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					First State UK
Business Overview

July 2003
Agenda


       Company history
       Current position
       Strategic drivers
       Core strategies
       Appendix: Investment approach




1
Company history


    Colonial First State UK
     Legacy of Colonial Life UK
     Established in 1998
     1998 - acquired Co-op Investment Mgt
     Mar 1999 - offered first external fund range in
     May 1999 – combined investment teams
     Investment/ business management separation
     At SICO acquisition:
          £6.0bn FUM
          45 staff (ex investments)
          Poor external assets, profile and performance
          Strong life company links

2
Company history


    Stewart Ivory & Co
     Management origins from 1873 (SAINTS)
     Quasi-partnership in need of capital
     Diverse business:
          Private clients
          Listed trusts
          UK pension funds
          Small retail presence
          US institutional accounts
     At SICO acquisition:
          £3.0 bn FUM
          110 staff
          Poor external assets, profile and performance
          Lack of investment across the business


3
Current position

        Focused business and investment entity
        Funds under management £5.3B (May 03)
        180 staff, 59 investment staff
        Single product range
        Strengthened investment team, and improving
         investment performance
        Investment in systems, brand and distribution
        Increasing brand awareness
        Robust distribution development
        Strong asset flow in a difficult environment

4
First State UK FUM breakdown May 03

                         Client Type:                                                                  Product Type:




                                          Retail                                                        UK Equity   European Equity
                                                                                                           2%             3%
                                          27%                                        Fixed Interes t
                                                                                        & Cas h
                                                                                                                                US Equity
                                                                                            26%
                                                                                                                                   4%


                                                                                                                                      As ia Pac ific
                                                                                                                                   ex J apan / GEM
                                                                                                                                          20%
                                                                                    Balanc ed
                                                                                       8%
        Institutional
            73%
                                                                                                                      Global Equity
                                                                                                                          37%




          Colonial First State Investments Group                     £ 34.9bn*

          First State Investments (UK)                               £ 5.3bn

          Global Equity Assets                                       £ 1.9bn                                                         As at Mar 2003


5   All figures as at 30 May 2003 except Group figure which is as at 31 Mar 2003.
Fund ratings

                                        Forsyth   Standard &    Standard &
                                         OBSR     Poor's Fund     Poor's                               Wassum
                           Feri Trust    Fund      Manager      Fund Stars                           Investment
                                        Rating      Rating                   Bluerating   Citywire     Network
                                                                                                        5 W-
    Asia Pacific               A         AAA         AAA                              AAA         Rating

    Global Emerging                                                                                     5 W-
    Markets                    A         AAA         AAA                             AAA         Rating

    European Smaller                                                                                    4 W-
    Companies                  A          AA          A                                          Rating
                                                                                                        4 W-
    Global Growth              -          A           A                                 A         Rating

    Global Health &
    Biotechnology              -           -          A                                                 -

    Global Opportunities       -          A            -                      -           A           -

    British Mid-Cap            -           -          A             -            -           -           -
    British Smaller
    Companies                  -           -          A                      -           -           -

    Corporate Bond             -           -           -                      -           -           -
6
    UK Gilt                    -           -          A                         -           -           -
       As at 30 May 2003
Brand : Awareness of Competitors (Total)

    % Yes

      40            38

                                                             32
      30
                                                      26
                            22
      20                                                              18
                                    14                                        14
              9
      10                                   7                                       6


       0
                         Pre Wave                                 Post Wave
                    FSI    M&G       Jupiter   Investec    New Star




7    Source : Continental Research, Ashes research 2003
Strong asset flow in a difficult environment



                1,400
                1,200
                1,000
                                                              Inflows
    Pounds £m




                  800
                  600
                  400
                  200
                    0
                 -200
                 -400
                 -600                                         Outflows
                 -800
                        Jun-01   Jun-02          Jun-03 est

                                   Retail   Institutional

8
Strategic drivers



    1.   Advent of compulsion
    2.   Shift from “balanced” to “specialist” mandates
    3.   Growing demand for “global” approach
    4.   Asset management for Group entities




9
1. Advent of compulsion

     The UK
      £27 bn “savings gap” (source:ABI Sept ‟02)
      No consumer take-up (mistrust/understanding)
      Failure of „Stakeholder‟
      Poor standards of retail intermediation
      Scheme deficits
      Move from DB to DC
     France & Germany
      Proportionately similar savings gaps
      Growing occupational pension sector
      Same demographic profiles.
10
2. Shift from balanced to specialist mandates



      Single manager, asset allocator model
       unsuccessful
      Development/results of specialist houses
      Role of asset consultants
      “Core” and “satellite” approach
      Loss of mandates from traditional managers:
         Schroders – lost 40% of balanced mandates in „02
         Merrill Lynch – lost 25% of balanced mandates in „02




11
3. Growing demand for global approach




12
3. Growing demand for global approach


      Views of the global consulting firms
      Fewer regional diversification opportunities:
           Technology
           Communications
           Cross-border investment
           Continued opening of markets
      Increased analytical focus on global industries
      Lack of consistent results in asset allocation




13
4. Investment mgt for Group entities


      One centre of excellence:
          Global equities
          Global fixed income
        Consistency of approach
        Leverage infrastructure
        Economies of scale
        Future avenue of growth for Investment and
         Insurance Services (IIS)




14
‘Local’ leverage opportunity


        Expected development of intermediation
        Growth in consumer awareness
        Growth in platforms
        Alignment of retail and institutional markets
        Poor local standards of business management
        Restrictions of legacy products and systems
        Proven business model, refined for UK/Europe.




15
Core strategies


     1.   Drive pan European distribution

               Low cost of incremental business flows
               Solid margins
               Improved market accessibility
               Relative ease of distribution




16
 Core strategies


     2. Focus on institutional & mezzanine distribution

              Leverage global consultant recommendations
              Low cost of incremental business
              Limited registry needs
              Solid margins
              First State operational strength




17
 Core strategies


     3. Develop institutional distribution in the US

              GEM market US$3.7bn, Global market $25bn (2002)
              Quality of our key funds
              Growing demand for global equity strategies
              Solid margins
              Babson acquisition
              Leverage global consultant recommendations




18
 Core strategies


     4. Focused manufacturing

             Strong support of prime funds/teams
             Build skills over medium term
             Investment environment attracts talent




19
Summary


      Four key strategic drivers:
         compulsion; specialist funds; global approach; Group.
      Competitive advantages:
         business management; Group; heritage; global; use of
          technology.
      Robust business structure
      Growing market recognition
      Key growth opportunity for IIS




20
 Appendix: Investment Philosophy



        EPS GROWTH
            drives long term share prices


        QUALITY
            determines the sustainability of EPS growth


        VALUATION
            is all important. Everything has a price




21
Equity Investment Team


                                                          Global Sector
                               Global Teams                                     Regional Teams
                                                          Analysts

                               Global/International       Technology            Asia Pacific
     Chief Investment          Equities                   &Com munications      Angus Tulloch
     Officer                   David Leary                Graham Hay            Alistair Thompson
     Global Asset Management   Andrew Dalrymple           Nigel Masding         Susie Rippingall
     Stuart Paul               Tom M ermagen                                    David Gait
                               Alistair Staddon           Health &              Vijay Tohani
                               Nicole Mardell             Biotechnology         Scott McNab
                               Trent Koch                 Dr Joe Anderson
                                                          Oliver Trefgarne
                                                          Lorenza Castellon     Continental
                                                                                European
     Equity Dealing            Global Em erging Markets   Financial             John Ew art
     Ian Firth                 Angus Tulloch              Services              Jimmy Burns
     Jeremy Campbell           Alan Nesbitt               Rob Grant
                               Charles Heenan             Vincent Houtteville
     Stephen Petersen
     Matthew McKeith           Susie Rippingall
                               Alistair Thompson                                North Am erican
                                                          Consumer
                               David Gait                                       Susan O’Brien
                               Vijay Tohani               Products
                                                                                Julian Bishop
                               Millar Mathieson           Neil Abbott
                               Glen Finegan               Lynne Braddick
                               Scott McNab
     Investment                                           Resources             United Kingdom
     Operations                                           David Whitten         Derek Lygo
     Shaun Forster                                        Dr Joanne Warner      Dr Paul Jourdan
     Michael Summers                                      Dr Chris Baker        Adam White
                                                          Todd Warren           Mikhail Zverev




22   As at 30th June 2003
Global Fixed Interest Team


                      Head of Global
                      Fixed Interest
                      Kevin Colglazier


     Head of Global   Senior Portfolio    Head of UK      Portfolio Manager
        Credit        Manager - Global   Fixed Interest         Cash
     Malcolm White     Steven Murphy       John Creet       Murray Collis


        Sydney          Hong Kong                              Dealer
      Credit Team       Credit Team                          Stuart Doyle
        Staff: 8          Staff: 4




23
FS Global Growth Fund
Performance since inception to 30/05/03




     60

     40

     20

      0

     -20

     -40
           Mar-99


                       Aug-99


                                     Jan-00


                                                Jun-00


                                                           Nov-00


                                                                       Apr-01


                                                                                  Sep-01


                                                                                              Feb-02


                                                                                                         Jul-02


                                                                                                                  Dec-02


                                                                                                                           May-03
                    First State Global Grow th A (MF)                           AUTIF/IMA Global Grow th (IN)
                    MSCI World


24                              Source: Reuters Hindsight, bid to bid, net income reinvested, in £ sterling

				
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