Schroder International Selection Fund

1
March 2003
Webcast Presentation

• Schroder International Selection Fund
• European Equity Alpha

Zafar AhmadullahFund Manager
For professional investors only
Schroder International Selection Fund will be
referred to as Schroder ISF throughout this
presentation
2
Fund Summary

• A new fund in the Schroder International
  Selection Fund range
• Emphasis on bottom-up stockpicking using
  Schroders extensive analytical resources and
  Fund Managers proven credentials
• Launched on 31 January 2003

The fund referred to in this presentation may
not be registered for sale in your
jurisdiction. Please contact your local Schroders
office for more information
3
Philosophy

• The Fund Manager will aim to invest over a longer
  time horizon using the best opportunities
  available
• How?
• Bottom-up stockpicking approach using Schroders
  extensive research capabilities
• Value hidden growth bias
• Flexibility to adapt to different market
  conditions
• High tracking error - no benchmark constraints

4
Portfolio Characteristics

• Minimum 40 stocks, no maximum
• Up to 10 tracking error
• Stocks/Sector/Country - Max contribution to TE of
  10 from an individual position
• Fully invested mandate (10 cash limit)
• Expect high short-term volatility v benchmark
• 5 p.a. outperformance target on a rolling 3
  year basis (MSCI Europe index)
• Small/mid-cap bias (c. 50 of portfolio) in short
  to medium term

5
Investment Process
Overview

• A multi-disciplined and highly structured
  investment process that draws on our proprietary
  research, our state-of-the-art investment tools
  and the stock-picking expertise of one of our key
  Fund Managers
• Award-winning Fund Manager, Zafar Ahmadullah
• 27 Pan European Analysts and specialist small cap
  team
• Global Research Information Database (GRiD)
• Portfolio Risk Investment Strategy Manager
  (PRISM)

Large Cap Stock Research
Portfolio Construction Monitoring
Small and Mid Cap Stock Research
Risk Management Tools
Source Schroders as at 30 December 2002
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Investment Process

• Primarily fundamental analysis
• Significant emphasis on stockpicking capabilities
  of Fund Manager and analysts
• Large Cap
• Focus on stocks rated 1 by our analysts rather
  than 1 and 2 - cherry picking the best prospects
• Significant divergence from Core Model Portfolio
  (which is index aware)
• Small/Mid cap
• Small/mid cap bias means wide use of research and
  interaction with European Small Cap team
• Focus on value and hidden growth

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What Will We Look for in a Stock?

• Industry anomalies undervalued against peer
  group
• Hidden growth not spotted by the market
• Potential corporate action
• Unfashionable companies with good business
  stories
• Turnaround/Recovery stories
• Companies trading at discounts to their
  realisable assets
• Unrecognised strong business franchises

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Stock Example
Anglo Irish Bank

• Fast Growing Bank
• High quality management
• Initially not recognised by the market
• Comprises large position in Schroder ISF EURO
  Equity Fund
• Performed strongly
• 1 Year 56, MSCI Europe -32
• Since Purchase 70, MSCI Europe -27

Anglo Irish Bank v MSCI Europe
x10E-2
Purchased for EURO Equity fund
Source Thomson Financial, Datastream Figures to
31 December 2002
9
Stock Example
Kingfisher
Kingfisher v MSCI Europe

• Europes largest DIY retailer
• DIY attractive industry with above average growth
  profile
• Castorama synergy benefits to come through
• Faster restructuring with sale of non core assets
• Kingfisher share price weakened by rights issue
  to purchase Castorama

x10E-2
Source Thomson Financial, Datastream
10
Stock Example
GBL
GBL v MSCI Europe

• Belgian holding company with stakes in Total
  Fina, Suez and Bertelsmann
• Current share price gives no value for the
  current stake in Bertelsmann
• Bertelsmann largest media company in Europe with
  20 bn in sales
• GBL is able to list Bertelsmann from 2005 and
  therefore crystallise value for its shareholders

x10E-2
Source Thomson Financial Datastream
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Stock Example
OTE
OTE v MSCI Europe

• Greek telco incumbent with exposure to Eastern
  European markets
• Limited 3G licence cost and potential for
  operational improvements
• One of the strongest balance sheets and a
  sustainable dividend yield of at least 6
• Fallen out of emerging market index and has not
  yet appeared on European investors radar screens

x10E-2
Source Thomson Financial Datastream
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Stock Example
Tesco
Tesco v MSCI Europe

• Dominant UK position - 25 of market share
• Focused overseas expansion
• 11x 2003E earnings, EV/IC 1.3
• Innovative and highly regarded management

x10E-2
Source Thomson Financial Datastream
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Zafars Track Record in EURO Equity
Calendar Year Performance (EUR)

• Zafar has managed the fund outright since April
  2000

Source Schroders, MSCI to 31December 2002 C
Class Shares
Please note that the above graphs relate to the
Schroder ISF EURO Equity fund It does not imply
that Schroder ISF European Equity Alpha will
enjoy similar performance or meet its objectives
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Schroder ISF European Equity Alpha Fund
Objective and Characteristics

• Performance Objective
• 5 p.a. on a rolling 3 year achieved utilising a
  tracking error range of up to 10

Fund Characteristics as at 28 February 2003

• Size Euro 10 million
• Benchmark MSCI Europe index
• Number of stocks 70
• Tracking error 5.0

Source Schroders
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Fund Positioning
Schroder ISF European Equity Alpha Fund - Sector
Allocation
Weight Relative to Index
9.2 2.9 2.5 1.0 0.1 -1.0 -3.7 -4.9 -5.4 -6.5 5.8
Consumer Discretionary
Financials
Telecommunications
Industrials
Energy
Information Technology
Utilities
Consumer Staples
Materials
Health Care
Cash
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EURO Equity v European Equity Alpha
EURO Equity Fund
European Equity Alpha Fund
Zafar Ahmadullah
Fund Manager
Zafar Ahmadullah
Universe
Eurozone
Pan Europe
Benchmark
MSCI EMU
MSCI Europe
Performance Objective
Benchmark 3 p.a. on Rolling 3 years
Benchmark 5 p.a. on Rolling 3 years
Tracking Error
3 - 8
Up to 10
Fees
Standard
Performance Related
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Why Choose This Fund?

• The Fund Manager will pick the best investment
  opportunities in the market
• Not constrained by benchmark weightings
• Pan-European larger investment universe
• Small/mid cap bias an under-researched area
  which gives greater opportunity to add value
• Emphasis on long-term returns rides through
  short-term market volatility

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Appendix
Fee Structure
Eur
Eur
Provided the absolute performance is positive
Note Administration fees include fees payable to
the Fund Administrator and Custodian of the Fund,
and to Schroder Investment Management
(Luxembourg) SA for its services as Transfer
Agent and Administration
Source Schroders
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Important Information

• This document 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 document
  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.
• The Company is not managed in order to qualify
  for UK distributor status. It may not meet the
  requirements of investors subject to UK taxation.
  
• An investment in the Company entails risks, which
  are fully described in the prospectus.
• Past performance is not necessarily a guide to
  future performance and may not be repeated.
  Investors may not get back the full amount
  invested, as prices of shares and the income from
  them may fall as well as rise.
• Exchange rate changes may cause the value of any
  overseas investments to rise or fall.
• Schroders has expressed its own views and
  opinions in this document and these may change.
  Unless otherwise noted all figures are sourced
  from Schroders as at 31 December 2002
• This presentation is issued by Schroder
  Investment Management (Luxembourg) S.A., 5, rue
  Höhenhof, L-1736 Senningerberg, Luxembourg. For
  your security, all telephone calls are recorded.