frontier markets - schroders · potentially be classified as an emerging market. a frontier market...

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Page 1: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

For professional investors only. This material is not suitable for retail clients

Frontier Markets

Zurich, June 5th 2013

For Professional Investors and Advisors only. Not Suitable for Retail Clients

Page 2: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Agenda

The Investment Case

Economic background

Equity Markets

Country Analysis/Key Stocks

Schroders Overview & Philosophy

Investment Process

Team

Appendices:

Performance

Competitor Analysis

Strategy

Biographies

2 Frontier Markets | May 2013

Page 3: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Economic background

Page 4: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Definitions vary and are somewhat judgmental

World Bank

What is a Frontier Market?

4 Frontier Markets | May 2013

Source: Schroders, MSCI, S&P, World Bank, as of June 2012

*World Bank, GNI per capita 2011, Atlas Method

** International Finance Corporation

IFC**

MSCI

Bracket*

Low income <$1,025

Low middle income $1,026 - $4,035

Upper middle income $4,036 - $12,475

High Income >$12,476

1.Not “High” income as defined by World Bank

2.Apparent lack of financial depth with low market cap to GDP ratio

3.Broad based discriminatory controls regarding foreign investment exist

4.Displays a lack of transparency, depth, regulation & operational efficiency

For inclusion in index a security is required to meet the following:

Free float > $43 mn, 2.5% ATVR, Foreign Inc. Factor > 0.15

Demonstrate a relative openness to and accessibility for foreign investors

Partial ease of capital inflows / outflows

Modest efficiency of the operational framework

Anything classified as Low income to Upper Middle income can

potentially be classified as an Emerging Market. A Frontier

market is therefore implicitly a low/low middle income country.

Any country satisfying at least one of these criteria can

potentially be classified as an Emerging Market

A Frontier Market is an Emerging Market which is relatively

small and illiquid, and has generally less information available.

Frontier Markets match all of these criteria.

Page 5: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Currently dominated by Middle East and Financials

Europe Middle East Regions

MSCI Frontier Markets Index – by country & sector

5 Frontier Markets | May 2013

Source: FactSet, MSCI. Data to March 31st, 2013

Countries and sectors are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

Africa Asia

Sectors

Latin

Country Weight (%)

Bulgaria 0.1

Croatia 2.0

Estonia 0.5

Kazakhstan 4.0

Lithuania 0.1

Romania 1.2

Serbia 0.3

Slovenia 1.6

Ukraine 0.2

Total 10.1

Weight (%)

Financials 50.9

Telecommunication Services 14.6

Industrials 10.3

Consumer Staples 9.4

Energy 8.1

Materials 3.7

Health Care 1.7

Utilities 1.2

Consumer Discretionary 0.1

IT 0.0

Total 100.0

Country Weight (%)

Bahrain 0.5

Jordan 0.8

Kuwait 23.9

Lebanon 2.2

Oman 3.2

Qatar 15.1

Tunisia 0.7

UAE 10.8

Total 57.2

Bangladesh 1.9

Pakistan 4.0

Sri Lanka 1.7

Vietnam 2.2

Total 9.9

Country Weight (%)

Kenya 3.8

Mauritius 0.9

Nigeria 15.0

Total 19.7

Argentina 3.1

Total 3.1

Weight (%)

Europe 10.1

Africa 19.7

Middle East 57.2

Asia 9.9

Latin 3.1

Total 100.0

Page 6: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Massive deposits of natural resources are not currently reflected in equity markets

MSCI Frontier Markets Index – by sector

6 Frontier Markets | May 2013

Source: FactSet, MSCI. Data to March 31st, 2013

Countries and sectors are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

Frontier Markets Emerging Markets Developed Markets

Sectors Weight (%) Weight (%) Weight (%)

Consumer Discretionary 0.1 7.8 11.3

Consumer Staples 9.4 9.1 11.0

Energy 8.1 12.0 10.0

Financials 50.9 27.6 20.4

Health Care 1.7 1.3 11.1

Industrials 10.3 6.4 11.0

IT 0.0 14.1 11.7

Materials 3.7 10.7 6.3

Telecoms 14.6 7.4 3.8

Utilities 1.2 3.6 3.4

Total 100.0 100.0 100.0

Page 7: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Frontier countries at early stage of development …… therefore should grow faster

Emerging markets stages of development

7 Frontier Markets | May 2013

Source: Schroders

Emerging market countries selected for this comparison are not representative of all emerging market countries. The countries shown are selected for illustrative purposes and

should not be viewed as an investment recommendation. The views and opinions contained in this presentation may change and there is no guarantee that any forecasts or

opinions will be realized.

Matu

rity

Time

Frontier Markets India China

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%)

Russia

Turkey

Page 8: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Frontier markets population 848mn (12.1% of world), GDP 3,251bn (4.4% of world)

Europe

Frontier markets basic information

8 Frontier Markets | May 2013

Source: IMF, World Bank, estimates as of October 2012 *GDP at PPP **UN World Population Prospects database, 2010 estimates

Countries mentioned are shown for illustrative purposes only and should not be viewed as a recommendation to buy/sell. Information and opinions obtained from third parties,

including forecasts, have been obtained from sources we consider to be reliable. We do not accept responsibility for errors of fact obtained from third parties, and there is no

guarantee that any forecasts or opinions will be realized.

Middle East

Nominal GDP 2013 (billions US$) GDP* per capita 2013 (US$) Population 2013 (millions) % Population <30yrs**

Bulgaria 51 14,725 7.2 32.6

Croatia 58 18,515 4.4 34.1

Estonia 22 22,262 1.3 36.7

Kazakhstan 220 14,896 16.7 51.1

Lithuania 43 21,091 3.2 36.8

Romania 172 13,357 21.3 36.0

Serbia 39 10,887 7.6 38.9

Slovenia 45 28,914 2.0 32.4

Ukraine 195 8,010 45.1 36.1

Europe Total 845 7,655 108.9 37.2

Bahrain 28 28,793 1.2 54.0

Jordan 34 6,197 6.5 64.0

Kuwait 175 44,041 3.9 48.9

Lebanon 44 16,286 4.1 52.1

Oman 83 29,112 3.3 62.0

Qatar 191 105,094 1.9 50.1

Tunisia 46 10,048 10.9 51.8

UAE 375 69,796 5.5 44.0

Middle East Total 975 27,554 37.3 53.4

Page 9: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Frontier markets population 848mn (12.1% of world), GDP 3,251bn (4.4% of world)

Asia

Frontier markets basic information

9 Frontier Markets | May 2013

Source: IMF, World Bank, estimates as of October 2012 *GDP at PPP **UN World Population Prospects database, 2010 estimates

Countries mentioned are shown for illustrative purposes only and should not be viewed as a recommendation to buy/sell. Information and opinions obtained from third parties,

including forecasts, have been obtained from sources we consider to be reliable. We do not accept responsibility for errors of fact obtained from third parties, and there is no

guarantee that any forecasts or opinions will be realized.

Africa

Latin America

Regional

Nominal GDP 2012 (billions US$) GDP* per capita 2012 (US$) Population 2012 (millions) % Population <30yrs** Bangladesh 127 2,166 151.6 60.5

Pakistan 237 2,949 182.6 65.8

Sri Lanka 65 6,554 20.8 49.2

Vietnam 152 3,759 91.5 52.3 Asia Total 580 1,203 446.5 57.0

Kenya 50 1,879 43.3 72.3

Mauritius 12 16,320 1.3 45.8

Nigeria 293 2,879 169.3 70.5 Africa Total 355 1,570 213.9 62.9

Argentina 495 18,800 41.5 49.3

Latin America Total 495 18,800 41.5 49.3

Frontiers 3,251 5,939 848 59.2

GEMS 24,035 9,210 3,970 51.3

USA 16,198 51,056 317 41.3

Japan 5,997 37,193 127 29.1

World 74,149 12,372 7,019 52.6

Page 10: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Services and industry not agriculture dominate

GDP Sector Profile (2013 estimates) Regional GDP by Sector (2013 estimates)

GDP sector analysis

10 Frontier Markets | May 2013

Source: Haver, EIU. Data as of February 2013

Sectors/Countries mentioned are shown for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

Information and opinions obtained from third parties, including forecasts, have been obtained from sources we consider to be reliable.

We do not accept responsibility for errors of fact obtained from third parties, and there is no guarantee that any forecasts or opinions will be realized.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Arg

entina

Bahra

inB

angla

desh

Bulg

aria

Cro

atia

Esto

nia

Jord

an

Kazakhsta

nK

enya

Kuw

ait

Leb

anon

Lithua

nia

Mau

ritius

Nig

eria

Om

an

Pakis

tan

Qata

rR

om

ania

Saudi A

rabia

Serb

iaS

lovenia

Sri L

anka

Tu

nis

iaU

kra

ine

UA

EV

ietn

am

7%

36% 57%

7%

43% 50%

1%

24%

75%

Frontier

Markets

GEMS

G7

Agriculture Industry Services

Page 11: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Frontier Markets currently small but huge growth potential

Frontier Market economies as a % of world economy

11 Frontier Markets | May 2013

Source: IMF, Data Mapper estimates for 2013 as of October 2012

*MSCI Frontier Markets consist of: Argentina, Bahrain, Bangladesh, Bulgaria, Croatia, Estonia, Jordan, Kazakhstan, Kenya, Kuwait, Lebanon, Lithuania, Mauritius, Nigeria, Oman,

Pakistan, Qatar, Romania, Serbia, Slovenia, Sri Lanka, Tunisia, UAE, Ukraine, Vietnam

848 (12.1%)

24,035 (32.4%)

36,561 (42.1%)

3,970 (56.6%)

45,027 (60.7%)

42,712 (49.2%)

1,036 (14.8%)

1,164 (16.6%)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Nominal GDP ($bn)

GDP at PPP ($bn)

Population (mn)

Frontier Markets* Emerging Markets Developed Markets Other

2,526

(2.9%)

1,836

(2.5 %)

3,251

(4.4%)

5,038

(5.8%)

Page 12: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Frontier markets have 2nd largest GDP after China, but the stock markets

are massively underdeveloped relative to their economies

Nominal GDP 2013

(US $bn)¹

Frontier Market Cap** vs. Emerging Markets

as at March 31, 2013 (US $bn)²

Market capitalization and GDP relative to other emerging

markets

12 Frontier Markets | May 2013

1Source: IMF world economic outlook database. Estimates for 2013 as of October 2012 2Source: FactSet, MSCI. Data to March 31st, 2013

*FM (Frontier Markets): Argentina, Bahrain, Bangladesh, Bulgaria, Croatia, Estonia, Jordan, Kazakhstan, Kenya, Kuwait, Lebanon, Lithuania, Mauritius, Nigeria, Oman, Pakistan,

Qatar, Romania, Serbia, Slovenia, Sri Lanka, Tunisia, Ukraine, UAE, Vietnam

**MSCI Free float adjusted

Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

3'251

2'504

2'117

2'109

1'234

1'210

839

469

402

340

276

GEM

China

FM*

Brazil

India

Russia

Korea

Mexico

Turkey

Taiwan

South Africa

Malaysia

Egypt

689

567

483

412

270

251

224

212

134

114

82

10

GEM

China

Korea

Brazil

Taiwan

S Africa

India

Russia

Mexico

Malaysia

Frontiers

Turkey

EgyptFrontiers 14% of GEMS Frontiers 3% of GEMS

3,815

9,039

24,035

Page 13: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Frontier stock markets very small relative to their economies

Market Cap to GDP Ratios

13 Frontier Markets | May 2013

Source: MSCI, IMF. As at March 2013

Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

3

17

39

62

106

0

20

40

60

80

100

120

140

Frontier Markets GEMs Germany Japan USA

%

%

%

%

%

%

Page 14: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Strong growth and mixed inflation

Frontier Markets GDP Growth*

% yoy

Frontier Markets Consumer Price Index**

% yoy

GDP growth and inflation

14 Frontier Markets | May 2013

Source: IMF Data Mapper. Estimates for 2013 as of October 2012

*Based on the change of the sum of Nominal GDP (US$ at PPP)

**Weighted average rate, using current MSCI Frontier Markets weights and % change CPI

The opinions stated in this presentation include some forecasted views. We believe that we are basing our expectations and beliefs on reasonable assumptions within the bounds

of what we currently know. However, there is no guarantee that any forecasts or opinions will be realized. Please see important notes at the end of this document.

0

2

4

6

8

10

12

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

0

2

4

6

8

10

12

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

% %

Forecast Forecast

Page 15: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Frontier economies expect to grow faster than Emerging or Developed economies

Differences between FM, EM and DM GDP growth (forecasts)

GDP growth

15 Frontier Markets | May 2013

Source: CITI Investment Research and Analysis. Estimates as at January 2013. The opinions stated in this presentation include some forecasted views. We believe that we are

basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know. However, there is no guarantee that any forecasts or opinions will

be realized. Please see important notes at the end of this document.

0%

1%

2%

3%

4%

5%

6%

7%

2012 2012-2021 2022-2031 2032-2041 2042-2051

Frontier Emerging Developed

GDP growth p.a.

Page 16: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

When economies grow quickly, stock markets usually perform very strongly

Markets in times of High Growth Korea

16 Frontier Markets | May 2013

Source: FactSet, Bloomberg.

Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

-60%

-40%

-20%

0%

20%

40%

60%

75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09

0%

2%

4%

6%

8%

10%

12%

Korea Market 5yr CAGR (lhs) Korea GDP 5yr CAGR (rhs)

February 1981 – February 1992

GDP Growth = 9.6% p.a.

Stockmarket performance = 18.2% p.a.

Page 17: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

When economies grow quickly, stock markets usually perform very strongly

Markets in times of High Growth Hong Kong

17 Frontier Markets | May 2013

Source: FactSet, Bloomberg.

Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

The opinions stated in this presentation include some forecasted views. We believe that we are basing our expectations and beliefs on reasonable assumptions within the bounds

of what we currently know. However, there is no guarantee that any forecasts or opinions will be realized. Performance shown is past performance. Past performance is no

guarantee of future results.

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09

0%

2%

4%

6%

8%

10%

12%

14%

Hong Kong Market 5yr CAGR (lhs) Hong Kong GDP 5yr CAGR (rhs)

Feb ‘74 – Nov ‘81

GDP Growth = 9.4% p.a.

Stockmarket performance = 16.7% p.a.

Page 18: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

-60%

-40%

-20%

0%

20%

40%

60%

80%

75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09

0%

2%

4%

6%

8%

10%

12%

Taiwan Market 5yr CAGR (lhs) Taiwan GDP 5yr CAGR (rhs)

When economies grow quickly, stock markets usually perform very strongly

Markets in times of High Growth Taiwan

18 Frontier Markets | May 2013

Source: FactSet, Bloomberg.

Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

The opinions stated in this presentation include some forecasted views. We believe that we are basing our expectations and beliefs on reasonable assumptions within the bounds

of what we currently know. However, there is no guarantee that any forecasts or opinions will be realized. Performance shown is past performance. Past performance is no

guarantee of future results.

Feb ‘73 – Aug ‘81

GDP Growth = 7.9% p.a.

Stockmarket performance = 9.0% p.a.

Page 19: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

It is strong domestic nominal growth combined with a stable or strong currency that

leads to strong stockmarket returns

GDP vs. Equity Market

19 Frontier Markets | May 2013

Source: Bloomberg, IMF, CEIC, Emerging Advisors. Data as at April 2013. * Excluding China and Mexico.

Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

No correlation here… Annual rate of growth/return, 2000-2012 (in %)

…but a tight correlation here Annual rate of growth/return, 2000-2012 (in %)

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Bra

zil

Ch

ile

Ch

ina

Cze

ch

Re

pu

blic

Hon

g K

on

g

Hungary

India

Indo

ne

sia

Isra

el

Ko

rea

Ma

laysia

Me

xic

o

Ph

ilip

pin

es

Po

land

Ru

ssia

Sin

ga

po

re

Sou

th A

fric

a

Taiw

an

Tha

iland

Turk

ey

Real GDP Equity market (USD)

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Bra

zil

Ch

ile

Ch

ina

Cze

ch R

epu

blic

Ho

ng

Ko

ng

Hu

ng

ary

India

Indo

ne

sia

Isra

el

Ko

rea

Ma

laysia

Me

xic

o

Ph

ilip

pin

es

Po

land

Ru

ssia

Sin

ga

po

re

So

uth

Afr

ica

Taiw

an

Tha

iland

Turk

ey

Nominal GDP (in USD) Equity market (USD)

Correlation: -0.07 (0.22*) Correlation: 0.53 (0.85*)

Page 20: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Fiscal position in most Frontier economies is better than that in Developed

Fiscal balance, 2013e

20 Frontier Markets | May 2013

Source: Haver, EIU. Data as at February 2013

The opinions stated in this presentation include some forecasted views. We believe that we are basing our expectations and beliefs on reasonable assumptions within the bounds

of what we currently know. However, there is no guarantee that any forecasts or opinions will be realized. Please see important notes at the end of this document. Countries are

mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

-15

-10

-5

0

5

10

15

Kuw

ait

Qata

r

Sau

di A

rab

ia

Om

an

UA

E

Esto

nia

Kaza

kh

sta

n

Bulg

aria

Nig

eria

Slo

ven

ia

Arg

en

tin

a

Rom

ania

Ukra

ine

Serb

ia

Lithu

ania

Vie

tna

m

Cro

atia

Ma

uritiu

s

Bah

rain

Ban

gla

de

sh

Pakis

tan

Ken

ya

Leb

ano

n

Sri L

an

ka

Tu

nis

ia

Jo

rdan

FM

EM

DM

% of GDP 17.2%

Page 21: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Fiscal balance and current account picture better than developed and improving

Fiscal Balance as % of GDP¹ Current Account as % of GDP²

Fiscal & current accounts

21 Frontier Markets | May 2013

Source: ¹Haver, EIU. Data as at February 2013

²IMF Data Mapper. Estimates for 2013 as at October 2012

The opinions stated in this presentation include some forecasted views. We believe that we are basing our expectations and beliefs on reasonable assumptions within the bounds

of what we currently know. However, there is no guarantee that any forecasts or opinions will be realized.

Please see important notes at the end of this document. Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

-6% -4% -2% 0% 2% 4% 6%

FM Europe

FM Africa

FM Middle East

FM Asia

FM Latin

FM Total

GEM

DM

2001 2013e

-3% 0% 3% 6% 9% 12% 15%

FM Europe

FM Africa

FM Middle East

FM Asia

FM Latin

FM Total

GEM

DM

2001 2013e

17.6%

Page 22: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Aggregate Debt to GDP Levels

Frontiers markets fiscal and debt levels

22 Frontier Markets | May 2013

Source: ¹ IMF. ² IMF DataMapper. Country selection based on MSCI FM & EM indices. Developed markets as per IMF classification. Data based on 2013 estimates as at

October 2012. The opinions stated in this presentation include some forecasted views. We believe that we are basing our expectations and beliefs on reasonable assumptions

within the bounds of what we currently know. However, there is no guarantee that any forecasts or opinions will be realized.

Significant improvements in FM fiscal position has led them to be as good as GEM countries

60%

70%

80%

90%

100%

110%

120%

20%

25%

30%

35%

40%

45%

50%

55%

60%

2001 2004 2007 2010 2013 2016

Frontier MarketsEmerging MarketsDeveloped Markets (rhs)

Government fiscal balances¹

-5%

-4%

-3%

-2%

-1%

0%

1990-1999 2000-2011

Emerging Markets Frontier Markets

(%) of GDP (%) of GDP (%) of GDP

Page 23: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Low and improving level of government debt. Very good relative to developed markets

Gross Public Domestic debt (%GDP)* S&P/Moody’s**

Debt and cost of funding

23 Frontier Markets | May 2013

*Source: IMF Data Mapper. Estimates for 2013 as of October 2012. **Bloomberg as at March 2013.

The opinions stated in this presentation include some forecasted views. We believe that we are basing our expectations and beliefs on reasonable assumptions within the bounds

of what we currently know. However, there is no guarantee that any forecasts or opinions will be realized.

Please see important notes at the end of this document. Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

%

0

50

100

150

200

250

Arg

en

tin

a

Bah

rain

Bulg

aria

Cro

atia

Esto

nia

Jo

rdan

Kaza

kh

sta

n

Ken

ya

Kuw

ait

Leb

ano

n

Lithu

ania

Ma

uritiu

s

Nig

eria

Om

an

Pakis

tan

Qata

r

Rom

ania

Serb

ia

Slo

ven

ia

Tunis

ia

Ukra

ine

UA

E

Vie

tna

m

Ja

pa

n

UK

US

2003 2013e

Bahrain BBB/Baa1

Kuwait AA/Aa2

Lebanon B/B1

Oman A/A1

Qatar AA/Aa2

UAE NR/Aa2

Tunisia BBB/Baa2

Kenya B/NR

Mauritius NR/Baa1

Nigeria BB-/Ba3

Bulgaria BBB/Baa2

Croatia BB+/Baa3

Estonia AA-/A1

Kazakhstan BBB+/Baa2

Romania BB+/Baa3

Slovenia A-/Baa2

Ukraine B/B3

Sri Lanka B+/B1 Vietnam BB-/B2

Developed

Page 24: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Despite being less developed, Frontier countries have strong reserves

FX Reserves as a % of GDP (2013 estimates)

FX Reserves

24 Frontier Markets | May 2013

Source: Haver, EIU. Data as at February 2013

*EFG-Hermes. Data as at September 2012, includes sovereign wealth funds

Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

62%

44%

29%29%26%25%23%23%21%19%19%17%14%14%13%11% 8% 8%3% 2% 1%

29%30%

41%

74%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

UA

E*

Kuw

ait*

Qata

r*

Lebanon*

Bahra

in*

Serb

ia

Bulg

aria

Om

an*

Cro

atia

Rom

ania

Tunis

ia*

Mauritiu

s

Lith

uania

Ukra

ine

Jord

an*

Kazakhsta

n

Nig

eria

Kenya

Vie

tnam

Sri L

anka

Bangla

desh

Arg

entin

a

Pakis

tan

Slo

venia

Esto

nia

Fro

ntie

r M

ark

ets

GE

MS

200% 235%

Page 25: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Frontier economies private debt is similar to that in Emerging economies

Private sector credit to GDP, 2012

25 Frontier Markets | May 2013

Source: CITI Investment Research and Analysis, IMF Banking Survey, Haver. Data as at January 2013

0%

40%

80%

120%

160%

200%

Frontier EM Developed

Corporate debt Household debt

Page 26: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Prudent bank lending policies – generally ratio under 100%

Loan to deposit ratios by country

26 Frontier Markets | May 2013

Source: EM Advisors. Data to October 31, 2012

Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

0

20

40

60

80

100

120

140

Arg

en

tina

Ban

gla

de

sh

Kaza

kh

sta

n

Ken

ya

Kuw

ait

Leb

ano

n

Nig

eria

Pakis

tan

Qata

r

Sri L

an

ka

Unite

d A

rab

Em

irate

s

Vie

tna

m

%

Page 27: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Rising FDI will support economic growth and development

Foreign Direct Investment into Frontier Markets

27 Frontier Markets | May 2013

Source: Haver, EIU. Data as of February 2013

Countries include: Argentina, Bahrain, Bangladesh, Bulgaria, Croatia, Estonia, Jordan, Kazakhstan, Kenya, Kuwait, Lithuania, Mauritius, Nigeria, Oman, Pakistan, Qatar,

Romania, Serbia, Slovenia, Sri Lanka, Tunisia, Ukraine, UAE, Vietnam

Information and opinions obtained from third parties, including forecasts, have been obtained from sources we consider to be reliable. We do not accept responsibility for errors of

fact obtained from third parties, and there is no guarantee that any forecasts or opinions will be realized.

US$ bn

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

0

20

40

60

80

100

120

140

160

180

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

FDI $bn FDI as % GDP (rhs)

Forecast

Page 28: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Many Frontier Markets rank better than BRIC on the Corruption Perceptions Index.

Corruption Perceptions Index Ranked by score, High (least corrupt) – Low (most corrupt)

28 Frontier Markets | May 2013

Source: Transparency International Corruption Perception Index, 2012 results (www.transparency.org)

The Corruption Perceptions Index ranks countries and territories based on how corrupt their public sector is perceived to be. A country or territory’s score indicates the perceived

level of public sector corruption on a scale of 0 - 100, where 0 means that a country is perceived as highly corrupt and 100 means it is perceived as very clean. A country's rank

indicates its position relative to the other countries and territories included in the index. This year's index includes 176 countries and territories.

Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

Countries Score Rank/176

Germany 79 13

Japan 74 17

UK 74 17

US 73 19

Qatar 68 27

UAE 68 27

Estonia 64 32

Slovenia 61 37

Mauritius 57 43

Lithuania 54 48

Bahrain 51 53

Jordan 48 58

Oman 47 61

Croatia 46 62

Kuwait 44 66

Saudi Arabia 44 66

Romania 44 66

Countries Score Rank/176

Brazil 43 69

Italy 42 72

Tunisia 41 75

Sri Lanka 40 79

China 39 80

Serbia 39 80

Morocco 37 88

India 36 94

Argentina 35 102

Vietnam 31 123

Lebanon 30 128

Kazakhstan 28 133

Russia 28 133

Pakistan 27 139

Nigeria 27 139

Bangladesh 26 144

Ukraine 26 144

Page 29: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Many Frontier Markets rank better than BRIC countries on the ease of doing business rank.

Doing Business in Frontier countries Ranked on the ease of doing business, High (easiest) – Low (hardest)

29 Frontier Markets | May 2013

Source: www.doingbusiness.org, June 2012 results

The ease of doing business index ranks economies from 1 to 183. For each economy the index is calculated as the ranking on the simple average of its percentile rankings on

each of the 9 topics included in the index in Doing Business 2011: starting a business, dealing with construction permits, registering property, getting credit, protecting investors,

paying taxes, trading across borders, enforcing contracts and closing a business. The ranking on each topic is the simple average of the percentile rankings on its component

indicators. Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

Countries Rank/183

US 4

UK 7

Saudi Arabia 12

Germany 19

Japan 20

Mauritius 23

Estonia 24

Lithuania 27

UAE 33

Qatar 36

Slovenia 37

Bahrain 38

Tunisia 46

Kazakhstan 47

Oman 49

Kuwait 67

Romania 72

Countries Rank/183

Croatia 80

Italy 87

Sri Lanka 89

China 91

Serbia 92

Morocco 94

Jordan 96

Vietnam 98

Lebanon 104

Pakistan 105

Argentina 113

Russia 120

Bangladesh 122

Brazil 126

India 132

Nigeria 133

Ukraine 152

Page 30: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Frontier Markets generally display high literacy rates and many have higher HDI

levels than the BRIC countries

Human Development Index and Literacy Rate Ranked by HDI score, High (best) – Low (worst)

30 Frontier Markets | May 2013

Source: United Nations Development Programme, Data for 2011.

* Human Development Index. A composite index measuring average achievement in three basic dimensions of human development—a long and healthy life, knowledge and a

decent standard of living.

Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

Countries HDI* Literacy rate

US 0.910 99.0

Germany 0.905 99.0

Japan 0.901 99.0

Slovenia 0.884 99.7

UK 0.863 99.0

UAE 0.846 90.0

Estonia 0.835 99.8

Qatar 0.831 94.7

Lithuania 0.810 99.7

Bahrain 0.806 91.4

Argentina 0.797 97.7

Croatia 0.796 98.8

Romania 0.781 97.7

Saudi Arabia 0.770 86.1

Serbia 0.766 97.8

Kuwait 0.760 93.9

Russia 0.755 99.6

Countries HDI* Literacy rate

Kazakhstan 0.745 99.7

Lebanon 0.739 89.6

Ukraine 0.729 99.7

Mauritius 0.728 87.9

Brazil 0.718 90.0

Oman 0.705 86.6

Tunisia 0.698 77.6

Jordan 0.698 92.2

Sri Lanka 0.691 90.6

China 0.687 94.0

Vietnam 0.593 92.8

Morocco 0.582 56.1

India 0.547 62.8

Kenya 0.509 87.0

Pakistan 0.504 55.5

Bangladesh 0.500 55.9

Nigeria 0.459 60.8

Page 31: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Diverse competitive advantages

Competitive advantages

31 Frontier Markets | May 2013

Source: Schroders

Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

The opinions stated in this presentation include some forecasted views. We believe that we are basing our expectations and beliefs on reasonable assumptions within the bounds

of what we currently know. However, there is no guarantee that any forecasts or opinions will be realized.

Kazakhstan

Argentina

Ukraine

DEMOGRAPHICS

Lebanon

Tunisia

LOW

LABOR

COSTS

Bahrain

Kuwait

Oman

Qatar

UAE

Pakistan

Bangladesh

Vietnam

Kenya

Jordan

Oman

Saudi Arabia

Nigeria

Bulgaria

Croatia

Estonia

Lithuania

Mauritius

Romania

Serbia

Slovenia

Sri Lanka

NATURAL

RESOURCES

Page 32: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Frontier countries tend to have relatively young populations…

Demographics

32 Frontier Markets | May 2013

Source: UN Population Division, June 2012. Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

0

10

20

30

40

50

Nig

eria

Ken

ya

Jo

rdan

Pakis

tan

Ban

gla

de

sh

Ind

ia

Kaza

kh

sta

n

Kuw

ait

Vie

tna

m

Tunis

ia

Leb

ano

n

Om

an

Bra

zil

Arg

en

tina

Sri L

an

ka

Bah

rain

UA

E

Qata

r

Ma

uritiu

s

Chin

a

US

Ru

ssia

Serb

ia

Ukra

ine

Rom

ania

Lith

ua

nia

Esto

nia

Cro

atia

Bulg

aria

Slo

ven

ia

Ja

pa

n

Germ

any

FM

Avera

ge

GE

M A

ve

rage

DM

Ave

rage

Median age in years

Frontier Markets Emerging Markets Developed Markets

Averages

Page 33: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

…and have strongly growing populations

Demographics

33 Frontier Markets | May 2013

Source: UN Population Division, June 2012

Information and opinions obtained from third parties, including forecasts, have been obtained from sources we consider to be reliable. We do not accept responsibility for errors of

fact obtained from third parties, and there is no guarantee that any forecasts or opinions will be realized.

Forecast annualized

population growth rate

DM EM FM

2025 0.45% 0.74% 1.38%

2030 0.42% 0.67% 1.32%

2050 0.32% 0.42% 1.13%

90

100

110

120

130

140

150

160

170

201

0

201

5

202

0

202

5

203

0

203

5

204

0

204

5

205

0

DM GEM FM

Populations rebased; 2010 = 100

Page 34: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Frontier Markets benefit from very competitive labour costs

Labour costs per hour (in US$) Asia and Latin America

34 Frontier Markets | May 2013

Source: Haver, EIU. 2013 estimates as at February 2013

*UBS/ILO estimates as at June 2011

Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

0.3 0.9 1.7 1.0 3.7

6.1

11.0

33.4

36.8

0

5

10

15

20

25

30

35

40

45

Ban

gla

de

sh*

Sri L

an

ka

Vie

tna

m*

Ind

ia

Chin

a

Arg

en

tina

Bra

zil

Ja

pa

n

Unite

d S

tate

s

$

Major Emerging Markets Frontier Markets Developed Markets

Page 35: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Frontier Markets benefit from very competitive labour costs

Labour costs per hour (in US$) Eastern Europe

35 Frontier Markets | May 2013

Source: Haver, EIU. 2013 estimates as at February 2013

Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

$

Major Emerging Markets Frontier Markets Developed Markets

3.0 5.0 5.3 5.1 5.0 5.5

7.8 10.6 10.9 11.8 12.2

36.8

46.7

0

5

10

15

20

25

30

35

40

45

50

Ukra

ine

Kaza

kh

sta

n

Bulg

aria

Ru

ssia

Rom

ania

Cro

atia

Lith

ua

nia

Esto

nia

Slo

ven

ia

Pola

nd

Cze

ch R

ep

ub

lic

Unite

d S

tate

s

Germ

any

Page 36: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Significant natural resources

Oil & Gas reserves

36 Frontier Markets | May 2013

Source: BP Statistical Review World Energy June 2012. Data for 2011

Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

% of World Proven resources

6.1

0.3 1.5

5.9

2.3 1.8

16.1

0.9 0.5

12.0

2.9 2.5 0.9

3.9

0

4

8

12

16

20

24

Kuw

ait

Om

an

Qata

r

UA

E

Nig

eria

Kaza

kh

sta

n

Sau

di A

rab

iaOil Gas

Total Oil reserves – 34% of world

Total Gas reserves – 24% of world

Page 37: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Equity markets

Page 38: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

3 Key prerequisites for investment

Pre-conditions for investment

38 Frontier Markets | May 2013

Source: Schroders

POLITICS

ECONOMICS

STOCKMARKET

Is the regime stable and pro-business?

Can foreign investors get secure custody, reliable accounting

standards, sufficient liquidity?

Are there policies in place to liberalize the economy?

Page 39: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Frontier stock markets very under-developed relative to their economies

MSCI Market Cap* to GDP ratios since 1988

Market structure

39 Frontier Markets | May 2013

Source: CITI Investment Research and Analysis, DataStream, Haver. Data to December 2012

*Free float adjusted

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Frontier Emerging Developed

60.8%

17.5%

2.8%

Page 40: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

MSCI FM provides reasonable country and stock diversification

MSCI Frontier equity market index

40 Frontier Markets | May 2013

Source: Factset and MSCI. Data to March 31st , 2013.

Countries mentioned are shown for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

Market Cap US ($mn) Weight % No of Stocks Weighted average MSCI Foreign Ownership Limit

Kuwait 27,338 23.9 12 49.6%

Qatar 17,305 15.1 13 18.3%

Nigeria 17,195 15.0 12 33.8%

United Arab Emirates 12,367 10.8 9 21.7%

Pakistan 4,629 4.0 12 21.9%

Kazakhstan 4,573 4.0 4 32.3%

Kenya 4,309 3.8 6 41.2%

Oman 3,683 3.2 8 34.5%

Argentina 3,519 3.1 5 36.8%

Lebanon 2,557 2.2 5 43.9%

Vietnam 2,496 2.2 9 12.6%

Croatia 2,315 2.0 4 18.5%

Bangladesh 2,224 1.9 9 33.4%

Sri Lanka 1,939 1.7 5 41.7%

Slovenia 1,862 1.6 3 55.5%

Romania 1,400 1.2 3 13.9%

Mauritius 1,036 0.9 2 40.6%

Jordan 921 0.8 4 6.6%

Tunisia 745 0.7 3 32.1%

Estonia 609 0.5 2 49.7%

Bahrain 574 0.5 2 17.6%

Serbia 331 0.3 2 17.6%

Ukraine 208 0.2 2 14.5%

Lithuania 171 0.1 2 17.3%

Bulgaria 104 0.1 2 31.2%

Total 114,410 100.0 140 -

MSCI GEMS 3,815,200 - 823 -

MSCI World 27,441,446 - 1608 -

Page 41: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Currently dominated by Middle East and Financials

Europe Middle East Regions

MSCI Frontier Markets Index – by country & sector

41 Frontier Markets | May 2013

Source: FactSet, MSCI. Data to March 31st, 2013

Countries and sectors are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

Africa Asia

Sectors

Latin

Country Weight (%)

Bulgaria 0.1

Croatia 2.0

Estonia 0.5

Kazakhstan 4.0

Lithuania 0.1

Romania 1.2

Serbia 0.3

Slovenia 1.6

Ukraine 0.2

Total 10.1

Weight (%)

Financials 50.9

Telecommunication Services 14.6

Industrials 10.3

Consumer Staples 9.4

Energy 8.1

Materials 3.7

Health Care 1.7

Utilities 1.2

Consumer Discretionary 0.1

IT 0.0

Total 100.0

Country Weight (%)

Bahrain 0.5

Jordan 0.8

Kuwait 23.9

Lebanon 2.2

Oman 3.2

Qatar 15.1

Tunisia 0.7

UAE 10.8

Total 57.2

Bangladesh 1.9

Pakistan 4.0

Sri Lanka 1.7

Vietnam 2.2

Total 9.9

Country Weight (%)

Kenya 3.8

Mauritius 0.9

Nigeria 15.0

Total 19.7

Argentina 3.1

Total 3.1

Weight (%)

Europe 10.1

Africa 19.7

Middle East 57.2

Asia 9.9

Latin 3.1

Total 100.0

Page 42: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Frontier Markets less liquid than Emerging but still investable

Frontier market liquidity

Equity market information

42 Frontier Markets | May 2013

Source: FactSet, Bloomberg, MSCI, Schroders as of March 31, 2013

*Less, if country index holds less than 5 stocks

Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

Countries Six Month Average Daily Traded

Value US$ Mn

5* largest stocks as %

of the index

United Arab Emirates 32.8 86.9

Qatar 27.9 71.0

Kuwait 24.1 77.9

Pakistan 19.6 75.2

Argentina 17.9 100.0

Nigeria 14.4 71.9

Kazakhstan 9.1 100.0

Vietnam 8.9 81.0

Bangladesh 3.7 72.5

Oman 3.6 83.6

Kenya 3.6 98.0

Sri Lanka 2.1 100.0

Romania 1.3 100.0

Countries Six Month Average Daily Traded

Value US$ Mn

5* largest stocks as %

of the index

Slovenia 1.0 100.0

Jordan 1.0 100.0

Mauritius 0.7 100.0

Lebanon 0.5 100.0

Croatia 0.5 100.0

Estonia 0.4 100.0

Tunisia 0.4 100.0

Serbia 0.2 100.0

Bulgaria 0.1 100.0

Lithuania 0.1 100.0

Bahrain 0.1 100.0

Ukraine 0.0 100.0

Days taken to buy most liquid 70% of MSCI index

Fund Size

Assumed % of average daily volume

bought each day $50mn $100mn

10% 3 days 6 days

25% 2 days 3 days

50% 1 day 2 days

Page 43: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Frontier Markets still 41% off their 2008 highs and are lagging emerging markets

Frontier Markets vs. GEMS and Developed

43 Frontier Markets | May 2013

Source: FactSet and MSCI, 31st March 2013 (Net total return indices, USD)

Performance shown is past performance. Past performance is not a guide to future performance. The value of investment can go down as well as up and is not guaranteed.

Market indices are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

Index (May 2002 = 100) Index (May 2002 = 100)

Performance (USD)

Region 1 Year to

Mar 13

Since

May ’02 to

Mar 13

Since

Feb ’09 to

Mar 13

Frontier Index 11.6% 164.7% 73.3%

EM Index 2.0% 286.2% 128.1%

World Index 11.8% 83.3% 109.1%

0

50

100

150

200

250

300

350

400

450

500

Ma

i 02

Dez 0

3

Jul 05

Jan

07

Au

g 0

8

Fe

b 1

0

Se

p 1

1

Mrz

13

MSCI Frontier MSCI Emerging

MSCI World

0

50

100

150

200

250

300

Ma

i 02

Dez 0

3

Jul 05

Jan

07

Au

g 0

8

Fe

b 1

0

Se

p 1

1

Mrz

13

Frontier relative to GEM

Frontier relative to World

Page 44: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Frontier Markets have not participated in market recovery since 2009

Frontier Markets vs. GEMS and Developed

44 Frontier Markets | May 2013

Source: FactSet and MSCI, March 31st, 2013 (Net total return indices, USD)

Performance shown is past performance. Past performance is not a guide to future performance. The value of investment can go down as well as up and is not guaranteed.

Market indices are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

Index (Jan 2009 = 100) Index (Jan 2009 = 100)

50

100

150

200

250

Jan 09 Sep 09 Apr 10 Nov 10 Jun 11 Jan 12 Aug 12 Mrz 13

MSCI Frontier MSCI Emerging MSCI World

60

70

80

90

100

110

120

Jan 09 Sep 09 Apr 10 Nov 10 Jun 11 Jan 12 Aug 12 Mrz 13

Frontier relative to GEM Frontier relative to World

Page 45: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Most markets well below peak

Frontier Stock Market History

45 Frontier Markets | May 2013

Source: FactSet, Bloomberg to March 31st, 2013

Performance shown is past performance. Past performance is not a guide to future performance. The value of investment can go down as well as up and is not guaranteed.

Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

% Fall from

Country Peak to trough Peak to 31/03/2013

Abu Dhabi -64% -58%

Argentina -75% -70%

Bahrain -63% -63%

Bulgaria -86% -82%

Croatia -77% -71%

Dubai -84% -80%

Estonia -79% -51%

Jordan -72% -70%

Kazakhstan -77% -64%

Kenya -64% -44%

Kuwait -65% -64%

Lebanon -55% -53%

Mauritius -64% -25%

Nigeria -77% -68%

Oman -60% -50%

Pakistan -79% -51%

Qatar -65% -33%

Romania -87% -65%

Slovenia -78% -73%

Sri Lanka -48% -37%

Tunisia -32% -32%

Ukraine -72% -72%

Vietnam -78% -64%

Page 46: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Frontier Markets tend towards low correlation with MSCI GEMs, MSCI World, S&P

GSCI and each other

Correlations* 2005-2013

46 Frontier Markets | May 2013

*Note: A Correlation Coefficient of +1 shows that two series rise and fall together, -1 shows that when one rises the other falls (and vice versa), 0 shows there is no relationship,

Countries <3% of MSCI Frontier Markets index excluded. 1Since January 2005

Source: FactSet, Bloomberg, Schroders, data to March 31st, 2013. Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to

buy/sell.

Correlation

coefficients Qatar Kuwait Oman UAE¹ Croatia Nigeria Slovenia Kazakhstan

MSCI

Frontiers

MSCI

GEMs

MSCI

World

S&P GSCI

Index

Qatar 1.00

Kuwait 0.50 1.00

Oman 0.49 0.63 1.00

UAE¹ 0.66 0.56 0.58 1.00

Croatia 0.48 0.39 0.35 0.50 1.00

Nigeria 0.23 0.46 0.40 0.46 0.46 1.00

Slovenia 0.09 0.12 0.22 0.05 0.04 0.10 1.00

Kazakhstan 0.30 0.33 0.42 0.30 0.51 0.36 -0.08 1.00

MSCI

Frontiers 0.72 0.78 0.69 0.82 0.62 0.55 0.06 0.42 1.00

MSCI GEMs 0.52 0.41 0.46 0.55 0.67 0.28 0.00 0.58 0.61 1.00

MSCI World 0.49 0.47 0.45 0.55 0.70 0.31 -0.07 0.58 0.63 0.89 1.00

S&P GSCI

Index 0.52 0.48 0.46 0.49 0.56 0.34 0.14 0.39 0.59 0.60 0.58 1.00

Page 47: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Frontier stocks are good diversifiers

Correlation of MSCI Frontier Markets with MSCI World

Correlation

47 Frontier Markets | May 2013

Source: Bloomberg, rolling 52-week correlations of weekly USD Net returns. Data to March 31st, 2013

-40%

-20%

0%

20%

40%

60%

80%

100%

2003 2003 2004 2005 2005 2006 2006 2007 2008 2008 2009 2009 2010 2010 2011 2012 2012 2013

MSCI Frontier Markets with MSCI World

51.9%

Page 48: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Correlation between Frontier stock markets and the oil price varies widely over time

Correlation of MSCI FM with Brent

Correlation with Brent Crude (rolling 40 weeks)

48 Frontier Markets | May 2013

Source: Schroders, Bloomberg. Data to March 31st, 2013.

-40%

-20%

0%

20%

40%

60%

80%

100%

Mrz 06 Mrz 07 Mrz 08 Mrz 09 Mrz 10 Mrz 11 Mrz 12 Mrz 13

30.8%

Page 49: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Frontier Markets have historically been excellent diversifiers

10 year (Annualized)* 5 year (Annualized)*

Frontier markets efficient frontiers vs. World

49 Frontier Markets | May 2013

Source: FactSet, MSCI. *All figures use weekly US$ MSCI Price returns to March 29th, 2013. Performance shown is past performance.

Past performance is not a guide to future performance. The value of investment can go down as well as up and is not guaranteed.

Annualized Risk (%S.D. p.a) Annualized Risk (%S.D. p.a)

Annualized return (%p.a.) Annualized return (%p.a.)

Cumulative Return

MSCI FM +76.1%

MSCI World +88.0%

Cumulative Return

MSCI FM -49.5%

MSCI World -0.1%

5.8%

5.9%

6.0%

6.1%

6.2%

6.3%

6.4%

6.5%

6.6%

6.7%

6.8%

14% 15% 16% 17% 18% 19%

MSCI World 100%

MSCI FM 100%

FM 80%

FM 60%

FM 40% FM 20%

-14%

-12%

-10%

-8%

-6%

-4%

-2%

0%

16% 17% 18% 19% 20% 21% 22% 23%

MSCI World 100%

MSCI FM 100%

FM 80%

FM 60%

FM 40%

FM 20%

Page 50: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Valuations well below their peak and cheap versus emerging and developed markets

Valuations

50 Frontier Markets | May 2013

Source: Schroders, FactSet, Bloomberg, MSCI as at March 31st, 2013.

*Since Dec 2001. ¹Last twelve months

Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

Countries Weight % Peak* PE Historic PE¹ Prospective PE % Below Peak

P/E

Kuwait 23.6 43.8 17.7 12.9 -60%

Qatar 15.0 40.0 12.3 9.6 -69%

Nigeria 14.9 28.7 15.0 10.2 -48%

UAE 10.7 51.3 12.9 11.2 -75%

Pakistan 4.0 16.2 7.8 7.0 -52%

Kazakhstan 4.0 10.5 6.7 5.5 -36%

Kenya 3.7 21.8 13.3 11.5 -39%

Oman 3.2 18.3 10.1 9.6 -45%

Argentina 3.0 446.6 3.8 3.9 -99%

Lebanon 2.2 27.3 8.9 12.4 -67%

Vietnam 2.2 41.0 18.9 12.6 -54%

MSCI Frontiers -- 17.8 11.8 9.6 -34%

MSCI EM -- 20.6 11.8 10.6 -39%

MSCI World -- 30.2 16.1 13.3 -47%

Page 51: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Frontier Markets cheap versus Global Emerging Markets

MSCI Frontier Markets vs. MSCI Global Emerging Markets relative trailing P/E

Frontier Markets vs. Global Emerging Markets

51 Frontier Markets | May 2013

Source: FactSet. Data to March 31st, 2013

Performance shown is past performance. Past performance is not a guide to future performance.

The value of investment can go down as well as up and is not guaranteed.

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

Dez 07 Sep 08 Jun 09 Mrz 10 Dez 10 Sep 11 Jun 12 Mrz 13

MSCI FM vs. MSCI EM relative trailing P/E

Page 52: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

0.4

0.6

0.8

1.0

1.2

1.4

Dez 07 Sep 08 Jun 09 Mrz 10 Dez 10 Sep 11 Jun 12 Mrz 13

MSCI FM vs. MSCI EM relative P/B

Frontier Markets cheap versus Global Emerging Markets

MSCI Frontier Markets vs. MSCI Global Emerging

Markets relative P/B

52 Frontier Markets | May 2013

Source: FactSet. Data to March 31st, 2013

Performance shown is past performance. Past performance is not a guide to future performance.

The value of investment can go down as well as up and is not guaranteed.

Page 53: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

0

1

2

3

4

5

6

7

8

9

Dez 02 Jun 04 Dez 05 Mai 07 Nov 08 Apr 10 Okt 11 Mrz 13

MSCI Emerging MSCI Frontier

Frontier markets have a higher dividend yield than emerging markets

MSCI Frontier Markets vs. MSCI Global Emerging Markets Dividend Yield

MSCI Frontier Markets vs. MSCI Global Emerging

Markets

53 Frontier Markets | May 2013

Source: FactSet. Data to March 31st, 2013

Performance shown is past performance. Past performance is not a guide to future performance. The value of investment can go down as well as up and is not guaranteed.

%

Page 54: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Few international investors have exposure to Frontier stock markets

Institutional funds allocated to EM and Frontier (as at 6th February 2013)

Fund allocation

54 Frontier Markets | May 2013

Source: CITI Investment Research and Analysis, EPFR. Data as of February 6, 2013

$4'380bn

US$ 692bn

US$ 15bn 0

500

1'000

1'500

2'000

2'500

3'000

3'500

4'000

4'500

5'000

Developed Emerging Frontier

US$ bn

Page 55: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Frontier Markets are under owned

GEM funds holdings in Frontier Markets

55 Frontier Markets | May 2013

Source: EPFR. Data to February 28th, 2013

This presentation provides opinions which may include forecasted views. We believe that we are basing our expectations and beliefs on reasonable assumptions within the

bounds of what we currently know. However, there is no guarantee that any forecasts or opinions will be realized.

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

Dez 95 Jun 98 Nov 00 Mai 03 Okt 05 Apr 08 Sep 10 Feb 13

% of GEM funds AUM invested in Frontier Markets

Page 56: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Frontier market stocks are relatively under-researched

Average number of analysts covering stocks in MSCI indices*

Analyst coverage

56 Frontier Markets | May 2013

Source: CITI Investment Research and Analysis, IBES, FactSet. Data to end December 2011

*The number of sell-side analysts covering an average stock in each of the three groups

0

2

4

6

8

10

12

14

16

18

1988 1992 1995 1998 2002 2005 2008 2011

Frontier Emerging Global

16.4

14.0

4.7

Page 57: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Frontier Markets give exposure to growth potential and provide diversification benefits

Summary

Attractive demographics, low labour costs and large resource base

Strong economic growth potential

Liberalisation of economies and markets provides excellent investment opportunities

Currently under owned

Low correlation provides good diversification

Attractive valuations

Why Now?

Foreign investor interest increasing

Liberalisation process gathering momentum

Beneficial impact of strong Chinese/Indian growth and FDI

Cheap versus emerging and developed markets

57 Frontier Markets | May 2013

This presentation provides opinions which may include forecasted views. We believe that we are basing our expectations and beliefs on reasonable assumptions within the

bounds of what we currently know. However, there is no guarantee that any forecasts or opinions will be realized.

Page 58: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Regional Key Drivers

Page 59: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Middle East*

Large Energy Reserves

52% of global oil reserves

36% of total oil production

40% of natural gas reserves

14% of natural gas production

Massive Government Spending

$465bn of infrastructure spending over the last 5 years, another $480bn expected by 2016

Diversification away from Oil

Growth in non-oil has outpaced oil growth despite the surge in oil prices

Contribution to GDP of oil sector in 2005 at 47%, compared to 29% in 2010

Young demographics

60% of population below the age of 30

59 Frontier Markets | May 2013

Source: Schroders, HSBC, BP, UN Population database. Data as at September 2012

*Bahrain, Jordan, Kuwait, Lebanon, Oman, Qatar, UAE

Page 60: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

High double digit GDP growth

Largest LNG producer in the world with export capacity of

77mn tons per year, 28% of the global LNG output

Home to world’s third largest proven natural gas reserves in

excess of 25trn cubic meter, 12% of the world’s total

One of the fastest growing economy in the world. Real GDP

grew by 14% in 2011 on the back of increased LNG capacity

A young population with the highest per capita income in the

world reaching USD 80,000 in 2011 (World Bank)

Over USD 185bn to be spent on 176 new construction and

hydrocarbon related projects in 2011-2016.

Qatar's successful 2022 FIFA World Cup bid will accelerate

large-scale infrastructure projects

2012/2013 budget committed to huge government spending,

supported by a huge fiscal surplus, 12.5% of GDP in 2011

Gas reserves¹

Qatar (15.6% of MSCI Frontiers Index)

60 Frontier Markets | May 2013

Source: Schroders. Data as at January 2013

¹BP Statistical Review, June 2012

This slide is intended as an example of our views and opinions on specific country but should not be viewed as an investment recommendation. This country does not necessarily

have an allocation in any current portfolio, and opinions and allocations are subject to change.

0%

2%

4%

6%

8%

10%

12%

14%

16%

0

5

10

15

20

25

30

35

40

199

01

99

11

99

21

99

31

99

41

99

51

99

61

99

71

99

81

99

92

00

02

00

12

00

22

00

32

00

42

00

52

00

62

00

72

00

82

00

92

01

02

01

1

Trillion cubic meters as % of global (rhs)

Cubic metres in trillion % of global

Page 61: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Key positives:

Largest industrial company in Qatar, with holdings in petrochemicals (40%

of EBITDA), fertilizers (40% of EBITDA) and steel (20% of EBITDA)

Owns 75% of the world’s largest single site producer of Urea (capacity of

5.5mn by 2013) and Ammonia (3.6mn by 2013)

Enjoys one of the cheapest cost structures in the world, sourcing natural

gas at USD 1.5-2/mmbtu from the Qatari Government

Capacity expansion will support EPS growth over the next few years

(2011-2015 CAGR of at least 5%)

Existing plants operate at full utilisation rate across all businesses

Has 95% market share in the Qatari steel market and is set to benefit from

the heavy infrastructure spending planned in the country in preparation for

World Cup 2022

Enjoys the full support of the Qatari government (51% owned by Qatar

Petroleum and 19% by Qatari pension funds)

Industries Qatar (Grade: 1, weight in MSCI Qatar : 17%)

Qatar – key stocks

61 Frontier Markets | May 2013

Source: Schroders, FactSet, as at December 2012. *Net (TR).

Securities above are shown for illustrative purposes and are not to be considered a recommendation to buy or sell.

This slide is intended as an example of our view or opinion on a specific stock in a Frontier country but should not be viewed as a recommendation to buy or sell. This stock is not

necessarily a holding in any current portfolio, and stock ratings and holdings are subject to change. For information on our stock ranking system, please see below beginning on

page 97.

US$ (re-based to 100)

Forward

P/E

Forward

EPSG %

Div Yield

%

Upside to

Fair Value %

10.1 5.0 6.0 +10.0

85

90

95

100

105

110

115

120

125

130

135

140

145

150

Sep 09 Mrz 10 Okt 10 Apr 11 Nov 11 Mai 12 Dez 12

Industries Qatar Relative to MSCI Qatar*

Bought

Sep 2010

Page 62: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Diverse economy with significant reserves

A diverse economy: hydrocarbon and resource rich Abu Dhabi

with an open, service based, dynamic Dubai. Abu Dhabi

accounts for 57% of UAE GDP, Dubai is 32% & the other

emirates 11%

Dubai is well positioned as the tourist and financial hub of the

Middle East

The UAE has never run a C/A deficit in the country’s history.

IMF projections through 2014 see the UAE with the 20th

strongest C/A balance globally

Estimated FX reserves and SWF assets are equal to around

235% of GDP as at January 2013 (one of the largest reserves

stock in the world relative to the size of the economy)

Young and growing population, at a CAGR of 6% in the last 5

years

GDP of Travel & Tourism

UAE (9.6% of MSCI Frontiers Index)

62 Frontier Markets | May 2013

Source: Schroders, World Travel & Tourism Council, IMF Data Mapper. Data as at January 2013

This slide is intended as an example of our views and opinions on specific country but should not be viewed as an investment recommendation. This country does not necessarily

have an allocation in any current portfolio, and opinions and allocations are subject to change.

US$ bn % of GDP

0

10

20

30

40

50

60

70

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

e

7

8

9

10

11

12

13

14

GDP (US$) % of total GDP (rhs)

Page 63: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Key positives:

Established brand name and solid execution track record with over 32,000

units delivered since 2001 (93% in the UAE)

Increasing recurring revenue stream from retail and hospitality assets,

expected to reach AED 3.8bn by 2013 (49% of total revenues)

Rental portfolio represents 75% of total estimated EV

Diversification away from Dubai with revenue contribution to decrease to

69% by 2015, coming mostly from recurring income

516mn sq.m of land bank secured at competitive valuations valued at over

AED 79bn

Trading at 0.9x P/NAV vs. MENA average of 1.1x P/NAV

Emaar Properties (Grade: 1, weight in MSCI UAE : 30%)

UAE – key stocks

63 Frontier Markets | May 2013

SourceSource: Schroders, FactSet, as at December 2012. *Net (TR).

Securities above are shown for illustrative purposes and are not to be considered a recommendation to buy or sell.

This slide is intended as an example of our view or opinion on a specific stock in a Frontier country but should not be viewed as a recommendation to buy or sell. This stock is not

necessarily a holding in any current portfolio, and stock ratings and holdings are subject to change. For information on our stock ranking system, please see below beginning on

page 97.

US$ (re-based to 100)

Forward

P/E

Forward

EPSG %

Div Yield

%

Upside to

Fair Value %

15.6 5.0 0.0 +10.0

60

65

70

75

80

85

90

95

100

105

110

115

120

125

130

135

140

Sep 09 Feb 10 Aug 10 Jan 11 Jul 11 Jan 12 Jun 12 Dez 12

Emaar Properties Relative to MSCI UAE*

Bought

Sep 2009

Page 64: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

The largest oil reserves in the world are now being used to diversify the sources of GDP growth

Country has grown by an

average 5% annually, with non-oil

sector leading the way

(accounting for 70% of headline

growth since 2003)

Has been running massive fiscal

surpluses over the past 5 years

Oil revenues have fuelled

extensive government spending

in infrastructure, education and

social projects

Government committed to

infrastructure spend – USD

400bn planned over the next

few years

Budget Break Even Oil Price

of $65/bbl

Oil reserves¹ Infrastructure spending²

Saudi Arabia (Not an MSCI Frontiers Index market)

64 Frontier Markets | May 2013

Source: ¹BP Statistical Review, June 2012. ²ML, UBS, SAMA. Data as at September 2012

This slide is intended as an example of our views and opinions on specific country but should not be viewed as an investment recommendation. This country does not necessarily

have an allocation in any current portfolio, and opinions and allocations are subject to change.

Barrels in billions US$ bn

15%

16%

17%

18%

19%

20%

21%

22%

23%

24%

25%

26%

27%

255

258

261

264

267

270

199

0

199

3

199

6

199

9

200

2

200

5

200

8

201

1

Billions of Barrels

as % of global (rhs)

0

10

20

30

40

50

60

70

80

90

100

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

% of global

f

Page 65: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Key positives:

One of the world’s five largest petrochemicals manufacturers

Access to significantly cheaper feedstock, with long term contracts to

receive natural gas at USD 0.75/mmbtu from the Saudi Government

Low cost structure acts as a natural hedge: it can operate well above

industry levels in a downturn, and still remain profitable

Able to gain market share globally while competitors struggle

High free cash flow generation

SABIC (Grade: 1, weight in MSCI Saudi: 16%)

Saudi Arabia – key stocks

65 Frontier Markets | May 2013

Source: Schroders, FactSet, as at December 2012. *Net (TR).

Securities above are shown for illustrative purposes and are not to be considered a recommendation to buy or sell.

This slide is intended as an example of our view or opinion on a specific stock in a Frontier country but should not be viewed as a recommendation to buy or sell. This stock is not

necessarily a holding in any current portfolio, and stock ratings and holdings are subject to change. For information on our stock ranking system, please see below beginning on

page 97.

US$ (re-based to 100)

Forward

P/E

Forward

EPSG %

Div Yield

%

Upside to

Fair Value %

9.7 5.3 5.3 +28.0

95

100

105

110

115

120

125

130

135

140

145

150

155

160

165

Sep 09 Feb 10 Aug 10 Feb 11 Jul 11 Jan 12 Jul 12 Dez 12

SABIC Relative to S&P Saudia Arabia

Bought

Sep 2009

Page 66: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Asia

Large, young population

Bangladesh population 162mn (60% below the age of 30)

Vietnam population 88mn (50% below the age of 30)

Population growth across the region over 1%

Competitive manufacturing base

Low Labor costs/hour in Bangladesh $0.3, Sri Lanka $0.9, Vietnam $1.7, vs. China $3.3

Strong economic growth expected to continue

Regional GDP growth estimated at over 8%

66 Frontier Markets | May 2013

Source: Schroders, IMF WEO database, UN World Population database, UBS, EIU as at September 2012

Page 67: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Large, young population, with strong growth

Large, young & growing population. Total population 88m

with 50% of the population below 30 yrs of age

Cheap & relatively well educated labour force

FDI commitments have consistently been high,

notwithstanding periodic macro crisis. FDI commitments were

USD 16bn in 2009 & USD 10bn as of June ’11

Large resource base

Advantageous geographic location

Annual GDP Growth

Vietnam (2.1% of MSCI Frontiers Index)

67 Frontier Markets | May 2013

Source: Schroders, IMF WEO database, EIU, UBS. Data as at September 2012

This slide is intended as an example of our views and opinions on specific Frontier country but should not be viewed as an investment recommendation. This country does not

necessarily have an allocation in any current portfolio, and opinions and allocations are subject to change.

% (yoy)

0

2

4

6

8

10

12

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Forecast

Page 68: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Large, young population. Strong Economic growth

Large, young and growing population. Total population 162m

with 60% of the population below 30 yrs of age.

Cheap labour force. Wages considerably lower than China,

making it a viable alternative to China based Multi National

Corporations

Strong GDP growth expected at 7% over the next 3 years

Enormous investment demand for infrastructure projects

Advantageous geographic location

Population split (2010)

Bangladesh (2.1% of MSCI Frontiers Index)

68 Frontier Markets | May 2013

Source: Schroders, IMF, EIU, UBS, UN World population database. As at September 2012

This slide is intended as an example of our views and opinions on specific Frontier country but should not be viewed as an investment recommendation. This country does not

necessarily have an allocation in any current portfolio, and opinions and allocations are subject to change.

Age group buckets

0% 2% 4% 6% 8% 10% 12%

0-4

15-1920-2425-2930-3435-3940-4445-4950-5455-5960-6465-6970-7475-7980-8485-8990-9495-99100+

5-9 10-14

Page 69: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Key positives:

Titas Gas has a dominant market share in the gas transmission

and distribution segment in Bangladesh. The company has

demonstrated its ability to reduce transmission and distribution

losses to almost nil, from the high 7% of total gas volumes a

few years ago

The company will benefit from price reforms and the

government focus on increasing supply of gas to the country to

avoid power shortages.

Strong balance sheet with over 50% of the market cap in cash

and long term deposits.

Titas Gas (Grade: 1, weight in MSCI Bangladesh: 9%)

Bangladesh – key stocks

69 Frontier Markets | May 2013

Source: Schroders, FactSet, as at December 2012. *Net (TR).

Securities above are shown for illustrative purposes and are not to be considered a recommendation to buy or sell.

This slide is intended as an example of our view or opinion on a specific stock in a Frontier country but should not be viewed as a recommendation to buy or sell. This stock is not

necessarily a holding in any current portfolio, and stock ratings and holdings are subject to change. For information on our stock ranking system, please see below beginning on

page 97.

US$ (re-based to 100)

Forward

P/E

Forward

EPSG %

Div Yield

%

Upside to

Fair Value %

6.9 28.0 4.3 +28.0

Overweight from

Dec 2010

0

50

100

150

200

250

Mrz 10 Aug 10 Jan 11 Jun 11 Okt 11 Mrz 12 Aug 12 Dez 12

Titas Gas Relative to MSCI Bangladesh*

Page 70: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Africa

Strong regional economic growth of over 5%

Large and young population

African population 1bn, 15% of global population. Contribution to total global GDP of only 2%

Could account for 30% of global youth by 2030

Rich in Natural Resources

approximately 30% of mineral reserves globally

Indirect beneficiary of Chinese growth

Trade between China and Africa has increased significantly from $10bn in 2000, to $100bn

in 2010

China responsible for 30% of electricity generation across the continent

Massive investment

Recent $23bn deal made outlining development of three oil refineries in Nigeria

70 Frontier Markets | May 2013

Source: Schroders, UN, IMF WEO database, Renaissance Capital. Data as at September 2012

Page 71: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Resource rich market which should benefit from a strong “demographic dividend”

Favourable demographics - With a population of about 160mn

people, Nigeria is the most populous country in Africa and in

the top 10 most populous worldwide. This population is very

young, with a majority below 20 years of age

Resource rich - At 37bn barrels, Nigeria has the 10th largest

proven oil reserves in the world, a significant source of foreign

exchange income

Growing fast - IMF forecasts Real GDP to grow at over 6% for

each of the next 3 years

Huge need for investment - Cement consumption per capita

100kg, compared to 300kg in South Africa and over 1200kg in

China

Oil reserves¹

Nigeria (14.0% of MSCI Frontiers Index)

71 Frontier Markets | May 2013

Source: Schroders, HSBC, U.N. age population database. As at September 2012. ¹BP Statistical Review 2011

This slide is intended as an example of our views and opinions on specific Frontier country but should not be viewed as an investment recommendation. This country does not

necessarily have an allocation in any current portfolio, and opinions and allocations are subject to change.

0

5

10

15

20

25

30

35

40

199

01

99

11

99

21

99

31

99

41

99

51

99

61

99

71

99

81

99

92

00

02

00

12

00

22

00

32

00

42

00

52

00

62

00

72

00

82

00

92

01

02

01

1

Page 72: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Key positives:

One of the biggest and most profitable banks in Nigeria, with a

market leading brand and a very strong capital base.

Well positioned to benefit from increased confidence in

Nigeria's banking sector following 2008 financial crisis, as

government supported bail-out of the sector continues.

Huge opportunities in Nigeria for trade financing, infrastructure

lending and household lending - Loans to GDP is under 25%

Credible management with a strong reputation for risk

management and transparency.

Zenith Bank (Grade: 1, weight in MSCI Nigeria : 13%)

Nigeria – key stocks

72 Frontier Markets | May 2013

Source: Schroders, FactSet, as at December 2012. *Net (TR).

Securities above are shown for illustrative purposes and are not to be considered a recommendation to buy or sell.

This slide is intended as an example of our view or opinion on a specific stock in a Frontier country but should not be viewed as a recommendation to buy or sell. This stock is not

necessarily a holding in any current portfolio, and stock ratings and holdings are subject to change. For information on our stock ranking system, please see below beginning on

page 97.

US$ (re-based to 100)

Forward

P/E

Forward

EPSG %

Div Yield

%

Upside to

Fair Value %

8.8 11.0 6.1 +13.0

80

90

100

110

120

130

140

150

160

170

180

190

200

210

220

Sep 09 Feb 10 Aug 10 Feb 11 Jul 11 Jan 12 Jul 12 Dez 12

Zenith Bank Relative to MSCI Nigeria*

Overweight from

Dec 2010

Page 73: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Large, young population. Economy growing strongly

Favourable demographics - At over 40mn people, Kenya is

the third most populous country in East Africa. Over 50% of

this population is under 20 years old, promising a significant

future demographic dividend as this group enters the labour

force.

Growing strongly - IMF forecasts real GDP growth of over 5%

for each of the next 3 years, supported by increased

government spending on infrastructure.

Proxy for East African growth - Kenya is the largest economy

in the East African Community, a regional grouping of over

130mn people with GDP of over $70bn. With the only major

port in East Africa, Kenya is ideally positioned to become the

commercial hub of the region and benefit from its

development, including that of oil-rich Uganda and South

Sudan.

Huge need for investment - Cement consumption per capita

60kg, compared to 300kg in South Africa and over 1200kg in

China

Population split (2010)

Kenya (3.1% of MSCI Frontiers Index)

73 Frontier Markets | May 2013

Source: Schroders, HSBC, U.N. age population database. As at September 2012

This slide is intended as an example of our views and opinions on specific Frontier country but should not be viewed as an investment recommendation. This country does not

necessarily have an allocation in any current portfolio, and opinions and allocations are subject to change.

Age group buckets

5-9 10-14

0% 4% 8% 12% 16% 20%

0-4

15-1920-2425-2930-3435-3940-4445-4950-5455-5960-6465-6970-7475-7980-8485-8990-9495-99100+

Page 74: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Europe

Region rich in natural resources

Oil reserves (as % of total global) in Kazakhstan 1.8% (2011)

Natural Gas reserves (as % of total global) in Kazakhstan 1% and Ukraine 0.4% (2011)

Iron Ore reserves (as % of total global) in Kazakhstan 5% and Ukraine 3%

Copper reserves (as % of total global) in Kazakhstan 2%

Manufacturing centre for central Europe

Low Labour costs/hour in Bulgaria $4.9, Romania $5.0 vs. Germany $33.9, France $30.5

Advantageous geographical proximity to central Europe

74 Frontier Markets | May 2013

Source: Schroders, BP Statistical review of World energy, International Iron and Steel Institute, UBS, EIU Forecasts, as at June 2012

Page 75: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Enormous natural resources

Huge endowment of natural resources, which have allowed

the country to build up an oil reserve of 50% of GDP. Only

16m population

Sits geographically in an excellent position to export to both

China and Europe. Borders with China and Russia

Corruption is high but the political situation is stable. President

Nazarbeyv is a popular President and is more Western facing

than Putin in Russia. There is limited scope for civil unrest in

the near future, in spite of Zhanaozen protests

Phase I of the Kashagan oil field is set to be brought online in

2014. Biggest oil find since North Sea oil and has taken a

decade to develop. It will be another huge source of

Government revenue after development costs have been paid

(estimated to be $120bn). Estimated oil in the field is 38bn

barrels with a field life of over 25 years

Kazakhstan natural resources

Kazakhstan (4.0% of MSCI Frontiers Index)

75 Frontier Markets | May 2013

Source: Schroders as at September 2012. ¹BP Statistical Review of World Energy 2012

This slide is intended as an example of our views and opinions on specific Frontier country but should not be viewed as an investment recommendation. This country does not

necessarily have an allocation in any current portfolio, and opinions and allocations are subject to change.

Resource % of global share World Ranking

Ferrochrome 5 2

Uranium 13 3

Cadmium 7 4

Zinc 7 4

Lead 4 5

Iron Ore 5 7

Rhenium 3 7

Bismuth 2 7

Molybdenum 1 9

Copper 2 10

Bauxite 1 11

Oil¹ 2 11

Page 76: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Key positives:

Huge excess capital reserves even under a penal Basel III

scenario. 2011 Tier 1 ratio 16+% and could be above 20% in

the next two years. Re-levaraging of the balance sheet will be

ROE supportive.

Halyk has a large funding advantage over the competition due

to its liquidity position and high pre-provision profitability – it is

almost considered a sovereign proxy on debt. Large liquidity

reserves to grow the balance sheet going forward.

Very strong GDP growth expected to be 7% in 2011, and 5% in

2012 in Kazakhstan. The banking opportunity is large due to

low consumer credit penetration levels. High profitability growth

to be supported over the next 3 years by a decline in risk costs

and a resumption of double digit loan growth.

Halyk Bank (Grade: 1, weight in MSCI Kazakhstan : 15%)

Kazakhstan – key stocks

76 Frontier Markets | May 2013

Source: Schroders, FactSet, as at December 2012. *Net (TR).

Securities above are shown for illustrative purposes and are not to be considered a recommendation to buy or sell.

This slide is intended as an example of our view or opinion on a specific stock in a Frontier country but should not be viewed as a recommendation to buy or sell. This stock is not

necessarily a holding in any current portfolio, and stock ratings and holdings are subject to change. For information on our stock ranking system, please see below beginning on

page 97.

US$ (re-based to 100)

Forward

P/E

Forward

EPSG %

Div Yield

%

Upside to

Fair Value %

4.9 14.0 6.1 +51.0

70

80

90

100

110

120

130

140

150

160

170

180

190

200

210

Sep 09 Feb 10 Aug 10 Feb 11 Jul 11 Jan 12 Jul 12 Dez 12

Halyk Bank Relative to MSCI Kazakhstan*

Overweight from

Jan 2011

Page 77: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

A dynamic economy held back by poor policies

Large and educated middle class

Agricultural powerhouse; 20% of global Soya, 5% of global

beef

Underleveraged population; 5% Credit to GDP

Membership of Mercosur: leveraged to Brazilian growth

Substantial shale oil and gas discoveries have been made

in the past year

Household debt (%of GDP)

Argentina (3.3% of MSCI Frontiers Index)

77 Frontier Markets | May 2013

Source: UBS, Bloomberg, USDA, Morgan Stanley, Credit Suisse as at September 2012.

This slide is intended as an example of our views and opinions on specific Frontier country but should not be viewed as an investment recommendation. This country does not

necessarily have an allocation in any current portfolio, and opinions and allocations are subject to change.

0%

5%

10%

15%

20%

25%

30%

Arg

en

tin

a

Peru

Co

lom

bia

Me

xic

o

Bra

zil

Chile

Page 78: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Agenda

The Investment Case

Economic background

Equity Markets

Country Analysis/Key Stocks

Schroders Overview & Philosophy

Investment Process

Team

Appendices:

Performance

Competitor Analysis

Strategy

Biographies

78 Frontier Markets | May 2013

Page 79: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Philosophy

We believe that developing stock markets are inefficient and provide strong potential for adding

value through active fund management. This value can be extracted through both country and stock

selection. We believe that it is inappropriate to apply a systematic style bias as Frontier Market

countries may differ in their stage of development. We believe that as fund managers we should

manage both return and risk. Our aim is to achieve returns with the minimum level of risk through a

pro-active approach to risk control. We believe that applying a systematic, disciplined

approach, with a strong team culture increases our ability to add value.

79 Frontier Markets | May 2013

Source: Schroders

Page 80: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Focus

Why Schroders? A worldwide team – dedicated to asset management

Asset management is our sole business

Frontier Markets | May 2013

Experience and independence

Over 200 years of financial services experience

Founding Schroder family still controls more than 47% of

voting equity

Resources

Well established teams in all key

investment regions

Over 360 portfolio managers and

analysts worldwide

Over 3000 personnel in 27 countries

Financial strength

$359.2billion in AUM globally of which $26.2 billion is in

Emerging Markets

Approximately $1.5 billion surplus capital available for

building the business¹ Source: Schroders

Statistics are as of March 31, 2013

¹As at December 31, 2012

Bermuda Cayman Islands Mexico City New York Philadelphia

Amsterdam Copenhagen Frankfurt Geneva Gibraltar Guernsey Jersey London Luxembourg

Madrid Milan Paris Rome Stockholm Zurich

Beijing Hong Kong Jakarta Seoul Shanghai Singapore Sydney Taipei Tokyo

Buenos Aires Santiago São Paulo

Dubai

Mumbai

Schroders offices (Investment offices in orange)

80

Page 81: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Emerging market resources Location and experience

Source: Schroders March 2013. ¹Includes 7 fund managers, 1 strategist/fund manager, 27 analysts and 2 client portfolio managers.

* Local office analysts not involved in EM portfolio construction, but are a further source of expertise for the EM team to reference. Excluded from the 37 total in team.

Mexico

London:

Allan Conway (32)

Robert Davy (30)

James Gotto (21)

Waj Hashmi (19)

Nicholas Morse (25)

Nicholas Field (21)

Tom Wilson (11)

Pablo Riveroll (6)

Jonathan Fletcher (3)

Robert Ledger (1)

Moreno Fasolo (2)

Hong Kong:

Maurien Yau (20)

Jay Luong (12)

Young Roe Kim (12)

Sherry Lin (19)

Jing Li (8)

Rebecca Xu (3)

Shanghai:

Wu Hui (18)

Alex Tang (8)

Taipei:

Chen-Hsiu Chen (15)

Karen Lin (15)

Seoul:

Juno Yoon (12)

Singapore:

Wai Yin Loke (27)

Siok Mei Lim (17)

Sameer Kakakhel (18)

Indonesia:

Kiekie Boenawan*

Sao Paulo:

Alexandre Moreira (13)

Pedro Baltazar (5)

Supported by:

5 Global Sector Portfolio Managers

50+ Developed Market Analysts

Locally based Investment Teams

Portfolio Managers

Research Analysts

Product Manager

( ) Years Experience

Local business units

Dubai:

Rami Sidani (9)

Maha Soueissy (8)

Maya Bou Kheir (9)

Buenos Aires

Alan Ayres (30)

Edward Evans (10)

Abbas Barkhordar (5)

Bryony Deuchars (12)

Rollo Roscow (8)

Mohsin Memon (5)

Andrew Boag (6)

37¹ INVESTMENT PROFESSIONALS WITH A TOTAL OF 495 YEARS OF EXPERIENCE

(168 YEARS FOR FUND MANAGERS, 287 YEARS FOR ANALYSTS) AND AN AVERAGE OF 13 YEARS EXPERIENCE

Frontier Markets | May 2013 81

India:

4 analyst from the JV*

Page 82: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Schroders investment approach Sources of outperformance

82 Frontier Markets | May 2013

Source: Schroders as of March 2013.

Investment Process PRIMARILY BALANCED APPROACH targets 50% value added from stock and 50%

from country decisions

Strong proprietary stock research: database/models (GRiD)

QUANTITATIVE process drives country decisions

Incorporates rigorous RISK CONTROLS, including alpha adjusted tracking error and

stop loss rules

Team 37 Investment professionals

Average 13 years experience

Regional expertise locally based

Matrix approach

Global Resources Central economics team

Global Sector Analysis

Use of Global Platforms (dealing, settlement, risk, research and performance)

Page 83: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Schroders investment approach Objectives

83 Frontier Markets | May 2013

Source: Schroders

* Turnover figures are based on the lesser of purchases and sales over mean market value

There is no guarantee that any managed portfolio will meet its objectives.

Return Outperform MSCI Frontier Markets Index by 2.5% p.a.

(gross) over 3 year rolling periods

Risk Tracking error: 5% (range 2%-8%)

Equal risk from country and stock

Characteristics Style – balanced

Turnover 60%-80% p.a.*

Portfolio of 50 - 70 stocks

Page 84: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Agenda

The Investment Case

Economic background

Equity Markets

Country Analysis/Key Stocks

Schroders Overview & Philosophy

Investment Process

Team

Appendices:

Performance

Competitor Analysis

Strategy

Biographies

84 Frontier Markets | May 2013

Page 85: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

A disciplined, systematic process with a well resourced, experienced team

Inputs

Emerging markets equity investment process

85 Frontier Markets | May 2013

Portfolio Construction Risk Management & Implementation

Stock Analysis

– Fundamental

Country Analysis

– Quantitative model

with judgemental

overlay

Stock Selection

(50%)

Country Allocation

(50%)

Portfolio

Execution &

Monitoring

Model

Portfolio

Client Portfolio

Implementation

Page 86: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Process overview

86 Frontier Markets | May 2013

Source: Schroders

Monthly Strategy Meeting

Country Stock Models

Country Quantitative Analysis

Country Allocation

GEMS Country Model tested on GEM, not frontier

Qualitative Judgement

Client Portfolio

Risk Analysis

Page 87: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Country analysis

Top down quantitative model

Factors

Source: Schroders

As of December 2012

The model takes the above mentioned factors into account in the percentages stated. Please see more details about the model on sl ide 87. Please see important information

about models at the end of this presentation.

Model aims to ensure systematic coverage of all key factors in all markets

Valuation 43%

Price/book 11%

P/E forecast 10%

Real earnings yield gap 10%

5yr P/E 12%

Growth 15%

Earnings growth 5%

Earnings revisions (3m) 7%

ROE 3%

Currency / Risk 17%

Real exchange rate 8%

Current account/GDP 9%

Momentum 20%

Price momentum (36m) 10%

Consensus

Weighting deviation 10%

Interest rates 5%

Real interest rate 5%

Frontier Markets | May 2013 87

Page 88: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Performance of GEM Model vs. MSCI EM

Source: Schroders. Data shown from December 31, 1991 to December 31, 2012. Results based on theoretical model output. Back test period 1992-2009 (excluding the out of

sample test period of 2004/2005). ¹Relative performance calculated arithmetically. ²Transaction costs include: commission + trader timing + market impact costs for a round trip.

The performance shown above is the performance of a hypothetical portfolio, net of transaction costs. The performance does not represent the performance of an actual account,

but instead is intended to indicate the impact that the GEM Model (a top down model for country selection) had on managed portfolios. Returns were calculated using end of day

trading prices for the day of the quarterly team meeting at which country allocations were determined. Please see the end of the presentation for a description of the model and its

limitations. Past performance is not a guide to future performance. The value of an investment can go up or down and is not guaranteed.

3.5%

0.1%

4.5%

1.6%0.4%

5.1%

2.4%3.7%

0.5%

2.6%

1.5%

3.3%

8.4%

4.5%4.2%

-0.7% -0.3%

7.7%3.5%

10.4%

2.9%

20.4%

-5%

0%

5%

10%

15%

20%

25%

92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12Since

Inc.

(pa)

0

50

100

150

200

250

300

Dec 91 Dec 94 Dec 97 Dec 00 Dec 03 Dec 06 Dec 09 Dec 12

0

100

200

300

400

500

600

700

Relative net Relative gross MSCI EMF (rhs)

Performance of top down model

31 December 1991 = 100

Annual relative performance (net)1

Consistent value added

Outperformed in 19 out of 21 years

Model returns (net of 1.65% transaction costs² x model turnover)

Annualized excess return = 3.7%

Annualized tracking error = 3.6%

Information ratio = 1.0

Annual Turnover = 38.5%

Model has provided consistent outperformance with low volatility

Hypothetical results: For further information on the risks involved please refer to the Important Information slide

Frontier Markets | May 2013 88

Page 89: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Performance of GEM model during up and down years December 1991 to December 2012

Source: Schroders. Relative performance calculated arithmetically.

The performance shown above is the performance of a hypothetical portfolio, net of transaction costs. The performance does not represent the performance of an actual account,

but instead is intended to indicate the impact that the GEM Model (a top down model for country selection) had on managed portfolios. Returns were calculated using end of day

trading prices for the day of the quarterly team meeting at which country allocations were determined. Please see the end of the presentation for a description of the model and its

limitations. Past performance is not a guide to future performance. The value of an investment can go up or down and is not guaranteed.

Down years

Up Years

Model has performed well during up and down years

1 (-0.3%)

1 (-0.7%)

2

Underperformance

8 (+0.1% to +8.4%)

11 (+0.5% to +20.4%)

19

Outperformance

3.4%

4.7%

Average relative

performance

Frontier Markets | May 2013 89

Page 90: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Performance of GEM model vs. MSCI Frontier Markets Since inception of the Frontier Markets Fund (14th December 2010)

Source: Schroders.

The performance shown above is the performance of a hypothetical portfolio, net of transaction costs. The performance does not represent the performance of an actual account,

but instead is intended to indicate the impact that the GEM Model (a top down model for country selection) had on managed portfolios. Returns were calculated using end of day

trading prices for the day of the quarterly team meeting at which country allocations were determined. Please see the end of the presentation for a description of the model and its

limitations. Past performance is not a guide to future performance. The value of an investment can go up or down and is not guaranteed.

Early days but looks promising

Frontier Markets | May 2013 90

99

100

101

102

103

104

De

z 1

0

Ja

n 1

1

Feb

11

Mrz

11

Ap

r 1

1

Ma

i 1

1

Ju

n 1

1

Ju

l 1

1

Au

g 1

1

Se

p 1

1

Okt 1

1

No

v 1

1

De

z 1

1

Ja

n 1

2

Feb

12

Mrz

12

Ap

r 1

2

Ma

i 1

2

Ju

n 1

2

Ju

l 1

2

Au

g 1

2

Sep 1

2

Okt 1

2

No

v 1

2

De

z 1

2

Ja

n 1

3

Feb

13

GEMS Model Performance for Frontier Markets

14 December 2010 = 100

Underperformance in 2H 2011

due to overweight Eastern

European countries as

Eurozone concerns intensified

Strong performance in other

periods from a wide range of

countries

Page 91: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Model is run monthly and countries ranked based on scores

Model scores and rankings

Country analysis GEMS country model scoresheet - Example

91 Frontier Markets | May 2013

Source: Schroders April 2013

Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

April-2013 TOT P/B P/E 5yr P/E P/E F/C EYG VAL EPS Gr

GDP 6m

Chg

Return on

Equity

Revisions

Ratio GRW

DividendCo

ver REER

Curr A/C

%GDP RISK Real IR INT RATE Price Mom

Active w gt

Dev MOM

100% 11.0% 0.0% 12.0% 10.3% 9.6% 43.0% 8.9% 0.0% 6.5% 0.0% 15.4% 0.0% 8.5% 8.6% 17.1% 4.9% 4.9% 19.6% 0.0% 19.6%

Serbia 77.0 88.2 94.7 98.9 99.6 95.2 76.8 79.1 77.7 85.7 14.9 50.2 40.7 40.7 68.9 68.9

Argentina 63.5 82.9 97.9 89.9 85.0 89.3 95.0 80.2 88.8 0.0 51.1 25.6 87.1 87.1 14.2 14.2

Ukraine 61.1 90.5 87.2 100.0 99.9 94.0 28.2 97.1 57.1 53.9 27.0 40.4 99.6 99.6 0.8 0.8

Estonia 53.4 60.8 16.6 36.2 47.6 39.6 93.5 12.8 59.6 67.6 38.2 52.8 17.9 17.9 88.1 88.1

Nigeria 52.8 16.2 21.1 29.8 20.2 21.8 76.3 82.7 79.0 57.9 54.2 56.1 78.5 78.5 91.1 91.1

Pakistan 52.8 27.2 47.9 49.5 37.7 40.7 42.8 94.7 64.6 9.4 43.4 26.4 82.4 82.4 85.5 85.5

Romania 52.7 57.2 41.0 45.8 49.5 48.2 91.7 16.2 60.0 71.8 39.9 55.8 39.8 39.8 57.2 57.2

Qatar 52.1 31.7 26.4 35.3 47.4 34.6 55.6 42.0 49.9 59.6 97.9 78.8 16.4 16.4 77.9 77.9

Kenya 50.5 13.0 18.1 28.0 11.3 17.6 73.2 99.4 84.2 51.2 24.2 37.6 95.8 95.8 96.0 96.0

Sri Lanka 50.1 19.9 16.4 23.9 12.4 18.2 64.9 60.7 63.1 89.4 31.7 60.5 87.7 87.7 91.3 91.3

Bulgaria 49.9 100.0 99.8 50.0 50.0 76.8 50.0 15.5 35.5 52.6 44.0 48.3 17.1 17.1 11.8 11.8

Kazakhstan 48.8 60.6 77.5 60.9 79.7 69.7 5.3 51.4 24.7 45.9 57.9 52.0 6.6 6.6 30.0 30.0

Bangladesh 48.3 37.9 47.5 50.0 50.0 46.2 50.0 44.1 47.5 96.8 56.9 76.8 87.2 87.2 19.0 19.0

UAE 48.0 56.7 25.8 30.3 31.2 36.0 59.1 13.2 39.8 59.7 65.0 62.4 42.9 42.9 69.6 69.6

Mauritius 45.1 31.8 31.5 50.0 50.0 40.2 50.0 57.6 53.2 16.4 21.0 18.7 34.1 34.1 75.3 75.3

Oman 44.5 38.7 44.8 39.5 50.5 43.2 31.0 45.8 37.2 58.9 80.6 69.8 19.7 19.7 37.2 37.2

Vietnam 43.5 18.0 28.3 24.7 19.7 22.9 85.3 47.4 69.4 53.9 47.1 50.5 63.7 63.7 57.4 57.4

Kuwait 40.9 31.7 29.2 25.3 24.3 27.8 65.8 18.0 45.8 32.3 100.0 66.2 47.8 47.8 42.1 42.1

Bahrain 40.1 59.6 82.2 37.0 45.4 57.3 1.1 30.0 13.2 59.7 55.2 57.4 24.7 24.7 12.2 12.2

Lebanon 39.6 61.8 50.9 35.6 35.5 46.6 55.2 26.4 43.1 59.7 20.4 40.0 48.0 48.0 19.2 19.2

Tunisia 39.5 19.9 25.7 50.0 50.0 35.5 50.0 32.0 42.5 36.0 25.5 30.7 20.5 20.5 58.6 58.6

Lithuania 39.2 19.3 21.9 25.9 29.6 23.9 11.4 75.1 38.1 52.9 41.9 47.4 31.8 31.8 68.4 68.4

Slovenia 36.4 55.1 41.1 35.2 40.0 43.0 25.6 12.6 20.1 52.6 61.6 57.1 33.4 33.4 17.3 17.3

Croatia 36.1 39.3 46.6 29.3 38.1 38.7 2.6 27.3 13.0 35.8 52.9 44.4 20.5 20.5 45.1 45.1

Jordan 35.0 44.5 28.8 34.3 37.0 36.0 50.9 22.9 39.2 59.6 6.6 33.0 38.9 38.9 30.2 30.2

Page 92: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Rather than optimization, a simple ‘worst to best’ asset allocation approach is used

Rankings – Weightings

Country allocation GEMS equity model - Example

92

Source: Schroders, April 2013. *Or 10% for countries over 15% of index.

Countries and country allocations are shown for illustrative purposes only, are subject to change and should not be viewed as a recommendation to buy/sell.

Identify top and bottom 6

countries

Take bottom 6 countries to

zero or maximum 5%

underweight*

Redistribute proceeds equally

across top 6 markets 7.6%

Country MSCI Index Rank Abs Rel

Serbia 0.3% 1 1.6% 1.3%

Argentina 3.1% 2 4.3% 1.3%

Ukraine 0.2% 3 1.4% 1.3%

Estonia 0.5% 4 1.8% 1.3%

Nigeria 15.2% 5 16.5% 1.3%

Pakistan 4.1% 6 5.4% 1.3%

Romania 1.2% 7 1.2% 0.0%

Qatar 14.8% 8 14.8% 0.0%

Kenya 3.8% 9 3.8% 0.0%

Sri Lanka 1.7% 10 1.7% 0.0%

Bulgaria 0.1% 11 0.1% 0.0%

Kazakhstan 3.7% 12 3.7% 0.0%

Bangladesh 1.8% 13 1.8% 0.0%

UAE 11.0% 14 11.0% 0.0%

Mauritius 0.9% 15 0.9% 0.0%

Oman 3.2% 16 3.2% 0.0%

Vietnam 2.2% 17 2.2% 0.0%

Kuwait 23.9% 18 23.9% 0.0%

Bahrain 0.5% 19 0.5% 0.0%

Lebanon 2.4% 20 0.0% -2.4%

Tunisia 0.6% 21 0.0% -0.6%

Lithuania 0.2% 22 -0.1% -0.2%

Slovenia 1.6% 23 0.0% -1.6%

Croatia 2.0% 24 0.0% -2.0%

Jordan 0.8% 25 0.0% -0.8%

100.0% 100.0%

Frontier Markets | May 2013

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Judgement

93 Frontier Markets | May 2013

Source: Schroders

Unreliable/Incomplete Data

Market factors – Liquidity/Access

Geo-political factors

Page 94: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Summary score sheet - example

Country allocation

94 Frontier Markets | May 2013

Source: Schroders, April 2013.

Countries representing over 15% of index can be up to 10% underweight, otherwise a maximum of 5% underweight.

In the case of off-index market Saudi Arabia, maximum allocation is restricted to 10%.

Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

Model Active

Weight

Index

Weight

Active

Weight

Final

Weight

Serbia 1 O 1 O 1.2% U 0.3% -0.3% 0.0%

Argentina 2 O 2 O 1.2% U 3.0% -3.1% -0.1%

Ukraine 3 O 3 O 1.2% N 0.2% 2.5% 2.7%

Estonia 4 O 11 N 1.2% U 0.5% -0.5% 0.0%

Nigeria 5 O 6 O 1.2% U 15.2% -1.5% 13.7%

Pakistan 6 O 7 N 1.2% U 4.1% 0.0% 4.1%

Romania 7 N 4 O 0.0% U 1.2% -1.2% 0.0%

Qatar 8 N 8 N 0.0% O 14.9% 4.0% 18.9%

Kenya 9 N 13 N 0.0% U 3.8% -2.5% 1.3%

Sri Lanka 10 N 14 N 0.0% N 1.7% 0.0% 1.7%

Bulgaria 11 N 9 N 0.0% U 0.1% -0.1% 0.0%

Kazakhstan 12 N 12 N 0.0% O 3.9% 3.5% 7.4%

Bangladesh 13 N 5 O 0.0% N 1.8% 0.0% 1.8%

UAE 14 N 10 N 0.0% O 11.0% 5.0% 16.0%

Mauritius 15 N 15 N 0.0% U 0.9% -0.5% 0.4%

Oman 16 N 16 N 0.0% O 3.2% 0.5% 3.7%

Vietnam 17 N 17 N 0.0% U 2.2% -2.2% 0.0%

Kuwait 18 N 18 N 0.0% U 24.0% -8.5% 15.5%

Bahrain 19 N 19 N 0.0% U 0.5% -0.5% 0.0%

Lebanon 20 U 24 U -2.2% N 2.2% -1.5% 0.7%

Tunisia 21 U 21 U -0.6% N 0.6% -0.6% 0.0%

Lithuania 22 U 20 U -0.1% N 0.1% -0.2% 0.0%

Slovenia 23 U 22 U -1.6% N 1.6% -1.6% 0.0%

Croatia 24 U 23 U -2.0% N 2.0% -2.0% 0.0%

Jordan 25 U 25 U -0.8% N 0.8% -0.8% 0.0%

Saudi Arabia 100% 8.0%

Georgia 2.5%

(Others AFRICA) 1.5%

Cash 0.2%

Decision

Previous

Month

April 2013

GEMs Model

JudgementModel Rank

Page 95: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Detailed fundamental analysis aim to cover a minimum of 70% of the stocks in each country

Stock analysis

95 Frontier Markets | May 2013

Source: Schroders, FactSet. Data as of March 31, 2013

* Excluding markets less than 1% of the MSCI Frontier Markets Index: Bahrain, Bulgaria, Estonia, Jordan, Lithuania, Mauritius, Serbia, Tunisia, Ukraine.

In Middle East, core coverage approx. 64% of UAE, 73% of Qatar, 61% of Oman, 97% of Lebanon and 69% of Kuwait.

Min. 70% market

capitalization

coverage*

57 out of 140 stocks

in the MSCI Frontier

Markets Index are

core stocks

Focus Universe Output Tools Communication

Common

research

template

Schroder

company

valuation model

3-stage DCF

analysis

Long term

Shareholder

value and

return

Sustainable

competitive

advantage

Stocks graded

1-4

Fair values

Global Research

Investment

Database

(GRiD)

Daily research

communication

Monthly sector

meetings

Page 96: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

In depth, fundamental stock research

Intranet based

Consistent modelling and valuation disciplines

Consistent economic, currency and pricing

assumptions

Enables quantitative measurement

of analysts’ impact

Stock analysis Global Research Investment Database – “the GRiD”

96 Frontier Markets | May 2013

Source: Schroders

Use of GRiD is for illustrative purposes only. All security information is for illustrative purposes and is subject to change at any time.

Not to be considered a recommendation to buy/sell.

Page 97: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

In depth, fundamental stock research

Stock analysis Global Research Investment Database – “the GRiD”

97 Frontier Markets | May 2013

Source: Schroders

Use of GRiD is for illustrative purposes only. All security information is for illustrative purposes and is subject to change at any time.

Not to be considered a recommendation to buy/sell.

Page 98: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Stock rankings

1 High conviction outperform

2 Low conviction outperform

3 Low conviction under-perform

4 High conviction under-perform

1’s and 4’s evenly split

5% performance cut off to

encourage conviction

*Note: Applies to Latin America and EMEA. Asia is minimum 30% 1’s and 20% 4’s

Source: Schroders

Stocks ranked 1-4 and distributed across the country index*

Buy Sell

1 2 4 3

30-50% 0-40% 30-50% 5%

Performance

Cut-off

5%

Performance

Cut-off

Hold

Conviction achieved through normal distribution requirement

and +/- 5% cut off for 2 and 3 ranked stocks

Frontier Markets | May 2013 98

Page 99: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Detailed analysis of analysts performance reviewed weekly

Ranking performance per country

Distribution of rankings in core

stocks

Number of ranking changes year

to date

Percentage of market ranked

(core plus non-core)

+/- 5% cut off for 2’s and 3’s

Weekly analysis per analyst:

Stock analysis Weekly Analyst Scoresheets

99 Frontier Markets | May 2013

Source: Schroders. All security information is for illustrative purposes and is subject to change at any time. Not to be considered a recommendation to buy/sell.

Bahrain Aluminium Bahrain 30%

Egypt Orascom Industries 32%

Egypt Commercial Int. Bank 26%

Jordan ARAB BANK 59%

Kuwait Mobile Telecommunications CO 26%

Kuwait NATIONAL BANK OF KUWAIT 26%

Lebanon SOLIDERE 51%

Morocco MAROC TELECOM 35%

Morocco Attijari Wafa Bank 35%

Morocco DOUJA PROM GROUPE ADDOHA 30%

Oman BANK MUSCAT 34%

UAE EMAAR PROPERTIES 30%

Analyst Scores – MENA – 30th April 2013

Market Score MSCI Wgt Total No. of Stocks Ranked No. of No. of 1's 2's 3's 4's T/O Limit T/O

Scores Core Non-core Stocks in Market

Maya Bou Kheir 11.66 3.25 19 6 41

Oman -1.84 0.10 -0.16 3 1 8 71% 56% 30% 14% 0% 3 0

Qatar 4.24 0.45 1.99 7 2 13 77% 25% 22% 30% 23% 7 2

UAE 3.14 0.35 0.96 4 3 9 76% 57% 0% 43% 0% 4 1

Bahrain 1.11 0.01 0.02 1 0 2 32% 0% 0% 100% 0% 1 0

Lebanon 7.00 0.07 0.49 3 0 5 83% 17% 23% 61% 0% 3 0

Jordan -2.00 0.02 -0.06 1 0 4 59% 0% 0% 100% 0% 1 0

Maha Soueissy 2.60 3.70 18 14 69

Egypt -5.24 0.06 -0.35 5 1 7 87% 29% 43% 20% 7% 5 0

Saudi Arabia 4.62 0.76 3.49 7 8 47 46% 17% 35% 38% 11% 7 3

Morocco -0.51 0.02 -0.01 2 0 3 74% 50% 0% 50% 0% 2 0

Kuwait 3.73 0.17 0.58 4 5 12 69% 0% 43% 35% 22% 4 0

Page 100: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

The strategy’s objective is to beat the MSCI FM index but we will actually look off-

benchmark for other alpha opportunities

Stock analysis

Non-core stocks are bottom 30% by market capitalisation of MSCI Frontier Markets Index + non

index frontier markets stocks

Analysts incentivized to find non-core stocks

Developed Market Frontier companies

– DM stocks which generate over 50% of their revenues from FMs screened on a quarterly basis by Stella

Huang and Jacob Reynolds

– Results reviewed by the team and detailed analysis carried out on potential investment ideas

– Strong opportunities presented at monthly strategy meeting for inclusion in the portfolio on a bottom up

basis

Up to 10 - 20 non-core stocks in portfolio representing about 10% of the portfolio

100 Frontier Markets | May 2013

Style

No imposed general style due to diversity of Frontier Markets

Non-core stocks

Page 101: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Global Emerging Markets Equities | May 2013 101

Stocks selected to be further analysed

Country Stock

Country Analysts Emerging/Developed

Analysts

Regional/Global Stock

Emerging/Developed

Analysts

Present the bottom-up case in monthly strategy meetings

Stock screens quarterly review

Report to the Fund Manager covering that country

Non core exposure – Developed/Emerging stocks

Page 102: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Return target can be converted into detailed risk budget

Risk controls

102 Frontier Markets | May 2013

Source: Schroders

Return objective

Information ratio

Tracking error target

Stock tracking error target

Stock tracking error target per country

MSCI Frontier Markets Index +2.5% (gross) p.a. over

3 year rolling periods

0.5

(2.5%)/0.5 = 5% (2-8% range)

0.5*(5²) = 12.5 12.5 = 3.5%

10% (4-15% range)

Page 103: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Aim of risk controls is to obtain return targets with minimum risk and achieve a

skewed distribution of returns in favour of the upside

Tracking error target 2 – 8%, average 5%

Country controls ± 5% vs. index

Alpha adjusted tracking errors

Risk controls

103 Frontier Markets | May 2013

Source: Schroders.

*This is not a guaranteed stop-loss

15% relative stop-loss rule*

15% relative stop-buy screen

Performance attribution

Sector reviews

Risk Controls

Stock Controls

Monitoring

Page 104: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

It is costly not to admit your mistakes

Portfolio manager psychology

104 Frontier Markets | May 2013

Source: Schroders, Deutsche Bank. February 2009. This slide is a joke/anecdote. It is not real and obviously not based on any real data.

Page 105: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Stock Country Date Sold Maximum

pain avoided

Relative performance from date

of sale to end of year (vs country index %)

Absolute performance

from date of sale to end

of year (%)

BRF-Brazil Foods Brazil 07-Feb-12 7% 30% 8%

CEMIG ADS Brazil 05-Nov-12 12% -12% -6%

PDG Realty Brazil 12-Mar-12 59% -51% -57%

Telefonica Brasil Brazil 14-Sep-12 3% 7% 8%

TIM Participacoes Brazil 20-Nov-12 13% -5% 7%

Anhui Conch Cement China 01-Aug-12 7% 15% 38%

Baidu Inc. ADS China 13-Nov-12 15% -6% 6%

Belle International China 16-Jan-12 4% 31% 57%

Belle International China 17-Oct-12 0% 15% 30%

China Mengniu Dairy China 29-Feb-12 8% -3% 1%

Dongfeng Motor Group China 04-Jan-13 0% 0% 0%

Lenovo Group Ltd. China 27-Jul-12 6% 6% 31%

Lenovo Group Ltd. China 04-Oct-12 10% -4% 12%

Parkson Retail Group Ltd. China 05-Jul-12 33% -24% -9%

Tingyi Holding Corp. China 29-Feb-12 14% -14% -9%

Centamin Egypt Ltd Egypt 01-Aug-12 58% -44% -39%

EFG-Hermes Holdings Egypt 26-Jul-12 13% -10% 1%

Infosys Ltd. India 23-Apr-12 14% -13% -3%

Reliance Industries Ltd. India 23-Mar-12 4% 1% 8%

IndoFood Sukses Makmur Indonesia 10-Feb-12 11% 6% 8%

London Sumatra Indonesia Indonesia 04-Sep-12 27% -5% 1%

CIMB Group Holdings Bhd Malaysia 20-Jan-12 4% 0% 10%

Genting Bhd Malaysia 07-Aug-12 4% 4% 9%

Wal-Mart de Mexico Mexico 21-Jun-12 4% 6% 31%

Buenaventura Peru 07-Aug-12 14% -13% 0%

KGHM Poland 09-Jan-12 0% 42% 96%

Globaltrans Russia 16-Nov-12 11% -5% 7%

Norilsk Nickel Russia 20-Mar-12 6% 16% 6%

NOVATEK Russia 26-Jul-12 15% 0% 12%

Stock Country Date Sold

Maximum

pain

avoided

Relative performance

from date

of sale to end of year

(vs country index %)

Absolute

performance

from date of sale

to end of year (%)

X5 Retail Group Russia 26-Jan-12 17% -13% -16%

Impala Platinum South Africa 09-May-12 15% 0% 12%

E-mart Co. Ltd. South Korea 02-Mar-12 16% -13% -8%

Hyundai Heavy Inds. South Korea 23-Jul-12 16% 0% 23%

Hyundai Mobis South Korea 03-Jan-13 0% 0% 0%

GS Eng. & Const. South Korea 17-Oct-12 29% -18% -11%

Samsung Engineering South Korea 19-Oct-12 18% -8% 0%

SK Hynix South Korea 29-May-12 11% 5% 26%

KB Financial Group South Korea 08-May-12 9% -1% 8%

KT&G Corp. South Korea 27-Jan-12 7% -1% 9%

Samsung Fire & Marine South Korea 09-Feb-12 2% -2% 5%

Shinhan Financial South Korea 20-Jul-12 10% 2% 21%

Chinatrust Financial Taiwan 01-Aug-12 6% -6% 7%

Chinatrust Financial Taiwan 03-Jan-13 0% 0% 0%

TAV Turkey 02-Nov-12 10% -9% 2%

Turk Telekom Turkey 10-Jul-12 24% -24% 0%

Average 12.5%

Pain avoided in 2012 by using the stop loss rule*

Year No of Transactions Average pain avoided

2012 45 -12.48

2011 39 -19.06

2010 45 -12.61

2009 41 -17.30

2008 46 -28.01

2007 40 -21.55

2006 27 -13.09

2005 18 -14.65

Pain avoided at 12.5% slightly lower than usual

Frontier Markets | May 2013

December 31, 2011 to December 31, 2012. US Dollar

Source: Schroders. *Please note that during periods of market volatility we may temporarily suspend the stop-loss rule. Suspended from Q3 2011 to year end

Performance shown is past performance. Past performance is not a guide to future performance. The value of investment can go down as well as up and is not guaranteed

Securities and countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell

105

Page 106: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

No need to implement the rule in 2012

% of MSCI EM Index Stop Loss (3 month rolling rule)

Percentage of Index Stop Loss

Source: Schroders. Data to March 2013.

+1 std deviation

-1 std deviation

0%

10%

20%

30%

40%

50%

60%

2005 2007 2008 2009 2010 2011 2012

Frontier Markets | May 2013 106

Page 107: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Risk

Why is risk adjustment correlated with performance rather than conviction?

Risk adjusted performance aim to deliver low volatility, consistent, incremental

outperformance to reach target returns

Why increase risk where performance is under-target?

If positive but below target alpha increase risk

If negative alpha reduce risk

A disciplined approach to risk control

Frontier Markets | May 2013 107

Page 108: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Implementation

Set at team monthly strategy meeting

Country weights: Targets

Portfolio characteristics: Sign off

Set by Portfolio Managers with Analysts’ Input

Stock weights

Fund manager assistants team

Liquidity testing

Assigned Portfolio Manager

Client guidelines and risk expectations

Cash flows

Source: Schroders, March 2013.

Please see the description of the model and its limitations at the end of this presentation.

Client Portfolio

Policy

Model Portfolio

Implementation

Model

Portfolios

Client

Portfolio

Implementation

4 person fund manager assistant team ensures fund manager’s

focus on fund management, not administration

Frontier Markets | May 2013 108

Page 109: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Trading

Investment team has primary responsibility

All trades are screened pre-trade in the

Charles River System

All trades carried out by the Central Dealing team

Trading costs are monitored using Alpha Capture

Performance and characteristics signed off

monthly by product manager and formally

reviewed quarterly

Source: Schroders, March 2013.

Portfolio

execution &

monitoring

Portfolio construction team

Central dealing team

Client portfolio

Pre-trade screening

Operations

Experienced, global team of dealers

Frontier Markets | May 2013 109

Page 110: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Agenda

The Investment Case

Economic background

Equity Markets

Country Analysis/Key Stocks

Schroders Overview & Philosophy

Investment Process

Team

Appendices:

Performance

Competitor Analysis

Strategy

Biographies

110 Frontier Markets | May 2013

Page 111: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Emerging market resources Location and experience

Source: Schroders March 2013. ¹Includes 7 fund managers, 1 strategist/fund manager, 27 analysts and 2 client portfolio managers.

* Local office analysts not involved in EM portfolio construction, but are a further source of expertise for the EM team to reference. Excluded from the 37 total in team.

Mexico

London:

Allan Conway (32)

Robert Davy (30)

James Gotto (21)

Waj Hashmi (19)

Nicholas Morse (25)

Nicholas Field (21)

Tom Wilson (11)

Pablo Riveroll (6)

Jonathan Fletcher (3)

Robert Ledger (1)

Moreno Fasolo (2)

Hong Kong:

Maurien Yau (20)

Jay Luong (12)

Young Roe Kim (12)

Sherry Lin (19)

Jing Li (8)

Rebecca Xu (3)

Shanghai:

Wu Hui (18)

Alex Tang (8)

Taipei:

Chen-Hsiu Chen (15)

Karen Lin (15)

Seoul:

Juno Yoon (12)

Singapore:

Wai Yin Loke (27)

Siok Mei Lim (17)

Sameer Kakakhel (18)

Indonesia:

Kiekie Boenawan*

Sao Paulo:

Alexandre Moreira (13)

Pedro Baltazar (5)

Supported by:

5 Global Sector Portfolio Managers

50+ Developed Market Analysts

Locally based Investment Teams

Portfolio Managers

Research Analysts

Product Manager

( ) Years Experience

Local business units

Dubai:

Rami Sidani (9)

Maha Soueissy (8)

Maya Bou Kheir (9)

Buenos Aires

Alan Ayres (30)

Edward Evans (10)

Abbas Barkhordar (5)

Bryony Deuchars (12)

Rollo Roscow (8)

Mohsin Memon (5)

Andrew Boag (6)

37¹ INVESTMENT PROFESSIONALS WITH A TOTAL OF 495 YEARS OF EXPERIENCE

(168 YEARS FOR FUND MANAGERS, 287 YEARS FOR ANALYSTS) AND AN AVERAGE OF 13 YEARS EXPERIENCE

Frontier Markets | May 2013 111

India:

4 analyst from the JV*

Page 112: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Emerging Market investment team

¹Deputy Heads.

Source: Schroders as of March 2013. * Plus access to the research of 4 analysts from our Joint Venture in India.

Regions are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

A matrix approach ensures involvement of whole team in all portfolios, minimising

divergent performance and retains individual accountability

Stock Analysis

Asia Latin America

Nicholas Morse Alexandre Moreira

Andrew Boag

Pedro Baltazar

Pablo Riveroll

EMEA

Tom Wilson Bryony Deuchars

Rollo Roscow

Mohsin Memon

Po

rtfo

lio

Co

ns

tru

cti

on

Korea Philippines

India

Mexico

Poland South Africa

Malaysia Thailand

Taiwan

Brazil

Czech Turkey

Allan Conway - Head of Emerging Markets

Alan Ayres/Edward Evans - Emerging Markets Client Portfolio Manager

Nicholas Field¹ - Emerging Markets Strategist/Portfolio Manager

Abbas Barkhordar - Emerging Markets Strategy Analyst

Middle East

Rami Sidani Maha Soueissy

Maya Bou Kheir

Indonesia

China

Chile Peru

Colombia

Russia Hungary

Morocco

Egypt

London Jonathan Fletcher

Robert Ledger

Moreno Fasolo

Asia 14 Analysts*

Robert Davy¹

Global manager

Waj Hashmi

Global manager

James Gotto

Global manager

Frontier Markets | May 2013 112

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Input from whole team - Global perspective - Individual accountability - Minimize divergent performance

Frontier Markets investment team

113 Frontier Markets | May 2013

Source: Schroders as of March 2013. ¹Deputy Head of GEMS. * Lithuania and Serbia not covered as too illiquid. ** Coverage transferred July 2011 from local Asian Analysts.

Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

Analysts

Allan Conway Head of Emerging Markets

Rami Sidani Frontier Markets Fund Manager

Nicholas Field Emerging Markets Strategist/Portfolio Manager¹

Alan Ayres / Edward Evans Emerging Markets Client Portfolio Manager

Maha

Soueissy

Rollo

Roscow

Jonathan

Fletcher

Abbas

Barkhordar

Kuwait

Tunisia

Kenya

Nigeria

Mauritius

Bulgaria

Croatia

Estonia

Kazakhstan

Romania

Slovenia

Ukraine

Bangladesh

Maya

Bou Kheir

UAE

Qatar

Oman

Bahrain

Lebanon

Jordan

Europe* Asia** Africa MENA

Andrew

Boag

Argentina

Latin America

Robert

Ledger

Sri Lanka

Moreno

Fasolo

Mohsin

Memon

Pakistan Vietnam

Page 114: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Front office support team

Source: Schroders as of March 2013.

Fund Managers

Strong support for fund managers enables them to focus on investments

Client Portfolio Manager

Alan Ayres

Rajan Shah Asma Bazza

Paramita

Mondal

Alasdair

Docherty

Michal

Paprocki Danielle Lovegrove Jacob Reynolds Tara Williams Fatna Chelihi

Edward

Evans

Frontier Markets | May 2013 114

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Emerging markets team assessment

Source: Schroders

Team compensation aligned with clients interests

Frontier Markets | May 2013 115

Global Fund Manager

(%)

Regional Head

(%)

Analyst

(%)

Stock Rankings 0.0 0.0 40.0

Global GEM performance 27.5 15.0 10.0

Regional performance 0.0 45.0 0.0

Frontiers performance 0.0 0.0 2.0

Countries within GEM 47.0 0.0 12.5

EMEA/Lat Am countries within GEM 0.0 10.0 0.0

Countries within Frontiers 0.0 0.0 3.0

Participation 8.0 8.0 5.0

Marketing 5.0 7.5 0.0

Market Coverage 0.0 0.0 10.0

Manage Team 3.0 10.0 0.0

Research/projects 0.0 0.0 10.0

Other 9.5 4.5 7.5

Total 100.0 100.0 100.0

Quant 74.5 70.0 67.5

Non-quant 25.5 30.0 32.5

Page 116: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Team meetings

116 Frontier Markets | May 2013

Daily Daily conference calls

Weekly Strategy – “Housekeeping”

Monthly Strategy – Country Allocation

Sector

Quarterly Performance/Risk Review with CIO

Page 117: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

A disciplined, systematic approach with strong risk control implemented with conviction

Summary

117 Frontier Markets | May 2013

Source: Schroders as at March 2013.

Investment Process PRIMARILY BALANCED APPROACH targets 50% value added from stock and 50%

from country decisions

Strong proprietary stock research: database/models (GRiD)

QUANTITATIVE model drives country decisions

Incorporates rigorous RISK CONTROLS, including alpha adjusted tracking error

and stop loss rules

Team 37 Investment professionals

Average 13 years experience

Regional expertise locally based

Matrix approach

Global Resources Central economics team

Global Sector Analysis

Use of Global Platforms (dealing, settlement, risk, research and performance)

Page 118: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

Agenda

The Investment Case

Economic background

Equity Markets

Country Analysis/Key Stocks

Schroders Overview & Philosophy

Investment Process

Team

Appendices:

Performance

Competitor Analysis

Strategy

Biographies

118 Frontier Markets | May 2013

Page 119: Frontier Markets - Schroders · potentially be classified as an Emerging Market. A Frontier market is therefore implicitly a low/low middle income country. potentially be classified

1 year

3 years p.a.

5 years p.a.

Since

inception p.a.

Schroder Middle East Equity Composite +30.4 +11.0 +0.2 +0.7

MSCI Arabian Markets Net (TR) and Turkey + Saudi Arabia (fixed at 20%)* +18.7 +4.3 -2.2 -1.5

Relative performance +11.7 +6.7 +2.4 +2.2

Tracking Error 4.1 3.3 4.7 4.7

Information Ratio 2.9 2.0 0.5 0.5

Performance (in US$ %) to April 30th, 2013

Annualized periods to April 30th, 2013 (in US$ %)

Investment mandate: Middle East Equity

Target: 2% p.a. (gross) over 3 year rolling periods

Inception date: October 31, 2007

Schroder Middle East Equity Composite

Frontier Markets | May 2013 119

YTD 2012 2011 2010 2009 2008

Schroder Middle East Equity Composite +14.7 +34.5 -19.2 +27.2 +30.1 -52.2

MSCI Arabian Markets Net (TR) and Turkey + Saudi Arabia (fixed at 20%)* +9.0 +24.7 -21.2 +20.3 +31.3 -47.6

Relative performance +5.7 +9.8 +2.0 +6.9 -1.2 -4.6

Tracking Error n/a 3.8 3.1 4.2 5.3 6.0

Information Ratio n/a 2.6 0.6 1.7 -0.2 -0.8

Source: Schroders. Performance shown gross of fees

Past performance is not a guide to future performance. The value of an investment can go down as well as up and is not guaranteed. Please see the end of the presentation for

performance notes.

*From inception to 9.30.2009 the index is MSCI Arabian Markets inc. Israel and Turkey Net TR with Saudi Arabia capped at 10%.

From 9.30.2009 to 9.30.2010 chain linked to MSCI Arabian Markets inc. Turkey Net TR with Saudi Arabia capped at 20%.

From 9.30.2010 to 8.31.2012 chain linked to MSCI Arabian Markets Net TR and Turkey + S&P Saudi Arabia Large / Mid Cap (fixed at 20%).

From 8.31.2012 to present chain linked to MSCI Arabian Markets inc. Turkey Net TR with Saudi Arabia capped at 20%.

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Quartile ranking to April 30th, 2013

Competitor analysis – Schroder ISF Middle East

120 Frontier Markets | May 2013

Source : Schroders, Morningstar Direct

Morningstar Direct: Performance for Schroder ISF Middle East A Acc.

Database Name : GEM Offshore Universe All Strategies USD/ Africa & Middle East Equity

Schroder ISF range is not available to US investors

Performance shown is past performance. Past performance is not a guide to future performance. The value of an investment can go down as well as up and is not guaranteed.

1 Year 3 Years 5 Years

Schroder ISF Middle East A Acc 1 1 1

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** Remove from final presentation **

Performance (in US$ %) to April 30th, 2013

Investment mandate: Frontier Markets

Benchmark: MSCI Frontiers Markets Net (TR)

Inception date: December 31, 2010

Schroder Frontier Markets Equity Composite

Source: Schroders. Performance shown gross of fees

Past performance is not a guide to future performance. The value of an investment can go down as well as up and is not guaranteed. Please see the end of the presentation for

performance notes.

Frontier Markets | May 2013 121

YTD 1 year 2 years p.a. Since inception

p.a.

Schroder Frontier Markets Equity Composite +18.9 +30.2 +10.1 +8.0

MSCI Frontier Markets Index Net (TR) +12.1 +16.8 +0.1 -0.4

Relative performance +6.8 +13.4 +10.0 +8.4

Tracking Error n/a 5.6 4.9 5.1

Information Ratio n/a 2.4 2.0 1.6

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Frontier Markets Attribution 2012

Source: Schroders, Factset, Gross. Total performance is calculated based on the Schroder regional composite. Attribution data is shown for a representative account.

Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.

Past performance is no guarantee of future results. Performance is gross of fees. Please see performance notes at the end of presentation for important disclosures. The value of an investment can go

down as well as up and is not guaranteed. The above attribution data was sourced from FactSet which uses bottom up methodology whereby constituents of both the index and the fund are priced at the

same point in time thus removing timing differences. FactSet returns do not take into account Transaction costs or Management fees. FactSet assumes trades go through at closing prices rather than the

actual price that may have been traded at during the day. The accounting data used by FactSet is un-audited, whereas the data used for actual fund performance is audited, therefore any subsequent

cleaning of data will not be reflected in FactSet.

Fund Benchmark

Total Return Total Return Allocation Selection Total Effect Explanation

Argentina -59.2 -37.1 1.02 -0.38 0.65 U/w. Market underperformed by 46%

Bahrain -- -3.8 0.08 0.00 0.08

Bangladesh -1.9 -10.5 0.19 0.37 0.56 O/w Titas Gas. U/w National Bank

Bulgaria -- -32.3 0.06 0.00 0.06

Croatia -2.0 -2.5 0.27 0.01 0.28

Estonia -- 46.4 -0.13 0.00 -0.13

Georgia 10.6 -- 0.08 0.00 0.08

Jordan -- -0.6 0.10 0.00 0.10

Kazakhstan 48.6 33.0 0.26 0.76 1.02 O/w Halyk Savings Bank

Kenya -- 61.9 -1.14 0.00 -1.14 Zero-weight. Market outperformed by 53%.

Kuwait 24.8 -0.0 0.79 4.93 5.71 U/w. Market underperformed by 9%. O/w Mabanee and Natonal Mobile Telecom

Lebanon 5.6 0.5 -0.14 0.19 0.05

Lithuania -- 26.4 -0.04 0.00 -0.04

Mauritius 0.4 0.9 0.06 0.01 0.06

Nigeria 72.0 62.9 0.82 0.69 1.51 O/w. Market outperformed by 54%. O/w Zenith Bank and UBA

Oman -0.1 -6.5 -0.07 0.24 0.17

Pakistan 27.8 32.5 -0.03 -0.25 -0.28

Qatar 2.8 -2.0 -0.47 0.99 0.53 O/w. Market underperformed by 11%. O/w Qatar Industries and Gulf International

Romania -- 25.9 -0.19 0.00 -0.19

Saudi Arabia 9.6 -- 0.21 0.00 0.21

Serbia -- 7.4 0.01 0.00 0.01

Slovenia -- -0.5 0.24 0.00 0.24

Sri Lanka 9.2 5.2 -0.00 0.04 0.03

Tunisia -- -4.8 0.12 0.00 0.12

Ukraine 46.6 -49.2 -0.43 1.14 0.71 O/w. Market underperformed by 58%. O/w Mhp

UAE 39.8 27.4 0.78 1.57 2.35 O/w. Market outperformed by 19%. O/w First Gulf Bank and Emaar Properties. Zero-weight Arabtec and Abu Dhabi Com. Bank

Vietnam -- 18.9 -0.13 0.00 -0.13

[Cash] -- -- -0.21 -- -0.21

Subtotal -- -- 2.11 10.31 12.42

[Residual] -- -- -- -- -0.36

Total 20.91 8.85 -- -- 12.06

Frontier Markets | May 2013 122

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Frontier Markets Strategy

123 Frontier Markets | May 2013

Source: Schroders, May 2013

Countries representing over 15% of index can be up to 10% underweight, otherwise a maximum of 5% underweight.

In the case of off-index market Saudi Arabia, maximum allocation is restricted to 10%.

Information is for illustrative purposes only and is subject to change. Not to be considered a recommendation to buy/sell

Frontiers Index Target Active Tgt Target Active Tgt Comments

09/05/2013 09/04/2013 09/04/2013 09/05/2013 09/05/2013

Kazakhstan 3.8 7.2 + 3.5 7.3 + 3.5 STRONG BOTTOM UP OPPORTUNITIES

Saudi Arabia 0.0 8.0 + 8.0 8.0 + 8.0 STRONG BOTTOM UP OPPORTUNITIES, FAVORABLE MACRO OUTLOOK

Qatar 15.0 18.8 + 4.0 18.5 + 3.5 STRONG GROWTH AND STRONG BOTTOM UP IDEAS

UAE 11.5 16.0 + 5.0 15.7 + 4.2 CHEAP VALUATIONS

Oman 3.2 3.7 + 0.5 3.7 + 0.5 FAVORABLE MACRO ECONOMIC BACKDROP, LIMITED BUTTOM UP OPPORTUNITIES

Ukraine 0.2 2.7 + 2.5 2.7 + 2.5 REASONABLE VALUATIONS, IMPROVING MACRO ENVIRONMENT

Georgia 0.0 2.5 + 2.5 3.0 + 3.0 STRONG BUTTOM UP OPPORTUNITIES

OTHERS(AFRICA) 0.0 1.5 + 1.5 1.5 + 1.5 OFF INDEX BOTTOM UP OPPORTUNITY IN EASTERN AFRICA

Sri Lanka 1.8 1.7 0.0 1.8 0.0 IMPROVING VALUATIONS, IMPROVING MACRO ENVIRONMENT

Pakistan 4.2 4.1 0.0 4.2 0.0 VERY CHEAP VALUATIONS, UNSTABLE POLITICAL ENVIRONMENT

Bangladesh 1.8 1.8 0.0 1.8 0.0 STRONG MACRO GROWTH, RICH VALUATIONS

Nigeria 14.9 13.7 (1.5) 12.9 (2.0) FAIR VALUATIONS

Lebanon 2.2 0.9 (1.5) 0.7 (1.5) ATTRACTIVE VALUATIONS, POLITICAL UNCERTAINTY

Mauritius 0.9 0.4 (0.5) 0.4 (0.5) REASONABLE VALUATIONS, LIMITED STOCK OPPORTUNITIES

Romania 1.1 0.0 (1.2) 0.0 (1.1) DETERIORATING MACRO ENVIRONMENT

Kenya 3.9 1.3 (2.5) 1.4 (2.5) RICH VALUATIONS, IMPROVING POLITICAL BACKDROP

Tunisia 0.6 0.0 (0.6) 0.0 (0.6) LIQUIDITY CONCERNS, POLITICAL INSTABILITY

Kuwait 23.9 15.4 (8.5) 16.4 (7.5) LIMITED VALUE OPPORTUNITIES AND RELATIVELY EXPENSIVE VALUATIONS

Vietnam 2.0 0.0 (2.2) 0.0 (2.0) IMPROVING MACRO ENVIRONMENT, RICH VALUATIONS

Croatia 2.0 0.0 (2.0) 0.0 (2.0) LIMITED STOCK OPPORTUNITIES, DETERIORATING MACRO ENVIRONMENT

Jordan 0.8 0.0 (0.8) 0.0 (0.8) LIMITED VALUE OPPORTUNITIES AND WEAK MOMENTUM

Bahrain 0.5 0.0 (0.5) 0.0 (0.5) ILLIQUID AND LIMITED OPPORTUNITIES

Argentina 3.1 0.0 (3.1) 0.0 (3.1) ATTRACTIVE VALUATIONS, DETERIORATING MACRO ENVIRONMENT

Slovenia 1.7 0.0 (1.6) 0.0 (1.7) LIMITED STOCK OPPORTUNITIES

Estonia 0.5 0.0 (0.5) 0.0 (0.5) MAJOR LIQUIDITY CONCERNS

Lithuania 0.1 0.0 (0.2) 0.0 (0.1) MAJOR LIQUIDITY CONCERNS

Bulgaria 0.1 0.0 (0.1) 0.0 (0.1) MAJOR LIQUIDITY CONCERNS

Serbia 0.3 0.0 (0.3) 0.0 (0.3) MAJOR LIQUIDITY CONCERNS

Total: 100.0 99.8 -0.2 99.9 -0.1

Liquidity: 0.0 0.2 0.2 0.1 0.1

Grand Total: 100.0 100.0 0.0 100.0 0.0

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GEM Model enhancements

124 Frontier Markets | May 2013

Source: Schroders as of December 2010.

Performance model is shown without making an allowance for advisory fees. The deduction of advisory fees would affect performance of an account managed in this strategy.

Performance shown is past performance. Past performance is not a guide to future performance. The value of investment can go down as well as up and is not guaranteed.

The model performance shown in this presentation is hypothetical and no representation is made that the particular combination of investments would have been selected at the

commencement date, held for the period shown, or the performance achieved. Please refer to the Important information slide for further details.

10/04 06/06 01/11 Change from 06/06

Valuation 45% 38% 43% 5%

Price/book 15% 9% 11% 2%

P/E trailing 10% 10% — -10%

5yr trailing P/E — — 12% 12%

P/E forecast 10% 10% 10% 0%

Real earnings yield gap 10% 9% 10% 1%

Growth 10% 25% 15% -10%

EPS Growth 5% 6% 5% -1%

GDP Growth (12month forecast) 5% 6% — -6%

ROE — 4% 3% -1%

EPS revisions (3 months) — 9% 7% -2%

Currency Risk 25% 18% 17% -1%

Beta 5% — —

Real exchange rate 10% 5% 8% 3%

Current A/C / GDP 10% 8% 9% 1%

Dividend cover — 5% — -5%

Momentum 15% 13% 20% 7%

Earnings revisions (1 month) 7.5% — —

Price momentum (36 months) 7.5% 9% 10% 1%

Consensus weighting deviation — 4% 10% 6%

Interest Rates 5% 6% 5% -1%

Real interest rates 5% 6% 5% -1%

100% 100% 100% 0%

Returns p.a. (from end 1991) — 3.0% 4.0% +1.0%

T/E — 3.5% 3.7% 0.2%

Information Ratio — 0.86 1.10 +0.24

Turnover (av. Annual) — 45% 39% -6%

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Head of emerging markets investment team

Allan Conway

Head of Emerging Market Equities

Degree in Economics

Allan Conway joined Schroders in October 2004 from West LB

Asset Management

After a number of Accountancy related positions Allan joined Provident

Mutual Life Assurance in 1983, where he was Investment manager for

Far East and North American markets before being appointed Head of

Overseas Equities in 1987

In 1992 he joined Hermes Investment Management (formerly Postel) as

Head of Overseas Equities, personally managing the Emerging Markets

and Pacific Basin portfolios

In 1997 he joined LGT Asset Management as Head of Global Emerging

Markets subsequently leaving when LGT was sold to Invesco in 1998

In 1998 he joined West LB as Head of Global Emerging Markets and

CEO of WestAM (UK) Ltd

Member of the Institute of Chartered Accountants and a Fellow of the

Securities Institute

Frontier Markets | May 2013 125

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Biographies Emerging markets investment team

Robert G. Davy

Emerging Markets Portfolio Manager Robert Davy joined Schroders in 1986 after spending

three years with Peat Marwick where he qualified as a

chartered accountant. He spent several years at

Schroders as an analyst on the American equity team.

He was a founding member of Schroders’ Latin

American team, becoming a Latin American portfolio

manager in 1990. Today, he is a global portfolio

manager on the Emerging Markets Team and Deputy

Head of Emerging Market Equities

James Gotto

Emerging Markets Portfolio Manager James has spent his entire career at Schroders, joining

after graduating from Oxford University with a BA Hons

in Classics in 1991. He began his career as a UK

Research Analyst, moving in 1994 to the Latin American

Team. He was seconded to Argentina in 1995, with

responsibility for Research and the management of local

funds, before returning to London in 1998 as a Latin

American portfolio manager. He was also responsible

for Latin American business development from 2000 to

2003. He is now a global portfolio manager on the

Emerging Markets Team

Waj Hashmi

Emerging Markets Portfolio Manager Waj joined Schroders in July 2005 from WestLB Asset

Management, where he was a Director and Global

Emerging Markets portfolio manager since 2002. Before

this he was Head of EMEA Emerging markets and a

senior investment analyst for EMEA stocks, having

joined WestAM in 1998 from LGT Asset Management.

Prior to joining LGT as an EMEA analyst in 1997, he

qualified as an accountant with Arthur Andersen. Waj is

a graduate in Physics from Oxford University, a qualified

chartered accountant (ACA) and CFA Charterholder. At

Schroders he is now a global portfolio manager

Nicholas Field

Emerging Markets

Portfolio Manager / Strategist Nicholas joined Schroders in July 2006 from WestLB

Asset Management where he was a Global Emerging

Markets Fund Manager from 1999. Prior to this Nicholas

worked at Dresdner RCM Global Investors as an

Emerging Markets Fund Manager from 1996. His

investment career started in 1991 upon joining HM

Treasury. Nicholas is a graduate in Mathematics from

Cambridge University and also holds a Masters in

Finance obtained from the London Business School.

Today, he is a portfolio manager and strategist on the

Emerging Markets Team as well as Deputy Head of

Emerging Market Equities

Frontier Markets | May 2013 126

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Tom Wilson

Head of EMEA Tom Wilson has a BA Hons in History from Newcastle

University. His investment career commenced in 2001

when he joined the Schroders Graduate Scheme. He

initially worked as assistant to the Institutional and Retail

CIO’s, but moved into the Research Development

Programme in 2002, working on the Global Oils team.

In 2004 he transferred to the Emerging Markets team to

be an EMEA analyst responsible for Turkey, Czech

Republic, Morocco and Jordan. In January 2007 Tom

was promoted to Head of EMEA

Alan Ayres

Emerging Markets

Client Portfolio Manager Alan Ayres started his investment career in 1983 as a

fund manager with The Co-Operative Insurance Society,

and also spent seven years with Merrill Lynch as an

institutional Salesman. He joined Schroder Securities in

1995 and moved to Hong Kong in 1996 as head of the

office and Hong Kong product. In 1998 he was

appointed Head of the Asian Equity Division. He

transferred to Schroder Investment Management in April

2000 as Product Manager for the Japanese and Pan

Pacific teams. Alan joined the Emerging Markets Team

as Product Manager in December 2006. Alan holds an

MSc in Applied Statistics from Oxford University and a

BSc in Maths & Statistics from Warwick University

Biographies Emerging markets investment team

Rami Sidani

Head of MENA Rami joined in July 2008 from SHUAA Capital where he

was a MENA Fund Manager from 2004 managing

conventional as well as specialist funds in twelve Arab

equity markets. His investment career started in 2003

upon joining Socofinance in Geneva as a currency

analyst. Rami has an MSc in Banking and Finance from

HEC Lausanne and also holds an MBA from the

Lebanese American University in Beirut

Nicholas Morse

Head of Latin America Nicholas joined Schroders in July 2005 as Head of Latin

America Equities. Nicholas started his investment

career in 1987 at Foreign & Colonial. He moved to

Singer & Friedlander in 1989 where he was responsible

for Latin markets. In 1993 he joined Grupo Financiero

Banamex Accival, where he was a manager of Latam

research. He went on to manage Latam funds for

Martin Currie Inv. Mgmt. in 1994 and Merrill Lynch Inv.

Mgmt. in 1996. In 2002 he re-joined Singer &

Friedlander as a director, managing Asia-pacific ex

Japan funds

Frontier Markets | May 2013 127

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Edward Evans

Emerging Markets Product Manager

Edward Evans joined Schroders in October 2009 from ABN AMRO Asset Management where he

was a Client Portfolio Manager representing and raising assets on behalf of the Emerging Markets

Equities team. His investment career commenced in 2002 as a client account manager with Fidelity

Investments. He then joined JPMorgan Asset Management on the graduate business development

program in 2003. Edward holds a BA (Hons) Economics, Business Management and French from

the University of Durham and is a CFA Charterholder.

Maha Soueissy

Analyst, Middle East

Maha joined in July 2008 from SHUAA Capital where she was an Associate in the Equity Asset

Management team and analyst of Middle East equities covering a range of sectors across the

MENA region. Prior to SHUAA, she worked as a capital markets Analyst with Hyphen Asset

Management in Beirut. She is currently stationed in Dubai as a Middle East Equity analyst

Maya Bou Kheir

Analyst, Middle East

Maya joined Schroders in October 2008 from SHUAA Capital where she worked as an analyst on

the Equity Asset Management team, covering equities across the MENA region since August 2006

. Her investment career started in April 2004 upon joining MEDGULF Insurance in Beirut as a

financial analyst. Maya holds a BA in Business Administration, majoring in finance from the

American University of Beirut.

Rollo Roscow

Analyst, Emerging Europe

Rollo joined Schroders in August 2008. Before joining, he was an Assistant Manager in the

Investment Management Audit Division at KPMG, specialising in the audit of funds, investment

managers and hedge funds. Rollo’s investment career started in September 2004 in the Edinburgh

Financial Services department of KPMG. After moving to London in 2006 he qualified as a

Chartered Accountant in December 2007. Rollo holds an MA (Hons) in Economics and

Accountancy from the University of Edinburgh. At Schroders he is an EMEA analyst

Mohsin Memon

Analyst, Emerging Europe

Mohsin joined Schroders in November 2010. Before joining, he was an Assistant Manager in the

Investment Management Audit Division at KPMG, specialising in the audit of investment managers

and funds. Mohsin’s investment career started in September 2007 in the London Financial

Services department of KPMG. He qualified as a Chartered Accountant in October 2010. Mohsin

holds a BSc (Hons) in Computer Science from Kings College London and a post graduate in

Accounting and Finance from London School of Economics. At Schroders he is an EMEA analyst

Biographies Emerging markets investment team

Frontier Markets | May 2013 128

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Jonathan Fletcher

Analyst, Asia

Jonathan commenced his investment career in 2009. Prior to joining Schroders he worked as a

technology analyst for Altrium Capital. Previously he worked for Deloitte as a Senior Consultant.

He is currently an analyst focusing on Asia. Jonathan graduated from Oxford University with a B.A

in Economics and Management.

Robert Ledger

Analyst, Asia

Robert joined Schroders in 2011. Prior to this he worked at Deloitte where he was primarily

involved in Financial Advisory projects. He is currently an analyst focusing on India and Korea.

Robert graduated from Nottingham University with a BA (Hons) Industrial Economics, is a qualified

charted accountant (ACA) and is currently studying towards the CFA designation.

Moreno Fasolo

Analyst, Asia

Moreno joined Schroders in 2011. Prior to this he worked as a banks’ equity analyst at Nomura.

Previously he worked for PWC as a manager in the valuation department. He is currently an Asian

Equity Analyst responsible for Malaysia, Taiwan and Thailand. Moreno graduated from King’s

college with PhD in Physics/Mathematics and is a qualified charted accountant (CA).

Andrew Boag

Analyst, Latin America

Andrew joined Schroders in April 2010. Andrew’s investment career started in August 2006 when

he joined Deloitte as a student accountant working in Insurance & Investment Management. He

holds a BA in American Studies from the University of Nottingham and is a Member of the Institute

of Chartered Accountants in England & Wales. At Schroders, he is now a Latin American analyst

Abbas Barkhordar

Analyst, EM Strategy & Frontiers

Abbas holds an MPhys in Physics from Oxford University. Abbas joined the team in January 2008,

after completing Schroders’ graduate training program commencing October 2007. Prior to this he

completed a six-month internship as an investment analyst at Clearbrook Capital Partners LLP, a

boutique private equity house, between January to July 2007. Abbas has passed all 3 levels of the

CFA examinations and obtained Investment Management Certificate (IMC) in November 2007.

Abbas is an emerging markets strategy and Frontier Markets analyst based in London.

Biographies Emerging markets investment team

Frontier Markets | May 2013 129

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Definition of the Firm

The Firm is defined as all accounts managed by Schroder Investment Management in the UK and

US, by wholly owned subsidiaries of Schroders PLC. Prior to 1st January 2007 SIM London &

SIM North America existed as two separate Firms which were compliant & verified as separate

entities until 31st December 2006. The consolidation of these two Firms was made as part of a

move towards creating one global Firm. Composite and Firm assets reported prior to 1st January

2007 represent those of the legacy firm which managed the product. Prior to 1st January 2011 the

SPrIM (Schroder Property Investment Management) Firm existed separate to the Schroder

Investment Management UK and US Firm, from 1st January 2011 these Firms have been

combined into a single firm. A complete list and description of the Firm's composites and

performance results is available upon request.

Composite Definition

The Schroder Middle East Equity Composite Composite (the "Composite") is comprised of all

Schroder Investment Management (UK & US), fully discretionary accounts which seek to achieve

returns above the MSCI Arabian Markets and Turkey with Saudi Arabia Domestic Capped at 20%,

prior to 31/08/2012 20% Saudi Arabia Large/Mid Cap (NDR) + 80% MSCI Arab Mkts ex SA +

Turkey (NDR), custom index prior to this index (or a similar benchmark) through capital growth by

investing in the Greater Middle East. The objective is to achieve long-term capital growth primarily

through investing in equity or equity related securities (including warrants and convertible

securities) and fixed interest securities of Middle Eastern Companies, including companies in

emerging Mediterranean markets. Accounts may also seek exposure to the markets of North

Africa. None of the accounts in the Composite uses leverage.

Composite Construction

New accounts are included from the beginning of the first full month of management on a

discretionary basis. Terminated accounts are excluded from the end of the last full month of

discretionary management.

The composite currency is US Dollar

Composite Inception Date: 31/10/2007

Composite Creation Date: 28/11/2007

Calculation Methodology

The portfolio returns are time-weighted rates of return that are adjusted for cash flows. Portfolio

returns are combined using beginning of period asset weights to produce the composite return.

Periodic returns are geometrically linked to produce annual returns.

Dividends on equities are recognised net of irrecoverable withholding tax. Since January 1999

dividends have been recognised as of the ex-dividend date having previously been recognised on

a cash basis. Performance results are presented before the deduction of management fees and

custodian fees but after trading expenses.

Fee Schedule The fee scale applied to the composite is 1.5% p.a.

Dispersion

The dispersion of annual returns is measured by the asset weighted standard deviation of

portfolio returns represented within the composite for the full year provided a minimum of 5

portfolios are available.

Additional Information

The exchange rates used are provided by WM. Each currency is valued at 4 pm on the last

business day of the month.

Additional information regarding policies for valuing portfolios, calculating and reporting returns

and a description of all composites are available on request.

GIPS Compliance Statement

Schroder Investment Management (UK & US) claims compliance with the Global Investment

Performance Standards GIPS® and has prepared and presented this report in compliance with

the GIPS standards. Schroder Investment Management (UK & US) has been independently

verified for the periods 1st January 1996 to 31st December 2011. The verification report(s) are

available upon request.

Verification assesses whether (1) the firm has complied with all the composite construction

requirements of the GIPS standards on a firm-wide basis, and (2) the firm's policies and

procedures are designed to calculate and present performance in compliance with the GIPS

standards. Verification does not ensure the accuracy of any specific composite presentation.

Schroder Middle East Equity Composite Composite Disclosures as of : December 31, 2011

130 Frontier Markets | May 2013

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Definition of the Firm

The Firm is defined as all accounts managed by Schroder Investment Management in the UK

and US, by wholly owned subsidiaries of Schroders PLC. Prior to January 1, 2007 SIM London

& SIM North America existed as two separate Firms which were compliant & verified as separate

entities until December 31, 2006. The consolidation of these two Firms was made as part of a

move towards creating one global Firm. Composite and Firm assets reported prior to January 1,

2007 represent those of the legacy firm which managed the product. Prior to January 1, 2011

the SPrIM (Schroder Property Investment Management) Firm existed separate to the Schroder

Investment Management UK and US Firm, from January 1, 2011 these Firms have been

combined into a single firm. A complete list and description of the Firm's composites and

performance results is available upon request.

Composite Definition

Accounts included in the Schroder Frontier Markets seek to achieve returns above the MSCI

Frontier Markets (NDR) index (or a similar benchmark) by providing capital growth primarily

through investment in equity and equity related securities of frontier markets companies.

Frontier markets are countries included in the MSCI Frontier Markets Index or any other

recognized Frontier Markets financial index. None of the accounts in the Composite

use leverage.

Composite Construction

New accounts are included from the beginning of the first full month of management on a

discretionary basis. Terminated accounts are excluded from the end of the last full month of

discretionary management. This Composite has no minimum asset level for inclusion.

The composite currency is US Dollar

Composite Inception Date: 12-31-2010

Composite Creation Date: 01-07-2011

Calculation Methodology

The portfolio returns are time-weighted rates of return that are adjusted for cash flows. Portfolio

returns are combined using beginning of period asset weights to produce the composite return.

Periodic returns are geometrically linked to produce annual returns.

Dividends on equities are recognized net of irrecoverable withholding tax. Since January 1999

dividends have been recognized as of the ex-dividend date having previously been recognized on

a cash basis. Performance results are presented before the deduction of management fees and

custodian fees but after trading expenses.

Fee Schedule

The fee scale applied to the composite is 1.5% p.a.

GIPS Compliance and Verification

Schroder Investment Management (UK & US) claims compliance with the Global Investment

Performance Standards GIPS® and has prepared and presented this report in compliance with

the GIPS standards. Schroder Investment Management (UK & US) has been independently

verified for the periods January 1, 1996 to December 31, 2011. The verification report(s) are

available upon request.

Verification assesses whether (1) the firm has complied with all the composite construction

requirements of the GIPS standards on a firm-wide basis, and (2) the firm's policies and

procedures are designed to calculate and present performance in compliance with the GIPS

standards. Verification does not ensure the accuracy of any specific composite presentation.

Additional Information

The exchange rates used are provided by WM. Each currency is valued at 4 pm on the last

business day of the month.

Additional information regarding policies for valuing portfolios, calculating and reporting returns

and a description of all composites are available on request.

Schroder Frontier Markets Composite Disclosures as of : December 31, 2011

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For Professional Investors Only. Not Suitable for Retail Clients

The views and opinions contained herein are those of the Emerging Markets team, and may not necessarily represent views expressed or reflected in other Schroders

communications, strategies or funds.

Risk warning: Investments in equities are subject to market risk and, potentially, to currency exchange rate risk. Investments in emerging markets are subject to market risk and,

potentially, liquidity and currency exchange rate risk. This fund may use financial derivative instruments as a part of the investment process. This may increase the fund’s price

volatility by amplifying market events.

Important Information: This presentation does not constitute an offer to anyone, or a solicitation by anyone, to subscribe for shares of Schroder International Selection Fund (the

“Company”). Nothing in this presentation should be construed as advice and is therefore not a recommendation to buy or sell shares.

Subscriptions for shares of the Company can only be made on the basis of its latest prospectus together with the latest audited annual report (and subsequent unaudited semi-

annual report, if published), copies of which can be obtained, free of charge, from Schroder Investment Management (Luxembourg) S.A.

An investment in the Company entails risks, which are fully described in the prospectus.

Past performance is not a reliable indicator of future results, prices of shares and the income from them may fall as well as rise and investors may not get the amount

originally invested.

The forecasts stated in the presentation are the result of statistical modelling, based on a number of assumptions. Forecasts are subject to a high level of uncertainty regarding

future economic, geopolitical and market factors that may affect actual future performance. The forecasts are provided to you for information purposes as at today's date. Our

assumptions may change materially with changes in underlying assumptions that may occur, among other things, as economic and market conditions change. We assume no

obligation to provide you with updates or changes to this data as assumptions, economic and market conditions, models or other matters change.

Hypothetical results must be considered as no more than an approximate representation of the strategies performance, not as indicative of how it would have performed in the

past. It is the result of statistical modelling, based on a number of assumptions and there are a number of material limitations on the retroactive reconstruction of any performance

results from performance records. For example, it does not take into account any dealing costs or liquidity issues which would have affected a real investment's performance. This

data is provided to you for information purposes only as at today's date and should not be relied on to predict possible future performance.

For the purposes of the Data Protection Act 1998, the data controller in respect of any personal data you supply is Schroder Investment Management Ltd (SIM). 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. SIM may also use such information for marketing activities unless you notify it otherwise in writing

Third party data is owned or licensed by the data provider and may not be reproduced or extracted and used for any other purpose without the data provider's consent. Third party

data is provided without any warranties of any kind. The data provider and issuer of the presentation shall have no liability in connection with the third party data. The Prospectus

and/or www.schroders.com contains additional disclaimers which apply to the third party data.

This presentation is issued by Schroder Investment Management Limited, 31, Gresham Street, EC2V 7QA, who is authorised and regulated by the Financial Services Authority.

For your security, all telephone calls are recorded.

Important information

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For Professional Investors Only. Not Suitable for Retail Clients

This presentation intended to be for information purposes only and it is not intended as promotional material in any respect. The material is not intended as an offer or solicitation

for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment

recommendations. Information herein is believed to be reliable but Schroder Investment Management Ltd (SIM) does not warrant its completeness or accuracy. This does not

exclude or restrict any duty or liability that SIM has to its customers under the Financial Services and Markets Act 2000 (as amended from time to time) or any other regulatory

system

Investors should be aware that frontier markets involve a higher degree of risk than emerging and developed markets. Less developed markets are generally less well regulated

than the developed markets, investments may be less liquid and there may be less reliable arrangements for trading and settlement of the underlying holdings. The strategy will

hold investments denominated in currencies other than the base currency and exchange rates will cause the value of these investments, and the income from them, to rise or fall.

The strategy can also use derivatives for investment purposes, which may increase the price volatility by amplifying market events and where OTC derivatives are used there is

the risk of counterparty default.

The model performance shown in the presentation must be considered as no more than an approximate representation of the portfolios’ performance, not as indicative of how it

would have performed in the past. It is the result of statistical modelling, based on a number of assumptions and there are a number of material limitations on the retroactive

reconstruction of any performance results from performance records. For example, it does not take into account any dealing costs or liquidity issues which would have affected a

real investment's performance. This data is provided to you for information purposes only as at today's date and should not be relied on to predict possible future performance.

Details of the assumptions used are available on request.

The hypothetical results shown must be considered as no more than an approximate representation of the portfolios’ performance, not as indicative of how it would have

performed in the past. It is the result of statistical modelling, based on a number of assumptions and there are a number of material limitations on the retroactive reconstruction of

any performance results from performance records. For example, it does not take into account any dealing costs or liquidity issues which would have affected a real investment's

performance. This data is provided to you for information purposes only as at today's date and should not be relied on to predict possible future performance.

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 Frontier Markets involves an above average degree of risk and should be seen as long-term in nature.

Important information

133 Frontier Markets | May 2013

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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: 020 7658 6000, Fax: 020 7658 6965

Company register number. 1893220

Authorised and regulated by the Financial Services Authority

Important information

134 Frontier Markets | May 2013