Fondsprofessionell Fondskongress Mannheim 2. Feburar 2006 Nicholas Williams

1. Fondsprofessionell FondskongressMannheim 2. Feburar 2006Nicholas Williams Auf der Suche nach neuem Potenzial: Outperformance mit europäischen Nebenwerten

2. Relative performanceSmall Cap vs Large Cap Since 1/1/1999

3. Relative PerformanceSmall Cap vs Large Cap Since 1/1/1990

4. Why European Mid and Small Cap? Risk and Return (EUR) • Small and Mid Caps have generated higher return, with comparable volatility to large caps • European and UK Small and Mid Cap returns and volatility very comparable Source: Baring Asset Management; Factset chart November 2005, based on index returns for last 7 years

5. Smaller Companies –Riskier than larger companies? Source: Cheuvreux

6. Smaller Companies – Riskier than larger companies? Source: Cheuvreux

7. Valuation Small vs Large (Europe) Source: UBS, Factset

8. Small Cap Premium –Forward P/E Source: Cheuvreux

9. Structural Changes in European Equity Markets • Improved disclosure standards • Corporate tax rate declining • Competition for investor attention • Improved financing • More active M&A environment • Decreased power of labour • Improved liquidity

10. Structural ChangesLabour Costs Labour costs as a percentage of sales Source: UBS smallcaps charts

11. Small er Companies – Financing and M & A Attractions

12. M&A Source: Dealogic, UBS estimates. M&A deals by size of target company.

13. Sector Variations – Small cap vs. Large Cap source: Factset, Baring Asset Management

14. Market inefficiencies increasing Analyst Coverage EU – Number of stocks researched down 15% from 2002 Source: Citigroup Small Cap Panorama February 2005 Source: Financial Times 8th November 2004

15. Some Examples • Sell-side Analyst Coverage remains low despite good returns Source: Factset, Baring Asset Management

16. Example – Current HoldingBanco Pastor S.A • Spanish domestic retail bank network. • Initial purchase on 24/2/05 at €26.9. Target price €45. • Valuation ignored strong growth, strong B/S, speculative appeal. • New 5 year plan announced December. • Market Cap €2,848m See Important Information Source: Factset January 2006

17. Example – Current HoldingFBD Holdings • Irish domestic P & C insurance group. • Initial purchase 23/3/05 at €21. Target price €28. • Valuation ignored strong cash generation, low combined ratio, capital strength, organic growth. • Target price revised to €41 19/12/05 based on continued growth, Irish P & C market and combined ratio. • Market Cap €1,517m See Important Information Source: Factset January 2006

18. Example – Current HoldingsMariella Burani Fashion Group • Italian fashion retail and apparel group • Initial purchase 13/10/05 at €11.79. Target price €16 • Strong management with venture approach creating value • Corporate restructuring ongoing highlights discount • Market Cap €378m See Important Information Source: Factset January 2006

19. Why Smaller Companies? Proportion of performance related to stock specific as opposed to macro factors • 90% of small companies’ historic returns have been driven by stock specific factors • Only 10% of smaller companies’ historic returns have been driven by macro factors • A bottom-up investment style addresses the key drivers of smaller companies’ returns Stock specific factors have a far greater impact on the returns of smaller companies Source: Citigroup Small Cap Panorama March 2005

20. Baring Europe Select Trust Performance as at 30th December 2005 Standard & Poor’s: ***** Source: Baring Asset Management, Standard & Poor’s. (bid to bid, in Euro, with net income reinvested), as at 30/12/2005. Baring Europe Select Trust is a UK Authorised Unit Trust managed by Baring Fund Managers Limited (authorised and regulated by the Financial Services Authority). Index is HSBC Smaller Companies Europe ex UK. Reference to the benchmark is for comparative purposes only. * Annualised. Median fund refers to the median fund listed within the peer Group as defined by Standard & Poors.