15 March 2011

The north-eastern region of Japan was hit by a major offshore earthquake shortly before 3pm on
Friday, 11th March 2011, with the epicenter approximately 400km from Tokyo. With a magnitude now
upwardly revised to 9.0. It was the worst in the world since 2004, and ranked 5th globally since
reliable recording began in 1900. We are told that the earth’s axis shifted by 25cm and the main
island of Honshu moved by 2.4m.

Here are some thoughts from our Japanese Equity team, covering the immediate and potential long
term economic impact of this disaster, as well as the short term impact on the Henderson Horizon
Fund - Japanese Equity Fund.

• While the Japanese stockmarket has fallen sharply and may remain volatile near-term it is
interesting to note that the yen and the Japanese government bond market have been relatively
stable. This might signify that Japan’s predicament is just that rather than initiating a contagion.
While the sell-off within the market has the hallmarks of knee-jerk reactions it may be that the worst
of individual stock movements have been seen.

• Henderson Horizon Fund - Japanese Equity Fund: From a portfolio perspective the falls in stock
prices have been widespread and somewhat indiscriminate. Encouragingly the market has traded
large volumes over the past couple of days and rallied intra-day on the 15 March signifying perhaps
that stock prices are attempting to bottom. The index has fallen by close to 20% since the
earthquake struck. Whilst stocks are now very cheap and are tempting to buy, their attraction is
qualified by the potential for further aftershocks and radioactive leaks which at this point are difficult
to quantify.

• The earthquake will change the shape but hopefully not the direction of recovery. Profit progression
will be dented near term along with economic activity but both should recover strongly thereafter on
increased government spending and through efforts by companies to get operations back up and
running. The Bank of Japan are already playing an active role in providing abundant liquidity to the
markets. Politicians have buried their differences as they all have reason to focus their efforts on
the economy.

Henderson Japanese Equity Team, 15 March 2011

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Date of issue: 15 March 2011