st February 2006 FondsKongress Presentation The Outlook for Global Emerging Market Equities Schroder Investment Management Limited 31 Gresham Street, London, EC2V 7QA Telephone: Fax: Authorised and regulated by the Financial Services Authority

year (Annualised)*3 year (Annualised)*10 year (Annualised)* Emerging Markets Efficient Frontiers vs Europe Annualised return (%p.a.) MSCI Europe 100% EM 40% EM 20% EM 60% EM 80% MSCI EM 100% Annualised return (%p.a.) Source: Factset, MSCI. *All figures are US$ MSCI Price returns to 30 December 2005 MSCI EM 100% EM 60% EM 80% EM 40% EM 20% MSCI Europe 100% MSCI EM 100% EM 60% EM 80% EM 40% EM 20% MSCI Europe 100% Cumulative Return MSCI EM +54.1% MSCI Europe % Cumulative Return MSCI EM % MSCI Europe +6.5% Cumulative Return MSCI EM % MSCI Europe +69.2% Emerging markets are excellent diversifiers Annualised Risk (%SD pa)

27026 Relative Performance of MSCI EM/World and OECD G7 Lead Indicator Cyclical recovery Economics Source: Thomson DataStream, data shown to December 2005 yoy % change Cyclical upturn supportive for gems

27026 Global Growth CPI Interest Rates EM Performance 2.1% 1.5% 2.3% 0% to -10% 3.2% 2.9% 2.8% +35% Country Global Economic Outlook for % 2.1% 3.2%* +10% to +15% 3.7% 2.8% 4.0% +20% 2005 (60% probability) Scenario 1 Base Case (30% probability) Scenario 2 Growth Resurgence (10% probability) Scenario 3 Ice Age *Fed fund rates to peak at 4.75% Q Source: Schroders

27026 Economics Outlook remains positive 2004 Consensus % World US Japan European Union Latin America North East Asia South East Asia Eastern Europe Consensus % Consensus % World GDP Growth Source: Consensus Economics December 2005

27026 Difference in real GDP Growth (Emerging vs Developed) and Relative Performance Differential (MSCI EM vs MSCI World) Emerging Market economies decoupling Economics Source: CSFB, data shown to December 2005 Mar 1989 = 100 *CLSA estimate Source: CLSA 26.0* Global GDP represented by Emerging Markets (%)

27026 Share in Emerging Market* Exports Emerging Market* Exports Economics Source: BCA Research December 2005 * Includes Brazil, Chile, Turkey, Taiwan, Korea, Thailand, Singapore, Malaysia, Indonesia, The Philippines and India ** Smoothed except for final data points % China now accounts for almost same share of emerging economies’ exports as the US

27026 G7 NorthEast Asia SouthEast Asia Eastern Europe Latin America Economics Economic Forecast GDP Growth Industrial Production Current Account (% of GDP) CPI Source: Consensus Economics October – 2015 (Average) Decoupling… continues

27026 Industrial Production GEM Industrial Production Outperforming G7 Industrial Production Economics Source: Thomson Datastream, EIU, Factsheet, ML GEM Equity Research, August 2005 * Weighted by MSCI, includes: Brazil, Mexico, Korea, Taiwan, China, India, Turkey and South Africa. Data rebased to 1/2000

27026 Debt/GDP EMBI+ Sovereign rating Inflation Fiscal balance Current account balance Gross external financing requirement as % of GDP GDP growth Exports to GDP Average 3 month volatility Structural improvement Economics 43.0% BB- 56% -3.1% -2.1% 4.2% 6.7% 19.0% 8% % 2 points -52% 2.1% 3.9% 1.5% -2.0% 15.2% 2.4% 2005 minus % BB+ 4% -1.0% 1.8% 5.7% 4.7% 34.2% 10.4% 2005 Change in leading emerging market parameters end Area Source: Deutsche Bank January 2006

27026 Emerging Markets Foreign debtTrade balanceEmerging markets*: Foreign reserves Some structural shifts % of GDP *Includes 20 Emerging Market economies Source: BCA Research December 2005 Record high A sharp decline A dramatic turnaround

27026 Economics...Exchange rates undervalued, not overvalued … Current accounts now in surplus Inflation well and truly beaten Structural Improvement Source: JP Morgan, data shown to December 2005 % Jan 90 =100 % GDP Source: JP Morgan, data shown to December 2005Source: JP Morgan, data shown to November 2005

27026 EM US Japan Europe Developed Markets EM minus Developed Markets GEM and Developed Markets Key macroeconomic data (%) CPI (%) (%) CA Bal (% of GDP) (%) Fiscal Bal (% of GDP) (%) (%) Total Govt Debt (% GDP) (%) Country Source: Deutsche Bank, MSCI, Bloomberg. Data shown at 16 November 2005

27026 BBB- BBB BBB+ Market Cap Weighted GEM Credit Rating Structural improvements have led to improved credit rating Economics Source: UBS December 2005

27026 MSCI EM Historical volatility As economies have improved, volatility has declined Risk Source: Bloomberg, data shown to December 2005

27026 Risk: 5 year market performance 5 Years: Volatility (%) $(%) Return Sharpe Ratio 16.5% -1.1% % -2.2% % 0.6% % 1.1% % 22.6% % 2.4% % 6.8% % 2.6% 0.11 GEMS S&P 500 Russell 2000 NasdaqACWIEAFEDAXNikkei … Resulting in excellent Sharpe ratios Source: Deutsche Bank GEMs Strategy, Bloomberg, MSCI, data shown for 30 December 2005

27026 MSCI EM Relative to MSCI World Relative price still well below 1994 highs Source: Factset, MSCI. MSCI Gross indices quoted 24.3% 180.6% MSCI World MSCI EM 31 December 1998 to 30 December 2005 Source: Thomson DataStream, data shown to December 2005 US$ Dec 1988 = 100

27026 MSCI EM Price Earnings Ratio* P/E ratio also at low historic levels Valuations * P/E ratio shown is MSCI EM from 30 September Prior to 30 September 1995 IFCI P/E ratio is shown Source: Factset, Thomson DataStream, data shown to December 2005

27026 Forward Price Earnings Valuations Source: Factset, MSCI As at December 2005, IBES – 12 month forward Source: Factset, MSCI, data shown to December 2005 US$ … Forward P/E also at low historic levels Emerging Markets USAWorld P/E EPS PE/G

27026 Price Earnings Discount Valuations Source: Thomson Datastream, data shown to December 2005 % Cheap relative to developed markets Emerging Markets at a Discount Emerging Markets at a Premium

27026 Price Earnings / Growth Ratio* Valuations * 12m rolling average of I/B/E/S 12m Forward P/E to Long Term average EPS growth (3–5 years) Source: Factset data shown to December 2005 % Cheap relative to developed markets

27026 Yields from different asset classes Valuations Yield % Cheap relative to other asset classes * Forward Earnings Yield for Equities ** Corporate Bond Source: BCA Research December 2005

27026 MSCI EM ROE relative to MSCI World ROE Valuations Underpinned by improving ROE Source: CSFB, data shown to December 2005

27026 GEM Aggregate Index / GDP Valuations Reasonably priced relative to size of economies Source: UBS, data shown to December 2005 % -1Std Avg +1Std

27026 Monthly change in flows for Emerging Market dedicated funds Liquidity Fund flow was supportive during second half of 2005 Source: EmergingPortfolio.com, data based on 352 dedicated GEM funds and is shown to November 2005 US$m Volatile flows have not affected performance

YTD 30/11/05 Foreign Fund Flows into Emerging Markets 2, , , , ,265.3 Global US$m Emerging Markets Equity New Inflows Source: EmergingPortfolio.com, data based on 352 dedicated GEM funds and is shown to November 2005

27026 Concerns –$ weakness –Rising interest rates

27026 Monthly change in flows for Emerging Market dedicated funds Concerns A weak Dollar has been positive for Emerging Markets Source: Thomson Datastream, data shown to December 2005 Inverted Scale US$m

27026 Concerns Interest rate cycles have been associated with financial crises Source: BCA Research December 2005 Bubbles? –High yield –EM Debt –Real Estate % First Penn LCD Crisis Continental III 1987 Crash S&L Crisis Mexican Peso Crisis Asian Crisis Tech Bubble Burst Do we need another crisis for Fed Tightening to stop? %

27026 Concerns Emerging Markets tend to falter when US rates peak Source: Citigroup Investment Research, Datastream, MSCI, Worldscope and IBES Emerging Markets Perf. Rel to US peaks 2 to 3 months before US Rate Hike Cycle Peaks

year correlation of key factors to GEM Source: Deutsche Bank, MSCI, Bloomberg. Data shown for October 2005 GEMs are positively correlated with rising US 10 year yields

27026 Summary Economics –Global slowdown, but modest –Emerging Market economies have been decoupling –Emerging Market economies have gone through structural improvement Valuations –Remain attractive Concerns –$ weakness supportive, provided not excessive –Over zealous monetary tightening

27026 Global Emerging Markets Strategy Source: Schroders, 6th January 2006

27026 The Case for BRIC

World Population BRICs nearly 3 times the population size of the OECD Source: World Bank, World Development Indicators Database April 2005 Population (2003, millions) , ,288.4 Brazil Russia India China ,272.5 OECD World

27026 Emerging Markets stages of development BRICs at early stage of development …… therefore should grow faster Source: World Bank, World Development Indicators Database April 2005 GNI/capita 2003 data Schroders Maturity Time Sub-Saharan Africa India China Russia Brazil Malaysia Mexico Czech/Hungary/Poland S. Korea Israel Taiwan Hong Kong/Singapore G7 Frontier markets deregulation Emerging markets Premium growth (5%-7%) Established growth (3%-5%) Mature economies (2%-3%)

* GDP 2040** BRICs small but growing percentage of World GDP Source: * World Bank, World Development Indicators Database April 2005 ** Goldman Sachs GNI per capita* 2003 (US$) 2,720 2, ,100 37,870 Brazil Russia India China USA 29,360 5,510 OECD World

E Global Growth Split 2040 BRICs to be 67% of global growth by 2040 GS BRICs Model Projections Source: Goldman Sachs, ‘How solid are the BRICs ’ Global Economics Paper No:134 (Dec 2005)

27026 China-India (Chindia)... the second-largest economy in 2004 on PPP basis The largest economies in 2050 GDP Source: Professor Lucas, University of Chicago – Sunday Times 25th September 2005 GDP (2005 US$bn)Proportional world GDP (PPP) –Per OECD China is already bigger than 2 of G7 – Canada and Italy –By 2010 China will be 4th largest economy after US, Japan and Germany –“If China were cut off from foreign trade and investment its growth would be just 1-2% p.a. less.” Source: GS BRICs Model Projections Source: World Bank %

27026 BRICs growth of middle class GS BRICs Model Projections Source: Goldman Sachs, Dreaming with BRICs: the Path to 2050 (Oct 2003) BRICs discretionary consumption will be key driver of global growth Number of people above $3,000 in the BRICs vs G6 population Number, millions

27026 BRICs growth of middle class 510% Consumer durable growth* *Schroders estimation using 50% and 70% of current developed market penetration rates. Assuming world population growth from 6.3bn to 7.6bn between 2003 and 2005 Source: Population forecasts - Goldman Sachs, Dreaming with BRICs: the Path to 2050 (Oct 2003), Penetration rates- HSBC Earthtrends, Schroders …driving strong consumer growth 720% 140% 200% 550% 770% 170% 230% Nuber, millions

27026 Currency PPP based on inflation differentials (not trade weighted) Source: Bloomberg, Schroders. All data to Dec 2005 (based from Jan 2002) BRICs currencies are undervalued on a PPP basis… Purchasing power parity* (against US$)

27026 BRICs vs MSCI China 5 year (Annualised)* BRICs vs MSCI India 5 year (Annualised)* BRICs Efficient Frontiers Annualised return (%pa) BRICs give higher returns and lower risk than single country portfolios Source: Factset, Bloomberg, Schroders * all returns to 31 Dec 2005 BRICS 100% BRICS 80% BRICS 60% BRICS 40% BRICS 20% MSCI China 100% BRICS 100% BRICS 80% BRICS 60% BRICS 40% BRICS 20% MSCI India 100% Annualised return (%SD pa)

27026 KOSPI Price Index Precedent of Korea Source: World Bank, World Development Indicators Database April 2005 GNI/capita US$ KOSPI growth % $602 to $2,643 $2,643 to $9, % 438% 1975 to to 1994 Source: Korean National Statistical Office GNI/capita 2003 US$ $2,720 $2,610 $540 $1,100 Brazil Russia India China

27026 TAIEX Index Precedent of Taiwan Source: World Bank, World Development Indicators Database April 2005 GNI/capita US$ TAIEX growth % $758 to $2,573 $2,573 to $9,591 40% 343% 1979 to to 1992 Source: Directorate – General of Budget Accounting & Statistics Taiwan, Bloomberg GNI/capita 2003 US$ $2,720 $2,610 $540 $1,100 Brazil Russia India China

27026 Country Allocation BRICs *Index levels calculated internally intra-month Source: Schroders, 6th January 2006

27026 Disclosure Statement The returns presented represent past performance and are not necessarily representative of future returns which may vary. The value of investments can fall as well as rise as a result of market or currency movements Potential investors should be aware that investment in Emerging Markets involves an above average degree of risk and should be seen as long-term in nature. Less developed markets are generally less well regulated than mature markets, they may be less liquid and may have less reliable custody arrangements Opinions Schroders has expressed its own views and opinions in this presentation and these may change Data Protection For the purposes of the United Kingdom’s Data Protection Act 1998, the data controller in respect of any personal data you supply is Schroder Investment Management Limited. Personal information you supply may be processed for the purposes of investment administration by the Schroders Group which may include the transfer of data outside of the European Economic Area. Schroder Investment Management Limited may also use such information for marketing activities unless you notify it otherwise in writing Taped Telephone Lines For your security communications with our London office may be taped or monitored Identification Schroder Investment Management Limited, 31 Gresham Street, London EC2V 7QA Telephone: , Fax: Authorised and regulated by the Financial Services Authority