2012 november sourcecap european alpha presentation eur cm110721

Hermes Sourcecap European AlphaNovember 2012

July 2012

Harriet Steel

For Professional Investors Only

Hermes SourcecapContents

Hermes Fund Managers Why Hermes Sourcecap? Overview Team Performance Investment Philosophy and Processest e t osop y a d ocess Risk Management Outlook Summary Summary Appendix

www.hermesfundmanagers.com I Hermes Sourcecap 1

Hermes Fund ManagersInstitutional asset manager

Established 1983

Owner BT Pension Scheme (BTPS)

Head Office London

Other Offices Boston, New York, Sydneyand Singapore

No. of Boutiques 14

Assets under Management €29.1bn1

Assets under Stewardship €93bnAssets under Stewardship €93bn

No. of Investment Professionals 121

1Please note the total AUM figure for Hermes Fund Managers Limited (“HFM”) includes €4.6bn of assets that are managed by Hermes GPE LLP (“HGPE”), which is a joint venture between HFM and GPE Partner Limited. HGPE is an independent entity and not part of the Hermes group.S H t 30 S t b 2012

www.hermesfundmanagers.com I Hermes Sourcecap

Source: Hermes as at 30 September 2012.

Fixed Income 32.4

Equities 15.9

Breakdownby asset type (%)

Commodities 4.9

Hedge Funds 6.6

Private Equity 15.6y

Real Estate 21.6

Cash 3.0

2

Hermes SourcecapWhy Hermes Sourcecap?

An established boutique specialising in pan-European equities, ba

Highly skilled investment team with almost 70 years’ combined inv

Delivered strong relative performance2 against the backdrop of elevolatility experienced since 2007volatility experienced since 2007

Track record based on a clear and consistent investment philosopthat exploits the power of change over the long-term

Over 20 institutional clients invested in a mixture of separate acco

1 See Appendix for biographies 2 S 6


2 See page 6

acked by a global asset manager

vestment experience1

evated market and economic

phy applied in a flexible manner

ounts and in-house UCITS funds

3

Hermes SourcecapInvestment philosophy

We believe that: High-conviction stock selection in a thematic framework is the bes

objectives in a sustainable manner over the long-term

Change provides a systematic market inefficiency where the cons Change provides a systematic market inefficiency where the conswhich can lead to significant shifts in the valuation of a company’s

Time is the last true arbitrage and final judge of a good investmen

Active managers are hired to be different to the index


st way to add value to client

sequences persist over time andsequences persist over time and s stock price

nt decision

4

Hermes SourcecapStructure

HERMES FUND

HERMHERMSOURC

AndrewCEO Di

James Rutherford CEO, Di

Tim CrockfordSenior Analyst

Chi Chan Senior Analyst

Richard Board Analyst

CIO, Director

yy y

Paul DaltonProduct Specialist


MANAGERS

MES HR / C li / Fi / ITMES ECAP HR / Compliance / Finance / IT

w Parry i t

Saker Nusseibeh – Director Victor Hymes – Directorirector Victor Hymes DirectorSteve Allen – Director

Alison UreMarketing / Admin Assistant

Melanie DukesCOO

Simon HandcockClient Service Administrator

Carly CzesnikowskaClient Service Administrator

5

Hermes SourcecapPerformance – Pan European

Composite returns to 30 September 2012 (%)

YTD 2012 1 yearComposite 18.5 32.4

35

p

Benchmark1 13.4 23.0

Relative Return2 4.5 7.6

51015202530

-10-50

YTD 2012 1 year

Composite Benchmark Relative Return1 2

Composite Benchmark Relative Return

Performance calculated in EUR (gross)

1 Benchmark FTSE All World Europe2 Relative Return is calculated on an geometric basis3 Performance calculated on an annualised basisPerformance calculated on an annualised basis4 From inception Date: 18th June 20075 3 years Ex-post Risk StatisticsThis information is supplemental to the GIPS© composite performance in AppendixSource: FTSE International Limited (“FTSE”)© FTSE 2012. FTSE® is a trade mark of London Stock ExchTimes Limited and is used by FTSE under licence. All rights in the FTSE Indices vest in FTSE and/or its its licensors accept any liability for any errors or omissions in the FTSE Indices or underlying data. No fuD t i itt d ith t FTSE’ itt t P t f i t li bl i di t f


Data is permitted without FTSE’s express written consent. Past performance is not a reliable indicator of

3 yrs3 5 yrs3 Since Inception3,4

13.8 1.5 1.0

6.9 -3.3 -3.8

6.4 4.9 5.0

3 yrs 5 yrs Since Inception 33 3,4

Risk Information5 Composite

Tracking Error 4.76

Information Ratio 1.35

Sharpe Ratio 0.58

Beta 0 95

hange Plc and The Financial licensors. Neither FTSE nor

urther distribution of FTSE f f t lt Beta 0.95f future results

6

Hermes SourcecapInvestment process

A four-stage process:

Idea generation Focused on

Bottom-up

Thematic

Thesis validation

Thematic

Thorough in

T Team appro

Detailed finValuation

Detailed fin

Look at mu

Implementation & portfolio construction

Portfolio of

Position siz


n change

nvestigation of investment thesis to identify enduring change

hoach

ancial analysisancial analysis

ltiple angles

between 40-60 stocks

ze reflects level of conviction

7

Hermes SourcecapIdea generation – a dynamic process

Identifying change: Company visits

Thematic research Themaframew

Opportunistic sources

Industry events

External research

T h i l l i

framew

Technical analysis

Porter’s Five Forces1

Forces of change:Chan

Restructuring

Management change

Industry consolidation

Capital cycles Capital cycles

Disruptive innovation

Improving fundamentals

Product cycle

Analy

Product cycle

New competition

1 P t ' Fi F i f k f i d t l i d b i t t d l t d l d


1 Porter's Five Forces is a framework for industry analysis and business strategy development developed

Thematic framework: Bottom-up approach

selecting each stock on its individual merits

atic work

Macro themes can be a source of ideas or lead to identifying change

Themes can be applied

work

Themes can be applied across different industries and businesses nge

Identifying the potential for sustained positivefor sustained, positive change lies at the heart of our approach

ysis

d b Mi h l E P t f H d B i S h l i 1979d by Michael E. Porter of Harvard Business School in 1979

8

Hermes SourcecapThesis validation

Company Analysis Team approach Meeting management and competitors

Industry conferences

Portfolio Managanalysts

Third-party company and industry research

Financial and sensitivity analysis

Analysts origina

Continuous andconviction

Extensive background checks using external research

Team discussionnew idea


er supported by 3 dedicated Develop thesis via intense analysis and team discussion

ate, as well as validate, ideas

open debate helps build

n and 360° appraisal of every

9

Hermes SourcecapValuation

Financial analysis Favoured charac Multiple metrics applied depending on

industry Businesses with

good cash gene

Evaluation of what is discounted already

Identification of where we differ from consensus

Self-help situati

Businesses expgrowth themes

Price sensitivity to the delta in the business

Understand the risks if thesis is proved wrong

Pricing power

Improving cash


cteristicsh high franchise value and eration

Seek companies whose share price has the potential to rise by at l t 50% 2ions

posed to long-term structural

least 50% over a 2-year horizon

returns to shareholders

10

Hermes SourcecapImplementation and portfolio construct

Implemented through typically 40-60 high-conviction individual posof ideas

All positions held as “active bets” and expected to be performance

Varying sector exposures depending on environment to further en Varying sector exposures depending on environment to further en

Unit sizes typically of 1-3% over the index weighting with active mavoid pools of unintended thematic exposures

Country exposure typically a residual of stock and sector decisiondepending on the macroeconomic environment


tion

sitions depending on availability

e-enhancing investments

nhance returns and control risk

A diversified portfolio structure that balances high-conviction i ti ith d tnhance returns and control risk

management of specific risk to

ns but can be a significant factor

investing with prudent risk control

11

Hermes SourcecapSell discipline

We sell stocks according to the following criteria:

Fundamentals Substitution

Positions are closed if the original thesis is broken

Another stock identified with a more compelling risk/reward profile


Valuation Technical indicators

Position reduced/exited as its price discounts future growth potential

Re-evaluate position if price acts incorrectly to news

12

Hermes SourcecapRisk management approach

Stock selection is the beginning of the risk management process

Investment research

Balancing the Risk/Reward in our favour

Focus on high conviction ideas only

Risk budget allocation emphasised by a

Portfolio construction

Risk budget allocation emphasised by a clear thematic framework through focus on stock-specific risk

A commonsense approach with no large active bets


Emphasis on empirical observation over a model-based approach

Risk management

Active management of stock specific, factor and portfolio risks

Extensive use of risk analytics, but with a sceptical mindset (MultiFrame (proprietary system) Barra Style Research Inalytics)system) Barra, Style Research, Inalytics)

Continuous reappraisal of existing holdings and investment themes

Portfolio management

Identifying and eliminating disappointments early

Active management of stock-specific and factor risks

13

Hermes SourcecapEuropean brands – global presence

Many European companies generate a large proportion


of revenue outside of Europe:

14

Hermes SourcecapOverview

Hermes Sourcecap European Alpha Strategy

Universe: Mid to Large Cap pan European sto

Holdings: Concentrated portfolio of 40 to 60 s

Investment Horizon: Long-term view with a holding perio

1Target Excess Return: > 300bps1 per annum over the benc

Country/Sector exposure: Typically a residual of stock and semacroeconomic environment

Stock weights: Typically 1-3% over the index weig

Benchmark: FTSE All World Europe (MSCI Euro

Strategy inception: 18th June 2007gy p

Out of Benchmark holdings Maximum 10%, including emerging

Total AUM €1.5bn

UCITS European Alpha €201.9m

UCITS Europe ex-UK €127.7m

1 T t d t ti t l N b i th t th t ill b hi d


1 Targeted returns are estimates only. No assurance can be given that these returns will be achieved

ocks with a free float >€1bn

stocks

od of typically over 2 years

chmark over rolling five-year periods

ector decisions and can be a significant factor depending on the

hting

ope)

g Europe

15

Portfolio positioning

Relative country weight

11.157.05

5.812 65

NorwayGermanySweden

Denmark 2.651.35

-0.14-0.18-0.20

DenmarkNetherlands

GreeceCzech Republic

Hungary 0.20-0.30-0.41-0.46-0.67

HungaryPortugal

IrelandAustriaPoland

-0.85-1.06

-1.62-3.04

TurkeyFinland

BelgiumRussia

-3.38-3.51

-4.01-4.264 95

UKItaly

FranceSpain

S it l d

All information as of 30th September 2012B h k FTSE All W ld E

-4.95

-10.00 -5.00 0.00 5.00 10.00 15.00

Switzerland

www.hermesfundmanagers.com

Benchmark: FTSE All-World EuropeSource: Style Research

Relative sector weights

13.796.23

4.252.15

Cons DiscHealth Care

Info TechMaterials

0.70-1.96

-4.68-5.83-5.86

Telecom ServicesEnergyUtilities

Cons StaplesIndustrials

-9.811.03

-15.00 -10.00 -5.00 0.00 5.00 10.00 15.00

FinancialsCash

Relative stock weights

Randgold ResourcesSyngenta Ag

Swedbank AbSwedbank AbElekta Ab

Pearson PlcAdidas Ag

Ing Groep N.V.

0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50

g pBayer Ag

Seadrill LtdPetroleum Geo-Services

16

0 00 0 50 00 50 00 50 3 00 3 50

Hermes SourcecapOutlook

Increasingly, local conditions will influence stock selection due to wperformance of individual companies in an environment of scarce

The global economic growth rate in the second half of 2012 is setin the first half of the year with the developing world slowing sharpy p g g p

Well-capitalized quality franchises with pricing power will get stronwhere there is a lack of credit

Draghi’s plans for the support of the ECB to struggling economiesrisk of fragmentation in the eurozone and is step towards makingrisk of fragmentation in the eurozone and is step towards making arm of governments

Politics is an unavoidable influence on markets with the decisions crisis at the heart of the Euro being pivotal to the direction and bebond marketsbond markets


widening divergence in the growth

t to be considerably lower than ply and the US cycle maturingp y y g

nger in a deleveraging world

s in Europe helps eliminate the the ECB the potential fundingthe ECB the potential funding

on the best way to solve the haviour of European equity &

17

Hermes SourcecapSummary

Infrastructure Resources of aa boutique

Team Investment teaexperience1, wownership

Why Hermes Sourcecap?

ownership

Investment philosophy &

Track record baphilosophy apph thprocess change over th

Performance Delivered strong performance2 asince 2007

1 Refer to biographies in Appendix 2 R f t lid 6


2 Refer to slide 6

a major asset management firm with the flexibility of

am with almost 70 years’ combined investment with a clear alignment of interest through equity

ased on a clear and consistent investment plied in a flexible manner that exploits the power of h l the long-term

against backdrop of strong market volatility experienced

18

A diAppendix


Hermes SourcecapBiographies

James Rutherford joined Hermes Sourcecap in December 2006 and is not only the Chief Investment Officer, but also the Lead Portfolio Manager for the Hermes

James Rutherford, CIO and Lead Portfolio Manager24 Years investment experience

Sourcecap European Alpha product. After graduating, James joined Fidelity as a Pan-European Research Analyst, initially specialising in areas such as property, transportation, autos and media. In 1994, he became Portfolio Assistant to Graham Clapp, and quickly progressed to become a Pan-European Institutional Portfolio Manager in 1995. James also co-managed the UK Recovery Trust which was ranked first in its peer group during that period OverRecovery Trust which was ranked first in its peer group during that period. Over 11 years James came to manage a USD19bn portfolio of Pan-European institutional funds and he remained at Fidelity until joining Hermes Sourcecap. James has over 20 years of experience in the investment industry and graduated from London School of Economics in 1988.


Andrew Parry joined Hermes Sourcecap in December 2006 and as Chief Executive Officer has specific responsibility for risk management, hedging and portfolio construction for the company Prior to joining Hermes Sourcecap

Andrew Parry, Director, CEO28 Years investment experience

portfolio construction for the company. Prior to joining Hermes Sourcecap, Andrew established Pembroke Capital Management in January 2003 and successfully launched the Magenta Fund, a global equity non-directional fund in March of that year, which reached $240m peak assets under management. Before establishing Pembroke, Andrew worked at Northern Trust Global Investments (Europe) Ltd as Chief Investment Officer of International Equities ( p ) qand was responsible for the management of Global, International and Regional portfolios. Prior to Northern Trust, Andrew held a variety of senior investment roles including Head of International Equities at Julius Baer Investments, Chief Investment Officer at Lazard Brothers Asset Management and Head of UK Equities at Baring Asset Management. He has over 25 years of highly successful investment management and business building experience and holdssuccessful investment management and business-building experience and holds an MA in Mathematics from the University of St Andrews.

20CFA® is a trademark owned by the CFA Institute.

Hermes SourcecapResearch personnel

Chi Chan joined Hermes Sourcecap as an Analyst in April 2007. Prior to this in early 2004, he had joined

Tim Crockford joined HermAnalyst in June 2008. Prior

Chi Chan, Senior Analyst14 Years investment experience

Tim Crockford, Senior An6 Years investment exper

p y , jExecution as a Senior Telecom Analyst with lead responsibility for companies with an aggregate market cap in excess of EUR200bn, and established a reputation for interesting and commercial analysis. Previously he was at Credit Suisse First Boston

yExecution in July 2006 as aAnalyst, working on major pand financial services. Tim with online, CATI, CAPI andcollection and was responsPreviously he was at Credit Suisse First Boston,

initially supporting the inception of the global value-based research group (the predecessor to HOLT) before being recruited internally to join the highly-rated pan-European telecom team. Chi started his

t th Fi i l S i ti f E t &

collection and was responsanalysis and interpretation subsequent report writing. Tcompleted his Securities anqualifications and in 2006 gU i it f M lt ith Bcareer at the Financial Services practice of Ernst &

Young where he qualified as a Chartered Accountant after graduating from UMIST in 1997 with a degree in Clothing Engineering and Management.

University of Malta with a B(Hons), having previously oCommerce degree from the


es Sourcecap as an r to this Tim had joined

Richard Board is an Analyst for Sourcecap, after joining the Client Support team in September 2010.

nalystrience

Richard Board, Analyst3 Years industry experience

ja Primary Research projects in consumer, retail has experience working d intercept methods of data

sible for providing the

j g pp pHis initial focus is on stocks in the Retail sector. He joined after completing a degree in Banking, Finance & Management from Loughborough University. Richard had worked previously at Morgan Stanley in their Settlements Department for the industrialsible for providing the

of primary data and Tim has recently nd Investment Institute graduated from the B h l f A t

their Settlements Department for the industrial placement part of his degree.

Bachelor of Accountancy obtained a Bachelor of e same university.

CFA® is a trademark owned by the CFA Institute.21

Hermes SourcecapSwedish Match: no smoke without fire

Smokeless tobacco pricing power Scandinavian snus sales gaining share of the tobacco market

at the expense of cigarettes (see chart). Premium positioning has enabled volume and pricing growth – thereby boosting p g g y goperating margins too

US snuff has thus far been a volume story; A&P investment has established the brands, now SM has recently been able to increase prices

Joint venture with Philips Morris International to sell smokeless products in markets outside of Scandinavia and the US is a significant opportunity not fully reflected in broker estimates

Mass market cigar growth driven by innovation Two new product categories launched in mass market cigars

in 2010: a FoilFresh range and sweet cigars

Volumes grew 69% in the last quarter of 2010 and were up Volumes grew 69% in the last quarter of 2010 and were up 35% YoY in 2011 when the company reported in February. The company expects continued strong momentum

Product introductions also drove an increase in profitability, with FY2010 margin up to 38 6% from 34 4% the year earlierwith FY2010 margin up to 38.6% from 34.4% the year earlier

Swedish Match was added to the portfolio in March 2011


Swedish Match was added to the portfolio in March 2011

Smoking cash generation and returns 2010 Free cash flow SEK3bn (FCF yield of over 6%). Share

buybacks combined with dividend puts the shares on a total yield of 8.5%. In 2010 the Group had a cash conversion ration y pof 85%

ROIC increased from 23% in 2009 to 27.3% in 2010 and ROCE increased from 28.4% to 32.2%

Sale of snus and cigarettes in Sweden

22

Hermes SourcecapValeo: I can see clearly now the rain ha

A quality franchise In all four business units (Powertrain, Comfort & Driving

Assistance systems, Visibility systems, and Thermal systems) it is number 1 or number 2 by market sharey

A strong reputation for quality and innovation within the industry

Demand-led innovation Legislation forcing car manufacturers to improve fuel efficiency

– achieved through powertrain innovations and lighter componentscomponents

Higher petrol prices and environmental impacts influencing consumer demand for more fuel efficient vehicles


as gone

Momentum in Markets Problems at Peugeot have caused negative market sentiment

towards Valeo but France represents <19% of sales

Quality manufacturers in Germany and Asia represent 28% Quality manufacturers in Germany and Asia represent 28% and 29% of sales respectively

A self-help story too Since the last recession, Valeo has outsourced more

production and lowered break-even point considerably –leading to lower cyclicality going forwardleading to lower cyclicality going forward

This is not reflected in current valuations as 6x 2013 P/E suggests the market still believes earnings will be volatile

Ideal for our longer investment horizon style as these changes appear over timeappear over time

23

European AlphaRepresentative portfolio analysis Septe

1.72.1

2.7

0.4

2.8

1.20.9

2.0

0.2 0.3

2.7

0.00.0

1.0

2.0

3.0

4.0

e T

ilt™

Portfolio Style Skyline™

50

60

70

80

ight

Style Dis

-2.6 -2.7

-1.9-2.2

-2.9

-1.7-2.0

-1.3

-4.0

-3.0

-2.0

-1.0Sty

le

0

10

20

30

40

% W

e

Style Factors S

Country Weights Portfolio Benchmark

C

Liquidity

15

20

25

30

35

Wei

ght %

Coverage

60

70

80

90

100

mina

ted %

0

5

10

W

0

10

20

30

40

50

< 0 1 < 0 2 < 0 3 < 0 4 < 0 5

Posi

tions

Elim

Portfolio and risk analysis provided by Style Research This information is supplemental to the GIPS© composite performance enclosed

Country< 0.1 < 0.2 < 0.3 < 0.4 < 0.5


This information is supplemental to the GIPS© composite performance enclosed

I Hermes Sourcecap

ember 2012

P tf li

tributionPortfolioBenchmarkCoverageMarket

18.1

22.5

11 6

19.6

12.511 7

14.215

20

25

t %

Industrial Sector Skyline Portfolio (41)Benchmark (591)Coverage (17.0%)

9.910.7

0.0

7.08.5

6.8

4.9

11.6

4.7

2.7

11.7

8.5

6.0

10.79.3

1.0 1.60.0

1.3

4.8

2.1 2.5 2.1

0.21.4

0

5

10

Wei

ght

Style Sector

y Analysis Trade to benchmark

T d t h Style DistributionPortfolioBenchmark

Trade to cash

01020304050607080

% W

eigh

t

Style Distribution CoverageMarket

100% - 60% represents the top 40% of companies sorted in descending order by Market Cap

< 1 < 2 < 3 < 4 < 5 < 10

Style

< 1 < 2 < 3 < 4 < 5 < 10Days

24

GIPS® CompositeHermes European AlphaComposite: Hermes Sourcecap European Alpha Composite (EUR)Creation date: 18 June 2007 Inception date: 18 June 200

YearGross of Fees

ReturnNet of Fees

ReturnBenchmark

ReturnComposite 3-Yr St

Dev (%)2012 Q2 -0.5 -0.6 -2.8 14.5

2012 Q1 8.8 8.6 8.4 15.0

2011 -0.5 -1.0 -8.8

2010 20.2 19.6 12.2

2009 26.9 -26.2 34.4

2008 -40.5 -40.9 -44.2

*Partial Year returns for Composite and Benchmark

Hermes Fund Managers Limited claims compliance with the Global Investment

Hermes Fund Managers Limited firm definition was broadened to better represent the full range of investment strategies offered. Information about changes is available upon request. Gross of fees returns have been calculated gross

2007 * -1.6 -2.0 -6.4

Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS® standards. Hermes Fund Managers Limited has been independently verified for the periods 1 January 1998 through 31 December 2010. The verification report is available upon

of management, custodial fees and reclaimable withholding taxes, but after all trading commissions. The composite includes all discretionary portfolios following the Pan European equity long only strategy run by Hermes Sourcecap Limited and has an inception date of COB 18 June 2007 (19 June 2007). The p p

request. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS®

standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards.

( )objective of the strategy is to outperform the benchmark over a rolling 3 year period. The composite benchmark is the FTSE All World Europe Index, which is designed to measure the equity market performance of European developed market countries. The tax basis of the benchmark is gross, except the UK which is net. p

Verification does not ensure the accuracy of any specific composite presentation.

Notes:For the purposes of compliance with GIPS®, the firm is defined as Hermes Fund Managers Limited ("Hermes") a multi-boutique asset

g , pThe benchmark is rebalanced quarterly.

The composite base currency is GBP. Performance returns shown in GBP. The management fee schedule for this strategy is 0.75% per annum on the first GBP 50m and 0 50% per annum thereafter with a minimum


Limited ( Hermes ), a multi boutique asset manager consisting of a number of subsidiary or affiliate companies. As of 31 December 2009 the

0.50% per annum thereafter, with a minimum requirement in management fees of GBP 250,000. Hermes Fund Managers Limited do not

07 All information is quoted in EUR

Benchmark 3-Yr St Dev (%) No of Portfolios

Composite Dispersion

EUR Total Composite Assets

(Million)% Total Firm

Assets15.1 17 0.33 1075.2 4.3%

16.5 16 0.42 1030.6 3.5%

16 0.32 990.3 3.7%

13 0.25 925.4 3.2%

7 N/A 407.4 1.6%

<5 N/A 177.5 0.7%

use leverage in the management of any portfolios unless otherwise explained in the relevant composite disclosure. A complete list of composites descriptions, along with additional information regarding policies for valuing

less than five portfolios for the full year then no measure of dispersion is shown.

The three year annualised standard deviation measures the variability of the composite and

<5 N/A 49.9 0.1%

portfolios, calculating performance, and preparing compliant presentations are available upon request.

Where appropriate, composite dispersion is calculated as the equal weighted Standard Deviation of the annual returns of the constituent

benchmark returns over the preceding 36 month period. Sourcecap International Limited was renamed Hermes Sourcecap Limited following its acquisition by Hermes Fund Managers Limited in December 2009. All rules relating to the portability of performance records have been met. Prior to intergration Hermes Sourcecap

portfolios. If a composite consists of less than five portfolios for the full year then no measure of dispersion is shown.

Hermes Fund Managers Limited do not use leverage in the management of any portfolios unless otherwise explained in the relevant

g pLimited's claim of compliance has been verified to 31 March 2010. A copy of the verifier's report, detailing the scope of their work and extent of their responsibilities is available on request.

pcomposite disclosure. A complete list of composites descriptions, along with additional information regarding policies for valuing portfolios, calculating performance, and preparing compliant presentations are available upon request. Where appropriate, composite dispersion is calculated as the equal weighteddispersion is calculated as the equal weighted Standard Deviation of the annual returns of the constituent portfolios. If a composite consists of

25

Disclaimer

This document is for Professional Investors only. Any investment products referred to in this document are only available to such clients. Investing with Hermes may be restricted in other countries and as such, any person who receives this document is required to make themselves aware of their respective jurisdictions and observe any restrictions.

This document is not advice on lematters so investor must rely on tmatters or seek advice. Before macontinuous) please consult a profeadviser as to its suitability.

Any opinions expressed may chanThis document does not constitute a solicitation or offer to any person to buy or sell any related securities or financial instruments; nor does it constitute an offer to purchase securities to any person in the United States or to any U.S. Person as such term is defined under the US Securities Exchange Act of 1933. It pays no regard to the investment objectives or financial needs of any recipient No action should be taken or omitted to be taken

Any opinions expressed may chanand income from them may go donot get back the original amount ioverseas may be affected by currperformance is not a reliable indicare not guaranteed. For more inforelevant Offering Document or co

any recipient. No action should be taken or omitted to be taken based on this document. Tax treatment depends on personal circumstances and may change.

CM110721


CM110721

I Hermes Sourcecap

egal, taxation or investment heir own examination of such aking any investment (new or essional and/or investment

nge. The value of investments

Issued and approved by Hermes Sourcecap Limited (“HSL”) which is authorised and regulated by the Financial Services Authority (“FSA”). Registered address is Lloyds Chambers, 1 PortsokenStreet, London, E1 8HZ. HSL is a registered investment adviser with the United States Securities and Exchange Commission (“SEC”). Hermes Investment Management Limited is the investment manager and promoter of Hermes Investment Fundsnge. The value of investments

own as well as up, and you may nvested. Any investments

rency exchange rates. Past cator of future results and targets ormation please read any ntact Hermes.

investment manager and promoter of Hermes Investment Funds plc (“HIF”) – an open-ended investment company with variable capital and with segregated liability between sub-funds –incorporated in Ireland. Authorised by the Central Bank of Ireland and recognised by the FSA. Telephone calls may be recorded for training and monitoring purposes. Potential investors in the United Kingdom are advised that compensation will not be available under the United Kingdom Financial Services Compensationunder the United Kingdom Financial Services Compensation Scheme.

26

Hermes Fund ManagersHermes Fund Managers is a multi-boutique asset manager with a growing global presence.Our pursuit for excellence is defined by aOur pursuit for excellence is defined by a commitment to deliver innovative investment solutions through a responsible asset management approach.

We offer investment solutions across alternatives, fixed income and specialist equity products, as well as being one of the market leaders in responsible investment advisory services.

Our specialist investment solutions include: Alternatives: Commodities, Hedge Fund Solutions, Infrastructure, Private Equity and Real Estate.

July 2012

Harriet Steel

Equities: Emerging Markets, Europe, Global, Japan and Small & Mid Cap.Fixed Income: Global and UK Government Bonds, Global and UK Inflation-Linked Bonds, Investment Grade and High Yield Credit.Responsible Investment Advisory Services:Responsible Investment Advisory Services: Corporate Engagement, Intelligent Voting, Public Policy Engagement and UNPRI compliance.

Offices:London I Boston I New York I Singapore | Sydney

Enquiries:[email protected]

For Professional Investors Only

Excellence. Responsibility. Innovation.

2012 november sourcecap european alpha presentation eur cm110721

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