TITLE OF PRESENTATION

Client’s name

Financial adviser’s name & company name

15 AUGUST 2013

FORWARD GUIDANCE

Duncan Gwyther Chief Investment Officer

26/27 NOVEMBER 2013

FOR INVESTMENT PROFESSIONALS ONLY

FORWARD GUIDANCE 2

2013 - A GOOD YEAR FOR MANY RISK ASSETS

Source: DataStream, 21/11/13

-25.6

-13.4

-11.0

-5.1

-3.5

-2.8

-2.6

-2.0

-0.5

-0.5

0.0

2.1

3.9

14.3

14.4

20.1

20.3

24.0

24.8

-30 -20 -10 0 10 20 30

Gold (€)

Copper (€)

CRB commodities Index (€)

FTSE All Gilts (€)

Brent crude oil (€)

MSCI Emerging Markets (€)

Eurofirst 300

Euro € to UK £

Euro € to CHF

US $ to UK £

FTSE Index-Linked Gilts (€)

FTSE W ex UK (€)

US $ to Euro €

FTSE W Asia Pacific ex Japan (€)

FTSE 100 (€)

MSCI Frontier Markets

FTSE W Europe ex UK

FTSE W Japan (€)

FTSE W US (€)

Percent %

Returns YTD - 31/12/2012 to 21/11/2013

2013 - EQUITY SECTOR PERFORMANCE

FORWARD GUIDANCE 3

Source: DataStream, 21/11/13

FORWARD GUIDANCE 4

2014 - MODEST GLOBAL RECOVERY

• Global growth

– US GDP to accelerate

– Japan policy momentum required to sustain recovery

– Europe emerging from recession slightly ahead of schedule

– UK recovering faster than expected

– China stabilising, EM mixed

• Monetary policy - low rates to continue

– US QE tapering will happen in 2014

– Steeper yield curve anticipates first rate rises

• Inflation - to remain low

– Global excess manufacturing capacity

• Fiscal sustainability and deleveraging

– US progress

– UK & peripheral Eurozone long way off

• Corporate earnings - strong upturn anticipated for 2014

• Equity valuations fair

5

Source: Citi Research Global Economic Outlook & Strategy, 23 October 2013

IMPROVING OUTLOOK FOR ECONOMIC GROWTH IN 2014

-2

-1

0

1

2

3

4

5

6

7

8

9

Euro Ireland UK Japan US GEMS China Global

Real G

DP

%

2012

2013

2014

FORWARD GUIDANCE

UK ACCELERATION RESULT OF CONSUMER AND CONSTRUCTION

FORWARD GUIDANCE 6

-2.5%

-2.0%

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

Bra

zil

India

Russia

Irela

nd

EM

US

Chin

a

Mexic

o

Glo

bal

Japan

DM

Fra

nce

Euro

Germ

any

Spain

UK

Change in GDP Growth Estimates April 13 vs October 13

Source: Citi Research Global Economic Outlook & Strategy, April 2013 and October 2013

FORWARD GUIDANCE 7 7

US CYCLICAL UPTURN MODERATE BY HISTORIC STANDARDS

FORWARD GUIDANCE 8 8

US EMPLOYMENT IMPROVING - FED TO ADJUST TARGET?

FORWARD GUIDANCE 9 9

Source: Barclays / Deutsche Bank, November 2013

Political Timetable

• Committee to agree a budget by Dec 13th

• Government funded until Jan 15th 2014 –

next round of sequester cuts take effect

• Debt ceiling suspended until Feb 7th 2014

US fiscal drag and deficit

US BUDGET UNCERTAINTY REMAINS BUT FINANCES STRONGER

FORWARD GUIDANCE 10

POSITIVE NEWSFLOW OVER SUMMER HAS EASED

FORWARD GUIDANCE 11

MANUFACTURING OUTLOOK IMPROVING IN MOST COUNTRIES

11

Source: Reuters, 50 = Expansion vs. Contraction Threshold, 20 November 2013

FORWARD GUIDANCE 12

GROWTH IN EXPORTS FROM ASIA REMAIN SUBDUED

12

Source: Reuters, 20 November 2013

-50

-25

0

25

50

75

Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13

% change yoyFar East Exports

Taiwan export orders South Korea exports Chinese exports Indian exports

CHINA GROWTH REMAINS STRONG IN ABSOLUTE TERMS

FORWARD GUIDANCE 13

CHINA TO BRING LAND PRICES UNDER CONTROL

FORWARD GUIDANCE 14

IRELAND - UNEMPLOYMENT REMAINS HIGH

FORWARD GUIDANCE 15

Source: Reuters 21 November 2013

0

50

100

150

200

250

300

350

400

450

500

04 05 06 07 08 09 10 11 12 13

Th

ousands

Unemployment - Ireland

IRELAND - LOAN GROWTH TO HOUSEHOLDS CONTRACTING

FORWARD GUIDANCE 16

Source: Reuters 21 November 2013

-10

-5

0

5

10

15

20

25

30

35

04 05 06 07 08 09 10 11 12 13

%

Private Sector Loans - Ireland

IRELAND - CONSUMER SENTIMENT IMPROVING

FORWARD GUIDANCE 17

Source: Reuters 21 November 2013

20

30

40

50

60

70

80

90

100

110

120

04 05 06 07 08 09 10 11 12 13

Consumer Sentiment - Ireland

Index V

alu

e

INFLATION REMAINS LOW, DANGEROUSLY SO IN EUROZONE?

FORWARD GUIDANCE 18

Consumer price inflation (%)

19

Source: Federal Reserve Board, Citi Research Global Economics 10 Sept 2013

US WILL BEGIN TO TAPER SOON

US Federal Reserve Balance Sheet – Cumulative Large Asset Purchases

FORWARD GUIDANCE

20

FORWARD GUIDANCE TO KEEP SHORT-RATES LOW

20

Source: Factset Deposit Rates, 20 November 2013

FORWARD GUIDANCE

FORWARD GUIDANCE 21

SOVEREIGN DEBT MARKETS ANTICIPATING HIGHER RATES

Source: Bloomberg, 21 November 2013

- 1 MONTH

(21 Oct 13)

NOW

(21 Nov 13)

- 1 YEAR

(21 Nov 12)

FORWARD GUIDANCE 22

• Increasing risk to obtain return

– Structural challenges remain, but

– Cyclical risks are abating as confidence improves and growth recovery broadens out

• Another challenging year for bonds

– Trend in longer-dated issues remains up

– Returns on quality bonds more likely to be ‘dull’ than ‘dreadful’

– Yield curve could flatten as economic growth improves = adverse impact on 3-7 year issues

– NB illiquid nature of some corporate bonds = diversification across issuers/regions could help

• Equity themes

– Cyclical recovery through financials, autos, media, retailing and small/medium companies

– US ‘onshoring’ of manufacturing helped by cheaper energy

– Demographics in emerging markets = long-term trend remains intact

– Ageing developed world = healthcare, obesity

– Mergers and acquisitions

– Self-help reconstruction

– Strong free cash flow to fund higher dividends and share buybacks

– Structural reform

INVESTMENT THEMES

FORWARD GUIDANCE 23 23

SOVEREIGN BONDS ARE ANTICIPATING HIGHER RATES

FORWARD GUIDANCE 24

SOVEREIGN DEBT YIELDS REFLECT NOMINAL GROWTH

Source: DataStream, 20 November 2013

FORWARD GUIDANCE 25 25

US corporate leverage versus spreads

Source: Citigroup, November 2013

Investment Grade debt maturities ($bn)

CORPORATE BOND MARKET FUNDAMENTALS DETERIORATING

FORWARD GUIDANCE 26 26

Increasing Proportion of Cov-Lite Loan Issuance

Source: Morgan Stanley, 18 November 2013

HIGH YIELD HAS SEEN RESURGENCE OF COV-LITE ISSUANCE

FORWARD GUIDANCE 27

• Increasing risk to obtain return

– Structural challenges remain, but

– Cyclical risks are abating as confidence improves and growth recovery broadens out

• Another challenging year for bonds

– Trend in longer-dated issues remains up

– Returns on quality bonds more likely to be ‘dull’ than ‘dreadful’

– Yield curve could flatten as economic growth improves = adverse impact on 3-7 year issues

– NB illiquid nature of some corporate bonds = diversification across issuers/regions could help

• Equity themes

– Cyclical recovery through financials, autos, media, retailing and small/medium companies

– US ‘onshoring’ of manufacturing helped by cheaper energy

– Demographics in emerging markets = long-term trend remains intact

– Ageing developed world = healthcare, obesity

– Mergers and acquisitions

– Self-help reconstruction

– Strong free cash flow to fund higher dividends and share buybacks

– Structural reform

INVESTMENT THEMES

EQUITY RETURNS IN 2013 MOSTLY DRIVEN BY P/E EXPANSION

FORWARD GUIDANCE 28

-10

0

10

20

30

40

50

US Europe Japan EM

Tota

l R

etu

rn Y

TD

Components of Equity Returns YTD

P/E Change

EPS Growth

Dividend Yield

Source: DataStream 20/11/13

FORWARD GUIDANCE 29

VALUATIONS NO LONGER ‘CHEAP’

US

10Y Avrg 20Y Avrg 20Y Peak

14.2

11.5

15.4

Source: DataStream 18/11/13. 1 year vs. current forward P/E

UK

EUROPE EX UK

JAPAN

ASIA

EM

DM

GLOBAL

13.6

11.3

13.3

13.0

11.6

16.5

13.8

24.3

18.5

12.0

16.1

15.7

14.0

19.8

16.8

56.2

35.1

21.2

20.2

19.7

19.0

FORWARD GUIDANCE 30

• Global policy support and negative real interest rates present profit opportunity

• Strong balance sheets, access to funding and cyclical exposure key drivers, but

• Business confidence/earnings momentum still weak

• Equities attractive on most valuation measures

Source: Citi GES, FactSet Consensus Estimates, MSCI, 9 November 2013

EQUITIES - GLOBAL MARKET OUTLOOK

MSCI AW MSCI MSCI ROE 10 yr Eq Risk

BMK WGT 2013E 2014E 2013E 2014E P/B Yield 2013E 2013E 2014E Yield Premium

UK 8.1% 0% 10% 13.5x 12.3x 1.8x 4.0% 15% 7.4% 8.1% 2.6% 4.8%

US 51.7% 7% 11% 16.4x 14.8x 2.3x 2.2% 15% 6.1% 6.8% 2.7% 3.4%

Europe ex UK 16.4% 7% 14% 15.3x 13.4x 1.6x 3.6% 12% 6.5% 7.5% 1.7% 4.9%

Japan 7.7% 60% 20% 16.4x 13.7x 1.2x 2.1% 9% 6.1% 7.3% 0.6% 5.5%

Pacific ex J 4.8% 2% 9% 15.9x 14.6x 1.7x 4.1% 11% 6.3% 6.8% 3.1% 3.2%

Emerging 11.1% 10% 12% 11.8x 10.6x 1.4x 2.9% 13% 8.5% 9.4% 6.8% 1.7%

Global 100.0% 9% 12% 15.2x 13.6x 1.8x 2.7% 13% 6.6% 7.4%

EPS YoY% Price/Earnings Earnings Yield

CYCLICAL RECOVERY - SECTOR VALUATION vs. EARNINGS

GROWTH

31

Source: Citi Research, EPS 31/10/13

FORWARD GUIDANCE

CYCLICAL RECOVERY - WHAT TO LOOK FOR WHEN INTEREST

RATES RISE

FORWARD GUIDANCE 32

Source: Citi Group GEMS Strategy, 18 November 2013

-2

-1

0

1

2

3

4

5E

arn

ings R

evis

ion

s R

atio

Ea

rnin

gs Y

ield

(T

raili

ng

)

Re

port

ed

RO

E

Div

ide

nd Y

ield

Earn

ings Y

ield

(1

2m

Fo

rward

)

Re

port

ed

Net

Ma

rgin

Ca

sh

Flo

w Y

ield

His

toric E

PS

Gro

wth

Sale

s Y

ield

Book Y

ield

Info

rmation R

atio

Factor Returns in GEMS During Periods of US Fed Tightening

June 99 - May 00

June 04 - June 06

CYCLICAL RECOVERY - REGIONAL MARKET SENSITIVITY

FORWARD GUIDANCE 33

Betas to Various Styles: Region vs. MSCI AC World

Source: CG, GEMS Strategy, 18 November 2013

US Europe Japan GEM Asia x Japan

Size 1.86 1.61 0.80 0.35 0.37

Price Momentum 0.24 -0.22 0.29 -0.63 -0.55

Estimates Momentum 0.05 -0.19 0.88 -0.31 -0.20

Risk -0.25 0.48 0.39 -0.04 -0.42

Growth 0.05 -0.38 -0.03 0.55 0.48

Value -0.29 0.42 0.01 0.40 0.33

Quality 0.21 -0.16 -0.62 -0.02 0.00

FORWARD GUIDANCE 34

CYCLICAL RECOVERY - DM VS. EM, ASIA VS. LATAM

US MANUFACTURING RENAISSANCE/ONSHORING

• Cheap energy - Self sufficiency by 2030

- Gas prices one third of Europe’s

• Lower input and transportation costs - Cheaper manufacturing and distribution

• Improving competitive advantage - 0% real wage growth v 15% p.a. in China

• Reshoring - Jobs returning to the US

FORWARD GUIDANCE 35

Image Source: Company websites

DEMOGRAPHICS

• Developing markets - improving living standards

• China - Second largest economy in the world but 86th when measured

by GDP per head ($6,000 v $50,000 in the US)

• Incomes increasing - Doubling over 5 years

• Everyday essentials - Trading up from low quality, generic items to branded

goods

• Aspirational purchasing - Premiumisation

• Ageing population - saving for retirement, healthcare

• Obesity - health & wellbeing

FORWARD GUIDANCE 36

Image Source: Company websites

TECHNOLOGICAL SHIFT

• Kondratieff waves / super cycles

– Steam engine

– Railways

– Automobiles

– Information technology

– ?

• The rise of the innovators

• Productivity enhancers

FORWARD GUIDANCE 37

Image Source: Company websites

SELF-HELP RECONSTRUCTION

• Companies have cut costs through recession and built up cash balances

• Global economy recovering. Tail risks receding

• Are we about to enter a new M&A cycle?

• Cheaper to buy than to build?

• Balance sheet repair

FORWARD GUIDANCE 38

Image Source: Company websites

FORWARD GUIDANCE 39

STRONG FREE CASH FLOW FUNDS HIGHER DIVIDENDS

39

Source: Morgan Stanley, MSCI, IBES Consensus 6 Sept 2013

UK Industrial Sector - Free Cashflow Yield vs. Dividend Yield

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

Autos Media Telcos Comm Serv Fd & Bev Pharma Retailing Oil Materials Utils

%

Average 2012-14 FCF Yield Average 2012-14 DY

40

RISING PROFITS WILL SUPPORT STRONG DIVIDEND GROWTH

40

Source: Morgan Stanley, MSCI, IBES Consensus 6 Sept 2013

UK Industrial Sector - 3 Year Compound Dividend Growth vs. 2013 Yield

0

10

20

30

40

50

60

70

80

Banks Media Fd & Bev Oil Autos Retailing Comm

Serv

Utils Telcos Pharma Materials REITS Ins

DY

vs. 3Y

Co

mp

ou

nd

Avera

ge G

row

th R

ate

FORWARD GUIDANCE

STRUCTURAL REFORM - JAPAN

STRATEGY COMPENDIUM – Internal use only 41

• Big bazooka – BoJ doubling size of balance

sheet in 2 years

• Targeting ‘sustainable’ 2% inflation

• QE will include JGB’s, REITS and (equity?)

ETF’s

• Yen should continue to weaken

• Economic activity should expand but watch

reliance/cost of imported energy

• LDP majority provides opportunity for structural

reform

• Equity themes:

– Aging population

– Exports

– Reconstruction

– Consumption pre tax hikes

• Potential for improving ROE and re-rating

• Equities very under-owned

FORWARD GUIDANCE 42

SENTIMENT - US MUTUAL FUND FLOWS

Source: Investment Company Institute, 06/11/13

FORWARD GUIDANCE 43

SENTIMENT - WALL STREET ‘FEAR GUAGE’ = COMPLACENT

CURRENCY - US$ /£ MOVING ON RATE DIFFERENTIALS

FORWARD GUIDANCE 44

Source: Bloomberg, 20 November 2013

UK / UK Interest Rate Differential vs. Exchange Rate

ASSET ALLOCATION MEETING 45 45

CURRENCY

FORWARD GUIDANCE 46

• Equities - overweight

– Growth expectations to improve 2014

– Central banks to continue reflation policies

– Earnings should grow to support valuations

– Absolute valuation ‘fair’

– Relative valuation attractive

• Government bonds - underweight

– Improving growth = higher yields

– Risk to 2-7 year maturities from flatter curve?

• Hedge funds – underweight

– Risk profile increased but better opportunity elsewhere

• Commercial property - overweight

– Income attractions

– Regional recovery anticipated

• Cash - underweight

STRATEGY - DECEMBER 2013

INTEREST RATE RISES ARE NOT ALL BAD FOR EQUITIES

FORWARD GUIDANCE 47

Source: Reuters, 20 November 2013

90

95

100

105

110

115

1 6

11

16

21

26

31

36

41

46

51

56

61

66

71

76

81

86

91

96

10

1

10

6

11

1

11

6

12

1

12

6

13

1

13

6

14

1

14

6

15

1

15

6

16

1

16

6

17

1

17

6

18

1

18

6

19

1

19

6

20

1

20

6

21

1

21

6

22

1

22

6

23

1

23

6

24

1

24

6

25

1

25

6

26

1

Performance of S&P Post Federal Reserve Rate Rise

31/01/1994

31/05/1999

31/05/2004

- 3 Months + 9 Months

Federal Reserve Rate Rise

FORWARD GUIDANCE 48 48

DISCLAIMER

This presentation has been prepared only for investment professionals only. It is not intended for any other persons

and should not be relied upon by other persons.

This presentation has been prepared for information purposes only and is not a solicitation or an offer to buy or sell any

security. It does not purport to be a complete description of our investment policy, markets or any securities referred to

in the material. The information on which the presentation is based is deemed to be reliable, but we have not

independently verified such information and we do not guarantee its accuracy or completeness. All expressions of

opinion are subject to change without notice. Any reference to the Quilter Cheviot Limited model portfolio, which is

used for internal purposes, is purely illustrative and should not be relied upon. The figures quoted do not include

charges.

Investors should remember that the value of investments, and the income from them, can go down as well as up and

that past performance is no guarantee of future return. You may not recover what you invest. Changes in exchange

rates may have an adverse effect on the value, price or income of foreign currency denominated securities. Levels and

bases of taxation can change. Investments or investment services referred to may not be suitable for all recipients.

Quilter Cheviot Limited is a private limited company registered in England with number 01923571, registered office at

One Kingsway, London WC2B 6AN. Quilter Cheviot Limited has established a branch in Dublin, Ireland with number

904906, is a member of the London Stock Exchange, is authorised and regulated by the UK Financial Conduct

Authority and regulated by the Central Bank of Ireland for conduct of business rules. Accordingly, in some respects the

regulatory system that applies will be different from that of the United Kingdom.