SEE: South East Europe

Slovenia: EU Member 2004

Romania: EU Member 2004

Bulgaria: EU Member 2004

Croatia: EU Candidate 2003, EU Member 2013

Macedonia: EU Candidate 2004

Serbia: EU Candidate 2012

Bosnia & Herzegovina: n.a.

CEE: Central & Eastern Europe

Poland: EU Member 2004

Czech Rep.: EU Member 2004

Hungary: EU Member 2004

Core Region Narrow Strategic Region Broad Strategic Region

Uniqueness of the EU convergence process in the region combined with relatively low correlation presents attractive opportunities for investors.

We are SEE asset manager with focus on Emerging European Union

Our ideas are tested from different angels

Analytics

Analytics

TOP-DOWN

BOTTOM UP

Analytics Portfolio construction Portfolio revision

3

Macro-economics & strategy

Risk matrix Cycle & earnings potential

Relative money flow

Global allocation guidelines

Initial screening Investible universe

Idea generation Approved stock

list

Even though GDP growth is higher than in developed countries, markets were hit badly

SLOVENIA

SERBIA

ROMANIA

BULGARIA CROATIA

UAE

QATAR

LEBANON

PAKISTAN

JORDAN

BAHRAIN

TUNISIA

KUWAIT

OMAN

ARGENTINA

UKRAINE

LITHUANIA

ESTONIA

SRI LANKA

VIETNAM

KAZAKHSTAN

MAURITIUS

BANGLADESH

NIGERIA

KENYA

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Maximum Drawdown

Implied Cost of Equity and Maximum Cycle Drawdown

and investors in a way ignored the region for the last few years

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okt.2007 okt.2008 okt.2009 okt.2010 okt.2011 okt.2012 okt.2013 okt.2014 okt.2015 okt.2016

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Local high before crisis = 100

Crisis composite index MSCI World AC

MSCI Emerging Markets Lower band - historical volatility (2std. Dev.)

Upper band - historical volatility (2std. Dev.) STOXX Balkan ex-Greece & Turkey

Recent versus current post peak crisis development

What makes us different?

Keeping a tight grip on the top down factors – Spliting of the factors

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Romanian Equity Index BET and Total Risk Premium vs. 10 Year Bund YTM

BET Index Romanian risk premium

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2007 2008 2009 2010 2011

Romania Pure Equity Risk Add-ON Premium

Playing the Top Down Factor – Increasing Romania Country Weighting on Macro Credit Premium Contraction and Rewarding Equity Risk Premium Component

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Romanian Equity Index BET and Total Risk Premium vs. 10 Year Bund YTM

BET Index Romanian risk premium

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Romania Pure Equity Risk Add-ON Premium

Rally fuelled only by contraction of macro premium , equity premium contraction still in the cards .

3) Stabilisation and decline in premium

4) Pure premium for equity still hovering round record highs

1) Premium escalation Loosing steam

2) Reversal

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10 12,5 15 Price 17,5 20

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How we hunt for value? Krka -A core blue-chip case

Share price and normalized earnings bands

Evolution of earnings per share potential

Share price implied equity risk premium

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1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

How we hunt for value? Krka -A core blue-chip case

1) Keeping and eye on continuity of management decisions and follow through¸with regular one –on-one meetings and on the field information gathering to make sure we understand the underlying factors and get a sustainibilty appraisal

2) Waiting for the margin of safety, when the market sentiment hits gloom and normalized P/E moves towards low end of the range

3) We use secondary indicators like equity risk premiums on indidivdual shares to complement our valuation models and soft factors analysis

Share price and normalized earnings bands

Evolution of earnings per share potential

Share price implied equity risk premium

Name Weight Country Sector eP/E e P/B e EV/EBITDA

Krka 8.9% Slovenia Health Care 9,8 1,34 5,8

BRD 7.2% Romania Financials 7,7 1,02 -

OMV Petrom 7.1% Romania Energy 5,6 0,95 3,7

Mercator 4.5% Slovenia Consumer Staples 30,6 0,63 9,7

Banca Transilvania

4.3% Romania Financials 8,8 0,70 -

Petrol 4.2% Slovenia Consumer Discretionary 6,2 0,85 7,0

AIK Banka 4.1% Serbia Financials 4,0 0,36 -

NIS 3.8% Serbia Energy 3,1 1,11 2,5

Zavarovalnica Triglav

2,2% Slovenia Financials 5,4 0,56 -

Telekom Slovenije

2.0% Slovenia Telecommunications Services

8,1 0,53 3,11

KD Balkans Top 10 holdings as of 29.2.2012

The easiest way to get an exposure to the SEE region

So there is a reason to invest.

Disclaimer

This presentation is provided for information purposes only and does not constitute financial or investment advice or

form part of an offer, subscription, recommendation or solicitation to buy or sell any financial instrument, nor should it be relied on in connection with any contract or commitment. Returns are not guaranteed and investment returns tend to fluctuate. Past performance does not guarantee future results.

KD Funds – Management Company LLC (KD Skladi, družba za upravljanje, d. o. o.), Dunajska 63, Ljubljana, Slovenia, manages the KD Umbrella Fund and its subfunds KD Galileo, Flexible Asset Structure; KD Rastko, Equity; KD Bond; KD MM, Money Market; KD First Selection, Fund of Equity Funds; KD Balkans, Equity; KD New Markets, Equity; KD North America, Equity; KD Raw Materials and Energy, Equity; KD Technology, Equity; KD New Energy, Equity; KD Vitality, Equity; KD India – China, Equity; KD EM Infrastructure and Construction, Equity; KD Financials, Equity; KD Latin America, Equity; and KD Eastern Europe, Equity, as well as the KD Equity Income Mutual Fund (KD Delniški dohodkovni). The investor is entitled to request a free copy of the simplified prospectus, the prospectus including the fund rules and the latest published audited annual and semi-annual reports (in Slovenian language). These and other documents as well as data and information referring to the funds are available to investors free of charge during business hours at the Management Company’s headquarters and subscription offices, and in e-format on the website www.kd-skladi.si, along with a list of subscription offices. KD Funds is registered in Slovenia.