Aberdeen World Growth and Income Fund

NMA Conference and Awards

13 – 14 January 2011

For Professional Use OnlyNot for public distribution

Bruce Stout, Senior Investment Manager

2

Agenda

• About Aberdeen

- Investment team

- Investment process

• Growth and income in a global context

• Aberdeen World Growth and Income Fund

3

About Aberdeen Asset Management

• An independent asset management group

• Origins in Scotland

• Still run today by its founders

• AuM has grown to £178.7bn since inception in 1983

• 1,829 staff including over 500 investment professionals

• Geographically diverse – 31 offices in 24 countries

• Working with clients across Institutional, Wholesale and Charity sectors

Asset Management is all that we do

Source: Aberdeen Asset Management, 30 Sep 10

Group AuM

Property12.1%

Fixed Income 25.3%

Equities40.3%

Money Market6.0%

Alternative Investment Strategies

16.3%

4

Global equity team

Team members Title Years in industry Years with firm

Stephen Docherty Head of Global Equities 17 15

Bruce Stout Senior Investment Manager 23 9

Andrew McMenigall Senior Investment Manager 22 6

Stewart Methven Senior Investment Manager 22 6

Jamie Cumming Senior Investment Manager 8 6

Samantha Fitzpatrick Senior Investment Manager 12 9

Martin Connaghan Investment Manager 11 9

Ella-Kara Brown Assistant Investment Manager 6 4

Ann Dewar Senior Portfolio Analyst 20 9

Cindy Rose Head of SRI Research 10 9

Jill Sneddon Global Trading Co-Ordinator 10 7

Jamie Govan SRI Analyst 3 3

Fionna Ross SRI Analyst 2 2

Gail McCullie SRI Researcher <1 <1

• Stable team with collective responsibility for investment decisions

• A mix of youth and experience

• Team members are all generalists

• Global equity team utilises proprietary research produced by regional teamsSource: Aberdeen Asset Management, 31 Oct 10

5

Key points of differentiation

• We are bottom-up stock pickers

• We rely on our own research

• We maintain high conviction portfolios of 40-60 stocks

• We don’t own companies we don’t like, regardless of benchmark weight

• Typical average stock position c2%

• We use a buy-and-hold approach with low turnover; we are true company stakeholders

• We build diversified portfolios of companies

• We employ a team approach, consensual decision-making, but senior managers have final say

• We control risk at the stock level through rigorous process, discipline and filters

6

Global

Equity

Buy List

C330 stocks

Re

gio

na

l de

sk in

tera

ctio

n

Regional teams(Pan Europe, Asia Pacific ex Japan, North America, Japan, Emerging Markets)

Same process = Common language = Ability to exchange thoughts across regions

Step 1

Global equity process

Comparativeanalysis

Global team

Model portfolioc50 stocks

Monitor

Risk checks

Step 3Step 2

Watchlist/review

c280 stocks

7

Step 1: Regional teams

Quality

Pass or fail?

Potential revisit

Portfolio construction

Monitor

Company visit note

Watchlist/ review

Aberdeen universe

Price

Cheap or expensive?

• Model is default

• Filter for mandate

• Refine weightings

• Compliance

checks

Total universeofstocks

• Desk research: Pre-screen of candidate companies

• No quantitative filters

• Many stocks eliminated over time or self-excluding due to size/structure

Risk controls

8

Step 2: Comparative analysis – Global team

• Stocks on global equity buy-list have passed regional quality and valuation screens

• Stocks with market cap < US$1bn are excluded from buy-list

• Global team makes comparisons across regions/sectors

• Global team focuses on the valuation differentials, where pricing anomalies are identified from a global perspective

• Unique companies are identified to help construct a diversified portfolio of businesses

We aim for a diversified portfolio, not driven by backward looking index composition

9

Comparative analysis example – energy sector

Source: Aberdeen Asset Management and all numerical data from Bloomberg, Nov 10Companies marked in bold are held in the global equity portfolios. Model research example used for illustrative purposes only

Company Region P/E09 P/E10 P/E11 P/B Dividend yield

Dividend growth (5yr) (%)

Exxon Mobil USA 18.5x 12.3x 11.3x 2.5x 2.4% 8.8%

Apache Corporation USA 19.9x 12.0x 10.3x 2.0x 0.5% 12.0%

EOG Resources USA 31.2x 83.1x 30.7x 2.4x 0.6% 32.4%

Hess Corporation USA 37.5x 14.4x 13.0x 1.5x 0.6% 0.0%

Total Europe ex UK 11.3x 8.5x 8.0x 1.7x 8.7% 20.4%

ENI Europe ex UK 11.4x 8.7x 7.8x 1.3x 6.2% -5.8%

Royal Dutch Shell UK 14.4x 10.4x 8.6x 1.4x 5.3% 4.8%

BP UK 9.3x 6.6x 6.4x 1.3x 1.9% -14.6%

PetroChina Asia 14.8x 12.1x 11.1x 1.9x 3.2% 2.7%

Petrobras Latin America 8.2x 8.5x 8.7x 1.7x 3.7% 16.5%

Lukoil EMEA 6.6x 5.8x 5.5x 4.4x 3.0% 11.5%

OMV Europe ex UK 10.9x 7.5x 6.1x 1.0x 3.7% 17.8%

PTT Exploration Asia 23.0x 15.5x 13.6x 4.2x 2.0% 5.3%

BG Group UK 18.7x 17.0x 15.9x 3.2x 1.0% 26.8%

10

Focus on enhancing value over long term

• Being right in long term matters more than buying early

• Buying is only the beginning, not end, of company research

• Top-slicing/adding on weakness is main source of turnover

• Actual company name turnover is kept low

We are owners of companies rather than buyers of stocks; we spread risk not by buying more stocks but by constructing a portfolio that invests in many different

businesses

11

FTSE All-Share Index Dividend Rate 12 month percentage change 1985 - 2009

Income challenges for the UK investor

• UK dividends remain under pressure as the shape of contribution changes

-30

-25

-20

-15

-10

-5

0

5

10

15

20

25

30

Percent change

Dec

86

Dec

88

Dec

90

Dec

92

Dec

94

Dec

96

Dec

98

Dec

00

Dec

02

Dec

04

Dec

06

Dec

08

Source: FT; Aberdeen Asset Management

12

Concentration of dividends within the UK market

Source: Morgan Stanley, Factset Mar 10

Stock % of total market dividend

Cumulative contribution to market dividend

Consensus dividend growth 2010(%)

BP 12.3 12.3 -5

Royal Dutch Shell 12.1 24.4 -3

Vodafone Group 7.4 31.8 3

HSBC Holdings 6.4 38.2 -1

GlaxoSmithKline 5.6 43.7 8

BHP Billiton 5.3 49.1 -5

AstraZeneca 3.8 52.8 4

British American Tobacco 3.3 56.1 8

Tesco 1.8 57.9 10

National Grid 1.6 59.9 8

13

Ingredients for income growth

• Same investment process which leads to the construction of the global equity model

• Universe expanded via the inclusion of stocks held within regional income portfolios

• Extended global buy list is screened for those companies with balance sheet strength, robustness of underlying cash flow a willingness to act in a shareholder friendly fashion and consequently the scope to deliver dividend growth

• Target a portfolio yield of 4.0%

• Quest for income orientated opportunities in a truly global capacity

14

Dividend growth from an international portfolio

Source: Bloomberg, Nov 10

StockYield

%Hist 5 year div growth

%Country

Zurich Financial Services 6.8 34 Switzerland

QBE 7.6 15 Australia

Takeda Pharmaceutical 4.6 13 Japan

Kimberly Clark de Mexico 4.1 9 Mexico

Taiwan Semiconductor 4.6 10 Taiwan

Telus 4.1 19 Canada

E.ON 6.6 13 Germany

Singapore Telecom 4.6 13 Singapore

Souza Cruz 4.6 14 Brazil

Novartis 3.8 15 Switzerland

15

Murray International v. Aberdeen World Growth and Income

Source: Aberdeen Asset Management 30 Sep 10

Murray International Aberdeen World Growth and Income

Number of Stocks 60 39

Fixed Income? c10% now Up to 10%

Leverage c10% now No

Yield c3.2% c4.0%

Premium / Discount c6% NAV

• Managed by the same team

• Uses the same investment approach

• All WGI stocks are held in MINT

• WGI could invest up to 10% in Fixed Income securities…but holds zero at present

16

Country/Region 30 Nov 10 (%) MSCI World (%) Accounts relative position (%)

Europe ex UK 30.7 18.9 +11.8

Asia Pacific ex Japan 22.8 6.1 +16.7

United Kingdom 15.9 9.7 +6.2

Latin America 11.7 0.4 +11.3

Japan 6.9 10.0 -3.1

North America 9.8 54.9 -45.1

Cash 2.2 - +2.2

Total 100.0 100.0

Aberdeen World Growth and Income

• Portfolio is diversified from a country/regional perspective, however benchmark has considerable exposure to the USA and no exposure to the emerging markets

Relative country positions

Source: Aberdeen Asset Management, BPSS, Datastream. 30 Nov 10

17

Sector 30 Nov 10 (%) MSCI World (%) Accounts relative position (%)

Energy 16.9 10.6 +6.3

Financials 16.6 19.7 -3.1

Information Technology 5.7 11.9 -6.2

Industrials 1.0 11.2 -10.2

Healthcare 12.3 9.5 +2.8

Utilities 7.5 4.1 +3.4

Consumer Staples 18.5 10.1 +8.4

Telecommunication Services 17.4 4.3 +13.1

Materials 1.9 8.0 -6.1

Consumer Discretionary 0.0 10.6 -10.6

Cash 2.2 - +2.2

Total 100.0 100.0

Aberdeen World Growth and Income

• Portfolio is diversified from a sector perspective

• If we can’t find value we will have zero exposure to a sector

Relative sector positions

Source: Aberdeen Asset Management, BPSS, Datastream. 30 Nov 10

18

• A high conviction portfolio of stocks

• Various businesses spread across sectors and countries from around the world

Aberdeen World Growth and IncomeTop 20 portfolio holdings by market value

Source: Aberdeen Asset Management. 30 Nov 10

Name Country % Name Country %

1 QBE Insurance Australia 3.6 11 Nordea Bank Sweden 3.0

2 Singapore Telecoms Singapore 3.6 12 Taiwan Mobile Taiwan 3.0

3 Zurich Financial Services Switzerland 3.5 13 Johnson & Johnson USA 3.0

4 Vodafone Group UK 3.5 14 Philip Morris USA 3.0

5 Tenaris Italy 3.3 15 Standard Chartered UK 2.9

6 Taiwan Semiconductor Taiwan 3.3 16 Takeda Pharmaceutical Japan 2.6

7 Roche Holdings Switzerland 3.0 17 Souza Cruz Brazil 2.5

8 British American Tobacco UK 3.0 18 Canon Japan 2.5

9 Royal Dutch Shell UK 3.0 19 Kimberley-Clark de Mexico Mexico 2.5

10 ENI Italy 3.0 20 Petrochina China 2.1

Cumulative (%) 59.9

19

Summary

Equities

• Robust investment process

- Consistent across all desks

Regional teams

• Conduct initial due diligence and filtering on stocks for Global equity buy list

• Always meet and interview a company before investing

• Provide company research and ongoing due diligence

Global Equities

• Pick stocks from a concentrated universe of what we believe are ‘best’ ideas from regional teams (Global equity buy list)

• Take advantage of the benefits and opportunities of a flexible universe

• Genuine team effort across all desks

• Concentrated portfolios – we back our judgements

Appendix

21

Quality

• Business prospects/strategyEvidence of industry growth, clear strategy and execution

• Management Motivation, experience and track record: do we trust individuals in charge?

• Financials Strong balance sheet, transparent

• TransparencyClean company structure, visible earnings, annual report

• Commitment to shareholder valueCompany is run for shareholders, not managers or controlling interests

What can you expect to find in our chosen stocks?

Prefer straightforward companies with clear-sighted management

22

Price

• Valuation: Use standard metrics, via P/E ratios, price/cashflow, NAV, dividend yield

• Different criteria depending on sector/industry

• Cross-border and industry comparisons

• Simple forward modelling of each investment using our own forecasts

• Conservative approach, focusing on downside

• Are risks in price? We avoid overpaying

• Relative value as important as absolute given limited number of portfolio names

Risk control AND relative value

Holistic approach – We identify where the value is and which stocks will work for us

23

Global equity team

Martin Connaghan, Investment Manager

Stephen Docherty, Head of Global Equities

Bruce Stout, Senior Investment Manager

Andrew McMenigall, Senior Investment Manager

Stewart Methven, Senior Investment Manager

Jamie Cumming, Senior Investment Manager

Samantha Fitzpatrick, Senior Investment Manager

Ella-Kara Brown, Assistant Investment Manager

Ann Dewar, Senior Portfolio Analyst

Jill Sneddon, Global Trading Coordinator

24

For professional use onlyNot for public distribution

• Investors should be aware that past performance is not a guide to future returns, the value of investments and the income from them can fall as well as rise and investors may get back less than the amount invested

• The views expressed in this presentation should not be construed as advice on how to construct a portfolio or whether to buy, retain or sell a particular investment. The information contained in the presentation is for exclusive use by professional customers/eligible counterparties (ECPs) and not the general public. The information is being given only to those persons who have received this document directly from Aberdeen Asset Management (AAM) and must not be acted or relied upon by persons receiving a copy of this document other than directly from AAM. No part of this document may be copied or duplicated in any form or by any means or redistributed without the written consent of AAM

• Issued and approved by Aberdeen Asset Managers Limited which is authorised and regulated by the Financial Services Authority in the United Kingdom