Emirates NBD Asset Management Newsletter

Quarter 4 - 2011 s o i d u t S k k n I / Contents m o c . o t > Letter to investors page 1 o h p k

c > Market performance page 2 o t S i > Investment ideas for volatile markets page 3 © : e r

u > MENA markets - defensive page 4 t c i p

r > Emirates NBD fund performance pages 5 & 6 e v o

C > Emirates Islamic Alternative Strategies Fund page 7 > Equity manager of the year award page 8 > Product performance page 9 Dear investor

As world governments and central banks continue to be pushed by markets towards rapid policy responses, the pace and frequency of market gyrations seems to be approaching a frenetic speed. This has meant that many investors have struggled to keep up with changing market views.

The third quarter of 2011 brought unprecedented volatility to valuations, dividend yields, and future growth prospects. In world markets. Using the S&P 500 as an example, the third quarter addition, the prospect of an MSCI upgrade to emerging saw 19 trading days where the index moved more than 2% in a markets status is a potential catalyst for the UAE and Qatar single day. This represents almost 30% of the trading days in the markets in the fourth quarter. quarter. Many investors, driven by concerns about government debt in Europe as well as fears of a global slowdown, rushed into As promised in our previous Newsletter, we have been working safe haven investments such as US treasuries. Although an hard to bring you new investment opportunities. One of the investment in treasuries may provide some respite from the storm, profiled ideas that is featured in this Newsletter is the re-launched a ten year yield of 1.9% is unlikely to provide investors with the Emirates Islamic Alternative Strategies Fund. Also included in this long term returns they require to fund their needs. Newsletter is a topical article about investment ideas for today’s volatile markets. I trust that these articles will provide you with The world equity markets declined 17% as gauged by the MSCI some new investing insights. While it may be difficult to cope World index. Emerging markets fared worse with an overall drop with market volatility, the current period creates significant of 22% as many investors lowered their estimates for future opportunities for investors who are willing to look beyond the growth due to a slowdown in the developed world. Despite the short term horizon. gloomy outlook, there were some bright spots in the quarter. Among investments that had a positive third quarter were gold As we are in the final quarter of the year, our investment teams which rallied 8%, as well as our Emirates MENA Fixed Income continue to work diligently to deliver superior returns for Fund, which notched a gain of 0.5% for the 3 month period. investors. Our Emirates Islamic Money Market Fund also continues its solid performance with a gain of 0.2% for the quarter, bringing its Regards year to date gain to 1.3%. Deon Vernooy It is worth highlighting that MENA equity markets performed Head of Emirates NBD Asset Management quite well in the quarter when compared with global equity markets. Many regional companies are starting to look Frederic de Melker attractive relative to their international peers based on Head of Priority Banking

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Newsletter Q4 2011 > Page 1 Helen Holmes Fund Manager Market performance Doom, Gloom… Boom?

Marc Faber is a contrarian investor who has long been bearish about the The downtrend continued into August where risk assets once again did not US economy. Nicknamed “Doctor Doom”, he is best known for his Gloom fare well at all. Global equities closed the month 7.3% lower, whilst the Boom & Doom Report, a financial publication that outlines investment perceived “safe-haven” assets such as US Treasuries and gold recorded opportunities that exist on Horace’s guiding philosophy that ‘many shall further gains. Having left it to the 11th hour, the extension of the US debt be restored that are now fallen and many shall fall that are now in honour.’ ceiling eventually came through at the beginning of the month, and At the risk of using his wisely selected words, albeit in a different order, subsequently the S&P credit rating agency downgraded the US sovereign we report on this quarter’s gloomy markets, data and events that could be rating from AAA to AA+. This combined with the continued barrage of poor the doom of the anticipated euphoric boom. macro-economic data, resulted in the high-risk markets being sold of heavily, although there was a degree of damage control done in the build up to and Global manufacturing data in the first week of July set off a tumultuous the aftermath of the US Federal Reserve conference at Jackson Hole start to the 3rd quarter as it continued the weak trend of the past few remembered fondly for the launching of the second round of quantitative months which dampened the excitement over the Greek Parliamentary easing in 2010. Very little came out of the conference this time, apart from acceptance of a second round of austerity cuts at the end of June. The vague suggestions that the Fed still had various policy tools hidden up their positive momentum that built up in the run up to the EU Summit in the 2nd sleeves should they be required. Given that macroeconomic leading half of the month, where the Greek bailout, worth “up to €159b”, indicators did not look healthy, corporate earnings revisions’ had turned combined with expanded powers for the European Stability Fund (EFSF) negative and that Greece remains poised on the point of implosion, volatility was short-lived as Italian and Spanish markets fell under the pressure that remained high, and positive returns for 2011 appeared to be doomed. their own debt burdens may prove too heavy. July saw investors taking very much the “risk-off” approach to their investment profiles as global equity Three main recurring concerns drove the market lower in the final month markets were sold off and US Treasuries reprieved their safe-haven status of the quarter: escalating problems in the Eurozone, slowing economic despite the threat of a potential US default at the beginning of August, as global data and data out of China raising the likelihood of a potentially the politicians in the US could not agree on extending their own debt very hard landing. The Eurozone was the main driver of the weakness with ceiling which risked the Government running out of funds. Poor GDP data investors becoming increasingly worried about a Greek default and what on the final day of July also then surprised sharply on the downside impact this would have on European banks and the borrowing costs for revealing a gloomier economic picture than had previously been feared. other struggling Eurozone countries such as Spain and Italy. Global economic data continued to disappoint with PMI Index / Market Value at 3 Mths 6 Mths 1 Yr 3 Yrs 5 Yrs numbers showing deterioration, and unemployment 30.09.2011 %%%%%(particularly in the US) remaining high. Counter- intuitively the USD strengthened significantly with EQUITY INDICES FTSE 100 5,128.48 -13.74 -13.78 -7.57 4.61 -13.96 the concerns over the US debt impasse and Dow Jones 10,913.38 -12.09 -11.64 1.16 0.58 -6.56 further high-profile rating downgrades; however S&P 500 1,131.42 -14.33 -14.82 -0.86 -3.00 -15.30 the risk aversion in the markets drove investors to Nikkei 225 8,700.29 -11.37 -10.39 -7.14 -22.73 -46.05 seek out fairly valued traditional safety nets. Dax 5,502.02 -25.41 -22.04 -11.67 -5.64 -8.37 Emerging market and commodity related MSCI India 643.52 -12.68 -15.29 -19.50 26.47 28.35 currencies were the worst affected by the sell-off. MSCI Arabian Markets 631.87 -7.69 -9.11 -9.57 -31.17 -38.94 The MSCI World index fell by almost 9% in MSCI Emerging Markets 880.43 -23.19 -24.07 -18.14 11.88 13.14 MSCI Europe 78.36 -16.80 -18.71 -12.94 -12.44 -34.32 September as emerging market equities, MSCI World 1,104.06 -17.06 -17.36 -6.37 -6.63 -19.61 commodities and even gold and silver which were Dubai 1,431.71 -5.62 -7.21 -14.97 -65.31 -70.29 previously safe havens were sold off. Treasuries 2,533.41 -6.32 -3.78 -5.23 -35.97 -28.52 were the beneficiary of the uncertainty, despite Jordan 1,991.60 -4.87 -8.28 -13.65 -51.03 -39.27 the ratings agency concerns, with yields dropping Bahrain 1,165.75 -11.67 -18.64 -19.31 -52.66 -47.83 to record lows. Egypt 4,137.35 -23.00 -24.51 -37.64 -41.39 -35.80 Morocco 23,644.19 0.14 -7.81 -4.17 -7.40 28.21 Qatar 8,393.92 0.39 0.08 9.08 -9.88 11.64 The downward trajectory in macro data remains a Kuwait 5,833.10 -6.09 -7.33 -16.49 -54.57 -42.66 concern for the markets as they search for a Oman 5,602.29 -5.31 -10.01 -13.45 -34.04 2.87 glimmer of good news to tide them over while Saudi Arabia 6,112.37 -7.05 -6.86 -4.38 -18.05 -46.43 politicians the world over try to resolve internal economic issues. The lack of resolution of the FIXED INCOME Eurozone sovereign debt crisis continues to be the 2 Year US Treasury Yield 0.24 -46.90 -68.91 -42.44 -87.60 -94.81 cause the main concern the world over, as the 10 Year US Treasury Yield 1.92 -39.39 -44.24 -23.68 -49.90 -58.61 10 Year UK Gilt Yield 2.43 -28.11 -33.75 -17.63 -45.38 -46.27 longer the delay, the more inevitable a double-dip JPMorgan Global Govt Bond Index 518.50 3.06 6.69 5.16 27.41 46.47 as delay breeds further economic deterioration. BarCap Global Emerging Mkt Yield 6.54 17.84 13.74 24.57 -23.15 6.86 Having been so oversold in the past 3 months, a BarCap Inv Grade Yield 4.29 12.60 4.63 -2.05 -47.62 -19.51 small sample of good news injected into the BarCap Global High Yield 9.65 30.41 34.40 22.31 -27.22 24.68 markets could project them sharply higher in a display of sheer willingness to evade a bear CURRENCY market and get the world economy back on track. USD Per GBP 1.558 -2.92 -3.04 -0.84 -12.47 -16.76 USD Per Euro 1.339 -7.69 -5.24 -1.81 -5.00 5.63 Unfortunately, considering the state of the Yen Per USD 77.06 -4.34 -7.03 -7.75 -27.38 -34.79 economic environment, the “boom days” are still very far off, and perhaps the only “boom” we COMMODITIES experience in the short-term is the sound a bomb Gold Spot 1,624.0 8.24 14.12 24.12 86.46 171.43 makes when it goes off. Brent Crude 106.3 -4.60 -8.65 28.93 9.00 73.15 S&P GSCI Commodity Index 591.0 -11.64 -16.90 8.23 -5.02 38.07 http://new.gloomboomdoom.com/public/pSTD.cfm?pageSPS_ID=1000 Data source: Bloomberg

Newsletter Q4 2011 > Page 2 Sean Daykin Senior Fund Manager Investment ideas for volatile markets September is historically a very difficult month for stocks. The Stock Trader’s almanac refers to September as the month when “leaves and stocks tend to fall; on Wall Street it’s the worst month of all”. Certainly judging by the performance of global stock markets during August and thus far in September, the trend for poor performance seems to be continuing.

As Mark Twain once said, “history doesn’t repeat itself, but it does rhyme” and many investors get the strange feeling that we are repeating the terrible credit crunch of 2008.

Of course the credit crunch of 2008 was primarily caused by sub- prime losses and made much worse by the bankruptcy of Lehman Brothers while this crisis is much more about sovereign debts and the fiscal problems in Europe and the US.

However, the effects have so far been similar with the global economy beginning to slow and increasing concerns over banks and their liquidity and solvency.

Unfortunately, this time around, Central Banks and Governments are less able to provide the boosts that previously helped the recovery get back on its feet as they did in 2009. Interest rates around the world in Developed markets remain at or close to zero and Governments are constrained by the fiscal positions from increasing spending.

On the plus side, companies remain in good shape however there appears to be a lack of confidence which is preventing a hiring surge.

So in this uncertain environment what can investor do? We believe that, despite the uncertainty, declines in many asset prices have created some decent opportunities for investors who are willing to take on some risk. Specifically;

> High dividend stocks. With the declines in equity prices many companies now offer dividend yields that are significant with several in excess of 6%, well above the poor yields offered on US, German or UK Government bonds; GlaxoSmithKline (6.2%), AT&T (6.1%) and AstraZeneca (6%) being just a few examples. The high yield at least offers investors some cushion from further equity declines.

> Emerging market bonds. Many emerging markets now have much better fiscal situations than the developed markets and are more likely to be upgraded by rating agencies than downgraded. For example, Qatar or Abu Dhabi Sovereign bonds offer significantly higher yields than “safe” US Treasuries but have the same credit rating.

> High Yield bonds. As stated previously corporate balance sheets are quite strong and the risk of default is reasonably low. High yield bonds now offer yields of around 7%.

In summary, the economic situation remains difficult and the outlook murky however we believe that there are still some good opportunities for investors (with some risk appetite) to find assets with potentially decent returns.

Newsletter Q4 2011 > Page 3 Yong Wei Lee Senior Fund Manager MENA Markets – defensive over the quarter The third quarter of 2011 has been plagued with tumultuous movements in equity markets with the MSCI Emerging Markets and World Equity indices falling by 22% and 17% respectively over the quarter. Fears of a possible recession in the US and Europe, US credit rating downgrade by S&P as well as sovereign credit risks in Europe were foremost on investors’ minds that culminated in a panic sell off in global equity markets. While MENA equity markets were not spared the malice in global markets, the impact was far more muted with the S&P Pan Arab index declining by just 8% over the quarter. Egypt and Saudi Arabia declined the most for the quarter, down 23% and 7% respectively while Qatar and Morocco proved more defensive, holding flat over the period.

It would seem counter-intuitive for a region that is dependent on 2. High oil price levels continue to support government oil revenues to hold up so well in light of the global economic spending. In recent months, GCC governments have placed concerns. We’ve examined several possible reasons behind this greater emphasis on alleviating social concerns such as and have highlighted them below. employment and housing through increased investment into infrastructure and job creation. One such country being Saudi 1. The MENA region has been trading at low valuations relative Arabia, which recently announced a social expenditure to its global peers. The occurrence of ‘Arab Spring’ earlier programme worth $130bn to be spent over the next few this year held back performance of the regional markets while years. This is well affordable for a country that has amassed oil prices and global markets continued to perform well. For forex reserves of $500bn, about the size of its GDP. example, for the first half of the year, the S&P Pan Arab Index was down by 7% while both the oil price and the MSCI We estimate that the breakeven oil price for GCC fiscal budgets World Index were up by 4%. This has resulted in the region is $90/b. The average oil price for this year is $107/b, suggesting currently trading at only 9x 2011 PER compared to 11x for that despite the increased spending, the GCC economies are the MSCI World. likely to report a fiscal surplus in their aggregate budget for 2011. Even if the oil price was to fall below $90/b momentarily, the In addition, significant de-leveraging of corporate balance sheets huge fiscal reserves accumulated should help sustain investments and business restructuring post the financial crisis in 2008 held towards key initiatives. back the performance of regional markets in comparison to its peers. Since the lowest point of 2009, the S&P Pan Arab Index 3. Macro growth remains relatively robust for GCC. In recent has appreciated by 29%. In comparison, the MSCI Emerging months, many economists have downgraded the growth Markets and World Indices are currently still 88% and 56% expectations for developed markets. The IMF now expects GDP higher than the lows of 2009. Hence, in an environment where growth for developed economies to expand by 1.6% for 2011, there is uncertainty over future growth, these markets are down from 2.4% previously. In comparison, the GDP growth experiencing significant weakness, having achieved strong gains for MENA has been lowered marginally to 4.0% from 4.1%. in the last 2 years. At the corporate level, earnings growth of 15% year-on-year for 1H11 supports the view that companies are continuing to report healthy growth in excess of macro level growth.

Conclusion With the exception of Egypt, where political uncertainty has taken center stage and is affecting investor sentiment, macro fundamentals for GCC continue to remain supportive of economic growth despite the turmoil affecting developed economies. The key risk lies in a sharp and sustained decline in oil price. However, it is worth highlighting that OPEC, where GCC countries hold majority membership, has a global oil production market share of about 30%. If global oil demand declines due to weakness in the global economy, OPEC is very likely to act swiftly to reduce supply in order to keep oil prices from declining too sharply.

With this in mind, we remain cautiously optimistic on regional equities. In recent weeks, many attractive investment opportunities have surfaced prominently. These represent companies that have reported consistent growth in profits, with good earnings visibility, strong balance sheets and pay an attractive dividend. We continue to seek out such investments for our MENA portfolios. We believe that investing into robust companies at attractive valuations will yield promising returns over the medium to long term.

Newsletter Q4 2011 > Page 4 Scott Samuel Performance analyst Product performance

Emirates Real Estate Fund 160 140 Objective: The Emirates Real Estate Fund is a Shari'a compliant investment that aims to achieve high-yielding rental income 120 and medium to long term capital growth by investing in a diversified portfolio of residential and commercial properties. The 100 6 7 8 9 0 1 5 6 7 6 8 7 9 8 0 9 0 Fund will focus predominantly on real property assets throughout the UAE, whilst re1 taining the flexibility to invest in markets 80 0 0 0 0 1 1 0 0 0 0 0 0 0 0 1 0 1 1 ------r r g r g r g r g r g g c c c c c outside of the UAE. c 60 p e p e u p e u p e u p e u p e u u A D A D A A D A A D A A D A A D A A 40 Performance: Since its launch in mid 2005, the Emirates Real Estate Fund has returned a total -15.0% which equates to a compounded annual growth rate of -2.6%. The Real Estate Fund has been temporarily suspended for dealing in and out of the fund so returns stated here are as of the latest available price date of 30 June 2011. Fund

Emirates Islamic Money Market Fund 104 Objective: The Emirates Islamic Money Market Fund is a Shari’a compliant investment that aims to achieve a higher profit 103 return than traditional Shari’a compliant bank deposits of similar liquidity. The Fund will primarily invest in diversified 102 1 0 1 0 1 portfolio of Shari’a compliant money market instruments including collectives investing in such instruments. 0 0 0 1 0 1 0 1 1 0 0 1 1 1 1 1 1 1 1 0 1 1 1 1 1 1 1 - - - 1 - 1 1 101 - 1 ------1 1 - y r y r g g r v r - - c t p p b l n l n n a a a a c u u p o p e e e e u u a u u S A O S A J J A M M F J N J J A M M Performance: The Emirates Islamic Money Market Fund rose by 0.2% for the 3 months ended SepteD mber 2011. This 100 compares with a benchmark (3 Month Libor + 0.5%) of 0.19%. The Fund launch was 14 April 2010. Since this inception period, the fund has returned 2.3% on an annualized basis.

Fund Benchmark

Emirates Global Sukuk Fund 110

Objective: The Emirates Global Sukuk Fund is a US Dollar denominated, Shari’a compliant open ended fund that will invest 105 in a diversified portfolio of Sukuk issues by companies locally and globally. The primary investment objective of the Fund 0 1 0 1 0 is to achieve high income as well as capital growth. Certain share classes of the Fund will make1 income as well as capital 0 0 0 1 0 1 1 100 0 0 1 1 1 1 1 1 1 1 0 1 1 1 1 1 - 1 1 - 1 1 - 1 - 1 - - 1 ------1 - 1 - r y r y r g r v growth. Certain share classes of the Fund will make income distributions on ag semi-annual basis, derived from income - c - t p b p n l n l n a a a a c p u p o e u e e e u u a u u A M J M A J O S A M F J N J M D A J generated by the underlying sukuk or maturity proceeds of sukuk. S 95

Performance: The Emirates Global Sukuk Fund fell by 0.6% in the 3 months ended September 2011. Since inception the Fund’s return is 8.0% with a volatility of 3.3% (annualized). The Fund launch was 21 April 2010. Fund Benchmark

Emirates MENA Fixed Income Fund 115 Objective: The Emirates MENA Fixed Income Fund is a US Dollar denominated open ended fund, which aims to achieve a 110 high level of income as well as capital growth, predominantly through a diversified portfolio of MENA debt securities of 105 varying maturities along with cash and other ancillary instruments, such as Wakala. The Fund may also take on exposure to issuers outside the MENA region provided a significant part of their business activity is derived from the region. The Fund 100 A S J D M J N J F M A A S O J M J may take exposure to non-MENA securities up to a limit of 20%. 95 F M A u u a u u e e e e u e o p u p c a a a a n l n l n p b p b t - c - g v r g r y r y r - 1 1 ------1 - - 1 - 1 - 1 1 - 1 1 - 1 1 1 1 1 1 0 1 1 1 1 1 1 1 1 0 0 1 1 0 0 1 0 0 0 1 0 1 0 1 Performance: The Emirates MENA Fixed Income Fund rose by 0.5% in the 3 months ended September 2011. This compares 0 with a benchmark (HSBC Middle East Total Return Index, weighted with 5% cash) that was up 1.1%. Since Fund launch on 10 March 2010 the Fund is up 12.0% with a volatility of 4.6%. Fund Benchmark

Emirates Islamic Global Balanced Fund 120 Objective: The primary investment objective of the Emirates Islamic Global Balanced Fund is to achieve medium to long term 110 capital growth while minimising risk through diversification across asset classes. The Emirates Islamic Global Balanced Fund 100 1 0 9 8 7 6 will invest in a diversified portfolio of collective investment schemes and direct inve1 stm0 ents, 0 inc9 luding9 bu8 t not l8 imi7 ted to, 7 6 6 1 1 0 0 0 0 1 1 1 0 0 0 0 0 0 0 0 ------90 ------g r g r g r g r g r g r investments in Murabaha, Sukuk, Real Estate and Equity. c c c c c u p u p u p u p u p u p e e e e e A A A A A A A A A A A A D D D D D 80 Performance: The Islamic Global Balanced Fund fell by 9.7% over the 3 months ending 30 September 2011. The Fund managed to outperform the benchmark by 3.0% over this same period. The fund’s volatility of 7.7% remains well below the benchmark’s volatility of 9.5%. Fund Benchmark

Emirates MENA Opportunities Fund 150 130 Objective: The objective of the Fund is to provide investors with a professionally managed means of participating in Shari’a 110 compliant growth investments across a range of MENA markets. The Fund aims to achieve long-term capital growth from 90 a diversified portfolio of Shari’a compliant equity securities, although it can take on exposure to other assets from time to 70 time if the Investment Manager believes it would be appropriate to do so. These assets include, but are not limited to, 50 A A D A A D A A D A A D A A D A Murabaha and fixed deposits, Sukuk, trade finance, real estate, alternative strategies and cash equivalent assets. 30 A p u e p u e p u e p u e p u e p u c c c c c r g r g r g r g r g r g ------0 0 0 0 0 0 0 0 1 1 1 0 0 0 0 1 1 6 6 7 7 8 8 9 9 0 0 1 6 7 8 9 0 Performance: The MENA Opportunities Fund returned -4.8% for the third quarter while its benchmark index return was - 1 4.1%. This performance results in a total return of -11.8% (vs -20.3% for the benchmark) since the fund’s inception at the end of April 2006. The annualised return (2.3%) remains well ahead of the benchmark’s annualised return of -4.0%. The Fund Benchmark MSCI Arabian Mkts Fund has been able to outperform the benchmark over the long term while also maintaining a similar volatility level to the benchmark, 14.9% versus 14.5%.

Source: FactSet Systems, USD, Bid to Bid, periods as stated.

Newsletter Q4 2011 > Page 5 Scott Samuel Performance analyst Product performance

Emirates Islamic Alternative Strategies Fund 110 Objective: The Fund is seeking to generate positive absolute returns through all market cycles by investing in Shari’a 100 compliant investment vehicles employing investment strategies that, in the opinion of the Manager, offer the prospect of 90 7 8 9 0 high risk-adjusted returns. The Fund will aim to generate returns that are indepe1 ndent of wider market movements and 7 8 9 0 1 8 9 0 1 0 0 0 1 1 0 - 0 - 0 - 1 - 1 - 0 0 1 1 80 ------y y y y therefore will aim to provide protection from volatility normally associated with invey stment in traditional securities markets. p p p p p n n n n a a a a a e e e e e a a a a J S M J S M J S M J S M S M 70 Performance: The Emirates Islamic Alternative Strategies Fund has been re-launched to track the MAN GLG Multi-Strategy Fund through the existing Islamic wrapper. The historical performance since December 2002 of the MAN GLG Multi-Strategy Fund is 48.3% compared to 22.1% for the HFRX Global Hedge Fund Index. This was accomplished with volatility levels that were slightly higher (8.2%) relative to the HFRX Index (6.3%) translating to a higher sharpe ratio (risk adjusted) for the Fund. Fund Benchmark

Emirates MENA Top Companies Fund 140 Objective: The Emirates MENA Top Companies Fund is a conventional fund that aims to achieve medium to long term 120 capital growth through investments in a portfolio of GCC and MENA listed equities. The Fund will invest primarily in the 100 GCC and MENA region, but may also invest in other jurisdictions if suitable investment opportunities arise. The Fund may 80 also invest in recognised collective investment schemes, and may hold other instruments and deposits in order to preserve 60 A D A A D A A D A A D capital value and reduce overall portfolio risk. 40 A A u e p u e p u e p u e p u c c c c g r g r g r g r g ------0 0 0 0 0 1 1 1 0 0 0 1 1 7 8 8 9 9 0 0 1 7 8 9 0 Performance: Over the third quarter, Emirates MENA Top Companies has produced a total return of -5.0%, 1 outperforming its benchmark index, which returned -6.1% over the same period. Since inception, the fund outperforms its benchmark by 10.4%. Fund Benchmark MSCI Arabian Mkts

Emirates MENA High Income Fund 150 Objective: The Emirates MENA High Income Fund is an open ended fund which aims to provide a high level of income from 140 a managed portfolio of MENA assets. The fund will invest primarily in equities, but also take exposure to other suitable asset 130 classes such as fixed income instruments, deposits and ancillary assets. Income will be distributed on a semi-annual basis 120 with a target rate of USD 3 month LIBOR plus 300 to 500 basis points. Additionally, through its mix of underlying 110 investments, the fund offers potential for capital growth. 100 J M J M J M M J S N M J S N M J 90 S a a a u u u e e e o o a a a a a a n n n l l l p p p - - - v v r r r y y y - - - 0 1 1 - - - - - 0 - 1 - 1 - - 0 - 1 - 1 0 1 9 0 Performance: The inception date of the MENA High Income Fund was 20 January 2009. Over the third quarter, the Fund 1 0 1 1 0 1 1 9 0 1 9 0 1 9 0 9 0 1 9 0 has produced a total return of -3.8% versus a benchmark return of -5.4%. Since inception, the Fund’s return is 35.3% versus 1 a benchmark return of 27.2%. The out performance of the fund has been generated with lower levels of volatility. The Fund Benchmark Fund’s volatility is at 15.3% versus 16.8% for the benchmark.

Emirates Active Managed Portfolio 140 Objective: The portfolio may invest globally through collective investment schemes in a range of asset classes including 120 cash/near cash, fixed income, equity, property and alternative strategy funds, with the aim of providing long-term capital 100 6 7 8 9 0 1 6 7 8 9 0 growth. The portfolio restrictions and investment strategies that will be follow1 ed are such as to characterise this portfolio 5 6 7 8 9 0 6 7 8 9 0 1 0 0 0 0 1 1 0 0 0 0 1 1 0 0 0 0 0 1 - 0 - 0 - 0 - 0 - 1 - 1 ------80 ------y y y y y as medium high risk. y g v g v g v g v g v g v b b b b b b a a a a a a u o u o u o u o u o u o e e e e e e A M F N A M F N A M F N A M F N A M F N A M F N 60 Performance: The Emirates Active Managed Portfolio fell by 10.1% in the third quarter while the composite benchmark was down 13.6% over the same period. The Fund manager tenure began in March 2008. Fund performance since the current manager’s inception is -15.2%. This compares to a benchmark return of -18.3%. Fund Benchmark

Emirates Balanced Managed Portfolio 140 Objective: The portfolio may invest globally through collective investment schemes in a range of asset classes including 120 cash/near cash, fixed income, equity, property and alternative strategy funds, with the aim of providing long-term capital 100 1 0 9 8 7 6 1 0 9 8 7 6 0 9 8 7 6 growth through a balanced investment strategy. The portfolio restrictions and investment strategies that will be followed 5 1 0 9 8 7 6 1 1 0 0 0 0 1 1 0 0 0 0 1 0 0 0 0 0 - 1 - 1 - 0 - 0 - 0 - 0 ------80 ------y y y y y y g v g v g v g v g v g are such as to characterise this portfolio as medium risk. v b b b b b b a a a a a a u o u o u o u o u o u o e e e e e e A M F N A M F N A M F N A M F N A M F N A M 60F N Performance: The Emirates Balanced Managed portfolio fell by 7.4% for the quarter ending 30 September 2011. The composite benchmark had a return of -9.5% over the same period. The Fund manager tenure began in March 2008. Fund performance since the current manager’s inception is -11.3%. This compares to a benchmark return of -12.4%. Fund Benchmark

Emirates Conservative Managed Portfolio: 140

Objective: The portfolio may invest globally through collective investment schemes in a range of asset classes including 120 cash/near cash, fixed income, equity, property and alternative strategy funds. The portfolio aims to provide long-term capital growth through price appreciation through investments in collective investment schemes investing in securities and 100 instruments in markets worldwide. The portfolio restrictions and investment strategies that will be followed are such as to N A N A N A N A N A N A characterise this portfolio as low to medium risk. 80 F M F M F M F M F M F M e e e e e e o u o u o u o u o u o u a a a a a a b b b b b b v g v g v g v g v g v g y y y y y y ------0 0 0 0 1 1 0 0 0 0 0 1 0 0 0 0 1 1 0 0 0 0 1 1 6 7 8 9 0 1 5 6 7 8 9 0 6 7 8 9 0 1 Performance: The Emirates Conservative Managed Portfolio fell 2.8% over the quarter ending 30 September 2011, while 6 7 8 9 0 1 the composite benchmark return was down 4.1% over the same period. The Fund manager tenure began in March 2008. Fund performance since the current manager’s inception is 5.8%. This compares to a benchmark return of 12.2%. Fund Benchmark

Source: FactSet Systems, USD, Bid to Bid, periods as stated.

Newsletter Q4 2011 > Page 6 Salman Bajwa Senior Manager

Emirates Islamic Alternative Strategies Fund: tie up with a member of the Man Group

Emirates NBD Asset Management Limited is collaborating with the world’s largest independent alternative asset manager, Man Group, to build on the success of the Emirates Islamic Alternative Strategies Fund, which has outperformed its inception since benchmark nearly four years ago.

The fund will allocate assets to the Man GLG Multi Strategy Fund > The Man GLG Multi Strategy fund offers access to the complete which is managed by Man Investments, a member of the MAN range of MAN Group products Group. This allocation of assets will take place through the fund’s existing Shari’a compliant structure. In addition to this, Emirates NBD > As a multi strategy solution, the Man GLG Multi Strategy Fund Asset Management has waived the fund’s performance fee and actively allocates assets to the most appropriate alterative strategy reduced the notice period on redemption to 20 business days solutions effective from the end of July 2011. > Investors will be able to share in the performance of the Man GLG Benefits to investors from this collaboration Multi Strategy Fund The fund is one of the very few Shari’a compliant alternative strategy products available in the market today. Through this partnership with > Waiver of the fund’s performance fee reduces the cost to Man Group investors will further benefit in the following way: investors

Publication source: 27 September 2011 – http://www.cpifinancial.net, http://www.bloomberg.com, 28 September 2011 – Gulf News, The National-Business, Khaleej Times, Al Khaleej-Business, Al Bayan-Business, Al Ittihad, Emarat Al Youm

Newsletter Q4 2011 > Page 7 Salman Bajwa Senior Manager

Emirates NBD Asset Management: equity manager of the year award

With a strong performance in testing markets, Emirates NBD Asset Management wins the equity manager of the year award.

Emirates NBD Asset Management, a wholly owned subsidiary of the major UAE-bank Emirates NBD, has been presented the first ever Equity Manager of the Year award in Global Investor/isf’s Middle East awards.

Equity fund managers have had a tough time of it of late. Local unrest and global financial market volatility means that almost all GCC stock market indices have fallen this year, so much so that in the first quarter of 2011, the majority of GCC Equity funds gave negative returns.

However, for Emirates NBD Asset Management, a focus on high quality companies has contributed to relative outperformance of its funds in the year. For example, the Emirates MENA Top Companies Fund had a one year return of 3.27% compared with the S&P Pan Arab Index, which provided returns of 0.16%.

Furthermore, in August 2011, Emirates NBD Asset Management announced high dividend payouts on its funds for the first half of 2011. The Jersey-domiciled funds, which cover Islamic and regional debt instruments, as well as a high yielding equity- based product, delivered annualised income distributions of 4.5% to 5%.

Emirates NBD’s equity specific funds comprised of stocks linked to domestic consumption and business investment in Saudi Arabia, Qatar and the UAE. They focus on stocks paying high dividends, high quality companies mispriced by the market, and low valuation multiples compared to other markets.

While recent economic disruption has affected the performance of regional equity markets, Emirates NBD Asset Management is confident that this is just a phase.

For access to our quarterly newsletter or fact sheets for the investment products, please follow the link indicated here: http://www.emiratesnbd.com/assetmanagement

The information and opinions expressed herein are made in good faith and are based on sources believed to be reliable but no representation or warranty, express or implied, is made as to their accuracy, completeness or correctness. These opinions are not intended to serve as authoritative investment advice and should not be used in substitution for the exercise of own judgement. This information, including any expression of opinion, has been obtained from or is based upon sources believed to be reliable, and is believed to be fair and not misleading. Any opinion or estimate contained in this presentation is subject to change without notice. Neither Emirates NBD Group nor any of its directors or employees give any representation or warranty as to the reliability, accuracy or completeness of the information, nor do they accept any responsibility arising in any way (including by negligence) for errors in, or omissions from the information. For further details of the investment products available from the Emirates NBD Group please contact your local Emirates NBD/Emirates Islamic Bank Branch. This document is provided for information and illustration purposes only. It does not constitute a solicitation, recommendation or offer to buy or sell any specific investment product or subscribe to any specific investment management or advisory service. Prospective investors in a Fund must obtain and carefully read the Fund’s most recent Private Placement Memorandum and Supplement as well as seek separate, independant financial advice if required prior to making an investment in the Fund to assess the suitability, lawfulness and risks involved.

This information is not for distribution to the general public but for intended recipients only and may not be published, circulated, reproduced or distributed in whole or part to any other person without the written consent of Emirates NBD Asset Management Ltd (“Emirates NBD AM”). Where this presentation relates to a Fund or an investment product licensed to be marketed, it is directed to persons authorized to invest in the Fund / investment product as applicable, and residing in jurisdictions where the Fund / investment product is authorized for distribution or where no such authorization is required. The Fund / investment product is intended for sophisticated investors only who understand the risks involved in investing in the Fund / investment product and can withstand any potential loss there from. The Fund / investment product may not be guaranteed and historical performances are not indicative of the future or likely performance and should not be construed as being indicative of or otherwise used as a proxy for the future or likely performance of the funds / investment products. The value of the investment and the income from it can fall as well as rise as the Funds / investment products are subject to investment risks, including the possible loss of the principal amount invested. The information contained herein does not have any regard to the specific investment objectives, financial situation or the particular needs of any person. This information has been distributed by Emirates NBD AM for and on its own behalf . Emirates NBD AM is regulated by the Dubai Financial Services Authority.

Newsletter Q4 2011 > Page 8 Scott Samuel Performance Analyst Product performance

Global Fund Range performance summary as at September 2011

Pricing Description Performance

Latest Prev Risk 3 6 1 3 5 Product Name Price Price Sharia Rating Type Mths Mths Year Year Year % % % % %

Emirates Islamic Money Market 10.33 10.33 • 1 Islamic Money Mkt 0.21 0.60 2.00 ––

Templeton Global Fixed Income 24.11 26.21 2 USD Fixed Income -7.98 -5.97 -2.94 34.02 59.14

Emirates Conservative Managed 1.03 1.05 2 Global Multi Asset -2.75 -2.91 -3.59 -4.99 -8.40

Close Freehold Income Trust 3.81 3.8 2 Global Property 2.12 3.90 5.63 18.42 34.26

Emirates MENA Fixed Income 11.2 11.33 2 MENA Fixed Income 0.47 3.69 5.08 ––

PIMCO GIS Total Return Bond Fund 22.61 23.02 2 USD Fixed Income -1.65 0.04 -0.66 24.64 –

Emirates Balanced Managed 1.11 1.15 3 Global Multi Asset -7.35 -7.28 -4.82 2.06 -7.03

Emirates Active Managed 1.08 1.13 3 Global Multi Asset -10.11 -10.57 -7.69 -1.40 -10.53

Emirates Islamic Global Balanced 9.54 10.05 • 3 Global Multi Asset -9.66 -9.60 -4.85 -10.69 -8.04

Emirates Real Estate Fund* 8.5 8.5 • 3 Regional Property – -0.82 -14.83 -47.92 -30.56

GAM Diversity Fund 641.79 654.36 3 Alternative Strategy -4.14 -4.44 -1.66 -6.49 -5.05

PIMCO Global Investment Grade Credit 12.86 13.14 3 USD Fixed Income -2.13 -0.69 -0.46 ––

Emirates Global Sukuk 11.71 11.85 • 3 Global Sukuk -0.56 2.12 4.52 ––

Crescent Global Equity • 4 Global Equity –––––

GAM Worldwide 1908.08 2150.54 4 Global Equity -22.34 -22.56 -13.83 -12.52 -18.65

Jupiter Income Fund 376.22 383.27 4 Specialist Equity -11.75 -11.50 -7.57 -1.50 -27.22

Jupiter Financial Opportunities 282.59 308.29 4 Specialist Equity -21.19 -23.74 -24.85 -0.87 -9.18

Franklin Mutual North America 41.27 44.72 4 Regional Equity -16.58 -16.31 -5.28 -6.10 -19.68

Schroder European Fund 16.29 17.73 4 Regional Equity -23.38 -23.34 -15.60 -14.67 -35.05

GAM Japan 980 1004.07 4 Regional Equity -12.63 -15.14 -7.96 -18.65 -38.87

Schroder Emerging Markets 10.61 12.39 5 Emgng Mkt Equity -23.00 -24.27 -16.46 17.11 17.76

Templeton Asian Growth 26.67 31.34 5 Emgng Mkt Equity -20.74 -21.93 -14.22 49.66 57.16

Templeton BRIC 14.35 17.21 5 Emgng Mkt Equity -26.90 -29.48 -21.93 -2.38 7.17

Schroder Greater China 35.07 41.4 5 Emgng Mkt Equity -22.15 -21.77 -19.45 31.89 44.74

Franklin India Fund 22.26 24.2 5 Emgng Mkt Equity -17.71 -18.82 -20.33 35.98 56.43

Emirates MENA Opportunities 8.82 8.99 • 5 Regional Multi Asset -4.76 -6.50 -5.64 -24.02 -15.18

Schroder Commodities 5 Commodities –––––

Emirates Islamic Alternative Strategies 8.6 8.77 • 5 Alternative Strategy -4.24 -6.44 -4.56 -6.60 –

Emirates MENA Top Companies 7.89 8 5 Regional Equity -5.01 -5.47 -3.38 -24.35 –

Emirates MENA High Income Fund 1.34 1.35 5 Regional Multi Asset -3.84 -3.70 -3.34 ––

Schroder ISF Emerging Market Debt AR 25.51 25.82 5 Emgng Mkt Debt -1.16 -0.70 -2.41 17.67 26.60

Prudential IOF Dragon Peacock Fund 15.82 18.01 5 Emgng Mkt Equity -22.55 -26.47 -24.35 23.86 –

Schroder ISF Global Energy Fund 28.34 34.43 5 Energy -28.79 -36.13 -17.06 -13.31 –

Emirates Emerging Markets Equity Fund 6.58 7.63 • 5 Emgng Mkt Equity –––––

Notes: 1. Performance in LOC on a Bid-Bid basis, source: Bloomberg 2. Sharia compliant funds have been approved by the Fatwa and Shari’a Supervisory Board of Emirates Islamic Bank * The Emirates Real Estate Fund is temporarily suspended for dealing in and out of the funds. Valuations stated here are the latest available prices. There is expected to be an indicative valuation for the Emirates Real Estate Fund early in Q4.

Newsletter Q4 2011 > Page 9

Branch contact details

Deira Branch Jumeirah Beach Walk Branch Al Qiyadah Branch Baniyas Road, Dubai Marina, Opposite Al Ahli Club & Lulu Hypermarket PO Box 2923 Dubai PO Box 2923 Dubai Al Nahda Road, Dubai, UAE Tel: +971 4 225 0077 Tel: +971 4 427 0353 Tel: +971 4 238 8440 Fax: +971 4 226 4302 Fax: +971 4 427 0350 Fax: +971 4 250 7957

Al Souk Branch Dubai Mall Branch Sharjah Industrial Branch Al Falah Road, Dubai Mall, PO Box 44470 Sharjah PO Box 11954 Dubai PO Box 2923 Dubai Tel: +971 6 534 5577 Tel: +971 4 309 3490 Tel: +971 4 434 4100 Fax: +971 6 534 6006 Fax: +971 4 353 0630 Fax: +971 4 434 4133 Sharjah Main Branch Al Maktoum Road Branch World Trade Center Branch King Abdul Aziz Rd, Al Qassimia Area, Sharjah Al Maktoum Road, Exhibition Hall No 4. Dubai Tel: +971 6 572 8898 PO Box 52088 Dubai Tel: +971 4 332 3636 Fax: +971 6 572 8810 Tel: +971 4 603 6004 Fax: +971 4 331 0387 Fax: +971 4 227 6987 Al Taawun Branch Umm Suqeim Branch Al Taawun street, Al Taawun 2 Building, Sharjah Jumeirah Branch Spinneys Centre, Ground Floor, Tel: +971 6 545 4666 AlWasl Road, Dubai PO Box 11909 Dubai Fax: +971 4 394 0010 Abu Dhabi Branch (Najdah) Tel: +971 4 349 5969 Najdah Road, PO Box 40355, Abu Dhabi Fax: +971 4 349 5453 Sheikh Zayed Road Branch Tel: +971 2 674 5588 Saeed Tower, Fax: +971 2 677 1978 Jebel Ali Branch Dubai Near Gate No. 3 Tel: +971 4 332 2534 Al Muhairy Center Branch PO Box 777 Dubai Fax: +971 4 331 4591 Zayed Street, PO Box 34543 Abu Dhabi Tel: +971 4 8085800 Tel: +971 2 631 9696 Fax: +971 4 8815545 Group Head Office Branch Fax: +971 2 631 8040 Baniyas Road, Deira, Green Community Branch Dubai Abu Dhabi Main Branch PO Box 2923 Dubai Tel: +971 4 201 2090 Sheikh Khalifa St, PO Box 110811, Abu Dhabi Tel: +971 4 885 3000 Fax +971 4 221 8777 Tel: +971 2 627 5554 Fax: +971 4 885 3639 Fax: +971 2 626 9398 Oud Metha Branch Branch Gulf Residence Building, Muroor Branch PO Box 2923 Dubai Dubai Al Muroor Street, Abu Dhabi Tel: +971 4 232 5568 Tel: +971 4 336 0015 Tel: +971 2 449 0404 Fax: +971 4 232 5623 Fax: +971 4 336 6145 Fax: +971 2 449 4824

Mirdiff Branch Bank Street Branch Qaryat Al Beri Branch PO Box 2923 Dubai BurJuman Centre, Dubai Qaryat Al Beri Souq, Level 2, Abu Dhabi Tel: +971 4 288 3774 Tel: +971 4 434 4111 Tel: +971 2 558 7227 Fax: +971 4 288 4695 Fax: +971 4 434 4139 Fax: +971 2558 1705

Mankhool Road Branch Emirates Airline HQ Branch Tourist Club Branch Nashwan Building, Next to EPPCO Airport Road, Dubai Electra St, Tourist Club Area, Mankhool Road, Tel: +971 4 286 4461 PO Box 47676 Abu Dhabi PO Box 2923 Dubai Fax: +971 4 286 4322 Tel: +971 2 645 1572 Tel: +971 4 398 5848 Fax: +971 264 50384 Fax: +971 4 398 6242 Burj Khalifa Residence Branch Burj Khalifa, Branch Tower Branch (The Tower) Dubai Sheikh Khalifa Bin Zayed, Street Planning Sheikh Zayed Road, Tel: +971 4 432 8622 Roundabout, PO Box 15095 Al Ain PO Box 2923 Dubai Fax: +971 4 432 8621 Tel: +971 3 751 0055 Tel: +971 4 329 0009 Fax: +971 3 751 1300 Fax: +971 4 332 0990 Jumeriah Beach Road Branch Opposite Marcato Mall, Dubai Fujairah Main Branch Al Qusais Branch Tel: +971 4 340 0020 Hamad Bin Abdullah St, PO Box 1472 Showroom 4, Fax: +971 4 349 7797 Fujairah Almaidoor Complex Tel: +971 9 222 2116 PO Box 2923 Dubai IBN Battuta Branch Fax: +971 9 222 2115 Tel: +971 4 263 8777 , Andalusia Court, Fax: +971 4 261 1813 Dubai Ras Al Khaimah Branch Tel: +971 4 429 7917 Al Muntasir Road, Sheikh Omar bin Saqr Burj Al Arab Branch Fax: +971 4 368 5501 Al Qasmi Building, PO Box 12132 Ras Al Khaimah Umm Suqeim 3, Opposite Burj Al Arab Tel: +971 7 227 2800 Parcel ID 366-104, Dubai Satwa Branch Fax: +971 7 227 3395 Tel: +971 4 348 2112 Behind Old Satwa Government Clinic, Fax: +971 4 348 8494 Dubai Ras Al Khaimah Corniche Branch Tel: +971 4 349 2690 Yousef Obaid Al Neaimi Building, Ras Al Khaimah Galleria Branch Fax: +971 4 349 9030 Tel: +971 7 233 3077 Hyatt Regency, Corniche Road, Deira Fax: +971 7 233 4197 PO Box 2923 Dubai Nad Al Shiba Branch Tel: +9714 2738888 Al Ain Road, Dubai Main Branch Fax: +9714 2722086 Tel: +971 4 336 3693 Sheikh Rashid Bin Humaid Street, Ajman Fax: +971 4 336 3788 Tel: +971 6 742 4721 Barsha Branch Fax: +971 6 742 7479 Plot no. 376-2378, Muraqabat Branch Near Al Mawakeb School, Al Riqqa Street, Near Muraqabat Mushrif Mall Branch Road No. 316 & 23, Police Station Unit 264 & 265, 2nd Floor, Mushrif Mall PO Box 2923 Dubai Deira, Dubai Airport Road, Abu Dhabi, UAE Tel: +971 4 3234455 Tel: +971 4 254 6320 Tel: +971 2 673 7585 Fax: +971 4 3234458 Fax: +971 4 254 6594 Fax: +971 5 673 7238