Element Global Opportunities Equity Portfolio

May 2012

The Element Global Opportunities Equity Portfolio has the mandate to go anywhere in pursuit of attractive investment opportunities, using a bottom-up investment approach. Being equity focused, the portfolio has at least 70% of its assets invested in international equity markets. The portfolio uses as benchmark the MSCI World (Local) but it does not seek to mimic or track this index in any way, which may lead both geographic and sectorial allocation differences.

Portfolio Details
Net Asset Value : Portfolio Assets (): Launch date: Portfolio Managers: 92.27 62400 14-January-2011 Filipe Alves da Silva, CAIA Afonso Janurio

Investment Highlights
The portfolio is down -6.98% for the month of May, while the MSCI world lost -7.13%, in the worst month of the year, so far. After a long streak of gains, the indecision in the Greek election, the worsening of the situation in Spain and bleak macro data from both the US, Europe and China was just too much for equity markets to continue their move upwards. As fear settled in, the yields on safe haven bonds dropped to never before seen levels, with Germany (GR) and US Government bond yields going as low as 1.20% and 1.59%, respectively. Today there are four companies with a AAA debt rating that have a higher dividend yield than GR or the US Government bonds. Those companies are Microsoft, Automatic Data Processing, Johnson & Johnson and Exxon Mobile, and currently their shares trade at an average dividend yield of 3% and an average earnings multiple of 14.7 times. And bear in mind that, during the next 10 years these companies will surely grow both their earnings and dividends. Choosing between high quality or safe haven government bonds has never been this easy. For us, Apple is one of the cheapest companies out there. It is growing at an impressive rate due to its innovative products and to the ecosystem it created. Apple has a debt free balance sheet and enough cash to buy Research in Motion, HTC, Nokia, Adobe and HP and still be left with $25bn of walking around money (as an alternative it could just buy McDonalds and still have $18bn left). The shares are trading at 13 times earnings and if you exclude it's $110bn of cash & equivalents the multiple drops to 11. We find no apparent reason for the company to be this cheap, and are happy to keep buying shares and make it our largest position.

Investment Guidelines
Max. Long Exposure: Min. Long Exposure: Equity Hedging: 130% 70% May use options on single name equities or equity indices to hedge downside risk Hedged on a best effort basis

Currency Hedging:

Weekly Performance Chart

106 103 100
97 94 91 88

MSCI World Local

Portfolio

85 82 14-Jan 18-Feb 25-Mar 29-Apr 3-Jun 1-Jul 5-Aug 9-Sep 14-Oct 18-Nov 16-Dec 20-Jan 17-Feb 16-Mar 20-Apr 18-May

Monthly Performance
Jan 2011 2012 -1,11% 7,06% Feb 1,61% 5,19% Mar -2,05% 1,62% Apr 3,30% -0,86% May -1,25% -6,98% Jun -1,72% Jul -1,37% Aug -7,23% Sep -7,20% Oct 8,70% Nov -2,83% Dec YTD -1,18% -12,57% 5,53%

Element Global Opportunities Equity Portfolio

Allocation by Sector
Cash Utilities Telecommunication Services 2,9% 0,9% 4,6% 4,8%

Allocation by Country
Cash Others Brazil China Netherlands Italy Sweden Spain Switzerland Germany Australia France Canada United Kingdom Japan United States
35%

2,9% 8,1% 1,3% 6,6% 0,2% 0,2% 0,3%

Materials
Health Care Consumer Staples Consumer Discretionary Energy Industrials Information Technology Financials 0%

6,7% 14,8%
18,5% 2,6% 2,6% 30,1% 11,4% 5% 10% 15% 20% 25% 30%

7,4%
0,9% 4,6% 0,9% 2,5% 4,9% 2,5% 2,2% 54,5% 0% 10% 20% 30% 40% 50% 60%

Top 10 Positions
i Sha res MSCI Worl d ETF Hedged Appl e Inc Mi cros oft Corpora ti on IBM Fi del i ty Chi na Speci a l Si tua ti ons Peps i Co Archer Da ni el s Mi dl a nds Teva Pha rma ceuti ca l s Ama deus IT Hol di ngs BMW

Weight
22,3% 7,3% 6,9% 6,4% 5,7% 5,6% 4,1% 4,0% 3,9% 3,8%
100% 80%
96,9%

Currency Exposure

60% 40% 20%

6,6%

1,3%

3,6%

0%
-20% EUR
-10,9%

0,3%

2,2%

Total

70,0%

USD

CNY

BRL

CAD

GBP

UAH

Glossary
Put Option An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security (in this case 100 shares of Telefnica) at a specified price (strike) on a specified date (maturity). Because we sold the put option, we are taking the other side of the trade, meaning that we will be the ones buying the security the buyer of the option sells us. For this we received a payment, called the premium. Bottom-up Investing A bottom-up strategy overlooks broad sector and economic conditions and instead focuses on selecting a stock based on the individual attributes of a company. Advocates of the bottom-up approach simply seek strong companies with good prospects, regardless of industry or macroeconomic factors. Net Asset Value The total value of a companys assets less the total value of its liabilities is its net asset value (NAV). For valuation purposes it is common to divide net assets by the number of shares in issue to give the net assets per share, also known as the price per share. Long Exposure Percentage of the Portfolios assets that are invested in equity markets and that benefit from the appreciation of equity markets. Currency Hedging Transaction implemented to protect the Portfolios foreign currency positions (non-Euro) from an unwanted move in exchange rates. Top 10 Positions Top holdings are those securities in which the latest percentage of the Portfolios total assets are invested. They do not include hedging derivatives. A full list of holdings, including derivatives, is available upon request.
E L E M E N T C A P I T A L

Contacts
For more information please contact Afonso Janurio or Filipe Alves da Silva directly or send an email to element.cap@gmail.com
recommendation to buy or sell these securities.
LONDON GENEVA

Disclaimer: Past performance is not indicative of future performance. Reference in this document to specific securities should not be construed as a

Element Global Opportunities Equity Portfolio

Complete List of Holdings

Name
iShares MSCI World ETF Hedged Apple Inc Microsoft Corporation IBM Fidelity China Special Situations PepsiCo Archer Daniels Midlands Teva Pharmaceuticals Amadeus IT Holdings BMW GAP Inc BlackRock Berkshire Hathaway Avangard Telefnica Corning Inc Jakks Pacific Renault Energold Drilling MRV Engenharia IMAX Corporation Monument Mining Cninsure OPAP Telefonica 11 PUT 06/2013 Premier Exhibitions Addvantage Technologies Ted Baker La Seda de Barcelona Cash

Weight
22,4% 7,4% 6,9% 6,4% 5,7% 5,6% 4,1% 3,9% 3,9% 3,9% 3,4% 2,6% 2,3% 2,3% 2,2% 2,2% 2,0% 1,6% 1,6% 1,3% 1,1% 1,1% 0,8% 0,8% 0,7% 0,5% 0,3% 0,3% 0,1% 2,5% 100,0%

Total

Disclaimer: Past performance is not indicative of future performance. Reference in this document to specific securities should not be construed as a
recommendation to buy or sell these securities.