RWC Enhanced Income Fund F E B R U A R Y 2 0 1 4 RWC Yields are - - PowerPoint PPT Presentation

F E B R U A R Y 2 0 1 4

RWC Enhanced Income Fund

For Professional Investors and Advisers Only

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Source: Bloomberg, December 2013

Yields are low across all asset classes

1 2 3 4 5 6 7 8 Base Rates UK 2 Year Barclays Capital IG Corporate Bond Index UK 10 Year FTSE 350 Dividend Yield UK 30 Year RWC Enhanced Income Yield (%) RPI, 2.6%

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Equities have shown alarming volatility

Our objective is to deliver an attractive and stable yield

Source: Bloomberg, December 2013

3000 3500 4000 4500 5000 5500 6000 6500 7000 7500 1998 2000 2002 2004 2006 2008 2010 2012 FTSE 100

• 50%
• 50%

2013

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RWC Enhanced Income Fund

Offers higher than average yield

• UK equity income fund targeting 7% yield
• Underlying fund yields c. 4%
• Yield is ‘enhanced’ through the use of covered calls

But with lower than average volatility

• High quality, lowly valued cash compounders
• Call overwriting strategy lowers volatility
• Willingness to hold cash
• Other methods of capital protection e.g. put spread

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How do we produce the income?

How the Strategy Works

• Current underlying portfolio dividend yield of c. 4% enhanced to 7%
• Fund sells 3 month call options on each stock in the portfolio for 1% premium (x 4 quarters=4%)
• 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

Example:

Vodafone option Vodafone share price 200p Option Price 1% = 2p 3 month option Strike level 220p = c. 110%

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Lower volatility produces smoother income streams

Yield 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0%

Source, RWC

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How do we lower the volatility?

• Call over writing strategy reduces volatility
• In a falling market, few prices go through strikes and hence premium income is retained
• Willingness to hold cash when dividend yields and projected returns are low
• 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
• High quality, lowly valued cash compounders
• This does not mean paying ANY price for Consumer Staple stocks!

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Expected cash levels Percentage of fund distribution arising from company dividends Expected put protection levels

50% 100% 75% 25% High Minimum Low Maximum High Minimum Low Maximum

Countercyclical cash and put protection levels

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Factor Yes No

Size Large to mega cap Small to mid cap Risk Lower risk stocks Higher risk stocks Valuation Not deep value Deep value Profitability High ROIC Low ROIC Implied volatility Mid level volatility Extreme low & high

Would I rather an average 120% strike or an average 110% strike?

• Not enough information. It all depends on the underlying stocks

What stocks are suited to the strategy?

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Growth Rates for Next plc 2003 - 2013

Source: RWC, 2012, company report and accounts *Dividends reinvested in stock

Stable cash compounders suit the strategy

Compounding cash flow drives value creation

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Lowly valued cash compounder – GlaxoSmithKline

• 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 12x 2012 earnings; 5.4% dividend yield

Source: Bloomberg, company report and accounts

5 10 15 20 25 30 35 40 45 20 40 60 80 100 120 140 160 180 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013e 2014e EPS (LHS) DPS (LHS) P/E (RHS) Share Price rebased (RHS)

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7% 10% 4% 6% 21% 8% 7% 2% 2% 4% 0.3% 20% 3% 3% 0.6%

Current Portfolio Breakdown – RWC Enhanced Income Fund

Source: RWC, December 2013. Stock position less than 2% excluded

Technology Microsoft 2% Food & Beverage Unilever 2% Other Financials Close Brothers 2% Insurance Legal and General 3% RSA Insurance 2% Energy Royal Dutch Shell 4% BP 4% Pharmaceuticals GlaxoSmithKline 5% Astra Zeneca 5% Merck & Co 3% Pfizer 3% Eli Lilly 2% J&J 2% Swaptions Cash Industrials Smiths Group 3% Media B Sky B 4% Reed Elsevier 3% Telecoms Vodafone 5% Deutsche Telecom 4% Retailers Next 4% Food Retailers Tesco 3% Wal-Mart 2% Index Put Options Utilities Centrica 3%

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• 15%
• 10%
• 5%

0% 5% 10% 15% 20% 25% Year to end December 2013 - drawdown*

2013 Performance

RWC Enhanced Income FTSE All-Share

Reducing drawdown, lowering volatility

• 15%
• 10%
• 5%

0% 5% 10% 15% 2012 2012 - drawdown*

2012 Performance

RWC Enhanced Income Fund FTSE All Share

Source: Bloomberg, RWC * Refers to periods 19th March 2012 to 1st June 2012 and 21st May to 24th June 2013 ** Average 30 day volatility for January 2012 to end of December 2013 Equity index used is FTSE All share (TR)

0% 2% 4% 6% 8% 10% 12% 14% RWC Enhanced Income FTSE All-Share

Volatility - 30 day rolling**

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Source: RWC/Bloomberg, December 2013 RWC Enhanced Income Fund volatility calculated on non-swing adjusted unit prices

Historic volatility closer to high yield bonds than equities

0% 5% 10% 15% 20% 25% Jan12 Mar12 May12 Jul12 Sep12 Nov12 Jan13 Mar13 May13 Jul13 Sep13 Nov13

30 day rolling realised volatility

RWC Enhanced Income Fund FTSE All Share Index BBG Global HY Corp Bond Index

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Sector Volatility

Pharmaceuticals Retail Integrated Oil VIX Index

Trade Update

Source, RWC, Bloomberg

Strike Levels Capped Stocks Covered

Roll 27 106% 18 24 Roll 28 106% 16 22 Roll 29 106% 15 24 Roll 30 106% 12 22 Roll 31 106% 5 23 Roll 32 107% 9 24 Roll 33 107% 8 24 Roll 34 107% 2 26 Roll 35 109% 8 26 Roll 36 108% 2 21 Roll 37 108% 10 24 Roll 38 108% 13 26 Roll 39 107% 8 25 Roll 40 108% 25 Roll 41 108% 24 Roll 42 107% 25 Roll 43 109% 25

• Quarter 1 was particularly difficult for a covered call strategy
• Low volatility, sharply rising market
• Quarter 2 and 3 was a big improvement
• Slight increase in volatility led to higher strikes, less aggressively rising market
• Quarter 4 was mixed
• Strong equity markets in October led to increased option payouts, November and December were neutral

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RWC 16 85 90 95 100 105 110 115 120 125 Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13

Covered Call TR Contribution

Covered Portfolio Uncovered Portfolio

Trade Update

Fund Distributions

Date Unit Price (B Share Class) Distribution (£) Yield %

Sep-11 81.9 1.66 1.75% Dec-11 84.5 1.48 1.81% Mar-12 87.7 1.50 1.78% Jun-12 86.4 2.06 2.35% Sept-12 87.3 1.43 1.67% Dec-12 87.3 1.37 1.57% Mar-13 92.7 1.20 1.37% Jun-13 91.2 2.10 2.27% Sep-13 90.6 1.45 1.59% Dec-13 92.0 1.36 1.50%

The Fund Continues to Deliver the Income Target

*The Yield is calculated as the summation of quarterly percentage distributions. Individual quarterly distributions are calculated based on the end of the previous quarters unit price. Source: RWC

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Summary

• Fund aims to deliver 7% yield, low volatility and element of drawdown protection
• Has delivered against these objectives and is attracting support
• RWC Enhanced Income Fund offers a unique approach in a difficult market

Stock Market Environment

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13.30% 1.40%

• 0.95%
• 1.80%
• 4.30%
• 6%
• 4%
• 2%

0% 2% 4% 6% 8% 10% 12% 14% CCC BBB BBB AAA AAA 0% 5% 10% 15% 20% 25% 30% 35% FTSE Small Cap FTSE 250 FTSE 100

2013 was another year of elevated appetite for risk

Source: Bloomberg, Bank of America Merrill Lynch

UK Equity Indices: 2013 Returns BAML Fixed Income Returns Global Equity Indices Total Return (USD) Best Performing Members on the FTSE 100 in 2013

59.3% 38.8% 32.4% 30.5% 26.1% 21.6%

• 2.4%
• 10%

0% 10% 20% 30% 40% 50% 60% Japan (JPY) Russell 2000 US Japan Europe UK EM 117.2 100.7 100.6 90.5 85.0 78.3 72.1 65.9 64.6 64.2 20 40 60 80 100 120 140 International Consolidated Airlines Easyjet Hargreaves Lansdown ITV Sport Direct International Ashtead Group Travis Perkins Persimmon Lloyds Banking Group BT Group

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Sentiment is very positive again…

Source: Bank of England Financial Stability Report June 2013, Bank of England Financial Stability Report November 2013 Bank of America Merrill Lynch, Emerging Portfolio Fund Research Global, JP Morgan, EPFR

Corporate high-yield bond spreads 0.00 500.00 1000.00 1500.00 2000.00 2500.00 3000.00 3500.00 2007 2008 2009 2010 2011 2012 2013 £ $ € Emerging markets NYSE Margin Debt Fixed-income volatility increased in the summer before falling close to historical lows US high-yield loan issuance reached record highs, with covenant-lite issues increasingly prevalent

100 200 300 400 500 600 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Other Covenant-lite volume

50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000 1959 1963 1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011

$m

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Even the Dot Com is back!

Source: Bloomberg

50 100 150 200 250 300 350 400 450 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14

Amazon

1000 2000 3000 4000 5000 6000 7000 8000 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14

Asos

50 100 150 200 250 300 350 400 450 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14

Netflix

10 20 30 40 50 60 70 80 06-Nov-13 26-Nov-13 16-Dec-13 05-Jan-14 25-Jan-14

Twitter

2014 P/E 100x 2014 P/E 100x 2014 Price to Sales 40x 2014 P/E 165x

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10 20 30 40 50 60

Greece Spain Italy Cyprus Portugal Slovak Republic Bulgaria Poland France Ireland Hungary Latvia EMU Sweden Romania Lithuania Belgium Slovenia UK Luxembourg Finland Czech Republic Estonia Malta Denmark Netherlands Austria Germany

100 115 130 145 160 175 190 205 220

US 2002 - 07 UK 2002 - 07 Japan 1985-90 Korea 1994 - 98 China 2007 - 12e

Non-Financial Debt/GDP (%)

t - 6 t - 5 t - 4 t - 3 t - 2 t - 1

… but some large uncertainties remain

Europe China Central Banks Debt levels in advance economies have risen Youth unemployment rate (%) using latest available data Five Credit Bubbles Comparison of central bank balance sheets – rebased to 100 May 2006 Debt-to-GDP ratios of selected advance economies

Source: Bloomberg, BOE, Fed, BOJ, ECB, US Congressional Office, Eurostat, Fitch , Bank of England Financial Stability Report, November 2013

100 200 300 400 500 1999 2001 2003 2005 2007 2009 2011 2013 BOE FED ECB SNB BOJ PBoC

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35% 40% 45% 50% 55% 1947 1955 1963 1971 1979 1987 1995 2003 2011

Growth remains elusive and earnings continue to be under some pressure

Source: Bloomberg, Societe Generale, Thomson Reuters I/B/E/S *US non-financials

• 40
• 30
• 20
• 10

10 20 30 40 1999 2001 2003 2005 2007 2009 2011 2013 Sales growth (%) EBIT growth (%)

US ratio of negative to positive EPS guidance – fastest pace of negative guidance EVER! Anaemic Sales and margins under pressure*

0% 2% 4% 6% 8% 10% 12% 1947 1955 1963 1971 1979 1987 1995 2003 2011

Wage share of GDP Corporate Profit share of GDP

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Quantitative easing has caused a disconnect between prices & fundamentals…

Source: Bloomberg, Citi Research, Haver Analytics, MSCI, Societe Generale

90 100 110 120 130 140 150 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14

Price up, EPS Flat = Biggest Mid-Cycle Re-Rating in Over 40 Years

MSCI World EPS 300 350 400 450 500 550 600 600 800 1000 1200 1400 1600 1800 2009 2010 2011 2012 2013 2014

QE Doesn't Mean Equities Must Rise

MSCI World (LHS) CRB Index (RHS)

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Cash on balance sheets is increasing but debt is growing faster

Source: Bloomberg, Société Générale

100,000 200,000 300,000 400,000 500,000 1990 1993 1996 1999 2002 2005 2008 2011

Same story in the UK

Total Debt Cash Net Debt

• 200,000
• 100,000

100,000 200,000 300,000 400,000 500,000 1996 1998 2000 2002 2004 2006 2008 2010 2012

Reality is that companies are using debt to produce EPS growth

Net share buybacks Change in debt 500 1,000 1,500 2,000 2,500 3,000 1998 2000 2002 2004 2006 2008 2010 2012

US corporates net debt is higher than 2008

Total Debt Cash Net Debt

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Hence market valuations look full

Source: Bloomberg, Robert Shiller, Societe Generale, Sanford Bernstein

5 10 15 20 25 30 35 40 45 1881 1889 1898 1906 1914 1923 1931 1939 1948 1956 1964 1973 1981 1989 1998 2006 2014

Shiller C.A.P.E. 1881 - 2014

2 4 6 8 10 12 14 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014

Continetal Europe: Median Price-to-Cash Flow

0% 1% 2% 3% 4% 5% 6% 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014

Continetal Europe: Median Dividend Yield

0% 2% 4% 6% 8% 10% 12% 14% 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014

UK: Median Dividend Yield

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The most stable businesses remain highly valued

Source: Bloomberg

4 4.5 5 5.5 6 6.5 40 45 50 55 60 65 70 75 80 85 90 2009 2010 2011 2012 2013 Price BEst Standard EPS Adjusted+ 2013* A

Pepsico

P/E 19.1x, DY 2.7%

2013 % Change

Earnings: -1.8%, Price: +19.5%

4 4.2 4.4 4.6 4.8 5 5.2 5.4 5.6 5.8 40 45 50 55 60 65 70 75 80 85 2009 2010 2011 2012 2013 Price BEst Standard EPS Adjusted+ 2014* A

Procter & Gamble

P/E 18.7x, DY 3.1%

2013 % Change

Earnings: -0.2%, Price: +15.7%

3 3.2 3.4 3.6 3.8 4 4.2 4.4 4.6 4.8 30 35 40 45 50 55 60 65 70 75 2009 2010 2011 2012 2013 Price BEst Standard EPS Adjusted 2013* A

Nestle

P/E 18.5x, DY 3.4%

2013 % Change

Earnings: -5.4%, Price: +4.3% 0.95 1.00 1.05 1.10 1.15 1.20 5 10 15 20 25 Feb-09 Nov-09 Aug-10 May-11 Feb-12 Nov-12 Aug-13 Price BEst Standard EPS Adjusted+ 2014* A Diageo 2013 % Change Earnings; -9%, Price; +10% P/E 18x, DY 2.8%

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As are many of the more cyclical names

Source: Bloomberg

0.8 0.85 0.9 0.95 1 1.05 1.1 1.15 1.2 1.25 1.3 2 4 6 8 10 12 14 16 18 2009 2010 2011 2012 2013 Price BEst Standard EPS Adjusted+ 2013* A

Travis Perkins

P/E 16.4x, DY 1.8%

2013 % Change

Earnings: +0.5%, Price: +44.9%

0.3 0.32 0.34 0.36 0.38 0.4 0.42 0.44 2 2.5 3 3.5 4 4.5 5 5.5 2009 2010 2011 2012 2013 Price BEst Standard EPS GAAP+ 2014* A

Marks and Spencer

P/E 15.3x, DY 3.5%

2013 % Change

Earnings: -9.6%, Price: +33.4%

0.2 0.21 0.22 0.23 0.24 0.25 0.26 0.27 0.28 0.29 0.3 1 1.5 2 2.5 3 3.5 4 4.5 2009 2010 2011 2012 2013 Price BEst Standard EPS GAAP+ 2014* A

Kingfisher

P/E 17.1x, DY 2.5%

2013 % Change

Earnings: -2.8%, Price: +41.4%

0.3 0.35 0.4 0.45 0.5 0.55 2 3 4 5 6 7 8 9 10 2009 2010 2011 2012 2013 Price BEst Standard EPS GAAP 2013* A

Compass

P/E 18.2x, DY 2.8%

2013 % Change

Earnings: +1.3%, Price: +15.9%

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Healthcare Sector – fundamental outlook improving

• Patent cliff
• Now past the peak
• Declining R&D Productivity
• FDA approved 37 NME’s in 2012 (18 first in class approvals) and 30 in 2011 vs long run average of 26
• Ex growth
• Spending forecast to rise from $956bn in 2011 to >$1200bn driven by ageing population and emerging
• markets. Prices +7.5% in US in 2012 (+17% for biologics)
• Pressure on government spending
• Pharmaceuticals only 10% of health budget and helps lower cost by preventing hospitalisation
• Obamacare
• Cost to industry of $80bn over 10 years better than many had feared and could end up as positive
• Cash flows wasted on unproductive R&D and M&A
• Change in management behaviour (cost reduction, dividends, share buybacks, disposals)

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European Telecom – some positive change at last?

• Last few years have been very tough – regulation, changes in consumer behaviour, economic

environment

• Regulation now improving – wholesale fibre, spectrum, consolidation
• “Quadplay” packages increasing in popularity – benefits incumbents and network owners (rather

than renters)

• Valuation Ratings are low – have started to improve
• Corporate activity picking up

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Appendix

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Liquidity Matters

0.0 0.5 1.0 1.5 2.0 2.5 3.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Monthly Turnover of European Equities (in € trillions)

2010 2011 2012 2013

US Primary Dealer’s Corporate Bond Inventories and Corporate Bonds Outstanding

Source: Barclays Capital, Bloomberg, Bank of England Financial Stability Report June 2013

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Legal and General

Source: Company accounts, Bloomberg, July 2013

50 100 150 200 250 300 350 400 450 1995 2000 2005 2010 2012

LGIM AuM (£bn)

5 10 15 20 25 30 35 2006 2012

Annuities (£bn)

200 400 600 800 1000 1200 1400 2001 2005 2012

UK Protection Premiums (£m)

200 400 600 800 1,000 1,200 2007 2008 2009 2010 2011 2012

Cash Generated (£m)

Invested in new business Post tax operational cash flow

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 2007 2008 2009 2010 2011 2012

IGD Capital Surplus (£bn)

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 2008 2009 2010 2011 2012 2013

Dividend per share (pence)

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Value in mining stocks?

Source: Company accounts, Bloomberg

1000 2000 3000 4000 5000 6000 Sep-88 Sep-90 Sep-92 Sep-94 Sep-96 Sep-98 Sep-00 Sep-02 Sep-04 Sep-06 Sep-08 Sep-10 Sep-12 Pence

Rio Tinto Share price

2 4 6 8 10 12 10 20 30 40 50 60 70 80 Oct-08 Feb-09 Jun-09 Oct-09 Feb-10 Jun-10 Oct-10 Feb-11 Jun-11 Oct-11 Feb-12 Jun-12 Oct-12 Feb-13 Jun-13 $ £

Rio Tinto Earnings Estimates

Price BEst Standard EPS Adjusted+ 2013* A 1 2 3 4 5 6 7 8 9 FY2012 FY2011 FY2010 FY2009 FY2008 FY2007 FY2006 FY2005 FY2004 FY2003 FY2002 FY2001 FY2000 FY1999 FY1998 FY1997 FY1996 FY1995 $

Rio Tinto EPS

20 40 60 80 100 120 140 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 $bn

Global Mining Capital Expenditure

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Risk Warnings & Disclaimers

This document contains information relating to RWC Partners Limited, RWC Focus Asset Management Limited and RWC Asset Management LLP (collectively, “RWC”), each of which is authorised and regulated in the United Kingdom by the Financial Conduct Authority (“FCA”), and services provided by them and may also contain information relating to certain products managed or advised by RWC (“RWC Funds”). RWC may act as investment manager or adviser, or otherwise provide services, to more than one product pursuing a similar investment strategy or focus to the product detailed in this document. RWC seeks to minimise any conflicts of interest, and endeavours to act at all times in accordance with its legal and regulatory obligations as well as its own policies and codes of conduct. The services provided by RWC are available only for and this document is directed only at, persons that qualify as Professional Clients or Eligible Counterparties under rules of the FCA. It is not intended for distribution to and should not be relied on by any person who would qualify as a Retail Client. In addition, although certain sub-funds of RWC Funds SICAV are recognised schemes for the purposes of Section 264 of the Financial Services and Markets Act 2000 of the United Kingdom (“FSMA”), all other RWC Funds are unregulated collective investment schemes for the purposes the FSMA, the promotion of which either in or from the United Kingdom is restricted by law. Accordingly, this document is issued and approved by RWC Limited for communication by RWC Partners only to, and is directed only at, persons reasonably believed by it to be of a kind to whom it may communicate financial promotions relating to unregulated collective investment schemes by virtue

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

persons outside the United Kingdom; (ii) persons having professional experience of participating in unregulated collective investment schemes; and (iii) high net worth bodies corporate, partnerships, unincorporated associations, trusts, etc. falling within Article 22 of the Order. Any unregulated collective investment schemes described herein are available only to such persons, and persons of any other description may not rely on the information in this document. Where this document is received outside the United Kingdom, it is the responsibility of every person reading this document to satisfy himself as to the full observance of the laws of any relevant country, including obtaining any government or other consent which may be required or observing any other formality which needs to be observed in that country. Nothing in this document constitutes an offer or solicitation by anyone in any jurisdiction in which such an offer is not authorised or to any person to whom it is unlawful to make such an offer or solicitation. Interests in RWC Funds are available only in jurisdictions where their promotion and sale are permitted. No person receiving this document may further distribute it, or copies of it, to any other person or publish any of its contents, in whole or in part, for any purpose. This document is provided for informational purposes only. The information contained in it is subject to updating, completion, modification and amendment. RWC does not accept any liability (whether direct or indirect) arising from the reliance on or other use of the information contained in it. The information set out in this document is to the reasonable belief of RWC, reliable and accurate at the date hereof, but is subject to change without notice. In producing this document, RWC may have relied on information obtained from third parties and no representation or guarantee is made hereby with respect to the accuracy or completeness of such information. Performance figures and data analysis within this document are shown and calculated net of fees and expenses and represent the reinvestment of dividends and income. Market index information shown within this document is included to show relative market performance for the periods indicated and not as standards of comparison. Such broadly based indices are unmanaged and differ in numerous respects from the portfolio composition of RWC Funds. This document does not constitute offer or solicitation to anyone in any jurisdiction of or to acquire interests in any RWC Fund. Investment in any RWC Fund should be considered high risk. Past performance is not a reliable indicator of future results and may not be repeated. The value of investments in RWC Funds and the income from them may fall as well as rise and may be subject to sudden and substantial falls. Changes in rates of exchange may cause the value of such investments to fluctuate. An investor may not be able to get back the amount invested and the loss on realisation may be very high and could result in a substantial or complete loss of the investment. In addition, an investor who realises their investment in RWC Funds after a short period may not realise the amount originally invested as a result of charges made on the issue and/or redemption of such investment. The value of such interests for the purposes of purchases may differ from their value for the purpose of redemptions. No representations or warranties of any kind are intended or should be inferred with respect to the economic return from, or the tax consequences of, an investment in RWC Funds. Current tax levels and reliefs may change. Depending on individual circumstances, this may affect investment returns. There is no guarantee that the securities referred to in this document will be held by RWC Funds in the future. Nothing in this document constitutes advice on the merits of buying or selling a particular investment. This document does not constitute investment, legal or tax advice. This document expresses no views as to the suitability or appropriateness of the RWC Funds or any other investments described herein to the individual circumstances of any recipient. Potential investors in the RWC Funds should refer to the latest relevant Full Prospectus, KIID and latest Annual and Interim Reports for more information. A United Kingdom investor may not have the right (otherwise provided under the FCA Handbook of Rules and Guidance) to cancel any agreement constituted by acceptance by or on behalf of an RWC Fund of an application for interests in an RWC Fund. In addition, most if not all of the protections provided by the United Kingdom regulatory structure will not apply to investments in an RWC Fund. Investors in an RWC Fund will not receive compensation under the Financial Services Compensation Scheme in the United Kingdom in the event that the fund is unable or likely to be unable to satisfy claims against it. This document is issued by RWC Partners Limited, a company registered in England and Wales (No. 03517613) with its registered address at 60 Petty France, London SW1H 9EU. .

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