GLOBAL EMERGING MARKETS

Investing for the long termInvesting for the long term

www.martincurrie.com

1

THE GLOBAL EMERGING MARKETS TEAM 

Jeff Casson

Experience: 12 years

Andrew Ness

Experience: 17 years

Alastair Reynolds

Experience: 20 years

Experience: 12 years

Kim Catechis

Experience: 24 years Mohammed Zaidi

Experience: 15 years

Andrew Mathewson

Experience: 9 years

Divya Mathur James Chong

2

y

Experience: 15 years

g

Experience: 17 years

Opinionated, experienced and integratedOpinionated, experienced and integrated

INDUSTRY GROWTH RATESINDUSTRY GROWTH RATES

2011 2012 2013 20142011 2012 2013 2014

Smartphone 55% 35% 20% 20%

Tablet 240% 50% 30% 30%

Laptop 4% 8% 7% 7%

PC 0% 2.5% 1.5% 1%

33Source: IDC, September 2011.

looking beyond headline growth rateslooking beyond headline growth rates

2nd lar est PC ompan loball

Market cap of USD7 billion and 29,000 employees

2nd largest PC company globally

Largest PC company in China with 31% market share

40% share of sales from developed markets

35% of sales from desktop PCs

Acquired IBM PC business in 2005q

4

not just an emerging markets companynot just an emerging markets companySource: Martin Currie. The information provided should not be considered a recommendation to purchase or sell any particular security. It should not be assumed that any of the securities transactions discussed here were or will prove to be profitable. This stock is selected purely to demonstrate the investment process. Past performance is not a guide to future returns.

LENOVO – THE OPPORTUNITYLENOVO  THE OPPORTUNITY

Increasing market share in both emerging and developed markets

China ‐ strong distribution network, particularly in the tier 3‐5 cities

Balance sheet strength to acquire PC vendors in developed markets, such as NEC and Medion

Economies of scale = higher margins

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growth opportunities in a mature industrygrowth opportunities in a mature industrySource: Martin Currie. The information provided should not be considered a recommendation to purchase or sell any particular security. It should not be assumed that any of the securities transactions discussed here were or will prove to be profitable. This stock is selected purely to demonstrate the investment process. Past performance is not a guide to future returns.

THE PC INDUSTRYTHE PC INDUSTRY

Impacted by competing products and slowing western market economies

Growth is in emerging markets, China now the largest PC market

Global PC market share is changing – Asian brands are winning

Developed market companies are re‐evaluating their strategies

Market share gains for Lenovo, Asus and Samsung; but Acer is struggling

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the industry structure is changingthe industry structure is changingSource: Martin Currie. The information provided should not be considered a recommendation to purchase or sell any particular security. It should not be assumed that any of the securities transactions discussed here were or will prove to be profitable. This stock is selected purely to demonstrate the investment process. Past performance is not a guide to future returns.

VARIETY OF FUNDAMENTAL ANALYSIS PARAMOUNTVARIETY OF FUNDAMENTAL ANALYSIS PARAMOUNT

Components Manufacturer

Consultants Retailer

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Logistics FinanceThe information provided should not be considered a recommendation to purchase or sell any particular security. It should not be assumed that any of the securities transactions discussed here were or will prove to be profitable. This stock is selected purely to demonstrate the investment process. Past performance is not a guide to future returns.

2011 RELATIVE PERFORMANCE TO MSCI GEM INDEX2011 RELATIVE PERFORMANCE TO MSCI GEM INDEX 

8Source: Bloomberg L.P. In US$ from 1.1.11 to 9.11.11 The information provided should not be considered a recommendation to purchase or sell any particular security. It should not be assumed that any of the securities transactions discussed here were or will prove to be profitable. This stock is selected purely to demonstrate the investment process. Past performance is not a guide to future returns.

the importance of stock selectionthe importance of stock selection

INDIAN CONSUMPTIONINDIAN CONSUMPTION

9The information provided should not be considered a recommendation to purchase or sell any particular security. It should not be assumed that any of the securities transactions discussed here were or will prove to be profitable. This stock is selected purely to demonstrate the investment process. Past performance is not a guide to future returns.

traditional areas of interesttraditional areas of interest

LOCAL KNOWLEDGE IS IMPORTANTLOCAL KNOWLEDGE IS IMPORTANT

THEME FACT OPPORTUNITYTHEME FACT OPPORTUNITY

• Largest consumer of gold • Jewellery retail• Largest consumer of gold• Wedding tradition• Wealth effect

• Jewellery retail• Gold lending finance

companies

• Tourism• Wedding tradition

• Luggage manufacturers• Travel agents• Wedding tradition • Airlines and hotels

• Largest market for pressure cookers

• Pressure cooker manufacturers

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understanding trends in the local marketunderstanding trends in the local market

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India’s largest branded watch and jewellery retailer

Exposure to both the rural and urban marketExposure to both the rural and urban market

Partly owned by Tata Group, one of the most respected Indian business Groupsrespected Indian business Groups

Hedges its Gold Exposure – a play on Jewellery VolumesVolumes

Revenue growth of over 34% pa in the last 5 years

11The information provided should not be considered a recommendation to purchase or sell any particular security. It should not be assumed that any of the securities transactions discussed here were or will prove to be profitable. This stock is selected purely to demonstrate the investment process. Past performance is not a guide to future returns.

established playerestablished player

TITAN – SHARE PRICE PERFORMANCETITAN  SHARE PRICE PERFORMANCE

200

250

R)

Titan industries

150

200

mance (IN

100

ce perform

50

Share pri

0

Oct 2008 Apr 2009 Oct 2009 Apr 2010 Oct 2010 Apr 2011 Oct 2011

12

p p p

Source: Bloomberg L.P. The information provided should not be considered a recommendation to purchase or sell any particular security. It should not be assumed that any of the securities transactions discussed here were or will prove to be profitable. This stock is selected purely to demonstrate the investment process. Past performance is not a guide to future returns.

sustained share price performancesustained share price performance

SUSTAINABILITY ‐ COUNTRYSUSTAINABILITY  COUNTRY

Share of middleclass consumption in IndiaShare of middleclass consumption in India50% of India’s population is below 25 years old now, and the median age by 2030 will be 31, far below China’s 42.,

By 2030  ‐ 70% of India’s population will be between 15 and 64between 15 and 64.

13Source: OECD.

best demographics in the BRIC countriesbest demographics in the BRIC countries

SUSTAINABILITY ‐ INDUSTRYSUSTAINABILITY  INDUSTRY

Will Indian consumers continue to buy Gold and Jewellery?

Move towards Branded chains from family jewellers:Move towards Branded chains from family jewellers:

•Trust•Service LevelsService Levels•Jewellery Designs•Credit Facilities and Promotions 

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potential in organised retailpotential in organised retail

SUSTAINABILITY ‐ COMPANYSUSTAINABILITY  COMPANY

Management execution and Group reputation

Dealing with changing consumer tastesDealing with changing consumer tastes

Self‐funding growth – no need to raise equity

Availability and cost of retail space

il bili d f lAvailability and cost of employees

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ability to manage sustainability challenges paramountability to manage sustainability challenges paramount

WHY CHOOSE MARTIN CURRIE FOR GLOBAL EMERGING MARKETS?

Experienced team High calibre, highly‐experienced and deeply‐resourced global emerging markets equities team

I di id l k l d Th t h 15 ’ i t t i fIndividual knowledge The team has on average 15 years’ investment experience, many of which have been gained as colleagues and peers. 

Sustainability of investment ideas They focuses on companies with strong management and clear titi d t t ti t i bl t th lcompetitive advantages, targeting sustainable returns over the long 

term.

Interpretation of fundamental  All investment ideas are rigorously analysed and all ideas are debated d h ll d hi fil h ‘ i ’ d ll f d i iresearch and challenged; this filters out the ‘noise’ and allows for decisions to 

be made based on the relevant information.

Look beyond the obvious Sector expertise means the managers can look along the value chain, with each link in the chain representing an opportunity; as active portfolio managers this allows us to find and test companies that others may miss.

16Committed to deliver for clientsCommitted to deliver for clients

GLOBAL EMERGING MARKETS AT MARTIN CURRIE

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INVESTMENT PHILOSOPHY AND APPROACH

We believe…

Share prices will reflect long‐term cash flow generation

Fundamental, bottom‐up research drives alpha generation

Sector specialisation enhances information flow Sector specialisation enhances information flow

Sustainability assessment enhances fundamental analysis

High conviction best ideas portfolios are inherently risk aware

18Consistent and disciplined

STRATEGY DETAILS

Global emerging markets

Performance target (gross of fees) Index +3% p.a. over rolling 5 year periods

Benchmark index MSCI Emerging Markets

Tracking error range  5‐8% p.a.

Number of stocks  40‐60

Capitalisation focus All‐cap

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GLOBAL EMERGING MARKETS TEAM – RESEARCH RESPONSIBILITIESGLOBAL EMERGING MARKETS TEAM  RESEARCH RESPONSIBILITIES

Alastair Reynolds Durable Goods and Homebuilders

Andrew Mathewson Healthcare and Consumer StaplesAndrew Mathewson Healthcare and Consumer Staples

Andrew Ness Financials

Di M h T h l d UtilitiDivya Mathur Technology and Utilities

James Chong China Specialist

Jeff Casson Telecoms, Media and Civil Engineering

Kim Catechis Oil and Gas

Mohammed Zaidi Natural Resources and Transport

20Sector specialisation encourages thought beyond country borders

INVESTMENT PROCESS

Risk management

Idea generation Fundamental analysis

Peer group review

Risk aware portfolio 

Stage 1 Stage 2 Stage 3 Stage 4

Research priority list

y

Published investment thesis

Unanimous stock rating

pconstruction

Best ideas

High conviction

Focused

21Rigorous and transparent

STAGE 1: IDEA GENERATION

Team discussion

GEMs team

Screening Research trips

Team of 8

16 years' average experience

J M C ChiJason McCayDirector, Head of Asia team

Team of 6

15 years’ average experience

China

Jamie MarianiDirector of research

Team of 11

James FairweatherDirector, Head of global equities

Team of 5

22Research priority list

12 years’ average experience 21 years’ average experience

STAGE 2: FUNDAMENTAL ANALYSIS

Quantitative Qualitative

Long‐term modelling

Financial analysis

Company life cycle analysis

Sustainability analysisFinancial analysis

Focus on cash flows and return on capital

Sustainability analysis

Extensive management contact

Macro factors

A source of risk, not alpha

Macro risk reflected via cost of equity

23Published investment thesis

STAGE 3: PEER GROUP REVIEW

Check

“Reality check” with Martin 

Conviction

Wider team discussion builds 

Challenge

GEMs team challenges yCurrie research platform conviction

ginvestment case

24Unanimous stock rating

STAGE 4: RISK AWARE PORTFOLIO CONSTRUCTION

Portfolio

Best ideas

Positive relationship between position size and upside to target

High active risk

Country and sector agnosticCountry and sector agnostic

Independent quantitative factor analysis

Strong buy/sell discipline

25Best ideas, high conviction and risk aware portfolio

MANAGER’S TRACK RECORDGlobal emerging markets – record at Martin Currie

4.5

+3.9

3 5

4.0

3.0

3.5

%)

+2.12.0

2.5

return (%

1.0

1.5

Relative r

0 0

0.5

R

26Source: Martin Currie calculated internally using StatPro, gross of fees in USD for the Martin Currie Emerging Markets fund. In October 2010 Kim Catechis, Alastair Reynolds and Andrew Ness joined Martin Currie’s global emerging markets team, with Kim as team head.  Jeff Casson, Divya Mathur and Mohammed Zaidi joined Martin Currie in September 2010. *To 31 October 2011.

0.0

1 year Year to date*

APPENDICES

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INTRA‐GEM TRADINGINTRA GEM TRADING

China became India’s largest trading partner in 2008

The t o o ntries si ned a $100bn bilateral tradeThe two countries signed a $100bn bilateral trade target by 2015, up from $60bn in 2010

Chi d d l i I di l h i iChinese trade delegation to India larger then visits by the the US, British and French

‘ d d h ll ’‘India and China will co‐operate in many areas’‐Premier Wen

‘S hi b i ’‘Strong partnership between our two countries’ –Premier Singh

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GOVERNMENT SPENDING: CONVERGING CREDIT RATINGS

June 2006 Latest Change

Developed markets

UK AAA AAA 0

USA AAA AA+ ‐1USA AAA AA+ 1

Spain AAA AA ‐2

Portugal AA‐ BBB‐ ‐6

Ireland AAA BBB+ ‐7

Greece A CC ‐11

Emerging markets

Russia BBB BBB 0

India BB+ BBB‐ +1

Brazil BB BBB‐ +2

Turkey B+ BB +2

Colombia BB BBB +2Colombia BB BBB‐ +2

China A‐ AA‐ +3

Source: Bloomberg L.P. 29

EMERGING POWERS

20301870 1973 2010

2030Forecast

16.4 18.6 13.3 18.0

9.3 8.0 12.3 10.1

8 0 6 3

Source: Arvind Subramanian.

8.3 8.0 6.9 6.3

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KEY CHANGES TO THE UK UPSTREAM OIL AND GAS TAX REGIME2002 to March 2011

KEY CHANGES TO THE UK UPSTREAM OIL AND GAS TAX REGIME (2002 TO MARCH 2011)KEY CHANGES TO THE UK UPSTREAM OIL AND GAS TAX REGIME (2002 TO MARCH 2011)

A 10% supplementary charge on ring‐fence profits introduced Budget 2002

Introduction of 100% first‐year allowance for expenditure incurred on almost all ring fence capital expenditure Budget 2002

Introduction of a 24% allowance for long‐life assets Budget 2002Introduction of a 24% allowance for long‐life assets Budget 2002

Abolition of Royalty for all fields Pre‐Budget 2002

Tariff receipts for new fields and certain new assets exempted from Petroleum Revenue Tax (PRT) Budget 2003

Introduction of the Exploration Expenditure Supplement (EES) Budget 2004Introduction of the Exploration Expenditure Supplement (EES) Budget 2004

Payments of the ring fence corporation tax and supplementary charge to move from four instalments to three Budget 2005

Supplementary charge increased to 20% Pre‐Budget 2005

The Ring Fence Expenditure Supplement (RFES) introduced, which extended and replaced the EES Pre‐Budget 2005g p pp ( ) , p

100 per cent first year allowances for new expenditure on long‐life assets and mid‐life decommissioning Budget 2008

Provide for companies to claim post‐cessation costs of decommissioning fields for tax purposes Budget 2008

Allow companies to carry back decommissioning costs Budget 2008

Introduction of a “New Field Allowance” for small fields and challenging HPHT and Heavy Oil fields Budget 2009

Removal of chargeable gains from license swaps and making gains exempt where disposal proceeds from ring fence assets are reinvested within the UKCS

Budget 2009

E i f h fi ld ll d fi ld f d i W f Sh l d h

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Extension of the field allowance to remote deep water gas fields, as are found in West of Shetland  March 2010

Increase in supplementary charge on corporation tax from 20% to 32% De‐linking of tax relief on decommissioning costs from tax rate on production

Budget 2011

Source: Based on information from HM Revenue and Customs and Oil & Gas UK.

REGULATORY INFORMATION

Important information:Martin Currie Investment Management Ltd (‘MCIM’) and Martin Currie Inc (‘MCI’) have jointly issued and approved this presentation in their capacity as investment advisers. MCIM and MCI are referred to throughout at ‘Martin Currie’. Both companies are authorized and regulated by the Financial Services Authority. MCI is incorporated with limited liability in New York, USA. MCIM and MCI are registered in Scotland (no 66107 and no BR2575), registered address Saltire Court, 20 Castle Terrace, Edinburgh, EH1 2ES.are registered in Scotland (no 66107 and no BR2575), registered address Saltire Court, 20 Castle Terrace, Edinburgh, EH1 2ES.

The presentation may not be distributed to third parties and is intended only for the attendee. The presentation does not form the basis of, nor should it be relied upon in connection with, any subsequentcontract or agreement. It does not constitute, and may not be used for the purpose of, an offer or invitation to subscribe for or otherwise acquire shares in any of the products mentioned.

The information contained in this presenter has been compiled with considerable care to ensure its accuracy. But no representation or warranty, express or implied, is made to its accuracy or completeness.Martin Currie has procured any research or analysis contained in this presentation for its own use. It is provided to you only incidentally, and any opinions expressed are subject to change without notice.

Past performance is not a guide to future returns. Markets and currency movements may cause the value of investments and income from them to fall as well as rise and you may get back less than you investedwhen you decide to sell your investments. There can be no assurance that you will receive comparable performance returns, or that investments will reflect the performance of the stock examples, contained inthis presenter. Movements in foreign exchange rates may have a separate effect, unfavourable as well as favourable, on the gain or loss otherwise experienced on an investment.

Investing in securities in international markets involves certain risks and special considerations.

Investment in the securities of smaller and unquoted companies can involve greater risk than is customarily associated with investment in larger, more established, companies. In particular, smaller companiesoften have limited product lines, markets or financial resources and their management may be dependent on a smaller number of key individuals. In addition, the market for stock in smaller companies is oftenless liquid than that for stock in larger companies, bringing with it potential difficulties in acquiring, valuing and disposing of such stock. Proper information for determining their value, or the risks to which theyare exposed, may not be available.

In some international markets and particularly in emerging markets the marketability of quoted shares may be limited due to foreign investment restrictions, wide dealing spreads, exchange controls, foreignownership restrictions, the restricted opening of stock exchanges and a narrow range of investors. Trading volume is lower than on more developed stock markets, and equities are less liquid. Volatility of pricesp , p g g g g p , q q y pcan also be greater than in more developed stock markets. The infrastructure for clearing, settlement and registration, on the primary and secondary markets of many emerging markets, may be undeveloped.Under certain circumstances, there may be delays in settling transactions in some of the markets.

Many emerging markets, and the companies quoted on their stock exchanges, are exposed to the risks of political, social and religious instability, expropriation of assets or nationalisation, rapid rates ofinflation, high interest rates, currency depreciation and fluctuations and changes in taxation which may affect the income and the value of its investments.

Companies in emerging markets are not always subject to disclosure accounting auditing and financial standards which are equivalent to those applicable in more developed countries Such information as isCompanies in emerging markets are not always subject to disclosure, accounting, auditing and financial standards which are equivalent to those applicable in more developed countries. Such information, as isavailable, is also often less reliable. There may be less rigorous government supervision and regulation.

Investment in derivative instruments, including futures, options or contracts for differences, carries a high risk of loss, the markets in these investments being very volatile. A relatively small adverse marketmovement may result not only in the loss of the original investment but also in unquantifiable further loss exceeding any margin deposited. Warrants often involve a high degree of gearing so that a relativelysmall movement in the price of the security to which the warrant relates may result in a disproportionately large movement, unfavourable as well as favourable, in the price of the warrant.

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