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  • F or

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  • Investment update February 2017

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  • Disclaimer This presentation has been prepared by Walsh & Company Asset Management Pty Limited as Investment Manager of the Emerging Markets Masters Fund (Fund).

    The information in this presentation is of a general nature and does not purport to be complete, nor does it contain all information which would be required in a

    product disclosure statement (PDS) prepared in accordance with the requirements of the Corporations Act.

    An investment in units of the Fund is subject to various risks, many of which are beyond the control of the Investment Manager. The past performance of the Fund is

    not a guarantee of the future performance of the Fund.

    This presentation contains statements, opinions, projections, forecasts and other material (forward looking statements), based on various assumptions. Those

    assumptions may or may not prove to be correct. None of the Responsible Entity, the Investment Manager, their respective officers, employees, agents, advisers nor

    any other person named in this presentation makes any representation as to the accuracy or likelihood of fulfilment of the forward looking statements or any of the

    assumptions upon which they are based.

    This presentation may contain general advice. Any general advice provided has been prepared without taking into account your objectives, financial situation or

    needs. Before acting on the advice, you should consider the appropriateness of the advice with regard to your objectives, financial situation and needs. Where the

    presentation relates to the purchase of a particular product, you should obtain a copy of the relevant product disclosure statement or offer document before making

    any decisions in relation to the product.

    Any opinions expressed reflect the Fund’s position at the date of this presentation and are subject to change. The information is taken from sources which are

    believed to be accurate, but the Responsible Entity accepts no liability of any kind to any person who relies on the information contained in this presentation. Unless

    expressly stated, none of the information should be taken to be a recommendation. You are acting independently at your own risk.

    To the extent permitted by law, the Responsible Entity, the Investment Manager or their respective officers, employees, agents and advisers give no warranty,

    representation or guarantee as to the accuracy or completeness or reliability of the information contained in this presentation. Further, none of the Responsible

    Entity, the Investment Manager or their respective officers, employees, agents and advisers accept, except to the extent permitted by law, responsibility for any loss,

    claim, damages, costs or expenses arising out of, or in connection with, the information contained in this presentation. Any recipient of this presentation should

    independently satisfy themselves as to the accuracy of all information contained herein.

    MSCI indices source: MSCI. Neither MSCI nor any other party involved in or related to compiling, computing or creating the MSCI data makes any express or implied

    warranties or representations with respect to such data (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all

    warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any such data. Without limiting any of the

    foregoing, in no event shall MSCI, any of its affiliates or any third party involved in or related to compiling, computing or creating the data have any liability for any

    direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages. No further distribution

    or dissemination of the MSCI data is permitted without MSCI’s express written consent.

    3 Investor update 2017

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  • Walsh & Company

    Asset Management

    • Walsh & Co is a Sydney-based specialist global fund manager

    co-founded by Max Walsh in 2007

    • Walsh & Co has approximately A$3.1 billion client assets under

    management across global equities, residential and commercial

    property, private equity, fixed income, and sustainable and social

    investments

    • We believe the best investment opportunities are often not readily

    accessible to investors. We provide investors with access to market

    segments that are often beyond reach, helping them build high quality

    diversified portfolios

    • Offices in Australia and New York

    4 Investor update 2017

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  • Emerging Markets Masters Fund

    • Diversified approach to emerging market equity investing,

    through a multi-manager approach

    • Differentiated exposure – over 60% of underlying portfolio

    holdings not represented in the MSCI Emerging Markets Index.

    Significant exposure to frontier markets

    • Solid performance since launch

    • Oversight by highly experienced, majority independent advisory

    board

    • Focus on emerging middle class

    5 Investor update 2017

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  • 1. 2016 Review

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  • 2016 – a year of rotation

    • Chinese stabilisation after concerns over debt and capital

    outflows

    • Recovery of energy and commodity prices

    • Significant dispersion across country and sector returns

    – Commodity and energy dependent markets (Brazil and

    Russia) performed best

    • Significant style rotation

    – Recovery of cyclicals and value stocks

    – Quality and growth lagged

    • India demonetisation caused short-term shock

    7 Investor update 2017

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  • 2. Emerging market

    considerations

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  • -4

    -2

    0

    2

    4

    6

    8

    10

    1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020

    G D

    P g

    ro w

    th (

    % y o

    y )

    Developed Markets Emerging Markets

    3.4

    EM economies have grown faster

    than DM

    Source: IMF World Economic Outlook October 2016

    2.6

    9 Investor update 2017

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  • Growth and return in emerging

    markets

    Source: IMF World Economic Outlook October 2016; Bloomberg: Annual total returns between 1987 – 2016 by MSCI Emerging Market Index and

    MSCI World Index.

    -1.0%

    0.0%

    1.0%

    2.0%

    3.0%

    4.0%

    5.0%

    6.0%

    7.0%

    0%

    20%

    40%

    60%

    80%

    100%

    120%

    140%

    160%

    180%

    1996 2001 2006 2011 2016

    MSCI EM / MSCI World Relative Return (LH1) EM/DM Growth Differential (RH1)

    Estimated differential by IMF

    10 Investor update 2017

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  • Stronger balance sheets

    Source: IMF World Economic Outlook October 2016

    0

    20

    40

    60

    80

    100

    120

    140

    2001 2004 2007 2010 2013 2016

    G o

    v t

    D e b

    t a s %

    o f

    G D

    P

    Developed Markets Emerging Markets

    11 Investor update 2017

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  • MSCI emerging markets sectors – % state control

    Source: “Finding value in your emerging-market investments”, September 2016, Newton Investment Management

    Dominated by state ownership?

    12 Investor update 2017

    4.6% 3.3%

    58.8%

    41.5%

    14.6%

    35.8%

    1.6%

    15.9%

    49.5%

    75.4%

    27.4%

    0.0%

    10.0%

    20.0%

    30.0%

    40.0%

    50.0%

    60.0%

    70.0%

    80.0%

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  • Emerging markets leapfrogging

    developed markets in usage Countries with the largest % of internet users that

    shop online

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