AFC FUND (Non–US) December 2016

Fund Category Iraq Public Equities Investment Objective Achieve long-term capital appreciation by investing in a diversified portfolio of listed Iraq equities Country Focus Iraq as well as foreign listed companies that derive the majority of their business from Iraq. Monthly at NAV (five business Subscriptions days before month end) Fund Information Monthly at NAV AFC Iraq Fund Class D shares returned +4.8% in December, in-line with the Rabee RSISX Redemptions 90 days notice for Class D, USD Index (RSISUSD) which returned +4.6% in USD terms. The fund has underperformed 180 days notice for Class E. the RSISUSD by −2.9% since inception. Benchmark Rabee USD Index The market continued to recover with turnover slowing somewhat but volume was still at the higher end of the range for 2016. The improvement in market sentiment that started a couple Fund Manager Thomas Hugger of months earlier was evident through the ease of absorbing the giant auction of Asiacell at Chief Investment Ahmed Tabaqchali over 4x the average daily turnover (The courts mandated that North Bank, a bank that is being Officer unwound, liquidate its holdings in Asiacell, valued at the time of announcement at about Asia Frontier Capital (Iraq) Ltd., Investment Manager USD4.8 m, in an auction in mid-December to satisfy debts of a creditor). Foreign inflows turned Cayman Islands decidedly positive with some funds seeing inflows for the first time in over two years reflecting Asia Frontier Investments Ltd., Investment Advisor the changed sentiment towards Iraq. The change in sentiment extended to international media coverage which has shifted from the overstated risk perception of the last two years into one of Fund Base Currency USD opportunities and investments. Minimum Investment USD 10,000 The catalyst for a new bull market in the Iraqi equity market was set by the battle to liberate Mosul in October. With the worst of it behind us, the market started the long process of USD 1,000 Subsequent Investments discounting the end of the conflict and the associated economic benefits which will unfold Class D - 1.8% p.a. of NAV Management Fee through the massive expansion in non-oil investment spending which is estimated to be up Class E - 1.5% p.a. of NAV +192% yoy in 2017 after contractions of −68% in 2016 and −50% in 2015. These estimates are Class D: 18% p.a. of NAV provided by the latest IMF Iraq Country Report (December 2016), in which the IMF’s USD5.4 appreciation with high bn Stand-by Arrangement (SBA) is a part of the USD11+ bn of aid/loans that are earmarked watermark Performance Fee for Iraq. As the government is the biggest player in the economy and its investment spending Class E: 15% p.a. of NAV appreciation with high drives non-oil GDP, the recovery in non-oil capital investment spending will drive a growth of watermark non-oil GDP of +3% in 2017 vs contractions of −5% and −14% in 2016 & 2015 respectively. While, from a low base and below trend, it is the rate of change from negative to positive that Fund Domicile Cayman Islands will have the greatest impact on liquidity in the economy and ultimately the market. Launch Date 26 June 2015 The expansion in non-oil spending will likely be bolstered by the reversal of net outflows of Custodian Iraq Depository Centre (IDC) FDI’s and foreign portfolio investments. While figures for 2016 are months away from being published, Moody’s reported in June that “In 2015, year-over-year net foreign direct investment Auditor Ernst & Young, Hong Kong inflows declined by -30% to USD3.2 bn, and net portfolio inflows dropped by -86% to about USD630 m. Net other investment outflows nearly doubled to about USD8.5bn”. The same data Administrator Custom House, Singapore points were likely to have been neutral throughout 2016 with a pick-up towards year end. Legal Advisor Ogier, Hong Kong The bull market will likely be in fits and starts with plenty of zig-zags on the way as liquidity is still scarce with a time lag before it can filter down into the economy and the risks of the last Contact Information two years are still present. But, a change of direction is at hand with the opportunity to acquire Asia Frontier Capital Ltd. attractive assets that have yet to discount a sustainable economic recovery. st www.asiafrontiercapital.com As of 31 December 2016, the AFC Iraq Fund was invested in 14 names and held 3.4% in cash. As the fund invests in both local and foreign listed companies that have the majority of their business activities in Iraq, the countries with the largest asset allocation were Iraq (97.2%), Mr. Thomas Hugger Norway (2.4%), and the UK (0.4%). The sectors with the largest allocation of assets were

CEO, Asia Frontier Capital Ltd. financials (52.9%) and consumer staples (23.2%). The estimated trailing median portfolio P/E Tel: +852 3904 1015, Fax: +852 3904 1017 ratio was 13.11x, the estimated trailing weighted average P/B ratio was 0.96x, and the estimated [email protected] portfolio dividend yield was 2.20%.

Mr. Peter de Vries Fund Performance (Net) Marketing Director , Asia Frontier Capital Ltd. 1100 Tel: +852 3904 1079, Fax: +852 3904 1017 1000 [email protected] 900 Registered Office: c/o Elian Fiduciary Services (Cayman) Limited, 800 89 Nexus Way, Camana Bay, Grand Cayman, KY1-9007, Cayman Islands 700

Hong Kong Office: 600 Asia Frontier Investments Limited 500 905, 9th Floor, Loon Kee Building 267-275 Des Voeux Road Central 400 Hong Kong

AFC Iraq Fund USD (Net) Rabee USD Index

AFC IRAQ FUND (Non–US) December 2016

Country Allocation Sector Allocation 97.2% 100% 60% 52.9% 90% 50% 80% 70% 40% 60% 50% 30% 23.2% 40% 20% 30% 13.7% 20% 10% 10% 4.1% 2.7% 3.4% 2.4% 0.4% 0% 0%

Monthly Performances AFC Iraq Fund (non-US) Class D Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD 2015 USD +0.00% −7.92% −5.20% −2.20% −7.00% −3.39% +0.56% −22.86% 2016 USD −9.71% −4.31% −5.85% −2.73% −8.59% +7.29% −1.92% −3.28% +0.55% +1.91% +0.53% +4.83% −20.50%

Monthly Performances AFC Iraq Fund (non-US) Class E Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD 2015 USD +0.00% −7.89% −5.17% −2.18% −6.98% −3.37% +0.59% −22.74% 2016 USD −9.69% −4.29% −5.83% −2.71% −8.57% +7.32% −1.89% −3.25% +0.57% +1.94% +0.56% +4.86% −20.26%

NAV as of 31st December 2016 Class D Class E NAV 613.28 616.05 Since Inception −38.67% −38.39% Inception Date 26/06/2015 26/06/2015

Security Numbers

Class D Class E ISIN KYG0133A1756 KYG0133A1830 CUSIP G0133A175 G0133A183 Bloomberg AFIRNUD KY AFIRNUE KY Valoren 28570227 28881954

* The representative of the Fund in Switzerland is Hugo Fund Services SA, 6 Cours de Rive, 1204 Geneva. The distribution of Shares in Switzerland must exclusively be made to qualified . The place of performance and jurisdiction for Shares in the Fund distributed in Switzerland are at the registered office of the Representative. * AFC Asia Frontier Fund and AFC Fund are registered for sale to investors in Japan, Switzerland (qualified investors), Hong Kong & UK (professional investors), Singapore (accredited investors) and USA (accredited investors and qualified purchasers) * Asia Frontier Capital manages funds for both US investors and non-US investors. This fund is for non-US investors only. If you are a US , please refer to the fact sheet for the fund called “AFC Iraq Fund”. By accessing information contained herein, users are deemed to be representing and warranting that they are either a Hong Kong Professional Investor or are observing the applicable laws and regulations of their relevant jurisdictions. DISCLAIMER Investments in equities in Iraq are subject to market risk, idiosyncratic risk, liquidity risk, and currency exchange rate risk. The fund may use financial derivative instruments as a part of the investment process. This document does not constitute an offer to sell, or a solicitation of an offer to buy shares in AFC Iraq Fund (non-US). We will not make suchAFC offer Iraq or solicitation Fund is prior registered to the delivery for of an sale offering to memorandum, investors thein operatingSwitzerland agreement (qualified or articles of association,investors), a subscription Hong Kongbooklet, & and UK other (professional materials relating toinvestors), the matters herein. Singapore Before making (accredited an investment investors decision, we) adviseand USApotential (accredited investors to read investors these materials and carefully qualified and to purchasersconsult with their) tax, legal, and financial advisors. The materials have not been reviewed by the regulatory authority of any jurisdiction. Investment is open only to accredited investors as defined by the relevant legal jurisdiction of residence and/or nationality. We have compiled this information from sources we believe to be reliable, but we cannot guarantee its accuracy. We present our opinions without warranty. Past performance is no guarantee of future results. © 2016 Asia Frontier Capital Limited. All rights reserved.