MANAGER PRESENTATION | OCTOBER 2011

LEVEL 27, 225 GEORGE STREET, SYDNEY NSW 2000 | PH: 612 8078 5000 FAX: 612 8078 5050
ACN: 096 269 322 ABN: 50 096 269 322 AFSL: 252748
It is impossible to produce
a superior performnce
unless you do something
dierent to the majority.
SIR JOHN TEMPLETON
Table of Contents
1. 0 MATHEWS CAPITAL PARTNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1. 1 INVESTMENT PHILOSOPHY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1. 2 OUR PEOPLE AND HISTORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1. 3 BIG IS NOT ALWAYS BETTER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1. 4 HOW WE ARE ORGANISED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1. 5 BUSINESSES AND OWNERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1. 6 OUR FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1. 7 KEY COUNTERPARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2. 0 VELOCITY FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2. 1 INVESTOR SUITABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2. 2 INVESTMENT PHILOSOPHY - KEY PRINCIPALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2. 3 THEMATICS MATTER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2. 4 MARKET CONSENSUS IS MORE OFTEN THAN NOT WRONG. . . . . . . . . . . . . . . . . . . . 8
2. 5 FOCUS ON SMALLER MARKET CAP COMPANIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2. 6 RUN A CONCENTRATED PORTFOLIO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2. 7 IGNORE THE BENCHMARK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2. 8 SHORT SELLING CAN REDUCE RISK, CREATE ALPHA AND DIVERSIFY . . . . . . . . . . 12
2. 9 RISK EQUALS LOSS OF CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3. 0 PEOPLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4. 0 RESEARCH. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4. 1 IDENTIFYING THEMES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4. 2 SECTOR ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4. 3 COMPANY LEVEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4. 4 RESEARCH ANALYSIS DISCUSSIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5. 0 PORTFOLIO CONSTRUCTION AND RISK MANAGEMENT . . . . . . . . 19
5. 1 PORTFOLIO CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5. 2 SHORTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6. 0 FUND PERFORMANCE ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7. 0 EXTERNAL FUND COVERAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7. 1 RESEARCH AND RATINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7. 2 PERFORMANCE RANKINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7. 3 AWARDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8. 0 APPENDICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
1
2
1.0 Mathews Capital Partners
1. 1 INVESTMENT PHILOSOPHY
We seek to exploit the fact that the share market has a tendency not to fully understand, or factor in the
impact of macroeconomic, or industry level changes. Specifcally we are interested in changes that will
have sustainable, long-term impact on the investments that we hold.
Focusing on a) where the most change is taking place or b) where market consensus has wrongly estimated
change by a wide margin results in a small number - usually 3 or 4 - investment themes that present the
greatest opportunity for long-term capital appreciation with the least risk of loss of capital.
Identifying change at the company, industry sector and market level is equally if not more important as
determining a companys fair value.
Having identifed the macroeconomic or industry thematics that matter, we focus on deep analysis of each
theme. Te goal is to fnd the most efective way to exploit these opportunities over the medium term.
We believe its a lower risk to invest only in our best ideas and to hold onto an investment until the
underlying thematics and the fundamentals of the investment change. It is better to hold an investment
that we know, as opposed to fnding new ideas to replace it.
We are frm believers in the importance of frequent company meetings. Each year, we attend hundreds of
meetings to ascertain the companys own views and expectations for their organisation.
We believe that a skilled and experienced portfolio manager who a) has the fexibility to invest where the
opportunities lie, b) is focused on generating positive absolute returns over time and c) is dedicated to the
preservation of client capital will ofen invest in ways that difer signifcantly from market benchmarks.
We defne risk as the potential loss of client capital as opposed to defning risk with statistical measures
such as than volatility of investment returns or deviation from a benchmark.
Our remuneration is primarily dependent on the investment performance of our Funds. We eat our own
cooking by investing alongside our clients.
Te fundamentals of our investment style have not changed since inception, however we are constantly
investigating advances in fnance and portfolio theory and the way markets react to the macro
environment.
Note - Troughout this document we have sought to explain our investment philosophy and process
by drawing on academic research in support of our approach to investment and our own empirical
knowledge learned over many years.
We acknowledge that there is a wide range of possible investment philosophies, which could work
successfully. Due to the manner in which markets function, no single investment philosophy can ever
dominate. As soon as such an investment philosophy was discovered, every investor would adopt it and
consequently the opportunity that gave rise to the strategy would be arbitraged away.
We have great confdence in our approach to investment and in the ability of our Funds to continue to
deliver strong investment performance on behalf of our clients.
3
1. 2 OUR PEOPLE AND HISTORY
Mathews Capital Partners Pty Ltd (MCP or the frm) is stafed with a group of seasoned investment
professional with a minimum of 10 years experience in investment management and investment related
felds. Each of the senior operational staf has a similar level of experience.
With over two decades of investment markets experience, Philip Mathews, MCPs founder and Managing
Director is widely regarded as one of Australias leading absolute return Fund managers.
Attachment 1 Masters of e Market, Secrets of Australias Share Market Investors.
Mr Mathews has developed a strong corporate culture that allows the investment staf to retain both
fexibility and autonomy with regard to their portfolio management duties, while adhering to a systematic
and highly disciplined research process.
Mr Mathews has oversight of the frms investment strategy that results in a focus of the frms primary
research resources into 3-4 key thematics. Te selection and monitoring of the frms key investment
thematics is a continuous and dynamic process.
We believe that MCP has competitive advantage in identifying change and exploiting share market
anomalies and inemciencies, due to the following important characteristics:
t A stable team in investment professionals, highly skilled and experienced
t Each Fund manager is solely responsible and accountable for portfolio performance of their Fund with
incentives that ensure an alignment of interest between investment manager and the client
t Ensuring that the portfolio retains fexibility at all times to take advantage of changing market conditions
t An investment process that ensures quick decision making to construct a portfolio that can take
advantage of changing market and economic conditions, diversify risk and remain liquid
Tese characteristics position us to take advantage of changes at a macro, industry sector and company
level and ensure that the portfolio is best positioned to take advantage of the opportunities before a market
realignment, or before a change in market consensus reduces or eliminates the investment opportunity.
Te ability of the team to take pre-emptive action is equally important as the skill-set required to complete
an accurate valuation at a company level.
1. 3 BIG IS NOT ALWAYS BETTER
To a large extent, our business strategy drives our investment philosophy. A manager that has a business
strategy of collecting large amounts of funds under management (FuM), has little option but to deploy
this capital into larger cap companies. To attract large amounts of FuM, these managers are more focused
on maintaining performance relative to their peer group, or a benchmark, rather than producing that best
absolute returns for investors. At MCP, we are driven to produce the best returns for our investors and
ourselves. We are paid to perform, not aggregate huge amounts of FuM.
Our approach to capacity management is consistent with the academic research of Berk and Green, who
note in their 2004 paper Mutual fund Flows and Performance in Rational Markets, (See Attachment 2.)
that managerial talent is a scarce resource and is dissipated as the scale of operations increases. Tis is
because the majority of investors chase performance; that is they interpret high historical performance
as evidence of a Fund managers superior ability. At the same time, Fund managers are incentivised to
increase the size of their Funds, and their own compensation, to the point where size inhibits them from
continuing to deliver excess returns.
4
1. 4 HOW WE ARE ORGANISED
Each member of the investment team has dual responsibilities. Firstly, contributing as a research
analyst and secondly, as a dedicated Portfolio Manager. All team members participate in and share equal
responsibility for the frm research efort.
MCPs resources are designed and organized to meet the demands of the frms research process.
Key features include;
t Collaborative research efort with open lines of communication
t Emcient, fexible and responsive decision making process
t Maximum time allocated to the most critical investment tasks
t Minimum red tape/fat management structure/no hierarchy
t High level of accountability for each staf member
Research and Portfolio Management Team
t Philip Mathews, Founder and Managing Director/Portfolio Manager Sabre Fund/Peak Energy and
Global Resources Fund
t Ben Henri, Senior Research Analyst/Portfolio Manager Velocity Fund
t Rod Hinchclife, Senior Research Analyst/ Portfolio Manager Mathews Capital Global
Opportunities Fund
t Glen Barnes, Senior Research Analyst/Portfolio Manager Searchlight Asia Pacifc Fund
t Angus Wright. Senior Research Analyst/Portfolio Manager Searchlight Asia Pacifc Fund
Attachment 3 includes the biographies for the senior sta in the Research and Investments Team and the
Client Servicesand Operations Team.
1. 5 BUSINESS AND OWNERSHIP
Mathews Capital Partners Pty Limited holds Australian Financial Services Licence no.252748 and was
established in 2001 by the frms Managing Director and Founder, Mr Philip Mathews. MCP is owned
100% by Philip Mathews.
Te frm has 5 full time investment staf and 5 full time client services and operational staf based in
Grosvenor Place, 225 George Street, Sydney Australia.
In addition to the Velocity Fund, MCP performs the role of the management company for external Funds
including the Sabre Fund, Mathews Capital Global Opportunities Fund LP, Peak Energy and Global
Resources Fund. MCP is also the manager of the frms managed accounts and private investment vehicles.
Te Manager of the Velocity Fund, Velocity Management Pty Limited, is jointly owned by Mathews
Capital Partners Pty Limited (60% ownership) and the Funds Chief Investment Omcer, Ben Henri
(40% ownership).
Te Manager of the Searchlight Asia Pacifc Fund, Searchlight Management Pty Limited, is owned by
Mathews Capital Partners Pty Limited (75%) and the Funds Portfolio Manager, Glen Barnes (25%).

5
1. 6 OUR FUNDS
Mathews Capital manages in excess of A$1.5 billion
1
on behalf of a variety of high net worth individuals,
private companies, trusts, superannuation Funds and selected institutional clients. Table 1 on the following
page outlines the diferentiating factors of our other unlisted Funds to Velocity Fund.
Te balance of the group FuM is held in accounts managed for external clients and private
investment vehicles.
1. As at 30 June 2011
6
Table 1
FUND NAME
(CAR net aer
all fees to 30/6/11)
LAUNCH
DATE
FUM
30/6/11 STATUS
DIFFERENTIATING
FACTORS (to Velocity)
Sabre Fund
(23%)
April 2002 A$520 mio Closed
2008
t Higher leverage
t Greater trading bias
t International investments
t Greater exposure to direct
commodities
t Agri sector exposure
Searchlight Asia
Pacifc Fund
(39%)
October
2010
A$45 mio Open t pan Asian mandate and
investments
Peak Energy
and Global
Resources Fund
(N/A < 1 yr)
February
2011
A$52 mio Seeding
Phase
t Greater trading bias
t Higher leverage
t Greater exposure to direct
commodity futures
Mathews
Capital Global
Opportunities
Fund (43.5%)*
Re-launched
June 2011
US$36.2 mio Open t Larger cap stocks
t Higher leverage
t International investments
* Under the full-time management of Rodney Hinchclife, the Mathews Capital Global Opportunities Fund has produced annualised returns in
excess of 43.5% (net of all fees, for the period I January 2009 to 1 June 2011).
1. 7 KEY COUNTERPARTIES
For the Velocity Fund, MCP utilises the services of the following counterparties;
t Prime Broker Bank America Merrill Lynch
t Custodian Bank America Merrill Lynch
t Administrator Citco Fund Services
t Audit Ernst & Young
t Legal Henry Davis York
MCP acts as Trustee for the Velocity Fund.
MCP has institutional broking accounts with most of the major and second tier brokers.
MCP has maintained long-standing and successful commercial relationships with key counterparties
including our Fund auditors, administrators and prime brokers. Te frm currently employs the services
of prime brokers including Bank America Merrill Lynch, Credit Suisse and Deutsche Bank. We believe
there to be signifcant additional capacity, from both existing, as well as new prime brokers to support the
growth of Velocity Fund AuM.
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2.0 Velocity Fund
2. 1 INVESTOR SUITABILITY
Te Velocity Fund (the Fund) is best suited to sophisticated investors seeking access to an investment
strategy that has the potential to deliver a high level of absolute performance over the medium term.
Investors should have a high tolerance for a month-on-month volatility in returns as the Fund does not
target volatility or standard deviation of returns as a measure of risk. Investors most commonly use the
Fund as a high growth/aggressive growth strategy.
For these reasons we seek to partner with sophisticated investors who are focused on capital preservation
and growth. Te Velocity Fund is not recommended for investors concerned about month-on-month
volatility in returns as they are more are likely to redeem their investment in the Fund during periods of
market volatility, crystallising market-to-market losses, missing any potential rebound and consequently
sufering a loss of capital.
Tere are currently 156 individual investors in the Velocity Fund, including family omces, SMSF,
investment companies, Not-for-Profts and high net worth individuals.
Te Fund is currently available to wholesale investors under an Information Memorandum with a
minimum investment of $250,000. MCP intends registering the Fund and opening it to retail investors
via a PDS in December 2011, with a reduction of the minimum application amount to $100,000. Tis will
greatly improve access to the Fund.
2. 2 INVESTMENT PHILOSOPHY - KEY PRINCIPLES
Our investment philosophy is built on the following core principles based on our years of experi-
ence, empirical evidence and academic research:
t Tematics matter
t Market consensus is more ofen than not wrong
t Focus on smaller market cap companies
t Run a concentrated portfolio
t Ignore the benchmark
t Short selling can reduce risk and diversify
t Risk equals loss of capital
We cover each of these points in detail the following pages.
2. 3 THEMATICS MATTER
Just as a rising tide foats all boats; positive thematics can lead to signifcant and sustainable changes to
an industry. Tese themes create investment opportunities for investors willing to put in the hard work
and time necessary to understand what is changing. Identifying these themes is the main priority of our
investment research.
In contrast, most equity Fund managers adopt a bottom-up perspective. By focusing on individual stocks,
a Fund manager avoids making infrequent and dimcult decisions on large portfolio positions. Instead they
focus on frequent decisions regarding many small positions. Tis approach might minimise the impact of
a wrong decision on investment performance, but it also forgoes the opportunity to position the portfolio
to beneft from sustainable themes.
8
2. 3 THEMATICS MATTER (CONTINUED)
We have come to appreciate the importance of focusing on things that other investors ignore. As Sir John
Templeton famously observed in his ten investment principles:
If you buy the same securities as other people, you will have the same results as other people. It is
impossible to produce a superior performance unless you do something diferent to the majority.
2. 4 MARKET CONSENSUS IS MORE OFTEN THAN NOT WRONG
Experience has shown us that market consensus frequently underestimates or overestimates the change
to a companys earnings and the subsequent revaluation of a companys shares. Research by McKinsey
(McKinsey on Finance Number 35, Spring 2010) provides a dramatic example of the magnitude and the
consistency with which the share market misestimates earnings.
McKinsey found that sell side research analysts covering shares listed on the S&P 500 were typically
overoptimistic, slow to revise their forecasts to refect new economic conditions, and prone to making
increasingly inaccurate forecasts when economic growth declined.
Graph 1 below shows how analysts have gradually revised their over-optimistic forecasts downwards.
In the 25 years from 1985 to 2009, only in years such as 2004 to 2006, when strong economic growth
generated actual earnings that caught up with earlier predictions, do forecasts actually hit the mark.
Graph 1 - S&P 500 companies
Moreover, as Graph 2 on the following page shows, from 1985 to 2009 analysts have been persistently
overoptimistic, with estimates of earnings growth ranging from 10 % to 18 % a year, compared with the
average actual earnings growth of 7 %.
9
Graph 2 - Earnings growth for S&P 500 companies
5 year rolling average (%)
2. 5 FOCUS ON SMALLER MARKET CAP COMPANIES
We believe that investing in smaller to medium size market cap companies (i.e typically < $1 bn
market capitalization) consistently ofer a greater money making opportunity when compared to larger
companies, for the following reasons;
t Increased margin volatility and variability in earnings means that picking winners and avoiding
losers makes a bigger diference
t More sensitive to the economic cycle, interest rates and changes in cap-ex
t Companies far less likely to be included in the major indices
t More short term growth potential
t Greater likelihood of corporate actions such as mergers and acquisitions
t Signifcantly less, or no broker coverage of smaller companies
t Less broker consensus on earnings
Te result of this is that small cap shares prices are less likely to refect their true value, which in turn
creates investment opportunities for active managers. Conversely, less coverage by sell side analysts may
also indicate that there is less demand from institutional investors for small cap shares. Tis is consistent
with the relative illiquidity, higher bid/ask spread and market impact costs relative to large and mid cap
shares, all of which limit the capacity of large institutional investors (particularly those with high levels of
Funds under management) to invest in small cap shares.
We have learned that some of the best investment opportunities can be found when the price of an
investment is lower than it should be. And the price of an investment can be lower than it should be only
when people do not see its merit. Tis is ofen true of small cap shares.
10
2. 5 FOCUS ON SMALLER MARKET CAP COMPANIES (CONTINUED)
Te November 2010, JPMorgan publication Small caps: the case examined supports this view. Te data
included in the Graph 3 below shows that market cap companies above $10bn are followed by an average
of 13.3 analysts; cap bands below $500m have on average fewer than three active analysts.
See Attachment 4.
Graph 3
In addition to less broker coverage of small cap stocks than large stocks, Graph 4 below shows that analysts are
less likely to agree on earing forecasts. Tis divergence of opinion creates a greater number of opportunities for
a manager to identify and exploit companies where the market has overstated or understated earnings.
Graph 4
Te above charts illustrate factors as to why small caps potentially ofer greater investment opportunities
than large caps. Graph 5 on the following page further supports this view and shows that with the median
manager in the small cap universe outperforming their benchmark by a greater amount than the large
cap equivalent. Commencing in 2003 (without the tech boom included), the simple average of the rolling
12-month excess returns is 6.5% for small caps compared with 1.7% for large caps.
A
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s
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o
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e
r
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e
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Graph 5
2. 6 RUN A CONCENTRATED PORTFOLIO
Consistent with all the MCP investment vehicles, the Velocity Fund is managed on a concentrated, index
agnostic basis with most of the Funds capital allocated to the frms very best research ideas. We do
not believe that diversifcation de-risks the portfolio. In fact, diversifcation ofen results in a manager
investing in poorly performing sectors, or companies. Diversifcation is a necessary evil for many
managers as they focus on performance relative to particular benchmark, or tracking error and peer
relative performance.
Concentrated, best ideas portfolios such as those successfully run by MCP are consistent with academic
research. For example, in 2009 Randy Cohen, Christopher Polk and Bernhard Silli published a research
paper which analysed the holdings data of every U.S. registered mutual fund registered with the Securities
Exchange Commission for the period from January 1991 to December 2005.
See Attachment 5.
Tis data sample represents assets of $2.6 trillion and large part of the U.S. professional money
management industry. Eligible funds included those with assets exceeding $5 million and must contain
more than 20 stocks. Key fnding of the Best Ideas paper include;
t A small number of ideas provide most of the positive portfolio alpha
t Investors are generally worse of in a diversifed portfolio
t Te need to over diversify is driven by institutional factors, not investment related factors
t Large FuM is driven by managers desire to collect fees and minimize idiosyncratic volatility
12
2. 7 IGNORE THE BENCHMARK
We do not use market benchmarks to guide our investment decisions. Tere is, in fact, no single index that
resembles our portfolio.
Benchmark-relative investment is prone to the following problems:
t Te use of market capitalisation benchmarks encourages investment managers to measure investment
performance and risk on a relative basis rather than an absolute basis
t Investment managers are at times forced to hold shares that they deem unattractive for investment
simply because they are included in the benchmark. Tus investment managers may not be free to take
full advantage of their best ideas
t Market capitalisation benchmarks are backward looking. Tey systematically underweight value
shares (i.e. shares trading at a lower price relative to their earnings/dividend yield) and the shares of
smaller companies
t Benchmark churn. As of March 2010, of the 200 shares that comprise the S&P ASX 200 only 82 have
been constituents since inception
2. 8 SHORT SELLING CAN REDUCE RISK, CREATE ALPHA AND DIVERSIFY
Short selling is an important risk management tool as well as an opportunity for additional investment
return. For example we use short selling to reduce the portfolios net equity exposure during periods of
macroeconomic uncertainty.
In addition to identifying investment themes and companies that are suitable long-term investments, our
research also identifes stocks, which we believe are due for a fall in price for many reasons, including
thematic headwinds, poor management and/or overvaluation.
We seek to incorporate all of our insight about industries and companies, whether they are positive
or negative, when constructing the portfolio. Tus our short ideas are also an important source of
diversifcation.
We do not use short positions as a source of funding for long positions.
2. 9 RISK EQUALS LOSS OF CAPITAL
We believe that the most appropriate measure of investment risk is loss of invested capital and that the
biggest contributor to a loss of capital is paying too much for an investment. Paying too much efectively
locks in an insumcient reward or risk premium as compensation for investment risk.
In contrast, investing at a discount to fair value or looking for a margin of safety helps to ensure that we
are taking investment risks that are more likely to be rewarded. Terefore the best protection against risk is
our in-depth research. It is only once we understand how thematic and company-level changes will afect a
stocks valuation that we are able to ensure that we invest with a margin of safety.
13
3.0 People
Ben Henri, is the Chief Investment Omcer of the Velocity Fund and has been responsible for management
of the Velocity Fund since inception in July 2006. Ben also participates actively as a senior member of the
MCP research team.
Prior to taking on fulltime responsibility for the management of the Velocity Fund, Ben worked as senior
research analyst from 2002 to 2006 for the successful Mathews Capitals Sabre and Mathews Capital Global
Opportunities Fund L.P. (previously named Tomahawk Fund L.P.)
Ben has a successful and longstanding working relationship that extends over a decade with Philip
Mathews and other senior members of the investment investments team, including Rodney Hinchclife.
Prior to joining Philip Mathews, Ben worked as an oil analyst with Global Pacifc & Partners.
In addition to his day-to-day, portfolio management responsibilities Ben participates actively at all levels of
the research process from thematic research, to the individual company analysis. Ben is highly regarded
in the market by other research analysts, managers and companies. His key strengths include his;
t consistency, discipline and conviction with his research views
t ability to ignore market noise and focus on factors that will impact on his portfolio over the medium
to long-term.
t skill in quickly identifying the value proposition at a company level
t investment management style that is both committed and passionate, while not retaining an emotional
attachment to individual investments or themes
t attention to the details that really matter
t assessment of company management and information fow
t team-work and open communication style
Bens strengths are common to other successful managers and best summarized by James Valentine
Global Head of analyst training and development at Morgan Stanley and Author of Best Practices for
Equity Research Analysts.
See Attachment 6.
Time is an analysts most valuable resource and will be the weapon to provide competitive advantage.
During my career, I had the opportunity to watch hundreds of buy-side and sell-side analysts conduct
their jobs. Over time I could put the analysts into one of two categories: ofensive and defensive.
Te defensive analyst attempts to digest all incoming information, regardless of its importance in
generating alpha, primarily out of concern that something will be missed. While this is a great CYA
strategy, it doesnt give analysts time to fnd ideas that separate them from the pack.
Richard Bilotti, an analyst with 27 years of experience on the buy-side and sell-side, reinforces this view
with, Most analysts on the buy-side dont have time to be creative in terms of exploiting unknown areas.
Te analyst who is on the ofensive learns to ignore most, if not all, of the noise, so as to explore unique
avenues that may lead to great stock picks. Tese types of analysts have enough confdence so as not to be
embarrassed when they dont have an answer to more esoteric questions that may come up from portfolio
managers (for buy-side analysts) or salespeople and clients (for sell-side analysts) Successful analysts
spend most of their day on conducting research ofensively, specifcally focusing on activities that help
discover unique insights about critical factors. Some people might call these activities the proprietary
aspect of research or the core to developing an edge.
14
4.0 Research
4. 1 IDENTIFY THEMES
Our internal research is focused on identifying the main themes driving change in company earnings and
investing in securities that will a) beneft from a thematic tailwind and b) are attractively priced.
Our key investment themes are typically developed by the research team starting at a marco, or global
level. Most themes are driven by changes in one, or more of the following areas;
t Geopolitics
t Demographic
t Economic
t Technology
t Climate
Identifying large-scale demand /supply changes in the market are most ofen the catalyst for developing
the next level of the investment thesis. Table 2 below provides examples of how the themes are developed
and the end investment made by the Velocity Fund.
Table 2
THEMATIC
INITIAL
REVIEW
PERIOD CATALYST
INDUSTRY
SECTOR
INVESTMENT
EXAMPLE
Energy 2005 Supply/demand
sea change
Oil WTI
Precious Metals 2000 Central bank led
demand/Financial
Market instability
Gold ASX SAR
Energy 2006 China/India led
demand
Termal Coal ASX CEY
Energy 2005 Technological
change
Coal Seam Gas ASX AOE
China 2006 Supply
Constraints
Coking Coal ASC CLR
Resources 2008 Industry Activity Mining Services ASX NRW
REITS 2009 GFC/
Recapitalisation
Property ASX GPT
Resources 2007 Technological /
Demographic led
Demand
Copper ASX DML
As the table above demonstrates, the Fund has consistently identifed sustainable investment themes
at an early stage, investing before these themes have become popular. By investing early, the Fund has
positioned itself to beneft as more and more investors recognise the investment opportunity and assets
and liquidity increase. We have learned that most trends both bullish and bearish eventually become
overdone, profting those who recognise them early but penalising the last to join.
15
4. 2 SECTOR ANALYSIS
Graph 6 below shows the performance of the 13 leading ASX sector over the past 5 years. Our research
process has led us to invest in 4 of the 5 best performing sectors on the ASX. It is worth noting that all 8
sectors that the Fund choose not to invest in, have produced negative returns over the same period.
Graph 6
Portfolio managers are also analysts, covering all industry sectors. Tis allows us to share the insights
gained from our top-down and bottom up research among the team to construct a picture of whats
happening across the market.
Our goal is to continuously check the facts supporting the investment thesis behind each stock that we
own. To achieve this we gather as much information as possible, through company visits, internal research
and broker research.
We conduct between 400 - 500 company visits per annum meeting with CEO and CFO level staf. Graph 7
on the following page, illustrates the level of research activity in CY 2010 and is drawn from data accessed
from the MCP group diary.
Tis efort allows meaningful interaction with senior management of the companies that we are
researching as well as their competitors, clients and suppliers of companies.
16
4. 2 SECTOR ANALYSIS (CONTINUED)
Graph 7
As part of our research efort we use external research in the following ways:
t To determine the market consensus view on a company, industry sector or the share market as a
whole. We seek to identify opportunities where market consensus is underestimating or overestimating
change and broker research can provide an insight into market consensus.
t Using broker valuation models to save time. Te intellectual capital in any valuation model is
the assumptions used. We develop our own assumptions regarding the key drivers of company
performance, such as sales, costs, margins, working capital requirements, debt, interest rates, foreign
exchange rates and commodity prices as well as other assumptions such as the WACC (Weighted
Average Cost of Capital) or relative valuation multiples.
Our assumptions are based on our decades of investment experience researching companies listed on the
Australian Securities Exchange and the hundreds of company meetings that we attend each year.
We stress test our valuations by varying the key assumptions in the valuation model to determine the
impact of our assumptions on the valuation.
Te research efort focuses on sourcing direct information from corporates and industry experts.
Tis includes a large number of meetings with senior management, engaging the services of industry
consultants, lawyers and other professional service providers, undertaking numerous site tours of potential
investment opportunities, attending industry conferences and events and reading various annual reports,
company presentations and industry reports.
Flexibility is central to the way that we invest. To remain fexible our research process must allows us to
notice when the fundamentals of an investment or market have changed and respond accordingly.
17
Several of our senior staf began their investment careers on the sell-side preparing detailed broker
research. Tis experience has taught us that writing detailed stock reports and maintaining valuation
models for a large number of stocks has the potential to be counterproductive. Tis is due to the following
behavioural biases:
t Anchoring
t Confrmation Bias
t Efort Justifcation
A summary of the psychological challenges that afect investment can be found in the book Best Practices
for Equity Research Analysts by James J. Valentine.
4. 3 COMPANY LEVEL RESEARCH
By avoiding a rigid research process, we are free to spend most of our time on company meetings and
research; activities, which our experience has taught, yield the greatest investment insight and therefore
the greatest potential for proft.
Graph 8 below illustrates the level of company contact with Bathurst Resources a major position in
the Fund. Tis graph illustrates the consistency of direct company contact at the CEO/CFO level. Te
Manager has on average met, or spoken directly with the CEO, at least once a month since the Funds
initial investment was made in July 2010.
Graph 8
Bathurst Resources also provide a good example of an investment where the Manager has employed
the services of external industry experts to support the in-house research efort. Bathurst Resources is
currently managing the appeal process afer gaining resource consent in September for their coal asset
located on the Buller Plateau on the South Island of New Zealand. Te Manager has employed New
Zealand based environmental lawyers to monitor the process and provide expert advice.
18
4. 3 COMPANY LEVEL RESEARCH (CONTINUED)
Graph 9 below shows the distribution of the gains/losses of the Velocity Funds long equity positions, from
1 July 2006 to August 2011. Te dollar value of gains over the life of the Fund has been almost three times
the value of losses. For every dollar of research capital we are investing, we are producing three times the
amount of wining dollars than losing dollars, further validating the quality of the frms research process.
Graph 9 - Winning vs Losing Stock Positions
$-3,000,000.00
$-2,000,000.00
$-1,000,000.00
$-
$1,000,000.00
$2,000,000.00
$3,000,000.00
$4,000,000.00
$5,000,000.00
$6,000,000.00
$7,000,000.00
Winning Positions
Losing Positions
MCPs research process consistently delivers some of the top performing stocks on the ASX. In 2010, the
Fund owned signifcant positions in 3 of the Top 10 best performing stocks in the ASX200 Index including;
Bathurst Resources (#1 up 585.6%), NRW Holdings (#5 up 184.69%), Intrepid Mines (#7 up 181.79%).
4. 4 RESEARCH ANALYSTS DISCUSSION
Thematic Reserach
Coking Coal (Glen Barnes)
Crude Oil (Rod Hinchclife)
Company Level Research
Nexis Energy sell action (Ben Henri)
Carabella Resources buy action (Angus Wright)
19
5.0 Portfolio Constructions and Risk Management
5. 1 PORTFOLIO CONSTRUCTION
Te Velocity Fund strategy is a high-conviction, long-short equity strategy. Te portfolio has a long bias
and investment is concentrated in our best ideas. Te investment horizon for long positions is typically
12-36 months.
Risk is defned as permanent loss of capital. For this reason the strategy is focused on long-term capital
preservation.
Te portfolio manager has the fexibility to expresses his investment view via listed equities, and
derivatives whose underlying assets include equities, market indices and commodities.
Te portfolio typically invests predominantly in small cap stocks. Industry sector positioning is an outcome
of our macroeconomic research to identify the industry sectors that are likely to experience change.
Short positions are used to manage the portfolio exposures and downside risk. Tey are also an important
contributor to the Funds performance. Te Fund does not use excessive leverage, as this can create
situations where the Fund may be a forced seller.
Rather than use excessive fnancial gearing, we use portfolio construction to, in efect, leverage our
investment ideas. Tis involves:
t Select the right theme selecting companies from industries that will beneft from sustainable change
and avoiding companies in industries facing structural headwinds which can have a large impact on
investment performance.
t Focus on small companies Liquidity is a key driver of small cap performance. By recognising
attractive small cap stocks at an early stage, the Fund is positioned to beneft as other market
participants also invest and liquidity fows into the stock.
t Concentrated holdings Backing our best ideas increases the impact of each investment decision on
the Funds performance.
Te Fund has capacity to grow further without negatively impacting performance. We are committed to
close the Fund to new investors once the Fund has reached an optimal size.
We adopt a disciplined and systematic approach to portfolio construction. Each positioned is sized to
refect the following factors:
1. Conviction Our level of confdence in an investment idea based on our in-depth research
2. Downside risk Where we feel that there are downside risks to our investment thesis we will size a
position accordingly.
3. Portfolio overlap (both on a company and a sector basis) Tis involves answering the question -
does the investment idea bring something new to the portfolio or does it double-up on an exposure or
investment theme already present in the portfolio?
4. Market Liquidity Ensuring that there is enough liquidity to a) take a position proportional to our
conviction in an investment idea and our assessment of downside risk and b) exit a position relatively
quickly if our investment thesis turns out to be incorrect.
As of September 2011, Velocity Funds average holding in a single company is less than 1% of the
companys issued capital, with the largest holding less than 2% of issued capital.
20
5. 1 PORTFOLIO CONSTRUCTION (CONTINUED)
Portfolio and Risk Management
While Velocity Management Pty Ltd operates under a fexible mandate, under normalised market
conditions, the Fund will not materially exceed the parameters outlined below in Table 3 (as measured
at the time of investment).
Table 3
RISK PARAMETER INVESTMENT GUIDE
CURRENT POSITION
(1 September 2011)
Position Diversity 35-45 41
Concentration Single Position < 20% NAV
Top 5 < 50% NAV
Top 10 < 75% NAV
13.6%
41%
62%
Exposure Gross < 200%
Net < 100%
160%
46%
Unlisted Investments 5% of NAV <1 %
Individual holding as a % of
Issued Capital
< 5% 2.38%
Portfolio average holdings as a %
of Issued Capital
<1% 0.82%
Market Cap/Liquidity % of
Total Portfolio in Market Cap
Companies < 200 million
< 20% 14.4%
Buy Decisions - We look to purchase shares, which meet any or all of the buy criteria for each theme.
Individual company characteristics such as valuation or quality of management are looked at in relation to
other shares in the same sector.
Sell Decisions - We constantly monitor investment themes to ensure that they are sustainable and that
the investment thesis behind each theme still holds. Individual stocks are monitored to ensure that
their characteristics remain attractive relative to competing shares. When this is no longer the case, we
will mark the share for sale and will time the sales based on our normal market timing considerations.
Secondly we monitor behavioural fnance issues such as liquidity and market sentiment to determine an
optimal selling period.
Underperforming shares are constantly reviewed via daily and monthly attribution analysis and we
consider whether to sell or to possibly add to the holding.
21
5. 2 SHORTING
In order to minimise portfolio downside risk and reduce net exposure in periods of market uncertainty,
the Manager adopts an active and diversifed shorting strategy. Te manager has maintained short
positions on 92% of months since the Fund inception. Selection of shorting instruments is generally based
on a combination of the following factors;
t Liquidity and observable pricing
t Comparable beta to Funds long positions
t Overlap with Funds long positions from a macro driver perspective
t Delivering the most efective exposure to the Managers investment view
t Impact on Funds Net/Gross Exposure
Shorting has been a material proft centre for the Fund contributing approximately 10% of the total Fund
proft since Fund inception (noting that the Fund has a defnite long-bias, averaging a 80% net long
position since inception).
Table 4 below shows the various shorting instruments applied by the Manager and the reasons why the
exposure was required.
Table 4
INSTRUMENT WHY REQUIRED
Merrill Lynch Mining Basket Small-Mid Cap ASX Mining stocks by position
EuroStoxx50 Index Shorts European Sovereign Debt Crisis (fnancials specifc)
VIX Index Sept 30 Call Options US equity market volatility
S&P500 Futures Shorts US equity market downside risk
S&P500 August 1300 Put Options US equity market downside risk
S&P ASX200 Dec put options Australian equity market downside risk
ASX SPI Futures Shorts Australian equity market downside risk
Opportunistically, the Manager also uses stock specifc shorts as proft centre. Recent stock specifc shorts
that have been proftable for the Fund, have included ERA, Macquarie Bank and Leighton Holdings.
Shorting Analysis
A review of the how the Funds net equity exposure has changed over time provides an insight into the
portfolio construction process, specifcally how short positions are used to reduce risk.
For example, as the graph on the following page shows, the Velocity Fund began reducing the net equity
exposure of the Fund in July 08. By Sept 08 it was only 56%, which helped to reduce the impact of some
of the worst months of the global fnancial crisis.
Conversely, the Fund increased its net equity exposure in March 09 as the equity market was bottoming.
By May 2009 the rally was in full swing and the Funds net equity exposure was 88% , positioning the
portfolio appropriately to participate in the subsequent rally.

22
Graph 10
0
5000
10000
15000
20000
25000
30000
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40000
45000
Jul-
06
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06
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06
Jan-
07
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07
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07
Jul-
07
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07
Nov-
07
Jan-
08
Mar-
08
May-
08
Jul-
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09
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11
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11
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11
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
ASX 300 Accumulation Net Equity Exposure
6 per. Mov. Avg. (Net Equity Exposure)
For the last 2 years , the ASX 300 has been range bound between 4000-5000 points. Te net equity
exposure of the Fund has been below 80% for most of this period . Tus the Fund has been generating
returns in excess of the ASX 300 with less than 100% netmarket exposure suggesting that the Funds
performance is primarily driven by stock or theme selection rather than market directionality .
Te Fund has reduced its net equity exposure since the beginning of the year, before the US Debt crisis and
the Euro crisis really blew up , again positioning the portfolio appropriately to reduce risk.
In summary, the net equity exposure of the Fund varies in response to current conditions. Rather
than forecast the future, the portfolio is positioned protect capital and or capitalise on current market
conditions at the time, i.e. when there is an increase in risk, shorting is used to reduce net equity exposure.
Conversely, if markets are its cheap and bad news has already been priced in, then the Funds net equity
exposure increases.
23
6.0 Fund Performance Analysis
Table 5: Returns (net of all fees) to 1 September 2011
VELOCITY FUND
ACCUMULATED
RETURN
ASX300
ACCUMULATION
INDEX RETURN
VELOCITY FUND
OUT PERFORMANCE
V S ASX300
ACCUMULATION
INDEX
August (0.11%) (1.98%) 1.87%
Calendar 2011 0.95% (6.93%) 7.88%
2010 38.00% 1.90% 36.10%
2009 62.27% 37.59% 24.68%
2008 8.64% (38.92%) 47.23%
2007 50.24% 16.22% 34.02%
2006 52.82% 14.39% 38.43%
Total Since Inception 463.90% 5.96% 457.94%
Compound p.a. 39.76% 1.13% 38.63%
Te Velocity Fund has consistently delivered positive returns to investors through a wide range of
economic conditions and equity market conditions over the past 5 years and produced a high level of
outperformance in each fnancial and calendar year, since inception. Te Fund has consistently ranked as
one of Australia best performing absolute return Funds over the past 5 years.
24
Table 6: Risk Metrics (as at 1 September 2011)
RETURN
VELOCITY FUND
ACCUMULATED
RETURN
AUSTRALIAN
ALL ORDINARIES
EQUITY INDEX
BANK OF BERMUDA/
ASIA HEDGE
AUSTRALIAN LONG
SHORT A$
Best Month 29.81% 7.64% 5.86%
Worst Month (17.58%) (14.00%) (8.92%)
% Positive Returns 70.37% 57.41% 61.29%
COMPARISON TO
BENCHMARKS
Alpha 3.65% 2.51%
Annualised Alpha 53.74% 34.65%
Beta 1.02 1.70
Correlation 0.50 0.53
R-Squared 0.25 0.28
RISK / RETURN
DATA
Standard Deviation 33.21% 16.05% 10.18%
Sharpe Ratio (5%) 1.03 -0.39 0.21
Sortino Ratio (10%) 1.55 -0.70 -0.37
Downside Deviation
(10%) 18.42% 14.79% 8.55%
Max Drawdown (41.38%) (51.37%) (24.09%)
Months in Maximum
Drawdown 5.00 16.00 16.00
Months to Recover 6.00 0.00 9.00
Source: Zenith Investment Partners, September 2011
25
KEY TERMS
Best Month Highest monthly investment return since inception.
Worst Month Lowest monthly investment return since inception.
% Positive Returns Percentage of months that the Fund has delivered a positive investment return. It
is calculated as the number of months where the Fund had a positive investment, divided by the total
number of months since the Funds inception.
Alpha Te incremental return over and above a benchmark added by an investment manager through
active management since inception.
Annualised Alpha - Alpha expressed as an annualised rate.
Beta Statistical measure of the sensitivity of a portfolio to movements in the market index. Portfolios
with a beta greater than one are expected to be more volatile than the market as a whole, outperforming in
rising markets and underperforming in falling markets (vice versa for portfolios with a beta less than one).
Correlation Measure of the interdependence of two or more variables; for example, the returns recorded
by a portfolio and a market benchmark. A correlation coemcient can range from -1 (inverse relationship)
to +1(perfect correlation change in variables will be identical). A correlation coemcient of 0 indicates the
absence of a relationship between the variables.
R2 - Statistical measure of how well a regression line approximates real data points; an r-squared of 1.0
(100%) indicates a perfect ft.
Standard Deviation Statistical measure of the historical variability of returns relative to their mean (or
expected return). An indicator of the degree to which a portfolios returns deviate over a specifc period in
absolute terms or relative to a market benchmark.
Shape Ratio Statistical measure of reward per unit of risk. It is calculated as the excess return over the
risk-free return, divided by the standard deviation of excess returns.
Sortino Ratio Modifcation of the Sharpe Ratio. Calculated as the diference between the actual return
and the risk free return, divided by the downside risk. Here, downside risk is a measure of deviation of
historical returns falling below a specifed target rate of return.
Downside Deviation - A measure of downside risk that focuses on returns that fall below a minimum
threshold or minimum acceptable return (MAR). It is used in the calculation of a risk measure known as
the Sortino Ratio.
Maximum Drawdown Te maximum peak-to-trough decline in the Funds value since inception.
Months in Maximum Drawdown Te period of time, expressed in months, that the Fund remained at
maximum drawdown,
Months to Recover Te period of time, expressed in months, for the Fund to recover its peak-to-trough
loss in value. In other words the time taken for the value of the Fund to return from maximum drawdown
to the previous high-water mark.
26
COMMENTS ON RISK METRICS
Te high volatility associated with our concentrated, best ideas investment philosophy is obvious.
While the Funds volatility is relatively high according to traditional measures, it has delivered more
positive months with higher average returns than the broader Australian equity market. Te best month
performance is far superior to the broad market index (29.92% vs 7.64%). While the worst month for the
Fund is a worse relative to its the Australian equity market, the Fund has captured more positive months
than the Index, with higher average returns than the broader Australian equity market. Te Funds Sharpe
Ratio, a commonly applied metric of investment risk/return is high at 1.03 indicating that it delivers a high
return for its underlying volatility. Tis compares favourably to both the broader market indices (-0.39)
as well as peer group indices (0.21) providing further evidence that our research, analysis and portfolio
construction all help to ensure that the Fund is rewarded with strong returns for the investment risk taken.
Concentrated investment portfolios typically exhibit higher than usual variability in performance over the
short term; the Fund is no exception with standard deviation of the Funds returns 33.21%. What is most
important is that the majority of the volatility is upside, as downside volatility is only 18.42%, which is similar
to the broader equity market. Te result is an outperforming Fund where losses are rapidly recovered.
It is also worth noting that the Funds maximum drawdown is 10% less than that of the Australian equity
market. Also the number of months spent by the Fund in a drawdown and the number of months required
to recover capital losses is a signifcantly less than that of the Australian equity market. Tis is consistent
with our defning risk as permanent loss of capital rather than volatility of investment returns.
A low correlation of 0.5 to the Australian equity market indicates that there might be a diversifcation
beneft if Velocity is combined with other equity managers in a multi manager portfolio (e.g. in a core/
satellite portfolio).
Te risk metrics demonstrate that the Fund clearly adds the stock specifc risk that it wants to capture, but
not that of the broader market. Te Fund does not dilute its stock picking best ideas with other ideas in an
attempt to reduce volatility. It is expected that the Fund will continue to experience variability in returns
on a month-by-month basis.
27
7.0 External Fund Coverage
7. 1 RESEARCH AND RATINGS
Mathews Capital The Velocity Fund - January 2011
Te Mathews Capital Velocity Fund (the Fund), is an Australian long/short absolute return fund
managed by Portfolio manager, Ben Henri. Te Fund is a rare example of true high conviction investing. It
has demonstrated that it can deliver consistently high returns dominated by high monthly upside volatility.
Mathews Capital Partners Pty Limited (Mathews Capital) is the trustee of the Fund. Velocity
Management Pty Limited (Velocity or the Manager) is the Manager and is 60% owned by Mathews
Capital. Te directors of Velocity are Philip Mathews and Ben Henri.
Te Fund invests principally in Australian listed equities but also has smaller exposure to commodities
and derivatives. Te Manager invests locally believing that it has the most competitive advantage in this
geography due to the time zone, proximity and, in particular, access to company management.
Te Fund has continued to produce consistently strong returns since inception in July 2006 with a total
return of 457% at an annualised rate of 46.46% net of fees as at December 31, 2010. Published performance
surveys rank the Fund amongst the top performing Australian based absolute return funds since
inception.
Te Fund has produced positive returns every calendar year since launch through a wide range of
economic and fnancial market conditions including the GFC and associated equity market downturn.
While the Funds volatility is relatively high according to traditional measures it has delivered more
positive months with higher average returns than the broader Australian equity market. It is expected that
the Fund will continue to experience variability in returns on a month-by-month basis.
See Attachment 7 for a complete copy of the Zenith Product Assessment.
For more information on the Morningstar Ratings go to http://www.velocityfund.com.au/wp-content/
uploads/2010/12/Mornigstar_Ratings_Flyer.pdf
Te Velocity Fund was awarded a Five Star rating by Morningstar in September
2011. Tis rating is a quantitative rating based on risk-adjusted returns. Te Velocity
Funds rating was for the Hedge Funds Australia Category. Te Morningstar Rating
is an assessment of a funds past performance based on both return and risk
which shows how similar investments compare with their competitors.
28
7. 1 RESEARCH AND RATINGS (CONTINUED)
Management Company Overview
Mathews Capital Partners Pty Ltd is a privately owned Sydney based investment manager established by
Philip Mathews in 2001 following a career as a fund manager, research analyst and stockbroker both in
London and Sydney. Prior to founding Mathews Capital he was employed by Bell Potter from 1992 to 2001
as the frms senior institutional adviser.
Mathews Capital ofer a number of actively managed funds, principally on behalf of wholesale investors
including high net worth individuals, superannuation funds, family omces, and institutions and has total
funds under management (FUM) of over A$1.5 billion. Other funds include the Sabre Fund, a domestic
unit trust established in June 2001, and the Tomahawk Fund, established in the Cayman Islands for
ofshore investors in February 2005 (both of which are now closed to new investors) the Velocity Fund and
the Searchlight Asia-Pacifc Fund.
Mathews Capital has an established and stable investment team of six people including Philip Mathews
himself, along with portfolio managers Rod Hinchclife and Ben Henri, both of whom have been with
Mathews Capital since the frms inception, and Glen Barnes who joined in September 2010. Ben McGary
joined Mathews in 2008 as the frms senior analyst to provide analytical and research support to the
Portfolio Managers.
Te investment team is supported by a back-omce and administrative department of three, including the
CFO, Susan Smyth and the Operations Manager and Accountant, Cathy Young.
See Attachment 8 for a complete copy of the AFM Fund Review, February 2011.
29
7. 2 PERFORMANCE RANKINGS
From the data provided by global alternative investment database provider BarclayHedge
(www.barclayhedge.com), the Velocity Fund ranked rst of the 249 long-bias equity funds surveyed
for the 5 year reporting period to 30 June 2011.
See Attachment 9 for complete survey details.
30
7. 2 PERFORMANCE RANKINGS (CONTINUED)
From data as at 30 April from Australian Fund Monitors (www.fundmonitors.com) showing annualised
returns afer fees since fund inception, the Velocity Fund ranked rst out of the 96 equity based
managers with a track record more than two years.
See Attachment 10 for complete survey details.
Based on the annualised returns since fund inception net of all fees the Triple A Partners
(triplepartners.net.au) September 2011 Hedge Fund Performance Rankings placed the Velocity Fund as
one of the best performing funds across all strategies over a 5 year reporting period.
See Attachment 11 for complete survey details.
Absolute Return Equity Fund Performances
31
7. 3 FUND AWARDS
Te Mathews Capital Velocity Fund has been nominated as 1 of 6 funds (from amongst 900 Asia based hedge
funds with an aggregate $150billion in Funds under Management) in the category of Best Single Country
Fund for 2010/11 at the 2011 AsiaHedge Awards, to be held in Hong Kong on October 20th, 2011.
For more information go to http://www.hedgefundintelligence.com/AsiaHedge
Te Mathews Capital Velocity Fund received the BarclayHedge Recognition Award for Excellence as the
best performing long-bias equity fund.
Te Fund was ranked #8 in the Equity Long-Bias category for the month of August, 2011.
For more information go to: http://www.barclayhedge.com/research/rankings.html
32
8.0 Appendices
Attachment 1 Masters of the Market. Secrets of Australias Leading Sharemarket Investors. 2nd Edition, 2005
(http://www.bookworm.com.au/Book/Masters-of-the-Market-Secrets-of-Australias-Leading-Sharemarket-
Investors-2nd-Edition-9780731402946.aspx)
Attachment 2 Berk and Green, Mutual Fund Flows and Performance in Rational Markets, 2004.
Attachment 3 Biographies of Senior Staf
RESEARCH AND INVESTMENTS TEAM
Philip Mathews, Founder and Managing Director. Philip has a proven investment track record that
spans over 25 years as chief investment omcer of private unlisted Funds. Philip has managed the groups
successful fagship investment vehicle, the Sabre Fund since inception in 2002. Philip is also responsible
for managing the Peak Energy and Global Resources Fund launched in February 2011. Philip is widely
recognized as one of Australias most astute and successful private investors. Early in his career he worked
with Bell Potter Securities, Jardine Fleming Australia and ArmstrongJones Investment Management Pty
Limited. Philip has a Bachelor of Economics from Sydney University.
Ben Henri, Senior Research Analyst and Chief Investment Omcer, Velocity Fund. Ben has over 12 years
investment markets experience and previously worked with Philip Mathews at Bell Potter Securities. He
has worked at Mathews Capital Partners since it was established in 2001. Ben has been responsible for
the management of the very successful Velocity Fund since inception in July 2006. Prior to managing the
Velocity Fund, Ben worked as a Research Analyst for Mathews Capitals Sabre and Global Opportunities
Fund L.P. (previously named Tomahawk Fund L.P.) He has a B Arts (Hons) from University of
Queensland. Prior to working with Philip Mathews, Ben worked in oil exploration consulting.
Rod Hinchclie, Senior Research Analyst and Portfolio Manager, Mathews Capital Global Opportunities
Fund L.P. (previously named Tomahawk Fund L.P.) Rod has over 14 years experience in equity research
sales and trading. Prior to joining Mathews Capital Partners Rod worked with Philip Mathews at Bell Potter
Securities. Prior to this Rod spent 3 years in London with the asset-trading group of Nomura International
and the treasury division of GE. Rod is Investment Manager of the Mathews Capital Global Opportunities
Fund L.P. and has a BBus from UTS and a Masters of Applied Finance from Macquarie University.
Glen Barnes, Senior Research Analyst and Portfolio Manager, Searchlight Asia Pacifc Fund. Glen
joined Mathews Capital in 2010. Glen is responsible for the management of the Searchlight Asia Pacifc
Fund launched in September 2010. Glen has over 10 years fnance experience, including over 5 years in
corporate fnance in M&A and leveraged and project fnance, primarily at Deutsche Bank in Sydney and
over 3 years in the Non US Special Situations team at US based hedge Fund Satellite Asset Management in
their London omce. While at Satellite Asset Management, Glen was a portfolio manager for a US$300m
portfolio and involved in the management of a portfolio of up to US$1bn. Glen holds a Masters of Applied
Finance through KAPLAN and a Bachelor of Commerce (BCom) from the University of Queensland.
Angus Wright, Senior Research Analyst and Portfolio Manager, Searchlight Asia Pacifc Fund. Angus has
over 12 years experience in Funds management and corporate fnance. Angus is jointly responsible for the
management of the Searchlight Asia Pacifc Fund launched in September 2010. Prior to joining Mathews
Capital Partners in 2011, Angus spent 6 years working in various investment roles in London, most recently
as a proprietary trader at Jeferies International and before that as a Portfolio Manager at Satellite Asset
Management and Lionhart Investments. Angus started his career with Deutsche Bank, where he worked in
mergers and acquisitions for 6 years in Sydney. Angus has a BCom from the University of Sydney.
32 32
33
CLIENT SERVICES AND OPERATIONS TEAM
Robert Duke, Head of Fund Distribution at Mathews Capital Partners and is responsible for the
organisations expanded Fund distribution activities. Robert has over 20 years experience in the marketing
and sales of fnancial products. Prior to working with Mathews Capital Partners, Robert held the position
of Managing Director of boutique investment frm Longreach Global Capital Pty Limited and held senior
management positions at JPMorganChase (and its predecessor banking organizations) from 1994 to 2003.
Robert has a BSc from Macquarie University.
Susan Smyth, Chief Financial Ocer of Mathews Capital Partners Pty Ltd. Sue is a fellow Chartered
Accountant and holds Bachelor and Masters degrees in Economics. She has over 20 years experience in
accounting and administration in the fnancial services industry. Prior to joining Mathews Capital in 2000,
she was fnancial controller/company secretary of a successful investment bank, and before that, was a
manager in the business services division of Pricewaterhouse Coopers.
Cathy Young, Head of Operations for Mathews Capital. Cathy has over 6 years accounting and Fund
administration experience. While studying towards BBus(FinPlan) Cathy gained her experience in the
fnancial markets working for a private investment omce based in Sydney. Cathy has also completed Dip.
Financial Services through FINSIA, is a member of the Taxation Institute of Australia and is currently
studying towards a Masters of Applied Finance.
Miles Balman, Operations for Mathews Capital. Miles has over 4 years experience in Hedge Fund
Operations. Prior to joining Mathews Capital Miles gained his experience with UBS where he worked in
the Prime Brokerage/Hedge Fund Operations Division. Miles has completed his Dip. Financial Services,
Dip. Financial Markets, Graduate Cert in Applied Finance and is currently studying to complete his
Masters in Applied Finance.
Sarah Jackson, Executive Assistant/Investor Relations Sarah joined Mathews Capital in May 2011. Sarah
has recently worked for the Bank of New Zealand, based in Auckland; she managed the Omce of the
Director of Retail Banking. Prior to that, Sarah spent fve years in London working in administration
positions in Private Investment and Hedge Funds. Sarah holds a BBus (Management and International
Business) from the Auckland University of Technology in New Zealand.
Attachment 4 - JPMorgan, Small caps: the case examined. November 2010
Attachment 5 Best Ideas Research Paper, Randy Cohen, Christopher Polk, Bernhard Silli 2004
Attachment 6 Best Practices for Equity Research Analysts: Essentials for Buy-Side and Sell-Side
Analysts, James Valentine www.amazon.com/Best-Practices-Equity-Research-Analysts/dp/0071736387
Attachment 7 - Zenith Product Assessment, September 2011
Attachment 8 - Australian Fund Monitors Review, February 2011
Attachment 9 - Barclay Hedge Performance Ranking, June 2011
Attachment 10 - Australian Fund Monitors Performance Ranking, April 2011
Attachment 11 - TripleA Partners Performance Ranking, September 2011
33
IMPORTANT DISCLAIMER
Tis presentation is given by Mathews Capital Partners Pty Limited ABN 50 096 269 322, AFSL 252748 (Mathews Capital). Tis presentation is intended only for wholesale
clients (as defned in the Corporations Act 2001 (Cth)(Act). Although the statements of fact in this presentation have been added from and are based on sources that Mathews
Capital believes to be reliable, we do not guarantee their accuracy, and any such information may be incomplete or condensed. Mathews Capital is not under any obligation
to update the information contained in this presentation to the extent that it is or becomes out of date or incorrect. Tis information must not be made available, published or
distributed to any third party without our prior written consent. Mathews Capital is not providing any general advice or personal advice regarding any potential investment in
any fnancial products within the meaning of section 766B of the Act. No consideration has been made of any specifc persons investment objectives, fnancial situation or needs.
Recipients should make their own enquiries and evaluations they consider appropriate to determine the suitability of any investment and should seek all necessary fnancial, legal,
tax and investment advice. Mathews Capital, its directors and employees assume no fduciary responsibility or liability for any consequences fnancial or otherwise arising from
any reliance on the information in this presentation, or for any negligent misstatements, errors or omissions.Te information in this presentation is indicative and may change
with market fuctuations. Tis presentation does not purport to be a comprehensive statement or description of any markets or securities referred to within. All performance
fgures are shown net of all fees. Past performance is not a reliable indicator of future performance.
It is impossible to produce
a superior performnce
unless you do something
dierent to the majority.
SIR JOHN TEMPLETON
MANAGER PRESENTATION | OCTOBER 2011
www.velocit yf und.com. au