Introducing

Henderson New StarOctober 2009

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Henderson New Star

Agenda

Introduction of Henderson New Star

Market Overview

What we like!

Summary

Source: Henderson Global Investors, as at 30 June 2009

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A history of Henderson New Star

De-merged from AMP. HHG PLC returns to being

an independent asset management company

Bought by AMP and merged with AMP Asset

Management

Acquired Touche Remnant, establishing Henderson as the UK’s

leading investment trust manager

Listed on the London Stock Exchange

Henderson starts managing pension funds

Founded to administer the estate of Alexander

Henderson

2003

1998

1934

1975

1983

1992

2008The company is

incorporated in Jersey and tax-resident in the

Republic of Ireland

2009Henderson buy New Star

Asset Management

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Seven stages of scepticism

“The economy won’t recover”

“The recovery will be weak”

“A second dip is coming”

“Medium-term growth will be slow”

“Price stability won’t last”

“It’s all priced in”

“Higher rates will kill the rally”

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G7 industrial output

78

80

82

84

86

88

90

92

94

96

98

100

102

2008 2009 2010 2011

Actual"Zarnowitz" ForecastIMF - Consistence Forecast

Fe

bru

ary

20

08

= 1

00

The Zarnowitz forecast - deep recessions have strong recoveries

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Will there be a second dip?

0

2

4

6

8

10

12

14

16

18

0 - 18 18 - 36 36 - 54 54 - 72 72 - 90 90 - 108 108 - 126

Number of occurances

Source: Henderson Global Investors

Double dips uncommon

Only 5 out of 33 expansions ended within 18 months

Duration (in months) of US business cycle expansions since 1854

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FED doesn’t raise rates...

6

7

8

9

10

11

12

1981 1982 1983 1984

5

10

15

20US UnemploymentFed Funds Rate (RHS)

1981 - 1984

%

2002 - 2005

Source: Datastream, Henderson Global Investors, as at 3 September 2009

1991 - 1994

5.0

5.5

6.0

6.5

7.0

7.5

8.0

1991 1992 1993 1994

2

3

4

5

6

7US UnemploymentFed Funds Rate (RHS)

%

4.0

4.5

5.0

5.5

6.0

6.5

2002 2003 2004 2005

0

1

2

3

4

5

US UnemploymentFed Funds Rate (RHS)

%

2007 -

4

5

6

7

8

9

10

2007 2008 2009 2010

0

1

2

3

4

5

6

US UnemploymentFed Funds Rate (RHS)

%

Source: Datastream, Henderson Global Investors, as at 3 September 2009

Source: Datastream, Henderson Global Investors, as at 3 September 2009Source: Datastream, Henderson Global Investors, as at 3 September 2009

...until some time after unemployment has peaked

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Is the recovery already priced in?

0

10

20

30

40

50

60

1910

1920

1930

1940

1950

1960

1970

1980

1990

2000

S&P 500 (Graham & Dodd P/E)

S&P 500 (Graham & Dodd P/E) average

S&P 500 (Graham & Dodd P/E) -1sd

S&P 500 (Graham & Dodd P/E) +1sd

Graham & Dodd P/E (Current price against a 10 year moving average of reported earnings)

Source: Henderson, S&P, Datastream, as at 31 July 2009sd = standard deviation

Graham & Dodd P/E (Current price against a 10 year moving average of reported earnings)

0

10

20

30

40

50

1945

1955

1965

1975

1985

1995

2005

FTSE All-Share (Graham & Dodd P/E)

FTSE All-Share (Graham & Dodd P/E) mean

FTSE All-Share (Graham & Dodd P/E) -1sd

FTSE All-Share (Graham & Dodd P/E) +1sd

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Still value in equities...

0

1

2

3

4

5

6

7

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

0

1

2

3

4

5

6

7

US 10 Year ILG Yield

FTSE All-Share DY

FTSE All-Share Dividend Yield and ILG yield

Source: Henderson Global Investors, Datastream, as at 3 September 2009

...even with expected dividend cuts

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*Source: Morningstar at 31 August 2009, based on cumulative performance, on a mid to mid basis (excluding initial charge), with net income reinvested for a basic rate taxpayer.

Henderson New Star Multi-Manager

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Identifying attractive investments

Focus on valuation (buy cheap assets)

Consider unfashionable assets

Avoid popular/crowded trades

Be patient (invest over a longer horizon than most)

Look for asymmetric outcomes

Applications

Buying UK Mid-Cap (Q1 2009)

Technology (Actively traded through 2006-2007)

Alternatives (2007)

Short Sterling (2007-2009)

Government bonds (2008)

We want to find investments that maximise upside/minimise downside (asymmetrical trades)

Asset allocation is a key driver of returns

Investment approach

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Investment grade spreads by sector - Still like corporate bonds

0

200

400

600

800

1000

1200

Jan

-97

Jul-

97

Jan

-98

Jul-

98

Jan

-99

Jul-

99

Jan

-00

Jul-

00

Jan

-01

Jul-

01

Jan

-02

Jul-

02

Jan

-03

Jul-

03

Jan

-04

Jul-

04

Jan

-05

Jul-

05

Jan

-06

Jul-

06

Jan

-07

Jul-

07

Jan

-08

Jul-

08

Jan

-09

Jul-

09

Financials

Industrials

Utilities

Corporate Index

Telecoms

Indices breakout

Source: Merrill Lynch, at 31 August 2009

bp Wide 1012

Currently 442

Value is in financials

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Threat - huge forecast increase in UK gilt issuance

-150

-100

-50

0

50

100

150

200

250

300

19

90

-91

19

91

-92

19

92

-93

19

93

-94

19

94

-95

19

95

-96

19

96

-97

19

97

-98

19

98

-99

19

99

-00

20

00

-01

20

01

-02

20

02

-03

20

03

-04

20

04

-05

20

05

-06

20

06

-07

20

07

-08

20

08

-09

20

09

-10

20

10

-11

20

11

-12

20

12

-13

20

13

-14

Net issuance

Quantitative easing - buyback

Enormous increase in gilt issuance partially offset by near-term quantitative easing

No

min

al a

mo

un

t is

sue

d £

bn

Source: UK Debt Management Office (DMO), at April 2009

Actual Forecast

‘Elephant is about to leave the room’

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Seven stages of scepticism

“The economy won’t recover” Already under way

“The recovery will be weak” Usually strong after deep recessions

“A second dip is coming” “Double dip” recessions unusual – watch money trends

“Medium-term growth will be slow” “Structural drags” possibly overstated

“Price stability won’t last” Medium-term inflation risk

“It’s all priced in” Equities inexpensive assuming return to “normality”

“Higher rates will kill the rally” Limited impact while below “neutral”

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Please see us at the Exhibition……

New fund launch – Richard Pease’s European Special Situations

Multi Manager range – performance and process

Fixed Income range

Fund Range and Managers

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Important InformationThis document is solely for the use of professionals and is not for general public distribution.

This document is issued and approved by Henderson New Star and is solely for the use of professionals, defined as Eligible Counterparties or Professionals in the Glossary of the Financial Services Authority’s Handbook of Rules and Guidance for Authorised Firms made under the Financial Services and Markets Act 2000, and is not for general public distribution. Any other persons who receive this document should not rely on or act upon its contents.

This document may not be reproduced in any form without the express permission of Henderson New Star and to the extent that it is passed on care must be taken to ensure that this reproduction is in a form which accurately reflects the information presented here. No responsibility or liability is accepted by Henderson New Star or by any of its directors for any action taken on the basis of the content of this document.

This document has been produced based on Henderson New Star’s research and analysis and represents our house view. The information is made available to clients only incidentally. Unless otherwise indicated, the source for all data is Henderson New Star. Any reference to individual companies is purely for the purpose of illustration and should not be construed as a recommendation to buy or sell or advice in relation to investment, legal or tax matters.  This document does not constitute or form part of any offer or solicitation to issue, sell, subscribe or purchase any investment, nor shall it or the fact of its distribution form the basis of, or be relied on in connection with, any contract for the same.

Please remember that past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise as a result of market and currency fluctuations and you may not get back the amount originally invested. Tax assumptions may change if the law changes and the value of tax relief will depend upon individual circumstances.

Issued in the UK by Henderson New Star.  Henderson New Star is the name under which Henderson Global Investors Limited (reg. no. 906355), Henderson Fund Management plc (reg. no. 2607112), Henderson Investment Funds Limited (reg. no. 2678531), Henderson Investment Management Limited (reg. no.1795354), New Star Asset Management Limited (reg no. 3984658) and New Star Investment Funds Limited (reg no. 4033107)  (each incorporated and registered in England and Wales with registered office at 201 Bishopsgate, London EC2M 3AE and authorised and regulated by the Financial Services Authority) provide UK retail investment products and services.  Telephone calls may be recorded and monitored.

Henderson Global Investors201 Bishopsgate, London EC2M 3AETel: 020 7818 1818 Fax: 020 7818 1819