1. 1 global investment management Market update & Harmony funds review Glyn Owen June 2012

2. 2 global investment management 1. Market environment

3. 3 global investment management This century has been bad for equity investing…… Source: Bloomberg, June 2012 10.1%

4. 4 global investment management ……but not for government bonds Source: Bloomberg, June 2012 133.3%

5. 5 global investment management Asset class returns YTD 2012 Source: Bloomberg, June 2012

6. 6 global investment management MSCI World since January 2008 Source: Bloomberg, June 2012

7. 7 global investment management 10 year government bond yield since January 2008 Source: Bloomberg, June 2012

8. 8 global investment management Map of the markets over the past three months Source: Bloomberg, June 2012

9. 9 global investment management Asset class returns 2012 YTD Source: Bloomberg, June 2012

10. 10 global investment management Asset class returns 2012 YTD Source: Bloomberg, June 2012

11. 11 global investment management Asset class returns 2012 YTD Source: Bloomberg, June 2012

12. 12 global investment management 10 year government bond spreads vs. Germany Source: Bloomberg, June 2012

13. 13 global investment management German vs. Spanish 10 yr government bond yields Source: Bloomberg, June 2012 January 2000 to date

14. 14 global investment management Performance of Chinese stock market vs. S&P500 Source: Bloomberg, June 2012

15. 15 global investment management Performance of Gold, Copper and Oil Source: Bloomberg, June 2012

16. 16 global investment management Currencies vs. USD Source: Bloomberg, June 2012

17. 17 global investment management 2. Market outlook

18. 18 global investment management Three critical issues Sustainability of growth in the US Structural slowdown in China – or hard landing? European imbalances

19. 19 global investment management US economic momentum is reasonable US labour market Source: Bloomberg, June 2012

20. 20 global investment management US construction: the only way is up? Source: Bloomberg, June 2012

21. 21 global investment management US consumer confidence Source: Bloomberg, June 2012

22. 22 global investment management One issue that will need to be tackled after November Source: Bloomberg, June 2012 US budget deficits

23. 23 global investment management China is landing Source: SocGen April 2012 GDP and industrial production

24. 24 global investment management Export sector flatlining Source: Bloomberg, April 2012 Chinese global exports (Real $)

25. 25 global investment management Imports slowing Source: SocGen April 2012 Chinese global imports (Real $)

26. 26 global investment management Credit tighter than during Lehmans Source: Bloomberg, June 2012 Chinese money supply

27. 27 global investment management Property bubble bursting? Source: Deutsche Bank, Soufun,.com, June 2012 Chinese property prices are falling (and few property downturns have ended well)

28. 28 global investment management Monetary easing in emerging markets Source: Bloomberg, June 2012

29. 29 global investment management Europe’s LTRO bounce is already slipping back Source: Bloomberg, June 2012 Citigroup’s Economic Surprise Index (EU)

30. 30 global investment management The European crisis is not simply debt Source: IMF, 2012 estimates Budget deficit to GDP Current account balance -2.2% -2.4% 5.2% -0.8% -1.9% -4.6% -1.7% -8.0% 1.0% -8.5% -4.2% -4.5% -2.1% -6.0% -7.4% -7.2%

31. 31 global investment management Unit labour costs since the launch of the euro Source: Bloomberg, June 2012

32. 32 global investment management Currencies vs. the Deutschemark Source: Bloomberg, June 2012

33. 33 global investment management German labour reform accelerated growth – can Italy Source: Bloomberg, June 2012

34. 34 global investment management Structural reforms

35. 35 global investment management The European stress / intervention cycle Don’t underestimate the political will to preserve the Eurozone Inflate, stagnate or default Austerity / growth European bail out of banks Issue of Eurobonds ECB – LTRO / SMP / rate cut Fiscal union

36. 36 global investment management Equity market valuations Source: Bloomberg, June 2012

37. 37 global investment management MSCI World P/E ratio since 1995 Source: Bloomberg, June 2012

38. 38 global investment management MSCI World price to book 1995 Source: Bloomberg, June 2012

39. 39 global investment management Tail wind of EM re-valuation now behind us Source: Bloomberg, June 2012 MSCI World PB vs. MSCI GEM PB

40. 40 global investment management Shiller PEs tell a similar story Trend PEs by region Source: Citi, January 2012

41. 41 global investment management High Yield Bond Spreads January 2008 to today Source: Bloomberg, June 2012

42. 42 global investment management Investment implications Interest rates to stay low for years US: fiscal consolidation post election growth risk in 2013 China: structural slowdown underway emerging markets generally slowing needs internal demand to pick up room for monetary loosening Europe: stress / intervention cycle to continue political will to preserve euromuddle through but risks are high

43. 43 global investment management Summary ‘New normal’ is now the consensus Global rebalancing set to continue for years We are five years into the deleveraging / rebalancing process Policy risks are high Likelihood of further monetary loosening The crisis has presented an extraordinary valuation opportunity After a decade of disappointments, equities will now surpass expectations

44. 44 global investment management Predictions for end 2012 Low growth environment - Global GDP growth 2-3% - Subdued inflation Low return expectations - cash close to zero - safe haven bonds 1-2% - credit & high yield 3-6% - equities 7-9% Valuation opportunity tactically Overall single digit returns expected

45. 45 global investment management 3. Harmony funds

46. 46 global investment management Introduction Risk profiled core solutions: Balanced and Growth Multi-asset, multi-manager, multi-currency Diversified between local and global investments, asset class, currency, manager and style Dynamic tactical asset allocation Available in five currency / regional bases: USD, GBP, EUR, AUD and Asian The Harmony range uses no derivatives, structured products or CDOs Managed by Momentum Global Investment Management in London

47. 47 global investment management Harmony Balanced Fund strategic allocation June 2012

48. 48 global investment management Harmony Growth Fund strategic allocation June 2012

49. 49 global investment management Summary performance May 2012 May 2012.. Past performance is not indicative of future returns.

50. 50 global investment management Harmony US Dollar Balanced asset allocation May 2012

51. 51 global investment management Harmony US Dollar Balanced currency allocation May 2012

52. 52 global investment management Harmony US Dollar Balanced May 2012. Past performance is not indicative of future returns.. *30/06/2005 to 30/12/2005

53. 53 global investment management Harmony US Dollar Balanced manager performance May 2012

54. 54 global investment management Harmony US Dollar Growth asset allocation May 2012

55. 55 global investment management Harmony US Dollar Growth currency allocation May 2012

56. 56 global investment management Harmony US Dollar Growth May 2012. Past performance is not indicative of future returns.. *30/06/2005 to 30/12/2005

57. 57 global investment management Harmony US Dollar Growth manager performance May 2012.

58. 58 global investment management Harmony performance vs. cash, bonds and equities Source: Bloomberg, May 2012. Past performance is not indicative of future returns..

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