.1% 1.4% 1.4% 0.7% -0.6% 1.0% 3.5% -3.3% 1.6% 9.7%

2008 GGF -3.5% -0.7%  -0.3%  2.1% 1.0%  -0.6% 0.5%  0.6% -3.3% -1.9% -1.1% -0.4% -7.4%

2009 GGF 1.8% -0.1% 2.0% 6.6% n/a n/a n/a n/a n/a n/a n/a n/a 10.5%

Source: January 2004 – May 2009, Cheyne Capital (Note: Returns shown for the period between January 2004 and May 2009 reflect the profit and loss earned on the gross market value of that book on a monthly basis generated by the capital book managed by Priya at Cheyne Capital during that time. The data, which was supplied by the Executive Committee of Cheyne Capital, does not make provision for any performance fees or other implied leverage.)Data from RWC Partners. Performance details are calculated on a NAV-NAV basis, net of fees with income reinvested. Share class: B USD. * October MTD performance is estimated.The RWC Global Growth Absolute Alpha Fund launched 16th February 2010. 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*Average Gross exposure – Fund launched with one Prime Broker (restricting gross exposure) - a second Prime Broker was added during March 2011.

% of up-months% of down-

monthsTotal Return

Average Gross exposure*

Average Net exposure

RWC Global Growth 60% 40% 4.1% 108.2% 27.9%

2010RWC Global

Growth- -0.4% 1.3% -0.9% -3.1% -1.4% 1.4% 0.3% 0.8% 3.7% 1.0% 2.2% 4.9%

2011RWC Global

Growth -0.4% 0.4% -0.6% 2.0% -0.3% 0.3% 1.2% -3.4% 0.2% 2.5%* 1.8%*

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

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• Joined RWC Partners in November 2009 to set up a global equity long/short team and fund focused on rapidly changing and innovating companies

• Partner, Cheyne Capital LLP, London, 2004 – 2009 • Portfolio Manager for a Global TMT oriented strategy from 2004 until early 2009 with an

unlevered CAGR of 9.0%• Became a Partner in 2007

• Co-Founder, Avocet Capital, London, 2001 – 2003• One of the original founders of the firm and helped co-launch the fund at Euro 85 million• Top alpha contributor for the fund

• Portfolio Manager, Morgan Grenfell Asset Management, London, 1997 – 2000• Initially managed long only Emerging Markets Funds and then Continental European Funds

(Funds managed USD 1.4 billion) for institutional clients• Outperformance vs Benchmark and House Average for every quarter and asset class

• Associate, Europa Capital Management, Prague, 1995 - 1997• Undertook private and public equity investments in Eastern and Central Europe on behalf of

Odyssey Partners and Templeton Direct Advisors • Fund returned 30% investing in private and public companies in Central and Eastern Europe

• Bachelor of Commerce, McMaster University, 1990 – 1994• Chartered Financial Analyst

Priya Kodeeswaran – Portfolio Manager, Head of Team

Source: January 2004 – May 2009, Cheyne Capital (Note: Returns shown for the period between January 2004 and May 2009 reflect the profit and loss earned on the gross market value of that book on a monthly basis generated by the capital book managed by Priya at Cheyne Capital during that time. The data, which was supplied by the Executive Committee of Cheyne Capital, does not make provision for any performance fees or other implied leverage.)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

Investment Analyst – Vivek Ghiya

• Joined RWC Partners as an investment analyst in July 2010 • Investment Analyst, Hasma Capital Advisors, London, 2008-2010

•  Asset Allocation and manager selection for a fund run on Endowment model

• Equity Research Analyst, Fidelity Investment, London, 2008-2008• Covering analyst for European mid-cap Telecommunications and Satellite industries

• Programme Manager, Oracle Corporation, San Francisco, 2001-2006• Advised Fortune 500 clients in implementation of supply-chain enterprise applications

• Master of Business Administration, The Wharton School, 2006-2008• Master of Science, University of Georgia, 1995-1997• Bachelor of Technology, Indian Institute of Technology, New Delhi, 1991-1995

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Investment Resource – Andrew Ballard• Assistant Portfolio Manager, RWC Pilgrim Fund, London, 2001 to Present

• Co-managed Anglo-European Fund as it grew from $50 million to over $1 billion• Primary responsibility for Continental Europe portion of the portfolio• Sector responsibilities include technology, telecoms, oilfield services and medical

technology• Eurohedge “UK Long-Short Fund of the Year” 2005

• Partner, ZAN Partners, London, 1999 to 2001 • Established start up long-short equity fund and wealth management business

• Vice President, Goldman Sachs Equities Arbitrage, London, 1997 to 1999• Invested in merger arbitrage, special situations, private equity transactions• Initial responsibility for European emerging markets, transitioned to Continental

European markets• Principal, Europa Capital Management, Prague, 1994 to 1997

• Invested in private and public equity market transactions on behalf of Odyssey Partners and Templeton Direct Advisors

• Fund returned 30% in a period when local equity markets were down• Associate and Analyst, Goldman Sachs, New York, London and Moscow, 1988 to

1992• Analyst in debt capital markets, interest rate swaps, and new product development• Promoted to Associate in mergers & acquisitions

• BA, Princeton University, 1987, International Affairs, MBA, Wharton School of the University of Pennsylvania, 1994

Placeholder

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How are we Differentiated?

• Investment focus is on companies or sectors undergoing rapid change or innovation

• Change & Innovation both create and fade supernormal profits

• Business models are often the most dynamic in TMT but other rapidly changing companies/industries provide similar investment opportunities

• Change & Innovation also create a dislocation between a company’s share price and its prospects

• High dispersion of future earnings estimates is one of the key indicators of an alpha opportunity

• The opportunity is maximised by focusing on the assumptions embedded in the earnings estimate outliers

• High dispersion of predicted future earnings will lead to both overvaluation (shorts) and undervaluation (longs)

• Global long short provides the optimum opportunity set• Global remit allows cross border comparisons of

valuation and opportunity on an objective basis

Companies/sectors with rapid innovation

High EPS dispersion

Optimum Opportunity Set

Global Equities

• Particularly relevant for technology, consumer discretionary and capital goods

• Often a fertile ground for long/short investing or timing an entry into a turnaround stock

Types of Investments

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Investment Types Cyclical

Product Cycle Timing

Cyclical Investing • e.g. Semis and SPE

• e.g. Intel/AMD

• Used to be a fertile ground for tech investors• Due to the large amount of capital focused on these type

of investments, it is less useful to us, although it does offer opportunities from time to time

• These are investments where a particular product or demand trend looks sustainable for a reasonable duration or unsustainable in the case of a short

Classical Investments

Classical Food chain/Data point investing

Thematic

• e.g. Apple (Sep 08), Google (Mar 09)

• e.g. ANAD, ASMPT

• e.g. Garmin&Tom2 (07-08), Crox (07-08)

• Good companies, Good Business Models, Good Management

• Rare to find at a reasonable price but panic provides entry points

• Where a company transforms from its traditional business area and the wrong types of analysts are often still covering the stock providing the opportunity for a surprise in estimates and metrics

• Company’s business models are built upon assumptions and key variables that are subject to rapid change creating investment opportunities on the long and short side

• Companies where ROCE is greater than ROA providing an opportunity to return excess cash to shareholders. Especially interesting when there is a management change

“Arbitrage”

Analyst Coverage “Arbitrage”

Business Model “Arbitrage”

Capital Structure “Arbitrage”

• e. g. Carphone Warehouse (06-08), Continental (04-07)

• e.g. Novatel (07-08), Logitech (08-09)

• e.g. Digicom (05-07)

Idea generation• Themes• Management access• Top down screening• Bottom up estimate dispersion

screening

Risk - Reward• Valuation – intrinsic, relative,

historic• Price levels established – entry,

exit, risk• Risk – Reward ratio

Idea check

• Fundamental analysis

• Sentiment check

• Holders review – marginal buyer/seller

• Industry expert network

Implementation

• Sizing of position – conviction, liquidity, diligence, event risk

• Timing and catalysts

• Soft stop automatically calculated

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The Investment Process

Idea generation• Bottom up estimate dispersion

screening• Top down screening• Themes• Management access

Risk - Reward• Valuation – intrinsic, relative,

historic• Price levels established – entry,

exit, risk• Risk – Reward ratio• Short interest analytics

Idea check

• Fundamental analysis

• Sentiment check

• Holders review – marginal buyer/seller

• Industry expertise

Implementation

• Sizing of position – conviction, liquidity, diligence, event risk

• Timing and catalysts

• Soft stop automatically calculated

RFMD example – Idea Generation from Estimate Dispersion

Left Tail Assumptions• Demand in end markets stays

depressed• Internal Fab utilisation stays

depressed at just above trough levels for most of the year

• This results in a depressed GM and –ve OM leading to a –ve EPS forecast

Right Tail Assumptions• Demand in end markets (principally

wireless handsets) recovers from depressed levels

• Utilisation on their internal capacity returns to more normal levels of 65-75% from q1 trough levels of 25%

• This drives substantial GM and OM leverage driving EPS upside

FY10e PE 15x for high end estimates

FY10e PE 48x for mean EPS estimates

FY10e PE n/a for low end estimates

Source: Bloomberg estimates, June 2009

Dispersion of Earnings estimates

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Portfolio Construction & Risk Management

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Gross and Net Exposure

• Gross Exposure reduced at time of performance stress and correlation spikes

• Overall Market Risk will be minimised through a lower net exposure

• Returns will be enhanced from subsector allocation

Event and Liquidity Management

• Ability to liquidate 100% of the portfolio within one day

• Minimize non-catalyst driven exposure during reporting season

Portfolio Construction

• Position sizing is a function of conviction, diligence, liquidity and event timing

• Portfolio will be tilted towards the stocks with the best risk-reward ratio

Short Book Management

• Single Stock Shorts will be absolute in nature and will not be used as a market risk tool

• ETFs and Futures will be used to manage optimal net exposure in the absence of single short stock ideas

• ETFs limited to 10% and ETFs and Futures combined will be limited to 15% in aggregate

• Stop losses will be soft and identified as 1/3 of targeted return or 15% whichever is more conservative

Geographic Exposure

• Typically 50% of gross exposure held within US markets, 20-30% within European markets

• 20-30% to come directly from Asian listed securities

• Additional Asian investment exposure will come from US/Euro listed companies that are exposed to Asian growth

Permitted / Maximum Range Typical Exposure

Long / short ratio n/a 1.5:1

Gross Range n/a Average 150%

Net Range n/a -30% to +50%

No of Long Positions n/a 25

No of Short Positions n/a 35

Largest Long Max 10% (at market) Average 3.5%

Largest Short Max 10% (at market) Average 1.5%

Illiquids There will be sufficient liquidity to meet redemptions at all times

90% of the portfolio invested in stocks with Mkt cap greater than $ 1 billion

VaR(99% / 1 month) 20% Maximum

9% Internal Maximum

n/a

Counterparty Exposure 10% of NAV to any single counterparty n/a

Concentration Limits Sum of position >5% cannot exceed 40% of NAV n/a

Portfolio Construction & Risk Management

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RWC Global Growth Absolute Alpha Fund – Term Sheet

• Launch Date Launched February 2010• Liquidity Daily subscriptions & redemptions / daily NAV• Fees 2% AMC / 20% performance fee• Performance Fee HWM Quarterly high water mark• Performance Fee hurdle US LIBOR (or share class currency equivalent)• Fund structure Luxembourg SICAV (UCITS IV) - sub-fund of the “RWC Funds”

SICAV• Currency USD base currency – EUR/GBP hedged classes available• UCITS IV designation “Sophisticated Fund” – VaR approach to exposure

20% VaR monthly with a 99% confidence level• Administrator Banque Privée Edmond de Rothschild Europe• Instruments used Long positions – cash equities / CFDs / ADRs

Short positions – CFDs, Futures, Swaps• Local Registrations Luxembourg, UK, Sweden• Tax UK

Appendices

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Permanently High

Energy

Permanently High

Where do the Opportunities lie?

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Core Sectors Non-Core Sectors No-Coverage

Sector TechnologyConsumer

DiscretionaryTelecoms Industrials

Consumer Staple

Healthcare Materials Financials Utilities

Earnings Estimate Dispersion

Permanently High

Permanently High

Medium MediumHigh – BRICLow - West

High in some areas

Currently High

Low

Reason for Dispersion

• Technology - short product and business cycles creates substantial earnings dispersion. Rapid product/service innovation can disrupt existing industry practice.

• Consumer Discretionary (media, leisure, retail) - increasingly transformed by technology and distribution changes.

• Telecom - disrupted by the fixed to mobile conversion and convergence with media industry.

• Industrials - impacted by the high secular growth in Asia/EM.

• Materials & Energy sectors - cyclicals driven by global supply and demand.

• Alternative Energy/Clean technology - substantial earnings dispersion due to regulatory environment, technology innovation, and global competitive shifts.

• Medical technology - shares similar attributes to technology sector.

• Consumer staples – low earnings dispersion but occasional opportunities will arise in rapidly developing Asia.

• Financials - earnings dispersion is currently high due to the sub-prime meltdown and credit cycle.

Opportunities for Capital Allocation

• High - dedicated global Long-Short capital focused on these high EPS dispersion sectors is lower than has historically been the case.

• Global focus allows us to follow the value transfer across regions and make money from both the long and short side.

• Low - there is significant global Long-Short capital focused on the broader Materials and Energy sectors.

• High - the subsectors of Clean Tech/Alternative Energy are considered key areas for capital allocation.

• Low - our process holds no advantage in generating alpha in Financials and Utilities.

The TMT Subset Opportunity

• Tech, Media, and Telecom fluctuates between 10 -22% of developed markets and up to 40% of some Asian markets.

• The cyclicality within TMT is pronounced versus the overall market.

• In Asia, the growth of Telecom and Media are still in the early phases of market growth. This represents a substantial investment opportunity for the fund.

19Data: November 2009

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Sector Market Cap as % of Total Market Cap (2009)

Tech Telco Media

Exploiting TMT Inefficiencies – Fertile Ground for Stock Picking

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• Since the bubble, there has been a significant spread in single stock returns within TMT on an annual basis.

• Historically, there is a disconnect between investors with a sole financial understanding and view of TMT companies vs. those technologists who focus purely on the product/technology and ignore the financials.

• There is a high barrier to entry on understanding BOTH of the above factors simultaneously.

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Performance of Strategy - Monthly Returns & Net Exposure

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

2004GGF 5.7% 0.3% -1.2% -1.1% -2.0% -1.0% 0.9% 1.8% 5.6% 3.3% -1.7% 2.5% 13.5%

Net Exposure 6.4% 3.0% 8.2% 7.0% 4.6% 8.9% 1.8% -2.2% 4.9% 13.3% 24.7% 41.4% 10.0%

2005GGF 4.9% -0.8% -0.6% 0.4% 0.3% 4.3% 5.2% 1.7% 0.8% -2.1% 1.1% 2.7% 19.1%

Net Exposure 41.9% 32.5% 16.6% 7.7% 20.8% 26.4% 28.5% 30.5% 26.5% 19.8% 19.4% 29.2% 25.0%

2006GGF 1.7% -0.6% 1.3% 2.8% -3.7% -3.5% 1.9% 1.5% 1.5% -0.9% 3.9% -1.1% 4.5%

Net Exposure 32.5% 25.5% 29.7% 38.2% 25.9% 13.3% 11.7% 22.3% 23.7% 22.8% 29.3% 23.3% 25.0%

2007GGF 1.9% 0.3% 0.5% 1.1% 1.4% 1.4% 0.7% -0.6% 1.0% 3.5% -3.3% 1.6% 9.7%

Net Exposure 21.2% 16.6% 11.0% 18.2% 25.2% 20.6% 14.5% 12.2% 14.2% 19.0% 17.9% 9.6% 17.0%

2008GGF -3.5% -0.7%  0.3%-  2.1% 1.0%  -0.6% 0.5%  0.6% -3.3% -1.9% -1.1% -0.4% -7.4%

Net Exposure 6.8% 13.4% 16.3% 14.1% 12.3% 7.4% 6.8% 10.7% 10.9% 19.5% 17.1% 19.4% 13.0%

2009GGF 1.8% -0.1% 2.0% 6.6% n/a n/a n/a n/a n/a n/a n/a n/a 10.5%

Net Exposure 24.6% 23.3% 41.2% 59.3% n/a n/a n/a n/a n/a n/a n/a n/a 37.0%

2010

RWC Global Growth

- -0.4% 1.3% -0.9% -3.1% -1.4% 1.4% 0.3% 0.8% 3.7% 1.0% 2.2% 4.9%

Net Exposure* - 7.5% 16.9% 28.8% 22.9% 23.2% 13.9% 12.0% 20.0% 28.8% 33.0% 34.5% 22.8%

2011

RWC Global Growth

-0.4% 0.4% -0.6% 2.0% -0.3% 0.3% 1.2% -3.4% 0.2% 2.5%* 1.8%*

Net Exposure* 37.8% 37.2% 32.2% 33.7% 39.3% 32.1% 37.6% 28.1% 28.3% 29.1%* 32.3%

Source: January 2004 – May 2009, Cheyne Capital (Note: Returns shown for the period between January 2004 and May 2009 reflect the profit and loss earned on the gross market value of that book on a monthly basis generated by the capital book managed by Priya at Cheyne Capital during that time. The data, which was supplied by the Executive Committee of Cheyne Capital, does not make provision for any performance fees or other implied leverage.)Data from RWC Partners. Performance details are calculated on a NAV-NAV basis, net of fees with income reinvested. Share class: B USD. Past performance is not a guide to the future. *October MTD performance is estimated.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*Average net exposure

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Risk Management

Portfolio Risk Management• Portfolio risk focused at a stock level • Portfolio analytics function gives output on a wide range of portfolio

level risks and attribution• Fund is highly liquid with position sizes matched to stock liquidity

Internal Risk Management & Oversight• Separation of compliance, risk monitoring & portfolio management• Independent Risk Manager reporting directly to CEO

• Daily independent review of stock, market, sector, style / thematic and macroeconomic exposures

• Exposures considered within the context of the risks observed and evolving within the market

• Bespoke risk analytics that are fully integrated with exposure analytics

• Significant risks discussed directly with PM and highlighted to CEO who has the ultimate oversight of risk. CEO has regular review meetings with the PM teams

Independent Fund Monitoring• RWC Asset Management LLP act as the fund’s advisor• BPERE (Rothschild) are independent administrator & custodian• Deutsche Bank A.G. and UBS A.G. have been appointed as prime

brokers*• AB Fund Services appointed for local Luxembourg and UCITS

oversight• Counterparty exposure limited to 10% of NAV• Daily production and reconciliation of NAVs• Daily cash reconciliation• Independent Board of Directors speak with portfolio manager and

CEO once a quarter

Corporate Risk Management• Revenue is diversified across investment teams, products and

clients. • Business is managed to be profitable before performance fees are

generated• An independent third party consultant reviews our compliance

infrastructure twice a year• Front end order management system (with trip wires and full audit

trail), Latent Zero, being implemented

*Fund launched with one Prime Broker - a second Prime Broker was added during March 2011.

Spikes in Global Correlations lead to opportunities for Stock Picking

23Source: CS Holt

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S&P 500 Long-Term Correlation Trends

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Fund performance under varying correlation environments

24Source: RWC Partners and Credit Suisse Holt Global Market Correlation Watch September 2011

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S&P 500 Sector 1-month correlation Europe Top 600 1-month correlation

Asia Ex-Japan Top 500 1-month correlation RWC Performance

Recent Stock Example

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Content is King

• The Liberty Starz content contract is arguably the content deal that built Netflix and allowed them to grow into a 25 million subscriber business

• Starz was responsible for up to 20% of Netflix’s actively viewed streaming content when Netflix launched although this has come down to 8% in 2011 according to Netflix

• The existing streaming contract with Netflix contract is currently $30M/yr and expires in 2012. Renewal Estimates were pegged at up to $300 million

• When the fund bought a position in LZTZA in 2010, street estimates did not attribute any value to a higher price for Starz streaming content contract with Netflix as the deal had not been agreed yet. This provided an excellent risk reward ratio with catalysts

• While 2011 estimates did not increase, 2012 estimates did as the renegotiation deadline approached. Since the termination of discussions, estimates have come down marginally but the value of the content still exists

Source: Bloomberg

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LSTZA FY11 EPS Estimates

BEst Standard EPS Adjusted+ 2011* A High Estimate 2011* A

Low Estimate 2011* A Price

Fund Entered the Position

LSTZA-NFLX Talks Broke Down

Fund Trimmed Postion

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LSTZA FY12 EPS Estimates

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LSTZA-NFLX Talks Broke Down

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Inflection Points in a Growth Stock

• Netflix is your classic growth stock which the Global Growth Fund actually owned at one point as the subscriber economics were initially very attractive

• Content costs increased at a substantial rate but so did subscriber growth allowing reinvestment into future content.

• Future Content commitments are pegged at $2.4 billion in while quarterly expensed content costs have climbed from $225 million to $430 million. Cash and ST investments are at $176 million

• The change point came with a price increase announced in July 2011 (60% increase effective Sept, 2011) and then the collapse of the Starzs content deal which was responsible for 8-20% of Netflix subscribers.

• 15th September 2011 – Netflix lowers domestic subscriber guidance by 1 million subscribers, causing the stock to drop by 38% in one week

Source: Company Reports; Bloomberg, Bernstein

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Netflix Subscribers v/s Quarterly Content Cost

Quarterly Content Cost ($M)- LHS Subscribers (M)- RHS

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5%

10%

15%

20%

25%

30%

35%

0

50

100

150

200

250

300

350

Mar-09 Jul-09 Oct-09 Jan-10 May-10 Aug-10 Nov-10 Feb-11 Jun-11 Sep-11 Dec-11

Netflix Share Performance v/s Netflix Household Penetration

Netf lix Penetration of US Broadband Households Share Price

1

2

3

1. Price increase announced2. Negotiations with Liberty Starz break down. Price increases take ef fect3. Netf lix lowers subscriber guidance

Short Position Entered

28

Contact Us

Please contact us if you have any general questions or would like to discuss any of our strategies

RWC Partners Ltd

60 Petty France

London

SW1H 9EU

Tel: +44 20 7227 6000

Fax: +44 20 7227 6003

Email: [email protected]

29

Risk Warnings & Disclaimers

This 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.