The Case for Investment in

New Emerging Markets -Africa & Middle East

Strong 10yrs returns and attractive entry point

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9%

9%

7%

4%

10%

6%

10%

15%

0%

13%

5%

6%

8%

6%

5%

-5%

8%

Tunisia

Mauritius

South Africa

Morocco

Botswana

Oman

Egypt

Qatar

Kenya

Kuwait

Abu Dhabi*

Ghana

Saudi Arabia

Nigeria

Dubai*

World

Emerging Markets

-10% -5% 0% 5% 10% 15% 20%

10 Year Annualized Euro Returns (%)

0%

-24%

-27%

-29%

-35%

-43%

-49%

-54%

-55%

-57%

-63%

-65%

-74%

-74%

-81%

-51%

-24%

Tunisia

Morocco

Mauritius

South Africa

Egypt

Oman

Botswana

Kuwait

Qatar

Kenya

Abu Dhabi*

Ghana

Nigeria

Saudi Arabia

Dubai*

World

Emerging Markets

-100% -80% -60% -40% -20% 0%

Current value vs. 5 Year high (%)

Source: Bloomberg; MSCI World; Silk InvestNote: Values of End November 2009; *Values for UAE are based on 2001 data

Salt trading predated all other forms of trade

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Early trading routes

Now the trading routes are re-establishing themselves

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o It is Silk Invest’s view that the barriers of trade are coming down and that new trading routes are being re-established.

o Over time, these will redistribute purchasing power based more on population and resources.

The story is not just oil

o OPEC producers have around two-thirds of the world’s oil reserves.

o Majority of these oil reserves are located in Saudi Arabia, Iran, Iraq Nigeria and Kuwait6

We are returning to a world where population correlates to GDP.

7Source: The World Economy Historical Statistics, Maddison & Angus, ; World Bank; Silk Invest

22%

7% 6% 7%14%

61%

57%

17%

37%

50%

9%

23%

26%

19%

10%

2%

27%

21%12%

4%2%

8%

8% 7%

5% 9%16%

9% 8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1000 A.D. 1820 A.D. 1950 A.D. 2009 A.D. 2050 A.D.

Africa & ME Asia Western Europe United States Latin America Other

Why are some countries developed, and others less so?

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o Attitudes are that societies somehow different, for instance with regard to underlying attitudes, preferences or culture.

o This generates a set of attitudes towards economic policy. By stressing the role of factors such as savings, population growth or levels of corruption

o But these are symptoms rather than causes

o FDI: $36 billion of FDI in 2006 twice the level of 2004o Best performers: Seven out of the top 20 fastest growing economieso Democracy: Number of non-democratic states has fallen to 11 from 37o M&A: Increasing M&A flows led by both local and internationalo Competitiveness: 2 African countries outrank India according to WEF

Regional drivers

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Sub-Saharan Africa

o Tourism: Continuous growth of tourism revenueso Outsourcing: Cost pressures in Europe lead to offshore diversificationo FDI: Foreign investments amount to more than USD 24 billion annuallyo Remittances: Remittances have doubled since 2002o Infrastructure: Sizeable investments should unlock long-term potential

North Africa

o Non-oil: 10% annual growth of non-oil industrieso Location: Region as economic hub linking Asia to Europeo Capital: Big reserves help to sustain investments during economic stormso Education: Increasing investments in education to improve productivityo Infrastructure: $400 billion in infrastructure in the coming 3 years

Middle East

Will there be convergence?

o Robert Solow (1956) - The dominant paradigm for several decades.

o By the law of diminishing returns to inputs, poor capital-scarce countries should exhibit higher rates of return to capital.

o Consequently, per capita incomes in poor countries should grow faster, and eventually living standards in all countries must converge.

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The Arab Common Market

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o The Arab Common Market was first proposed in August 1964 on the basis of a resolution passed by the Council of Arab Economic Unity.

o The long-term goal of the ACM was to establish a full customs union that would abolish—amongst its members—trade restrictions, trade quotas, and restrictions on residence, employment, labor, and transportation.

o In 2008, the Council of Arab Economic Unity has finalised a blueprint to set up a customs union that will lead to the establishment of the Arab common market by the end of 2019.

Arab Maghreb Union

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o Created in 1989 under the Marrakech Treaty.

o Objective is to create a common market.

o In 1991 adopted an agreement on trade and tariffs. Under the protocol on rules of origin, 17.5 % is to levied on goods manufactured with imported inputs.

o Hope to pursue Euro-Mediterranean FTA through the Mediterranean Development

o Assistance Program provided by the EU.

Community of Sahel-Saharan States

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o Created in 1998o Objective is to form a common

marketo Pursuing programs that seeks to

reverse desertificationo Established African Development and

Commerce Bank in 1999 as a source of financing projects that contribute to strengthening integration of the Community of Sahel-Saharan States

East African Community

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o Objective under the Arusha Treaty includes: broad based cooperation; gradual creation of a Customs Union, a common market a monetary union and political federation; etc.

o It is a Customs Union and close to forming a Common Market

o Harmonized custom rules to facilitate trade within the region

o Harmonized financial rules governing security markets.

o Created the supra-national East African Securities Regulatory Agency (EASRA) to regulate Banks and the stock markets in the three member countries

o Has a framework for the coordination of monetary and fiscal policies, including macroeconomic convergence.

The Common Market for Eastern and Southern Africa

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o Created as a PTA in 1981 and was reconstituted in 1994.

o FTA launched in 2000 and working towards a Customs Union in 2008.

o Reduced non-tariff barriers: (1) introduced a harmonized single customs form in 1986; (2) third party insurance

o Follow a monetary program with member countries expected to follow convergence criteria.

Southern African Development Community

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o Created in 1994, out of Southern African Development Cooperation Conference (SADCC)

o Working on the creation of FTA 2008, Customs Union (2010) and Monetary Union in the foreseeable future

o Harmonized a number of its customs and transport policies so as to speed the facilitation of trade in the region

o In 1995 the Southern African Power Pool(SAPP), a consortium of twelve national electricity companies, was created to provide economical and reliable supply of electricity to member states

Remittances and FDI are fueling growth

17Source: World Bank ; IMF; Silk Invest

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Communications systems impact:Organisation of business life.Organisation of household and community life.Productivity of firms and workers.

Communications systems lower transaction costs, widen buyer and supplier networks.

Two-way networks (telecoms) more important than one-way networks (broadcasting).

As is the communication revolution

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o Wireless has skipped a generation.

o ARPU’s of USD 40 per annum.

o Africa is the fastest growing region in the world for mobile phones

o Sub Saharan Africa grew 67% last year compared with 10% in W. Europe

o Last year there were more new mobile phone customers in Africa than in North America

Wireless is being rolled out across the continent

Growth trajectory is steady

20Source: World Bank December 2008; Silk Invest

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Double digit population growth every5 years

Source: World Bank

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Positive catalyst for growth in all sectors related to growing

population needs and especially middle class

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And low debt levels.

Source: IMFNote: Debt is total of public and private debt; Reserves are IFS Reserves ex. Gold

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Middle East and Africa are only regions with more reserves than Debt giving them more flexibility to deal with current challenges

Developing the yield curve

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o Financial Stability reducing foreign currency exposure and improving financial intermediation

o Avoiding concentration of intermediation uniquely to bankso Allow the Efficient Allocation of Resources: Market interest

rates reflect opportunity cost of funds at given maturityo Increase price competition iand permit market pricing

instead of relying on banks onlyo Benefit Corporate Funding: Create

possibility of matched currencies

o Stimulate domestic Savings

o Liquid and deep government bond market will over time reduce debt service cost

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o Education is a laggingindicator

o Previously it was often viewed as an expensive and inefficient public service that largely benefited the wealthy and privileged.

o Now it is understood to make a necessary contribution to boost productivity, competitiveness and economic growth.

Educational standards are improving

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Backgroundo With USD 40 billion revenues, SABIC is

the world’s leading manufacturers of chemicals, fertilizers, plastics and metals.

o SABIC has comparative advantages regarding due its cost structure and being in the middle between its main markets China and Europe.

Saudi Arabia

Valuationo PE ’09e = 22.1xo PE ‘10e = 11.6xo Target return = 22 %

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United Arab Emirates

Backgroundo The MENA’s leading low cost carrier

serving 60 destinations and which will carry more than 4 million passengers in 2009.

o One of the world’s most efficient low cost carrier with the industry’s highest load factor (86%).

Valuationo PE ’09e = 10.9xo PE ‘10e = 9.8xo Target return = 33 %

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Qatar

Backgroundo Qatar Navigation is a diversified

shipping and transportation company. its key divisions are the Shipping Agency, Marine Transportation, and Commercial Activities.

o Well positioned to profit from growth of Qatari economy and its gas sector.

Valuationo PE ’09e = 9.7xo PE ‘10e = 9.0xo Target return = 25 %

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Kuwait

Backgroundo One of the world’s most global

mobile telecom players with significant markets shares in a number of African markets

o ZAIN provides its services in six Middle Eastern and 14 sub-Saharan countries to over 29.7 million active individual and business customers.

Valuationo PE ’09e = 11.4xo PE ‘10e = 10.3xo Target return = 50 %

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Egypt

Backgroundo The largest domestic, private

pharmaceutical company in Egypt.o EIPICO’s pharmaceuticals portfolio

covers over 20 therapeutic classes.o Growing exports to Arab Countries,

and to some African, Asian and East European Countries

Valuationo PE ’09e = 8.7xo PE ‘10e = 8.4xo Target return = 32 %

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Morocco

Backgroundo Moroccan leader in the Real Estate

sector, with focus on the highest growing demand segment of the market “low cost housing”.

o Holds one of the largest land reserves at strategic locations all over the country estimated at more than 63 million square meters.

Valuationo PE ’09e = 16.1xo PE ‘10e = 12.0xo Target return = 52%

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Backgroundo Largest mobile phone service

network operator in Kenya with anestimated market share of 77% andcurrently has 14.5million subscribers.

o It provides products and services fortelephony and has developed aleading mobile money transferservice called “MPESA”

Kenya

Valuationo PE ’09e = 11.8xo PE ‘10e = 9.8xo Target return = 68 %

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Backgroundo Largest gases and welding products

supplier in South Africa and sub-Saharan Africa.

o Products and services that form part of most manufacturing, industrial and construction processes.

South Africa

Valuationo PE ’09e = 24.4xo PE ‘10e = 19.9xo Target return = 41 %

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Backgroundo Largest sugar refining company in

Nigeria with a market share of 72.5%market share and a current installedcapacity of 1.44Mn tonnes per year.

o The company produces andpackages unfortified and Vitamin A-fortified white sugar for industrialusers and retail consumers.

Nigeria

Valuationo PE ’09e = 10.6xo PE ‘10e = 9.1xo Target return = 70%

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Backgroundo Third largest bank in Africa with

leading market shares in among others Morocco, Tunisia and Senegal

o Management team has been able to deliver 15-20% growth in earnings on an annual basis

Morocco

Valuationo PE ’09e = 12.8xo PE ‘10e = 11.3xo Target return = 43%

Conclusions

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o A generational changeo New leadershipo A technological leapo Barriers to trade are being removedo Consumer driveno Outstanding opportunities

o The old trading routes are re-establishing themselves.

United Kingdom4 Lombard StreetEC3V 9HDLondon

Tel: +44 207 933 8610www.silkinvest.com

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All information herein must be treated as confidential or legally privileged information that is intended for theaddressee(s) only.You are advised to exercise caution in relation to its contents. If you are in any doubt about any of the contents ofthe document, you should obtain independent professional advice.This document does not constitute an offer forsale of any security or fund mentioned herein and is for information purposes only on Silk Invest funds.Silk Invest has a number of funds (“funds”) on its platform. Information on these funds should be read in conjunctionwith the Offering Memorandum or Prospectuses.Silk Invest funds may invests in speculative investments and involve a high degree of riskAn investor could lose all or a substantial portion of his/her investments in frontier marketsAn investment in the frontier markets is not suitable for all investors.Some Silk Invest funds may be leveraged and performance could be volatile.Silk Invest funds may execute a substantial portion of trades on poorly regulated emerging market stock exchangesas well as OTC products.Silk Invest funds may be illiquid and there may be significant restrictions on transferring interests in such the funds.Silk Invest’s fees are higher than fees for mutual funds as they include a performance incentive.The contents of this document have been approved by Silk Invest’s compliance officer.This summary is not a complete list of the risks and other important disclosures involved in investing in any Silk Investfund, details of which can be found in the Offering Memorandum or prospectus.

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