Safe Port in the recent Sub-Prime Storm Gartmore’s Cautious Managed fund in today’s market Chris Burvill October 2007 For business and professional investors only. Please do not circulate to private investors.

… Now this is “Cautious” That’s not “Cautious”

Agenda Why this sector is so important Why the traditional approach works Why it’s important now How the Gartmore Cautious Managed Fund can weather the storm

What do Cautious Managed Funds do? Hold no more than 60% in equities (often no less than 40%) Genuinely “balanced” portfolios – as opposed to: Balanced Managed (Max equities 85%) UK Equity and Bond Income (Max equities 80%) Active Managed (Max equities 100%) … with different risk profiles: Which appeal to cautious investors….

A typical “cautious” investor

A “truthful” typical cautious investor

What is their attitude to risk? Return 200 Our objective 180 160 140 120 100 80 60 40 Won’t accept 20 20 40 60 80 100 120 140 160 180 200 Market Level For illustrative purposes only.

Some evidence that it’s happening % 8 Maximum Gain Maximum Loss 6 4 2 -2 -4 -6 -8 Gartmore Cautious IMA Active IMA Balanced IMA Cautious IMA UK Equity & Managed Acc Managed Managed Managed Bond Income Source: Gartmore, as at 31st August 2007 Basis: Measured between 28/02/03 to 31/08/07

Performance: 1m 3m 6m 1yr 2yr 3yr Since Inception Percentile Ranking % 1m 3m 6m 1yr 2yr 3yr Since Inception Percentile Ranking 5th 22nd 24th 27th 28th 19th 35th Relative to Sector Average 0.88 1.24 1.50 1.17 2.07 5.14 8.48 Source: Lipper/ Thomson Datastream, as at 31st August 2007 Basis: Mid to mid, net income reinvested and net of fees in Sterling

Protecting & adding value in asset allocation Cautious Optimistic 60% Bonds 40% Equities 40% Bonds 60% Equities Structure of portfolio is key

How about more diversification? Overseas equities? Large UK companies provide international exposure Does the cautious investor appreciate the risk Does he need the risk? Property? Equities provide property exposure Bonds track property yields Diversify into property…or away from it? Commodities? Art Stamps Tea cosies

The Investment Background or “What’s all the fuss about?”

We all know the market is cheap…..isn’t it? Traditional valuations look fine Company balance sheets strong World economy appears healthy Interest rates set to fall

If only it were that easy Earnings are cyclically high Rates falling for governments – rising for everyone else? Hard to divorce Financial Sector from everything else

Just in case we forgot… …There’s a few financial problems out there Prices of US Sub-Prime Mortgages (ABX.HE Indices) 110 100 90 80 70 60 50 40 30 21.06.07 28.06.07 05.07.07 12.07.07 19.07.07 26.07.07 02.08.07 AAA AA A BBB BBB- The indices are published by Markit, based on credit default swaps on MBS backed by sub-prime home equity loans. Each series contains five-sub indices, based on credit rating. The ratings range from AAA to BBB-. The indices roll every six months; This chart is based on the 07-1 index

Gartmore Cautious Managed Fund Current Asset Allocation Top Ten Equity Holdings Asset Name % of Equities BP 7.91 GlaxoSmithKline 6.28 Royal Dutch Shell 6.01 HSBC 5.59 Vodafone 5.03 Aviva 4.00 AstraZeneca 3.20 HBOS 2.81 Unilever 2.80 Tesco 2.76 Cash 11.6% Equities 46.1% Bonds 42.3% Fund size: £592m Source: Gartmore/FactSet as at 30th September 2007

Conclusion Cautious Managed Funds have a crucial role Traditional cautious managed funds – more than capable of fulfilling that role Investment parameters Diversification Rarely have those virtues been more relevant Still plenty of potential for absolute returns

Important Information For business and professional investors only. This document should not be circulated to private investors. Past performance is not a guide to future performance. The value of investments and the income from them may go down as well as up and you may not get back your original investment. When a Fund holds high yielding bonds there is an increased risk of capital erosion through default or if the redemption yield is below the income yield. You should also be aware that economic conditions and changes to interest rate levels may significantly impact the values of high yield bonds. The annual management fee is currently charged to the capital of the Fund. Whilst this increases the yield, it will restrict the potential for capital growth. The level of yield is subject to fluctuation and is not guaranteed. More than 35% of the Fund is likely to consist of Government and other Public Securities issued by one issuer. Please ensure clients read the Simplified Prospectus Document before investing. All opinions and estimates constitute our judgment as of the date of this presentation and are subject to change without notice. Clients of Gartmore Group or any individual involved in the preparation of this material may at any time have a position in securities or options of the issuers named within this material. This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. Gartmore Group consists of the following affiliates of Gartmore Investment Management Ltd: Gartmore Fund Managers Ltd, Gartmore Investment Ltd, Gartmore Investment Japan Ltd, Gartmore Global Partners*. *SEC Registered. These asset management affiliates of Gartmore Investment Management Ltd do business under the trade name of 'Gartmore Group'. All data as at 31st August 2007, unless otherwise stated. Issued by Gartmore Investment Limited (GIL). Gartmore’s authorised unit trusts and OEICs are managed by Gartmore Fund Managers Limited (GFM). Both GIL and GFM are authorised and regulated by the Financial Services Authority. Gartmore House, 8 Fenchurch Place, London EC3M 4PB. 18