21 november 2006 schroders speciality finance conference · this presentation uses figures for 2006...

21 November 2006

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Jonathan AsquithChief Financial Officer

SchrodersSpeciality Finance Conference

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Important information

This presentation uses figures for 2006 which represent a linear annualisation of the first three quarters trading performance

These figures are for comparison purposes only and do not constitute a profit forecast or other prediction

21 November 2006

21 November 2006

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Perception and Reality

Schroders

21 November 2006

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Diverse

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Frankfurt

TorontoMexico City

BermudaCayman Islands

New York

São PauloBuenos Aires

Seoul

Singapore

TaipeiTokyo

Sydney

JakartaHong Kong

Shanghai

Beijing

Paris

Milan

Luxembourg

Lisbon

Copenhagen

Madrid

Guernsey

London

Padua

Jersey

Rotterdam

Geneva

Vienna

Rome

Stockholm

Zurich

Diverse by Geography

International Investment Centres (3)

LondonNew YorkSingapore

Local Investment Operations (7)

ZurichHong KongSeoulSydneyTokyo PhiladelphiaJakarta

Sales and Distribution Offices (24)

Philadelphia

Schroders Diverse

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34 Offices in 26 Countries

London

Singapore

New York

Frankfurt

Tokyo

Schroders Diverse

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Diverse by Channel and by Revenues

In excess of 2800 institutional clients and more than 9000 relationships with distributors who have sold our funds to retail clients

Notes: Closing FUM and Revenues as at 30th September 2006, sub-advisory reported as retailTotal revenue excludes 2.6mn statutory gross profit (other AM)

Revenue - £521mn

48%

13%

39%

FUM - £122.8bn

32.0%

61.3%

6.7%

Institutional Retail Private Banking

Schroders Diverse

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Diverse by Region

UK - 44.7%

Americas - 11.6%

Cont. Europe - 22.9%

Japan - 9.6%

Asia ex Japan - 11.2%

Location of clients (FUM)

Source: Schroders, as at 30 June 2006

Schroders Diverse

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Diverse by Investment Desk28 investment desks

Schroders Diverse

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Diverse by Investment Style

Core, 47%

Specialist, 26%

Specialist Value, 3%

Specialist Growth, 2%

Specialist Yield, 1%

Unconstrained, 7%

Property, 6%

Absolute Return, 3%

Private Bank / Other, 5%

FUM by Product / Investment Style YTD (Sep 06)

Source: Schroders Finance Data

Schroders Diverse

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Diverse by Product

Equities

UK EquityEuropean EquityUK/European Small Cap EquityPacific EquityAsia EquitiesGlobal EquityQuantitative Equity ProductsEmerging Markets EquitiesInternational (ex-US)Japan EquitiesUS Small Cap Equity New YorkUS Large Cap Equity

FixedIncome

UK Fixed IncomeEurozone Fixed IncomeGlobal Fixed IncomeAsia Fixed IncomeUS Fixed Income

Alternatives

Hedge FundsStructured ProductsEmerging Market DebtProperty

Schroders Diverse

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Diverse by People

55%male

Schroders Diverse

45%female

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Summary

Broad range of asset classes

Selection of styles

Multiple client channels

Across the world

Schroders Diverse

21 November 2006

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Changing

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Asset Class Rotation

Major new products in last 5 years – Alpha products– Asian Bond– Enhanced cash – Municipal Bond– Global Property– European Equity

Schroders Changing

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Schroders Leading Innovation

Quantitative Active Value

Income Maximiser

Diversified Growth

Strategic Bond

Property Fund of Funds

Commodities and Agriculture Funds

Schroders Changing

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New and Improved for Schroders

Emerging Market Equity

Quantitative Equity

Global ex US / EAFE

Liability Driven Investment

New Balanced

Hedge Funds of Funds

Schroders Changing

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Gross Flows 01/03 – 09/06

2003 - 2006 (£bn) Inflows Outflows Net Flows FUMSept 2006

Institutional 29.2 (54.4) (25.2) 75.3

Retail 65.9 (53.7) 12.2 39.3

Private Bank 6.7 (5.4) 1.3 8.2

TOTAL 101.8 (113.5) (11.7) 122.8

Schroders Changing

Source: Schroders Finance Data

Gross flows mask the rotation of assets

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FUM mix by channel

Source: Schroders Finance DataNotes: 2006* - Annualised Revenues for Sept 2006 YTD

Schroders Changing

FUM (£Bn)

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

2003 2006


22%

73%

5%

7%

32%

61%

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Revenue mix by channel

Revenue (£Mn)

0

100

200

300

400

500

600

700

800

2003 2006*


53%39%

48%

37%

10%

13%

Schroders Changing


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Margins by channel and overall Schroders Changing

Margins (Bp)

31

8076

46

35

88

113

57

20

30

40

50

60

70

80

90

100

110

120

Institutional Retail Private Banking AM & PB

2003 2006*

+25%


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Improved Efficiency

Total Cost/ Operating Revenue Ratio*

86%

64%

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

2003 2006

-25%

Comp/ Operating Revenue Ratio

57%48%

0%

10%

20%

30%

40%

50%

60%

70%

2003 2006

-16%

Schroders Changing

Source: Schroder Finance Data* Combined Asset Management and Private Banking

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Increased ProfitSchroders Changing

-50

0

50

100

150

200

250

300

2003 2006*


-18%

22%

68%

89%

29%

10%

+323%

Asset Mgmt and Private Banking PBT (£Mn)

Source: Schroders Finance DataNotes: 2006* - Annualised Revenues for Sept 2006 YTD used to calculate the ratios

21 November 2006

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Unchanging

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Brand

1804-2006

Schroders Unchanging

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The Family

Bruno Schroder


Johan Heinrich

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HeadquartersSchroders Unchanging

London

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Asset Class Weights (FUM)

71% 72%

20% 18%

4% 4%5% 6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2003 2006

Equities Fixed Income Alternatives Property


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Inwardly Unchanged

Culture

Standards

Respect for clients

Citizenship


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Schroders Today

Independent

Pure asset manager

Exceptionally diverse

Proven capacity for change

Motivated by clients and profits

Strong culture

Unique business model

Schroders Today

21 November 2006

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Looking Forward

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The world needs more savings ….

Birth rates

Baby boomers

Longevity

2000 – 2050*

UKItalyUSAChinaKoreaWorld

0.270.290.210.110.110.13

Year 2000

0.480.710.360.420.590.28

Year 2050Ratio of 65+ year olds to 20 – 65 year olds

Source: Adair Turner, Schroders Secular Market Forum, June 2006

Schroders Looking Forward

Dependency Ratio Forecasts

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18 16 14

25 24 19

25 3031

18 17 22

14 13 14

2001 2010 2020

Two thirds of all investable assets will soon be controlled by retirees and near-retirees in the income/protection/preservation mode

Retirement Market is going to continue to grow

* Investable assets include financial assets held in pension accounts such as 401(K) and IRAsSource: Survey of Consumer Finances 1989, 1995, 2001; US Census Bureau, McKinsey analysis

Investable assets by age group (%)*

<45

45-54

55-64

64-74

75+

Retiree Segments:Around 57% in 2001, 67% in 2020

Estimates


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Average Life Expectancy**

Average life expectancy has increased from 46 years in 1950 to 66 years now*

Longevity

*The State of the World Population, 1999 and 2004, United Nations Population Fund**OECD Statistics

***McKinsey, The Demographic Deficit: How Ageing will Reduce Global Wealth, March 2005

85

81

81

81

79

83

79

79

79

77

68

70

71

70

70

Japan

Germany

UK

Italy

US

1960**

2005***

2025***

Continuous improvements in healthcare have helped to increaseaverage life expectancy


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Structural trends

DB Schemes closing to new entrants and capping benefits

DC Schemes’ share of assets rising

A-Day improved portability of pensions

Government schemes will not fill savings gap


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Defined benefit plans under pressure

Disclosure: FRS17 / IAS19

Longevity on an uncontrolled upward trend

Equity shock of 2000-2003 still overhangs market

Funding levels weak


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Defined benefit plans’ responses

Limit / close plans where possible

Control volatility of funding ratios

Try to limit costs overall


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Implications for defined benefit fund managers

DB reducing (but still important) component of market

Liability–oriented benchmarks

Greater diversification/lower volatility via asset allocation

Challenge of maximising returns


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Tools for defined benefit fund managers

Risk analysis

Access to a broad range of asset classes/investment styles

Coverage of alternative and conventional markets

Derivatives expertise for alpha porting and overlays

Solid fund analysis capabilities to extend capacity and fill gaps with 3rd party products


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What do our clients want?

S.M.A.R.T

Diverse asset base e.g. Diversified Growth Fund

Property/Unconstrained /Absolute Return funds

Derivatives platform established for structured products and fixed income

High-quality FOF/Manager of Manager products in Equities, Property and Hedge Funds


Institutional

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Changing risk appetites of retirees

Focus on:

Liabilities rather than assets

Meeting needs rather than maximising wealth

Risk management rather than risk taking

Diversification


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What do our clients want?

Yield based and inflation+ products– Fixed Income– Property– Equity Yield

Life cycle mixes

Absolute Return

Structured products


Retail

Schroders can offer all of these

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Sales channels for retirees

Not all sophisticated investors

Seek trusted intermediary channels

Banks/insurance companies are natural choice but lack credibility Need to partner with strong fund management brand

Fund management partner needs to offer broad range of products, strong brand, clean reputation, institutional strength, multi-market relevance

Like Schroders


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Looking Forward

A diverse firm

Positioned to meet future demand

Still committed to and caring for existing clients

On a journey


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OutcomeChanging

Old Schroders New Schroders Schroders

Time


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Schroders – do you see the potential?Schroders Looking Forward

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Important information

This presentation is intended to be for information purposes only and it is not intended as promotional material in any respect. Reliance should not be placed on the views and information in these presentations when making individual investment and/or strategic decisions. Schroders has expressed its own views and opinions in this document and these may change. Although the information and opinions contained in this document have been obtained from sources we consider to be reliable, no responsibility can be accepted for errors of fact or opinion. This does not exclude or restrict any duty or liability that Schroder Investment Management Limited (SIM) has to its customers under the Financial Services and Markets Act 2000 (as amended from time to time) or any other regulatory system

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 investors may not get back the amounts originally invested

Issued in November 2005 by 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

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