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1st February 2006

FondsKongress Presentation The Outlook for Global Emerging Market Equities

Schroder Investment Management Limited31 Gresham Street, London, EC2V 7QA

Telephone: 020 7658 6000Fax: 020 7658 6965

Authorised and regulated by the Financial Services Authority

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5 year (Annualised)* 3 year (Annualised)*10 year (Annualised)*

4.0%

4.5%

5.0%

5.5%

6.0%

6.5%

7.0%

7.5%

16.0% 17.0% 18.0% 19.0% 20.0% 21.0%

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.) Annualised return (%p.a.)

Source: Factset, MSCI. *All figures are US$ MSCI Price returns to 30 December 2005

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

15.5% 16.5% 17.5% 18.5% 19.5%

MSCI EM 100%

EM 60%

EM 80%

EM 40%

EM 20%

MSCI Europe 100% 18.0%

20.0%

22.0%

24.0%

26.0%

28.0%

30.0%

32.0%

34.0%

36.0%

12.5% 13.5% 14.5% 15.5% 16.5%

MSCI EM 100%

EM 60%

EM 80%

EM 40%

EM 20%

MSCI Europe 100%

Cumulative ReturnMSCI EM +54.1%

MSCI Europe +100.2%

Cumulative ReturnMSCI EM +111.7%

MSCI Europe +6.5%

Cumulative ReturnMSCI EM +141.9%

MSCI Europe +69.2%

Emerging markets are excellent diversifiers

Annualised Risk (%SD pa) Annualised Risk (%SD pa) Annualised Risk (%SD pa)

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Relative Performance of MSCI EM/World and OECD G7 Lead Indicator

Cyclical recovery

Economics

Source: Thomson DataStream, data shown to December 2005

-6

-4

-2

0

2

4

6

8

Dec-90 Jun-93 Dec-95 Jun-98 Dec-00 Jun-03 Dec-05

-60

-40

-20

0

20

40

60

OECD G7 Lead Indicator MSCI EM / MSCI World Free (rhs)

yoy % change yoy % change

Cyclical upturn supportive for gems

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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 2006

2.9%

2.1%

3.2%*

+10% to +15%

3.7%

2.8%

4.0%

+20%

2005

(60% probability)

Scenario 1Base Case

(30% probability)

Scenario 2Growth

Resurgence(10% probability)

Scenario 3Ice Age

*Fed fund rates to peak at 4.75% Q1 2006Source: Schroders

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EconomicsOutlook remains positive

2004Consensus %

World

USJapanEuropean Union

Latin AmericaNorth East AsiaSouth East AsiaEastern Europe

+3.8

+4.2+2.3+2.3

+5.8+7.9+6.3+7.2

2005Consensus %

+3.2

+3.6+2.4+1.6

+4.2+7.2+5.0+5.3

2006Consensus %

+3.2

+3.4+2.0+2.1

+3.9+6.9+5.0+5.3

World GDP Growth

Source: Consensus Economics December 2005

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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

-4.0-3.0-2.0-1.00.01.02.03.04.05.06.0

Mar-89 Mar-92 Mar-95 Mar-98 Mar-01 Mar-04

306090120150180210240270300

Real GDP growth differential (LHS)

Relative performance MSCI EM vsMSCI World (rhs)

Mar 1989 = 100

*CLSA estimateSource: CLSA

26.0*

25.9

24.9

24.2

2005

2004

2003

2000

Global GDP represented by Emerging Markets (%)

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4

8

12

16

20

24

1996 1998 2000 2002 2004 2006

U.S.** China **

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

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G7NorthEast AsiaSouthEast AsiaEastern EuropeLatin America

Economics

Economic Forecast

GDP Growth

+2.4+6.5+5.2+5.0+3.8

IndustrialProduction

+2.5 +10.8+6.9+5.8+4.3

Current Account

(% of GDP)

-0.9+1.2+5.1-0.5-0.8

CPI

+2.0 +2.9+3.4+4.0+4.4

Source: Consensus Economics October 2005

2011 – 2015 (Average)

Decoupling… continues

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95

105

115

125

135

145

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05

G7 Industrial Production

GEM Industrial Production*

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

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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%

1994

0.1%

2 points

-52%

2.1%

3.9%

1.5%

-2.0%

15.2%

2.4%

2005 minus 1994

43.1%

BB+

4%

-1.0%

1.8%

5.7%

4.7%

34.2%

10.4%

2005

Change in leading emerging market parameters end 1994 - 2005Area

Source: Deutsche Bank January 2006

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Emerging Markets

Foreign debt Trade balanceEmerging markets*: Foreign reserves

10

12

14

16

18

20

22

24

26

28

94 96 98 00 02 04 06

Foreign reserves

Some structural shifts

% of GDP

% of GDP % of GDP

*Includes 20 Emerging Market economiesSource: BCA Research December 2005

24

26

28

30

32

34

36

94 96 98 00 02 04 06

Foreign debt

-1.5

-0.5

0.5

1.5

2.5

3.5

94 96 98 00 02 04 06

Trade Balance

Record high A sharp decline

A dramatic turnaround

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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

0

100

200

300

400

500

600

Jan-92

Oct-94

Jul-97

Apr-00

Feb-03

Nov-05

GDP weighted-average EmergingMarket inflation rates

%

75

80

85

90

95

100

105

110

90 93 96 99 02 05

Real effective exchange rate (median)

Jan 90 =100

-2

-1

0

1

2

3

4

96 97 98 99 00 01 02 03 04 05e

Emerging Markets current account %GDP

% GDP

Source: JP Morgan, data shown to December 2005Source: JP Morgan, data shown to November 2005

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EM

US

Japan

Europe

Developed Markets

EM minus Developed Markets

GEM and Developed MarketsKey macroeconomic data

4.2

3.0

0.5

1.9

2.3

1.9

06 (%)

CPI

(%)

2.1

-6.4

3.3

0.0

-3.2

5.3

05 (%)

CA Bal

(% of GDP)

-1.7

-2.7

-5.7

-2.8

-3.1

1.4

05 (%)

Fiscal Bal

(% of GDP)

-1.9

-3.3

-5.0

-2.8

-3.3

1.4

06 (%)

44.4

65.7

174.3

70.0

79.9

35.5

05 (%)

Total Govt

Debt (%

GDP)

1.3

-6.8

3.3

0.3

-3.3

4.6

06 (%)

Country

Source: Deutsche Bank, MSCI, Bloomberg. Data shown at 16 November 2005

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0

2

Dec-97 Dec-99 Dec-01 Dec-03 Dec-05

BBB-

BBB

BBB+

Market Cap Weighted GEM Credit Rating

Structural improvements have led to improved credit rating

Economics

Source: UBS December 2005

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MSCI EM Historical volatility

As economies have improved, volatility has declined

Risk

Source: Bloomberg, data shown to December 2005

0%

10%

20%

30%

40%

50%

Dec-93 May-96 Oct-98 Mar-01 Aug-03 Dec-05

MSCI EM 10 week volatility

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Risk:

5 year market performance

5 Years: Volatility (%)

$(%) Return

Sharpe Ratio

16.5%

-1.1%

-0.07

25.8%

-2.2%

-0.09

15.1%

0.6%

0.04

24.8%

1.1%

0.05

18.4%

22.6%

1.22

15.6%

2.4%

0.15

19.8%

6.8%

0.35

22.7%

2.6%

0.11

GEMSS&P 500

Russell2000

Nasdaq ACWI EAFE DAX Nikkei

… Resulting in excellent Sharpe ratios

Source: Deutsche Bank GEMs Strategy, Bloomberg, MSCI, data shown for 30 December 2005

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MSCI EM Relative to MSCI World

Relative price still well below 1994 highs

4080

120160200240280320360400

Dec-88 May-92 Oct-95 Feb-99 Jul-02 Dec-05

MSCI EM relative to MSCI World

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

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MSCI EM Price Earnings Ratio*

P/E ratio also at low historic levels

Valuations

* P/E ratio shown is MSCI EM from 30 September 1995. Prior to 30 September 1995 IFCI P/E ratio is shownSource: Factset, Thomson DataStream, data shown to December 2005

10

15

20

25

30

35

40

45

Dec-91 Apr-94 Aug-96 Dec-98 Apr-01 Aug-03 Dec-05

MSCI EM P/E

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Forward Price Earnings

Valuations

0

5

10

15

20

25

Jun-94 Oct-96 Feb-99 May-01 Sep-03 Dec-05

MSCI EM Forward P/E

Source: Factset, MSCIAs at December 2005, IBES – 12 month forward

Source: Factset, MSCI, data shown to December 2005

US$

… Forward P/E also at low historic levels

EmergingMarkets USA World

10.8

14.3

0.8

15.3

13.9

1.1

14.8

12.2

1.2

P/E

EPS

PE/G

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Price Earnings Discount

Valuations

-70%-60%-50%-40%-30%-20%-10%

0%10%20%30%

Jan-92 May-94 Sep-96 Jan-99 May-01 Aug-03 Dec-05

MSCI EM relative to MSCI World Forward P/E

Source: Thomson Datastream, data shown to December 2005

%

Cheap relative to developed markets

Emerging Markets at a Discount

Emerging Markets at a Premium

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Price Earnings / Growth Ratio*

Valuations

-80%

-70%-60%

-50%-40%

-30%

-20%-10%

0%

93 96 98 01 03 05

MSCI EM vs MSCI US MSCI EM vs MSCI World

* 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

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Yields from different asset classes

Valuations

0

1

2

3

4

5

6

7

8

9

10

EMEquities

US HighYield

Bonds**

UKEquities**

EMUEquities**

EMSovereign

Bonds

USEquities**

JapaneseEquities*

US AAABonds**

USTreasurys

Yield %

Cheap relative to other asset classes

* Forward Earnings Yield for Equities** Corporate Bond

Source: BCA Research December 2005

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MSCI EM ROE relative to MSCI World ROE

ValuationsUnderpinned by improving ROE

Source: CSFB, data shown to December 2005

0.0

0.5

1.0

1.5

2.0

2.5

Jan-92 May-94 Aug-96 Dec-98 Apr-01 Aug-03 Dec-05

MSCI EM ROE / MSCI World ROE

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GEM Aggregate Index / GDP

ValuationsReasonably priced relative to size of economies

Source: UBS, data shown to December 2005

0

50

100

150

200

250

300

Jan-88 Aug-91 Mar-95 Oct-98 May-02 Dec-05

GEM Aggregate Index/GDP

%

-1Std

Avg

+1Std

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Monthly change in flows for Emerging Market dedicated funds

LiquidityFund flow was supportive during second half of 2005

Source: EmergingPortfolio.com, data based on 352 dedicated GEM funds and is shown to November 2005

-3000

-2000

-1000

0

1000

2000

3000

Jan-95 Jan-97 Jan-99 Jan-01 Jan-03 Jan-05

US$m

Volatile flows have not affected performance

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1998

1999

2000

2001

2002

2003

2004

YTD 30/11/05

Foreign Fund Flows into Emerging Markets

2,228.5

3,563.6

-164.4

-350.8

-868.6

5,896.2

-2,268.3

2,265.3

Global US$m Emerging MarketsEquity New Inflows

Source: EmergingPortfolio.com, data based on 352 dedicated GEM funds and is shown to November 2005

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Concerns

– $ weakness

– Rising interest rates

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Monthly change in flows for Emerging Market dedicated funds

ConcernsA weak Dollar has been positive for Emerging Markets

Source: Thomson Datastream, data shown to December 2005

80

85

90

95

100

105

110

115

Dec-90 Jun-93 Dec-95 Jun-98 Dec-00 Jun-03 Dec-05

0

5

10

15

20

25

30

35

Trade-weighted US$

MSCI Emerging Markets relative to MSCI World in localcurrency (rhs)

Inverted Scale US$m

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2

4

6

8

10

12

14

16

76 81 86 91 96 01

02468101214161820

10-Year treasury yield (LS)Fed funds target rate (RS)

ConcernsInterest 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

MexicanPeso Crisis

Asian Crisis

Tech Bubble Burst

Do we need another crisis for Fed Tightening to stop?

%

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85

90

95

100

105

110

-12 -10 -8 -6 -4 -2 0 2 4 6 8 10 12Mean, EM rel. to the US Median Perf, EM rel to US

ConcernsEmerging 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

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5 year correlation of key factors to GEM

-0.67

0.02

0.380.48 0.5 0.53

-0.73-0.9

-0.6

-0.3

-0

0.3

0.6

0.9

EMBI+ VIX GlobalM2

US 10YrYield

LocalCurrency

OECDLeadingIndicator

Copper

Source: Deutsche Bank, MSCI, Bloomberg. Data shown for October 2005

GEMs are positively correlated with rising US 10 year yields

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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

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Global Emerging Markets Strategy

Source: Schroders, 6th January 2006

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The Case for BRIC

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2003

World Population

BRICs nearly 3 times the population size of the OECD

Source: World Bank, World Development Indicators Database April 2005

Population(2003, millions)

176.6

143.4

1,064.4

1,288.4

Brazil

Russia

India

China

914.6

6,272.5

OECD

World

BRICS43%

Rest of World57%

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Emerging Markets stages of development

BRICs at early stage of development …… therefore should grow faster

Source: World Bank, World Development Indicators Database April 2005GNI/capita 2003 data

Schroders

Ma

turi

ty

Time

Sub-Saharan Africa

IndiaChinaRussia

Brazil

Malaysia

Mexico

Czech/Hungary/Poland

S. KoreaIsrael

TaiwanHong Kong/Singapore G7

Frontier markets deregulation

Emerging markets Premium growth (5%-7%)

Established growth(3%-5%)

Mature economies(2%-3%)

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2003*

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

2,610

540

1,100

37,870

Brazil

Russia

India

China

USA

29,360

5,510

OECD

World

Rest of World92%

BRICS8%

BRICS40%Rest of

World60%

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BRICS31%

Rest of World69%

2005E

Global Growth Split

2040

BRICs to be 67% of global growth by 2040

GS BRICs Model ProjectionsSource: Goldman Sachs, ‘How solid are the BRICs ’

Global Economics Paper No:134 (Dec 2005)

BRICS67%

Rest of World33%

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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

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

Ch US In Jpn Br Mex Russ Ger UK Fr

21.3

20.6

7.3

4.4

3.1

3.1

0 5 10 15 20 25

US

Chindia

Japan

Germany

France

UK

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

%

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BRICs growth of middle class

6.0

684.8

295.7

1195.4

390.2214.1

69.786.551.9164.3

1882.7

349.7

733.4

132.8

0.0200.0400.0600.0800.0

1000.01200.01400.01600.01800.02000.02200.0

Brazil China India Russia BRICs G6 USA

2005 2025

GS BRICs Model ProjectionsSource: 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 populationNumber, millions

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BRICs growth of middle class

0

200

400

600

800

1000

1200

1400

1600

1800

2000

Passenger cars TV sets PCs Mobile phonesBRICs 2005 est BRICs 2025 forecast 50% penetrationBRICs 2025 forecast 70% penetration

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

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Currency

-50.0 -45.0 -40.0 -35.0 -30.0 -25.0 -20.0 -15.0 -10.0 -5.0 0.0

Brazil

Russia

India

China

% Undervalued

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$)

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17.5%

18.0%

18.5%

19.0%

19.5%

20.0%

20.5%

23% 24% 25% 26% 27%

BRICs vs MSCI China 5 year

(Annualised)* BRICs vs MSCI India 5 year (Annualised)*

BRICs Efficient Frontiers

2%

7%

12%

17%

22%

23% 24% 25% 26% 27% 28%

Annualised return (%pa) 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) Annualised return (%SD pa)

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KOSPI Price Index

Precedent of Korea

0

200

400

600

800

1000

1200

75 80 85 90 95 00 05

Korea SE Composite (KOSPI) - PriceIndex (~KW)

Source: World Bank, World Development Indicators Database April 2005

GNI/capita US$

KOSPI growth %

$602 to $2,643

$2,643 to $9,459

150%

438%

1975 to 1986

1987 to 1994

Source: Korean National Statistical Office

GNI/capita 2003 US$

$2,720

$2,610

$540

$1,100

Brazil

Russia

India

China

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TAIEX Index

Precedent of Taiwan

0

2,000

4,000

6,000

8,000

10,000

12,000

79 83 87 91 95 99 03

TAIEX Index

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 1983

1984 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

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Country AllocationBRICs

*Index levels calculated internally intra-monthSource: Schroders, 6th January 2006

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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

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Identification

Schroder Investment Management Limited, 31 Gresham Street, London EC2V 7QA

Telephone: 020 7658 6000, Fax: 020 7658 6965

Authorised and regulated by the Financial Services Authority