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Matthew Dobbs, Fund Manager

Disruption in AsiaSelect 2018

June 2018

1

Source: http://newatlas.com/chinese-one-ton-delivery-drone/49637/Company information is sourced from the respective company website.Stocks shown are for illustrative purposes only and should not be viewed as a recommendation to buy or sell.

Asian outlook“Chinese retail giant building one-ton delivery drones”

Tencent – Weichat/Weixin –over 1 billion monthly users

Alibaba – Money Market Fund US$230bn – bigger than J.P.MorganChase US Government Bond Fund

HDFC Bank – 14 million PayZapp users –half do not have a bank account

Go-Jek – 100,000,000 transactions per month (4th quarter 2017)

Asian outlook

2

Young(ish) men in chinos

Jack Ma, Executive Chairman, Alibaba

Robin Li, CEO of Baidu

Pony Ma, CEO of Tencent

Asian outlook

3

18th century fishwives

Source: www.wsj.com, April 10, 2018

Apr 10, 2018 at 5:55 pm ET

Facebook Is an 'Only in America' Story... Right?

America-focused lawmakers and globally minded Facebook CEO Mark Zuckerberg don't always see eye-to-eye on the world order

When Sen. Dan Sullivan (R., Alaska) said Facebook's meteoric rise from a startup in a dorm room seemed like an "Only in America" story, Mr. Zuckerberg demurred

"You couldn't do this in China, right?" Sen. Sullivan asked

"Well, senator, there are some very strong Chinese internet companies," Mr. Zuckerberg responded

The moment, which Sen. Sullivan said was meant to be a complimentary levity, was lost in translation

"Come on, I'm trying to help you," Sen. Sullivan said. "Give me a break; you're in front of a bunch of senators. The answer is yes“

Lawmakers and the audience laughed

Asian outlook

4

The power of disruption

Past performance is not a guide to future performance and may not be repeated.Source: visualcapitalist.com. Yahoo Finance (peak value in 2006), Google Finance (values for December 30, 2016). Securities shown are for illustrative purposes only and should not be viewed as a recommendation to buy or sell.

How the value of companies has changed over last 10 years

Company MV 2006 (US$bn)

MV 2016 (US$bn) % Change Number of

employees

Sears 27.8 1.1 -96 178,000

JCPenney 18.1 2.6 -86 108,000

Nordstrom 12.4 8.3 -33 72,500

Kohl’s 24.2 8.8 -64 140,000

Macy’s 24.2 11.0 -55 158,000

Best Buy 28.4 13.2 -54 125,000

Target 51.3 40.6 -21 341,000

Walmart 241.0 212.4 -1 2,100,000

Amazon 17.5 355.9 +1,934 267,000

Asian outlook

5

Demographics - but not as we know it

Source: www.whyMillennialsmatter.com, Macquarie Research, July 2017

Who are the millennials?

Asian outlook

6

US millennials generally still act like their parents

Source: CLSA. www.sutori.com, www.billboard.com.

Asian outlook

7

Young Chinese share very little common experience with their parents

Source: CLSA. www.nytimes.com, www.chinainternetwatch.com

Asian outlook

8

Hope…

Source:1http://uk.businessinsider.com/trump-trade-policy-lead-to-global-recession-2016-11?r=US&IR=T November 2016. 2WIN/GALLUP Annual Global Survey 2016.

Developed Markets’ middle and lower-middle income families have not benefitted from global growth over the past two decades1 Global survey results2

Next year will be better

Economic prosperity will

improve

Happy or unhappy

Average of all three

18-34 vs>55s

China +56 +34 +60 +50 +22

India +55 +54 +42 +50 +60

Indonesia +38 +17 +75 +44 +35

Thailand +29 +9 +63 +34 +20

South Korea -31 -62 +40 -18 -7

Hong Kong -34 -56 +14 -25 =

United States +11 -2 +48 +19 -3

Germany +6 -24 +46 +9 -15

Japan +7 -17 +55 +15 -21

UK +4 -38 +47 +4 -7

Asian outlook

9

India - the young are in charge

Source: Morgan Stanley. April 2017.

Millennials in India are rich compared to their parents and grandparents

57% of working millennials are already the chief wage earners in the family

As incomes rise, product/brand loyalty may decrease across categories

Index

70

80

90

100

110

120

Phili

ppin

es

Mal

aysia

Indo

nesia

Chin

a

Indi

a

Thai

land

S. K

orea U

K

Sing

apor

e

Aust

ralia

Fran

ce

USA

Indexed Millennial Gross IncomeGross income of older population (100)

57

26

43

74

0 20 40 60 80 100

WorkingMillennials

Total

Yes No

0

10

20

30

40

50

60

15,001–25,000

25,001–35,000

More than35,000

Never Just once or twice A few times

Asian outlook

10

China’s young online shoppers are leaving the US in their trail

Source: CLSA, Euromonitor, iResearch, US Department of Commerce, October 2017

China and USA online retail sales China online shopper by age

0

5

10

15

20

25

30

35

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016USA online retail sales as % of total retail sales

China online retail sales as % of total retail sales

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

19 to 30 31 to 40 41 to 50 51 or above

China online shopper by age 2015

%

Asian outlook

11

Astonishing pace of change

Source: CB Insights, Roland Berger, September 2016.

Would you be interested in an automated driving function in 90% of everyday situations?

USA China

0

10

20

30

40

50

60

70

80

90

100

< 25 26 – 40 41 – 55 > 56

Yes No

0

10

20

30

40

50

60

70

80

90

100

< 25 26 – 40 41 – 55 > 56

Yes No(Age range) (Age range)

Asian outlook

12

Build - and they will come

Source: ITU, InternetWorldStates, UN, US Census Bureau, wearesocial.com, Macquarie Research, July 2017. Regions shown are for illustrative purposes only and are not a recommendation to buy or sell.

Regional internet penetrationInternet penetrationInternet users, millions

0%

20%

40%

60%

80%

100%

0

200

400

600

800

1000

East Asia South Asia Africa West Europe NorthAmerica

East Europe SoutheastEurope

SouthAmerica

Middle East CentralAmerica

Oceania Central Asia

Internet Users (M) Internet penetration (%), rhs

Asian outlook

13

Asian outlook

14

Brains vs. brawn

Source: 1World Bank, OECD, Macquarie Research, April 2016. 2Patsnap, February 2017. Regions shown are for illustrative purposes only and should not be viewed as a recommendation to buy or sell.

R&D spending as a % of GDP1 Number of patents filed2 Share of global patents filed2

2000 2008 2012Korea 2.3% 3.3% 3.7%Japan 3.0% 3.4% 3.4%Taiwan 2.0% 2.8% 3.1%US 2.8% 2.8% 2.8%Germany 2.5% 2.6% 2.8%France 2.2% 2.0% 2.3%Singapore 1.5% 2.3% 2.2%Australia 1.6% 2.2% 2.2%China 0.9% 1.5% 2.0%Canada 1.9% 1.8% 1.9%UK 1.8% 1.9% 1.8%Spain 0.9% 1.4% 1.3%Italy 1.1% 1.2% 1.3%Russia 1.1% 1.0% 1.3%Brazil 1.0% 1.1% 1.2%India 0.8% 0.9% 0.9%Hong Kong 0.5% 0.7% 0.8%South Africa 0.8% 0.9% 1.0%Turkey 0.5% 0.7% 0.9%Malaysia 0.5% 0.7% 0.8%Mexico 0.4% 0.4% 0.5%Thailand 0.3% 0.3% 0.3%Egypt 0.2% 0.2% 0.1%Philippines 0.1% 0.1% 0.1%Indonesia 0.1% 0.1% 0.1%

(Thousands)

0

50

100

150

200

250

Dec

85

Dec

88

Dec

91

Dec

94

Dec

97

Dec

00

Dec

03

Dec

06

Dec

09

Dec

12

Americas APAC ex. Japan

Japan EU

Eastern Europe LATAM

Middle East and Africa

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Dec

85

Dec

88

Dec

91

Dec

94

Dec

97

Dec

00

Dec

03

Dec

06

Dec

09

Dec

12

Americas APAC ex. Japan

Japan EU

Eastern Europe LATAM

Middle East and Africa

(%)

Asian outlook

15

Who needs Trump?

Source: 1Thomson Reuters Datastream 2Global Times, CLSA, May 21, 2018

Increasing numbers of Chinese students returning home1 Increasing numbers of Chinese students returning home2

350,000

360,000

370,000

380,000

390,000

400,000

410,000

420,000

430,000

440,000

2013 2014 2015 2016

Chinese students returning home

Asian outlook

16

We’re after you

Source: www.wsj.com, CLSA Research, PWC CB Insights Money Tree Report Q4, 2017. May 21, 2018

2017 investing: China catches up to the US in VC funding

China$71B invested +2,800 deals

50% YoY

Europe$18B invested +2,400 deals

40% YoY

United States$74B invested +5,300 deals

17% YoY

Asian outlook

17

The challenge to California

Source: Best of AI Journals and Conferences. Keith Woolcock – 5th Column

Artificial Intelligence Research

(%)

Chinese Authors of Research as % of Total

Citations for Chinese Research as % of total

23.29

42.89

25.5

55.8

0

10

20

30

40

50

60

70

80

90

100

2008 2015 2008 2015

Asian outlook

18

Asia’s growing role in the world markets

Source: CLSA. April 2018. Securities shown are for illustrative purposes only and should not be viewed as a recommendation to buy or sell.

Company Valuation, US$bn Headquarters Industry

Ant Financial 75 Hangzhou Internet Finance

Didi Chuxing 54 Beijing Auto & Transportation

Xiaomi Inc 46 Beijing Industrial & Manufacturing

Aliyun 39 Hangzhou Cloud Services

Meituan-Dianping 30 Beijing Ecommerce

Contemporary Amperex Technology (CATL) 20 Ningde New energy vehicles

Jinri Toutiao 20 Beijing New media

Cainiao Network 20 Hangzhou Logistics

Lufax 18.5 Shanghai Internet Finance

Jiedaibao 10.7 Beijing Internet Finance

China’s unicorns

Asian outlook

19

You may be hearing more about them

Cheng Wei, CEO of Didi Chuxing

Lei Jun, CEO of xiaomi inc

Eric Jing,CEO of Ant Financial

Asian outlook

20

Grey chaps in suits

Wang Qishan Liu He

Asian outlook

21

Stimulus definitely on the wane in China

Source: TS Lombard. February 2018.*Non Bank Financial Institutions (NBFI), Gross Domestic Product (GDP)Countries mentioned are for illustrative purposes only and are not a recommendation to buy or sell.

Banks' claim on NBFI*, RMB trn Credit growth vs nominal GDP* growth

-20

-10

0

10

20

30

40

50

60

70

80

90

0

5

10

15

20

25

30

2010 2011 2012 2013 2014 2015 2016 2017 2018

Banks' claim on NBFI Growth rate, yoy, RHS

0%

10%

20%

30%

40%

2010 2011 2012 2013 2014 2015 2016 2017 2018

Gap Total credit growth Nominal GDP growth

Asian outlook

22

What might support the Chinese economy?

Source: Credit Suisse, January 2018. Countries mentioned are for illustrative purposes only and are not a recommendation to buy or sell. The forecast should be regarded as illustrative of trends. Actual figures will differ from forecasts. Please refer to the important information slide at the end of this presentation.

China – working age population China real wages versus productivity

-15%

-10%

-5%

0%

5%

10%

15%

20%

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

2020

2025

2030

2035

2040

2045

2050

Working age population (15-59), 5y% chg

Projected

5%

6%

7%

8%

9%

10%

11%

12%

13%

14%

1994 1999 2004 2009 2014

China productivity growth (%, yoy) China real wage growth (%, yoy)

Asian outlook

23

Summary

Source: Schroders

Perhaps the active stock picker has a future

The new era Disruption/Demographics/Inno

vation

The new phaseAttractive stage in capital cycle

RisksGlobal growth, China’s tricky

adjustment, US strategic thrust

Thank you

25

For professional investors and advisers only.

Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested

Schroders has expressed its own views and these may change. The data contained in this document has been sourced by Schroders and should be independently verified before further publication or use. This presentation is intended to be for information purposes only and it is not intended as promotional material in any respect

The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but Schroder Unit Trusts Limited (Schroders) does not warrant its completeness or accuracy. No responsibility can be accepted for error of fact or opinion. This does not exclude or restrict any duty or liability that Schroders has to its customers under the Financial Services and Markets Act 2000 (as amended from time to time) or any other regulatory system. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions

The forecasts included should not be relied upon, are not guaranteed and are provided only as at the date of issue. Our forecasts are based on our own assumptions which may change. We accept no responsibility for any errors of fact or opinion and assume no obligation to provide you with any changes to our assumptions or forecasts. Forecasts and assumptions may be affected by external economic or other factors

Issued in June 2018 by Schroder Unit Trusts Limited, 31 Gresham Street, London EC2V 7QA. Registered No. 4191730 England. Authorised and regulated by the Financial Conduct Authority. ASI00304

Disclaimer