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WHEB Listed Equity

WHEB Listed Equity. May 2014 www.whebgroup.com. Important information.

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WHEB Listed Equity

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  1. WHEB Listed Equity May 2014 www.whebgroup.com CONFIDENTIAL - FOR PROFESSIONAL INVESTORS ONLY

  2. Important information This presentation, its contents and any related communication (altogether, the “Presentation”) is provided by WHEB Asset Management LLP (“WHEB Asset Management”) and: (1) does not constitute or form part of any offer or invitation to buy or sell any security including any shares in the FP WHEB Sustainability Fund (“Shares” and “Fund” respectively), or any offer to perform investment management or other investment business; (2) should not be relied upon and should not form the basis of any investment decision in relation to Shares or otherwise; any such investment decision should be made only on the basis of authorised material provided to you, legal documents and the advice of your professional advisers; (3) is not and should not be treated as advice of any kind, investment research or a research recommendation; (4) any opinions expressed in this Presentation should not be relied upon as an indication of future performance of the Fund, Shares or any stock market, or of any guarantee of any return from the Fund or Shares; (5) is in summary form and may refer to and may be materially affected by future events, and may contain statements, estimates and projections of anticipated future performance which reflect various assumptions which may or may not be within the control of WHEB Asset Management or be correct; (6) WHEB Asset Management has exercised all reasonable care in preparing this Presentation and it includes information from sources that we consider to be reliable, however no representation or warranty, express or implied, is made as to the accuracy, reliability or completeness of the Presentation or as to whether any future event may occur, by WHEB Asset Management, its group companies and its or their directors, officers, employees, associates and agents (“WHEB Persons”); (7) is subject to change at any time and no WHEB Person is under any obligation to inform any person of any such change; (8) is only made available to recipients who may lawfully receive it in accordance with applicable laws, regulations and rules and binding guidance of regulatory bodies; (9) in the UK, is only directed at and available to persons who are Professional Clients or Eligible Counterparties; and (10) is not available to or directed at persons located in the U.S. or to U.S. Persons, as defined in SEC Rule 902 of Regulation S under the U.S Securities Act 1933, as amended, and does not constitute an offer to sell or a solicitation of an offer to buy securities in the United States, other than pursuant to an exemption under that act.  To the fullest extent permitted by applicable law, regulation and rule of regulatory body, WHEB Persons shall have no liability for any loss in relation to the Presentation, however arising including without limitation direct, indirect, consequential or loss of profit. The prices of Shares and the income from them can fall as well as rise and you may not get back the amount originally invested. This can be as a result of market movements and also of variations in the exchange rates between currencies. Past performance is not a guide to future returns and may not be repeated. By opening, reading and not returning this Presentation you agree to and acknowledge the above. “WHEB Asset Management” is a trading name of WHEB Asset Management LLP, whose registered office is at 2 Fitzhardinge Street, London W1H 6EE and which is registered in England and Wales with number OC 341489. WHEB Asset Management LLP is authorised and regulated by the FCA with registered number 496413.  Fund Partners Limited (formerly   IFDS Managers Limited) is the Authorised Corporate Director of the Fund and is authorised and regulated by the Financial Conduct Authority and has its registered office at Cedar House, 3 Cedar Park, Cobham Road, Wimborne, Dorset, BH21 7SB’. FP WHEB Sustainability Fund is listed on ImpactBase, the online directory of impact investment funds and products. CONFIDENTIAL

  3. WHEB: Leading Sustainability Boutique Founded in 2002 £370m of assets under management1 Team formerly ran leading strategies at Jupiter, Henderson and Aviva Source: 1WHEB Group Feb 2014 CONFIDENTIAL

  4. WHAT IS WRONG WITH THE FUND MANAGEMENT INDUSTRY? CONFIDENTIAL

  5. Markets are beset by short-termism FTSE average holding period, 1966-20051 Source:1Bank of England/London Stock Exchange CONFIDENTIAL

  6. This is a real quote!! “We’d like to help you update your models for the fact that Christmas falls on a Tuesday this year” US CFO CONFIDENTIAL

  7. Fund Managers tend to hug benchmarks “As long as the music is playing, you’ve got to get up and dance, we’re still dancing.” Charles Prince, Citigroup CEO, July 2007 CONFIDENTIAL

  8. Benchmarks tend to be backwards Looking Is the Index a good starting point for constructing a portfolio? Source: MSCI. Those shares coloured in red represent top 15 index constituents in 1993 that have since dropped out of the top 15. Those coloured in green represent new entrants to the top 15 list during the period. CONFIDENTIAL

  9. Have Ethical Funds done enough to be different? 3.6% Vodafone Glencore Xstrata 7.5% 3.5% 4.5% Lloyds Banking Group National Grid 3% 4.2% Tesco BG Group 2.1% 3.9% Shire Prudential 3.7% BT Group Legal & General Group 1.6% Source: Anonymous ethical fund fact sheet. Data as at 31 March 2014. CONFIDENTIAL

  10. Fund Management Industry Lacks Transparency Active fund management full of “terminology, pseudoscience and sales patter” Michael Johnson, Centre for Policy Studies (CPS) CONFIDENTIAL

  11. IN SUMMARY!! • SHORT TERM • BACKWARD LOOKING • OPAQUE • HERD MENTALITY CONFIDENTIAL

  12. DOES SUSTAINABLE INVESTMENT HAVE ANY ANSWERS? CONFIDENTIAL

  13. What is happening in the economy and society? Northern hemisphere average surface temperature Population GDP Paper consumption Species extinctions Fisheries exploited Loss of tropical rainforest and woodland Water use CO2 concentration Ozone depletion Foreign investment Motor vehicles 1750180018501900 19502000 Source: New Scientist 18/08/2009 reporting Singer-Verlag, Berlin, Heidelberg, New York on unsustainable exponentials CONFIDENTIAL

  14. Traditional energy production is unsustainable Source: UNEP CONFIDENTIAL

  15. Energy Efficiency is part of the solution Lighting sales growth 2011-20201 +90%2 • Use of LEDs will cut energy use in general lighting worldwide by 24% by 20201 • Retrofitting the Empire States Building cost $1m, which paid for itself in 18 months3 * Source: 1. McKinsey 2. Bloomberg 15/05/14 3. Johnson Controls annual report 2012 15

  16. Half the population will live under water stress by 20301 Source: 1. Bank of America CONFIDENTIAL

  17. Water efficiency doesn’t have to be very high tech In 2013 alone, installed Geberit products saved 2,000 million m3, more than half of the annual water consumption of all German households.1 +24%2 Sources: 1. Geberit Annual Report 2013 2. Bloomberg 15/05/14 17

  18. World population is growing and ageing Average global life expectancy: 1960 – 52 / 2011 – 681 1 http://projects.flowingdata.com/life-expectancy/ CONFIDENTIAL

  19. Health represents a broad and diversified opportunity 85+ age group requires 6x more healthcare products and services than those under 651 French population growth by age (2010-60E)2 +78%3 Sources: • 1 Hartman M et al. Health Affairs 2008;27:w1-w12, 2 INSEE, Kepler Care Home initiation March, 2014, 3 Bloomberg 15/05/14 19

  20. Global infrastructure is significantly underinvested 2 http://www.mckinsey.com/insights/mgi3 Reuters CONFIDENTIAL

  21. Opportunities from infrastructure investment Infrastructure investment required for mitigation and adaptation +52%2 Sources: 1http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/8-04032013-BP/EN/8-04032013-BP-EN.PDF 2 Bloomberg 15/05/2014 CONFIDENTIAL

  22. Investing in Solutions to Sustainability Challenges Resource Efficiency Environmental Services Water Management Cleaner Energy Sustainable Transport Safety Education Health Well-being CONFIDENTIAL

  23. Long-term growth The growth rates of the universe are weighted average growth rates of the individual stocks based on their current market capitalisations. The growth rates of MSCI World are weighted average growth rates of the constituents based on their weightings in the index. 1The 5-year historical sales growth of individual stocks is calculated as: [((Most recent sales growth / Sales growth five years earlier) ^ 0.2) – 1 ] * 100 3The 1-year forecast sales growth of individual stocks is calculated as: [(Sales estimate for current financial year / Comparable sales a year earlier) -1] * 100 Source: Bloomberg. (5-year and 1-year data are the latest available from Bloomberg as at 31/3/2014.) CONFIDENTIAL

  24. FP WHEB Sustainability Fund Top 10 Holdings 1.8% Borg Warner – Emission Reduction Novo Nordisk – Diabetes Treatment 2% 1.8% 1.9% Trimble – Resource Efficiency Quanta Services – Energy Infrastructure Pentair – Water Management 1.8% 1.9% Xylem – Water Management 1.8% 1.8% Orpea – Nursing Homes Covidien – Medical Devices 1.8% Thermo Fisher – Life Sciences Praxair –Gases and Coatings 1.8% Source: Bloomberg. Data as at 30 April 2014. CONFIDENTIAL

  25. WHAT DO WE MEAN BY “INTEGRATED ESG”? “FUNDEMENTAL RESEARCH”? “ENGAGEMENT”? CONFIDENTIAL

  26. Most analysts miss half the picture …ignores vital information A narrow financial focus… CONFIDENTIAL

  27. Research intensive process… LONG-TERM SUSTAINABLE GROWTH | INTEGRATED STOCK-LED RESEARCH | FOCUSED INDEPENDENT CLIENT-DRIVEN | PERFORMANCE AND UPDATE Company background NibeIndustrier is a European market leader for heat pumps and wood-burning stoves How heat pumps work * 1. Universe Formation Companies provide solutions to sustainability challenges At least one third of its business coming from one of our nine themes Heat pumps regarded as renewable energy in the European Union 2. Idea Generation Used quant screen to identify Nibe, a quality company, thinly covered by brokers Over 28,900 active trading companies1 Investment universe (over 1,000 stocks) Investment universe (over 1,000 stocks) * Source: East Tech Electrical 27

  28. 4.5 year average holding period… LONG-TERM SUSTAINABLE GROWTH | INTEGRATED STOCK-LED RESEARCH | FOCUSED INDEPENDENT CLIENT-DRIVEN | PERFORMANCE AND UPDATE 3. Fundamental Analysis 4. Portfolio Monitoring • Financial angle • Consistent revenue and earning growth • High profitability and returns even during tough market conditions • Sustainability angle • Increasing interest in renewable energy • Low market penetration • Supportive govt policies (e.g. UK) Management meeting Learnt the latest development of the Co and the sector Engagement Voted against the Co due to the lack of independent sub-committees +91%* -16%* Engagement Very satisfactory response from the chairman Fundamental focus Did not shy away from high quality Co amid European crisis Valuation discipline Initiated a position at a 4-year low P/E (13x) * Quarterly results reviews Results continued to validate our investment thesis * Source: Bloomberg as of 2 May 2014 28

  29. Identifying higher quality management teams… • Fundamental Analysis: Faiveley 58% / Wabtec 63% • Sector is highly exposed to business ethics risks though long-term contracts, role in public procurement, Transparency International Bribe Payers’ Index. • Our analysis indicated that Faiveley has weaker governance, related party transactions, lack of independence, poor disclosure • Faiveley had poorer management of business ethics issues when compared to Wabtec 29

  30. Transparent: Who holds us to account? Full list of holdings published on website Comprehensive quarterly Engagement and Voting Report Independent Investment Advisory Committee (below) reviews holdings quarterly 12-month trailing average holding period published monthly Summary Minutes of Investment Advisory Committee meeting published LONG-TERM SUSTAINABLE GROWTH | INTEGRATED STOCK-LED RESEARCH | FOCUSED INDEPENDENT CLIENT-DRIVEN | PERFORMANCE AND UPDATE “Sunlight is the best disinfectant”1 Ebba Schmidt Responsible Investment Manager at the UK Pension Protection Fund (PPF) David Lloyd Owen Waste and Water Industry Expert Nick Robins Co-Director UN Inquiry into the Design of a Sustainable Financial System Geoff Hall Chairman of WHEB Asset Management. Former Chief Investment Officer at Allianz Insurance Plc Tristan Hillgarth Former CEO Invesco Europe, and Head of Jupiter Private Clients Ben Goldsmith Co-founder of WHEB Group 1U.S. Supreme Court Justice Louis Brandeis CONFIDENTIAL

  31. Conclusion FP WHEB Sustainability Fund 1 Integrity • Every stock in our universe provides a solution to a sustainability challenge1 2 Growth • Universe growing faster than MSCI World Index1 3 Leading team • Long track-record of out-performance 1Source: WHEB Listed Equity estimates CONFIDENTIAL

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