Hesperian Capital Management Ltd. norrepFUNDS

Hesperian Capital Management Ltd.

norrepFUNDS

Randy Oliver, CFAAlex Sasso, CFA

June 2007


norrepFUNDS

Legal DisclaimerThe material contained in this presentation is for information purposes only and does not constitute an advertisement or an offer to sell or a solicitation to buy any securities in any jurisdiction. Such an offer can only be made by prospectus.

MUTUAL FUND SHARES OF THE NORREP GROUP OF FUNDS ARE OFFERED FOR SALE BY WAY OF PROSPECTUS ONLY IN THE PROVINCES OF ONTARIO, SASKATCHEWAN, ALBERTA, BRITISH COLUMBIA, MANITOBA AND THE ATLANTIC PROVINCES.

Every effort has been made to ensure that the information contained herein is accurate, complete and up-to-date. However, no guarantee, either express or implied, is made that the information in this presentation is accurate, complete or up-to-date. The contents of this presentation are for informational purposes only and are not intended to provide financial, legal, accounting or tax advice and should not be relied upon in that regard.

Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments.

Indicated rates of return are the historical annual compound total returns including changes in share value and reinvestment of all dividends and do not take into account sales, redemption, distribution or optional charges or income tax payable by any security holder, if any, that would have reduced returns. The rate of return is used to illustrate the effects of the compound growth rate and is not intended to reflect future sales of Norrep Funds or returns on investment in Norrep Funds.


norrepFUNDS

Who We AreHesperian Capital Management Ltd.•Niche Managers

•Small Cap

•Quantitative

•Flow-Through (Resources)

•Established in 1995

•Began managing the Norrep Fund on Jan. 1, 1999

•Six seasoned investment professionals

•Three investment analysts

•90 years of cumulative investment experience

Assets Under Management $930 M

Norrep/NorrepII Norrep QFTLPs Norrep IGNorrep US Global LPNorrep G Pooled


norrepFUNDS

The Management Team

Randy Oliver, CFA Chief Investment Officer, Portfolio Manager and founder of HesperianPortfolio Manager of the Norrep, Norrep II and the Flow Through Funds

Alex Sasso, CFAVice President, Portfolio Manager and owner/partner of HesperianPortfolio Manager of the Norrep, Norrep II, Norrep Income Growth and Norrep Q Funds

Keith Leslie, CFAVice President, Portfolio Manager and owner/partner of Hesperian Portfolio Manager of the Norrep Q and the Norrep Income Growth Fund


norrepFUNDS

Management Team cont.

Craig Millar, CFA Vice President, Portfolio Manager and owner/partner of HesperianPortfolio Manager of the Norrep Global Small Cap products and the Norrep US Fund

Steve Smith, CAEnergy Specialist and owner/partner of HesperianOversees Hesperian’s energy investments

Kamran Khan, CFASenior Research Analyst and owner/partner of Hesperian Analysis for U.S. and Global mandates


norrepFUNDS

Norrep Funds StructureOpen-ended mutual fund structureRRSP eligible Minimum initial purchase of $10,000 Tax deferred switches amongst funds in the Norrep Opportunities corporate structure

Norrep II Class (Closed)Norrep Q ClassNorrep US ClassNorrep G ClassNorrep Income Growth Class

2% management fee (1.65% for Income Growth)Performance bonus payment of 20% of NAV growth measured at market value over a high water mark above the benchmark


norrepFUNDS

Norrep FUND Performancevalue of $10,000 investment since inception

At May 31, 2007* Compound Annual Rates of Return , NorrepFUND inception June 1997

$83,158

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Norrep Fund BMO Small Cap TRI S&P/TSX TRI


norrepFUNDS

Norrep II CLASS Performancevalue of $10,000 investment since inception

At May 31, 2007

* Compound Annual Rates of Return, Norrep II Class inception Sept. 2001

$49,656

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

$55,000

2001 2002 2003 2004 2005 2006 2007

Norrep II Class BMO Small Cap TRI S&P/TSX TRI


norrepFUNDS

Norrep Q CLASS Performancevalue of $10,000 investment since inception

At May 31, 2007* Compound Annual Rates of Return, Norrep Q Class inception March 2004

$19,641

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

$20,000

2004 2005 2006 2007

Norrep Q Class S&P/TSX TRI


norrepFUNDS

Norrep Income Growth CLASS Performancevalue of $10,000 investment since inception

At May 31, 2007* Compound Annual Rates of Return, Norrep Income Growth Class inception December 2005

$13,548

$9,000

$10,000

$11,000

$12,000

$13,000

$14,000

2005 2006 2007

Norrep Income Growth S&P/TSX Income Trust TRI


norrepFUNDS

Norrep US CLASS Performancevalue of $10,000 investment since inception

At May 31, 2007* Compound Annual Rates of Return, Norrep US Class inception December 2005

$11,343

$9,000

$9,500

$10,000

$10,500

$11,000

$11,500

$12,000

$12,500

2005 2006 2007

Norrep US Russell MicroCap C$ TRI


norrepFUNDS

Norrep G CLASS Performancevalue of $10,000 investment since inception

At May 31, 2007* Compound Annual Rates of Return, Norrep G Class inception June 2006

$11,799

$9,500

$10,000

$10,500

$11,000

$11,500

$12,000

$12,500

May June July Aug Sept Oct Nov Dec Jan Feb Mar April May

Norrep G Class Citigroup EMI C$ TRI


norrepFUNDS

Norrep Global LP Performancevalue of $10,000 investment since inception

At April 30, 2007* Compound Annual Rates of Return, Norrep Global LP inception June 2005

$15,309

$9,500

$10,000

$10,500

$11,000

$11,500

$12,000

$12,500

$13,000

$13,500

$14,000

$14,500

$15,000

$15,500

2005 2006 2007

Norrep Global LP Citigroup EMI TR C$


norrepFUNDS

Hesperian’s Overriding Philosophy

Our Credo

We only offer investment products where we can provide “measurably superior investment

performance”


norrepFUNDS


norrepFUNDS

Norrep II In A Nutshell

Canadian small cap focused productConcentrated holdings of 30-50 stocksTop 10 names will represent roughly 50% of the portfolioThe Fund will use the proven Hesperian investment methodologyHeavy fundamental emphasis with help from quantitative analysisThe benchmark is the weighted BMO Small Cap Equity Only Total Return Index


norrepFUNDS

Why Invest In Small Cap Stocks?

Great historical performanceDiversificationMany companies are under covered by analystsMany are inefficiently pricedDisciplined and motivated management teamsLarge number of investment opportunities


norrepFUNDS

The Desired Portfolio StructureNorrep II Class

We design an attractive portfolio before we purchase the investments

We screen hundreds of companies with these and other attractive attributes to create a workable list of opportunities to examine fundamentally

May 31, 2007 Norrep II (ideal)

Norrep II (actual)

BMO Small Cap

Trailing P/E 15.0x 13.0x 34.6x

Trailing ROE 15.0% 28.1% 11.0%

Earnings Surprise

>0% 2.8% -0.9%

Yield 1.0% 1.2% 0.5%


norrepFUNDS

Hesperian’s Quantitative Process

Very effective way to find new stock ideasAssists in monitoring existing holdingsHelps identify industry trendsAll quantitatively derived stock selections also undergo a rigorous and extensive fundamental examination before investment is made


norrepFUNDS

Norrep II Class AdvantageFund Attribute: Norrep II Class

BMO Small CapIndex Our Advantage

Price to Earnings (trailing) 13.0 34.6 21.6

Price to Earnings 11.8 25.2 13.4

Price to Cash Flow (trailing) 9.0 13.9 4.9

Return on Equity (trailing) 28.1 8.0 20.1

Earnings Surprise 2.8 -0.9 3.7

Estimate Revisions -2.8 -12.4 9.6

Quarterly Earnings Momentum 7.1 -0.6 7.7

Quarterly Cash Flow Momentum 6.6 0.8 5.8

Expected Dividend Yield 1.16 0.53 0.63

Debt to Equity 0.25 0.45 0.20

Cash Flow to Debt 1.43 0.35 1.08


norrepFUNDS

Norrep II Performancevs. Benchmark

For the period ending May 31, 2007* Annualized

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

1 Month 3 Month 6 Month 1 Year 2 Year* 3 Year* 5 Year* SinceInception*

Norrep II Class BMO Small Cap TRI


norrepFUNDS

Norrep II Performance Advantage

For the period ending May 31, 2007

* Annualized

** Source: Globefund

Norrep II ClassPeer Group Average** Value Added

BMO Small Cap TRI Value Added

1 Month 7.3% 3.2% 4.0% 2.7% 4.6%

3 Month 12.3% 8.6% 3.7% 8.6% 3.7%

6 Month 25.3% 14.8% 10.5% 15.7% 9.6%

1 Year 26.7% 16.0% 10.7% 21.9% 4.8%

3 Year* 34.1% 18.9% 15.2% 22.1% 12.0%

5 Year* 28.1% 15.5% 12.6% 18.2% 9.9%

Since Inception*

32.7% n/a n/a 22.4% 10.3%


norrepFUNDS

2004 Flow-Through PerformanceAfter Tax Numbers 2004

Inception Date 08-Jun-04

Flow Through Portion

After Tax Cost $ 4.375

Distribution #1 $ 0.73

Distribution #2 $ -

Total Distributions $ 0.73

Closing Value of LP $ 8.81

Closing Value & Distribution $ 9.54

Taxes Payable if sold at rollover $ 2.15

Total "After Tax" Return 68.97%

Total "After tax" Annualized Return 19.03%

* Assumes a 45% marginal tax rate

* Assumes full cycle investing with all tax deductions taken, sale of investment at June 12, 2007 and all capital gains taxes paid


norrepFUNDS

Canadian distributor of software products

Current valuation 14x Trailing P/E33% ROE

Reasons to ownAttractive valuationStrong, dominant operatorNew products

SO Softchoice


norrepFUNDS

Rents modular structures for workforce accommodations

Current valuation (f2007)6.5x ev/ebitda55% payout ratio

Reasons to ownAttractive valuation3 years of visibilityMgmt owns a large percentage of co.

BDI-U Black Diamond IF


norrepFUNDS

Why Should You Keep your Investment In The Norrep II Fund?

Very strong Norrep/Hesperian track record

Access to one of Canada’s premier small cap investors

Unique product in Canada

Focus on great portfolio metrics ensures a very attractive group of stocks

Safer way to play Canadian small caps

Very disciplined and consistent approach

Attractive trailer will grow as the Fund grows


norrepFUNDS

Overexposed To Canadian Small Caps?

You can make a tax deferred switch within Norrep Opportunities CorporationConsider the following products:

Norrep Q ClassNorrep Income Growth ClassNorrep US ClassNorrep G Class


norrepFUNDS

Risks Of The Norrep II Class

Volatility of small companies vs. large

Liquidity (Small Co. vs. Large Co.)

Political and regulatory

Interest rates

Equity risk

Slowdown in macro economic growth

Currency


norrepFUNDS

Thank youwww.norrepfunds.com


norrepFUNDS

Investment Toolbox

Long Term

StrategyManagement

Business Model

Competition

Fundamental

Short TermStrategyEconomicCurrenciesMarket Trends

Quantitative

Mass ScreeningMultiple variablesIdea Generator

Technical

Identify PatternsOpportunistic buying andselling

PORTFOLIO FRAMEWORK

VALUATION


norrepFUNDS

The Sell Decision

Has management changed, in person or philosophy?Is the company growing slower and/or trading at higher values relative to its peers?Has the macro situation for the company changed?Does the company still “work” as part of the “Desired Portfolio Structure”?Quantitative analysis highlights necessary reviews.


norrepFUNDS

Norrep II Class P/E and ROE

0.0

5.0

10.0

15.0

20.0

25.0

30.0

01

/05

/20

05

01

/06

/20

05

01

/07

/20

05

01

/08

/20

05

01

/09

/20

05

01

/10

/20

05

01

/11

/20

05

01

/12

/20

05

01

/01

/20

06

01

/02

/20

06

01

/03

/20

06

01

/04

/20

06

01

/05

/20

06

01

/06

/20

06

01

/07

/20

06

01

/08

/20

06

01

/09

/20

06

01

/10

/20

06

01

/11

/20

06

01

/12

/20

06

01

/01

/20

07

01

/02

/20

07

01

/03

/20

07

01

/04

/20

07

01

/05

/20

07

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

Trailing P/E Current Year P/E ROE

***Source: Globefund

Documents

Hesperian Capital Management Ltd. norrepFUNDS