citywire event presentation oct 13 final updated

69
Investing in equities for income in a low return world Thomas See, Head of Structured Fund Management October 2013 | For professional investors or advisors only *Schroder International Selection Fund is referred to as Schroder ISF throughout this presentation Schroder ISF* Global Dividend Maximiser Schroder ISF European Dividend Maximiser Schroder ISF Asian Dividend Maximiser

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Page 1: Citywire event presentation oct 13 final updated

Investing in equities for income in a low return world

Thomas See, Head of Structured Fund Management

October 2013 | For professional investors or advisors only*Schroder International Selection Fund is referred to as Schroder ISF throughout this presentation

Schroder ISF* Global Dividend MaximiserSchroder ISF European Dividend MaximiserSchroder ISF Asian Dividend Maximiser

Page 2: Citywire event presentation oct 13 final updated

USD3.9bn invested in Maximiser strategies

Schroders’ Maximiser fund rangeTested approach to generating income – range started in 2005

1Schroders' Maximiser range of funds | October 2013

Source: Schroders, All AuM as at 31 August 2013

Three UK AUTs 31/08/13

Schroder Income Maximiser Equity income portfolio investing predominantly in UK equities with covered call overlay $1,550.3m

Schroder Asian Income Maximiser Equity income portfolio investing in Asia (ex Japan) with covered call overlay $324.3m

Schroder Global Property Income Maximiser Globally diversified portfolio of property securities with covered call overlay $140.1m

Two SICAV funds

Schroder ISF European Dividend Maximiser European equity income portfolio (EUR denominated) with covered call overlay $479.8m

Schroder ISF Global Dividend Maximiser Global equity income portfolio (USD denominated) with covered call overlay $792.1m

Schroder ISF Asian Dividend Maximiser Equity income portfolio investing in Asia (ex Japan) with covered call overlay Recently launched

Two segregated mandates for wholesale distribution

Segregated mandates Global REIT portfolio with covered call overlay $298.8m

European equity portfolio with covered call overlay $261.8m

Multi-asset income fund with a monthly distribution (new)

Schroder Managed Monthly High Income Fund of funds investing 50% in Maximiser funds, 50% in fixed income funds $16.6m

Page 3: Citywire event presentation oct 13 final updated

Schroders’ Maximiser two-step strategyDistinctive, high yield funds with an attractive proposition and investor appeal

2

Two layers of fund management, but only one layer of fees

1 The gross target yield quoted is an estimate and is not guaranteed. Schroder ISF Asian Dividend Maximiser applies the same two-step approach but targets 7% p.a.2 Only some upside is sold, in order to preserve the potential for capital growth over the option term

Schroders' Maximiser range of funds | October 2013

7% (Asian) 8% (Global, European) target yield 1

Step 1 Step 2

Dividends from an actively managed equity income

portfolio c. 4.0%1 p.a.

Premium from selling covered call options2

c.4.0%1 p.a.+

Page 4: Citywire event presentation oct 13 final updated

Interest rates may stay low for more years than many think

Financial repression – cash is no longer ‘risk free’

3

A tax on savers and investors to subsidise public debt and economic recovery?

With negative returns after tax and inflation, is cash safe?

Will inflation spike? Path of least resistance to the fiscal debt problem?

Schroders' Maximiser range of funds | October 2013

Source: Schroders, forecasts for interest rates as at 30 September 2013Forecast risk warning: Please refer to the important information slide at the end of this presentation

Schroders’ interest rate forecast

End 2013 End 2014 How long ?

EUR 0.50% since May 2013 0.50% 0.50%

USD 0.25% since Dec 2008 0.25% 0.25% > 2015 ?

GBP 0.50% since Mar 2009 0.50% 0.50% > 2016 ?

Page 5: Citywire event presentation oct 13 final updated

0

2

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8

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16

1980

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2008

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2011

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2013

Germany UK US

Official policy is to depress short and long-term yieldFor risk averse investors, there are fewer opportunities

4Schroders' Maximiser range of funds | October 2013

Source: Datastream., as at 30 September 2013, 10 year government bonds. Forecast risk warning: Please refer to the important information slide at the end of the presentation

(%)

Schroders Global CPI Target 2014

loss making after inflation

quantitative easing

Page 6: Citywire event presentation oct 13 final updated

Not many fixed income securities across the globe offer yields above low single digits at the moment

1.8%0.7%

2.6%2.7%4.3%

7.0%

9.5%

0%

5%

10%

15%

20%

Gree

ce

Portu

gal

Spain

UK US

Germ

any

Japa

n

Schroders' Maximiser range of funds | October 2013

Bond yields are compressed across the quality spectrumHunt for yield is driving-up risk appetite

5

Corporate bond yields

Source: Thomson Datastream & Bloomberg. As at 30 September 2013, *BofAML, **Moodys

Global 10-year government bond yields

2.62%

2.20%

4.61%

4.77%

3.75%

5.36%

0% 2% 4% 6% 8%

Global Large Cap AAA*

Global Large Cap AA*

Corporate AA**

Corporate A**

Global Large Cap BBB*

Global High Yield BB*

Page 7: Citywire event presentation oct 13 final updated

Emerging market bond yields

Source: Schroders; Bloomberg; JP Morgan – Covering period 1992 to 30 August 2013

Schroders' Maximiser range of funds | October 2013 6

Yield %

Persistent cheap money has reduced returns everywhere

0

10

20

30

40

50

60

70

80

90Highest Yield

Lowest Yield

USD Bond Local Currency Bond Last Yield

Bul

garia

Chi

le B

road

Chi

na

Thai

land

Pola

nd

Rus

sia

Sou

th A

frica

Mex

ico

Per

u

Bra

zil

Turk

ey

Indo

nesi

a

Pola

nd

Per

u

Mex

ico

Hun

gary

Indi

a

Indo

nesi

a

Turk

ey

Rus

sia

Bra

zil

Ecua

dor

Mal

aysi

a

Col

ombi

a

Philip

pine

s

Pana

ma

Mal

aysi

a

Col

ombi

a

Ukr

aine

Vene

zuel

a

Sou

th A

frica

Arg

entin

a

Nig

eria

Page 8: Citywire event presentation oct 13 final updated

Current yield versus 10-year average

Equities still yielding near the 10yr averageCheap money and the hunt for yield is working its way across the asset classes

7Schroders' Maximiser range of funds | October 2013

Source: UBS, Bloomberg, MSCI. As at 26 June 2013

(%)

0

1

2

3

4

5

6

Europeandiv yield

USdiv yield

Asiandiv yield

A € corp bond yield (10y)

A $ corp bondyield (10y)

German 10 yrBund yield

US 10yr bondyield

German 3mrates (EUR

Libor)

US 3m rates(USD Libor)

Equities Corporate bonds Government bonds Money markets

Page 9: Citywire event presentation oct 13 final updated

Market contextHigh-dividend-yield stocks compared to high-yield bonds

Page 10: Citywire event presentation oct 13 final updated

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Dec

-90

Dec

-91

Dec

-92

Dec

-93

Dec

-94

Dec

-95

Dec

-96

Dec

-97

Dec

-98

Dec

-99

Dec

-00

Dec

-01

Dec

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Dec

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-04

Dec

-05

Dec

-06

Dec

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Dec

-08

Dec

-09

Dec

-10

Dec

-11

Dec

-12

Yield of high-yield corporate credit vs. dividend yield of ‘quality’ high-yield stocks

Investors paying a premium for the safety of credit assets

9

The yield pickup of high-yield credit is close to record lows

Schroders' Maximiser range of funds | October 2013

Source: Bloomberg, Societe Generale, Schroder analysis. As at 30 September 2013. High-yield corporate credit is represented by the Merrill Lynch HY USD Corporate Bond Index. High-yielding stocks are represented by the Societe Generale Global Quality Income Index, which is available on Bloomberg as SGQINTR Index

Yield gap (%)

Page 11: Citywire event presentation oct 13 final updated

Source: Bloomberg, Societe Generale, Schroder analysis. As at 31 August 2013. High-yield corporate credit is represented by the Merrill Lynch HY USD Corporate Bond IndexHigh-yielding stocks are represented by the Societe Generale Global Quality Income Index, which is available on Bloomberg as SGQINTR Index

Schroders' Maximiser range of funds | October 2013 10

Default rate of high-yield corporate credit

Investors paying a premium for the safety of credit assetsDespite cyclical low default rates

Default rate (%)

0%

2%

4%

6%

8%

10%

12%

14%

16%

Dec

-90

Dec

-91

Dec

-92

Dec

-93

Dec

-94

Dec

-95

Dec

-96

Dec

-97

Dec

-98

Dec

-99

Dec

-00

Dec

-01

Dec

-02

Dec

-03

Dec

-04

Dec

-05

Dec

-06

Dec

-07

Dec

-08

Dec

-09

Dec

-10

Dec

-11

Dec

-12

Page 12: Citywire event presentation oct 13 final updated

Source: Bloomberg, Societe Generale, Schroder analysis, as at 17 September 2013. Bond rating defined as average of Moodys, S&P and Fitch

11

Which investment has the better balance sheet?Very different asset backing

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

AA

A/A

aa

AA

+/A

a1

AA

/Aa2

AA

-/Aa3

A+/

A1

A/A

2

A-/A

3

BB

B+/

Baa

1

BB

B/B

aa2

BB

B-/B

aa3

BB

+/B

a1

BB

/Ba2

BB

-/Ba3

B+/

B1

B/B

2

B-/B

3

CC

C+/

Caa

1

CC

C/C

aa2

CC

C-/C

aa3

CC

/Ca

C/C

NR

/Oth

er

Merrill Lynch Euro High Yield 3% Issuer Constrained Schroder ISF Global Dividend Maximiser

Schroders' Maximiser range of funds | October 2013

Page 13: Citywire event presentation oct 13 final updated

Source: UBS. MSCI Europe dividend paid. As at 31 December 2011

Schroders' Maximiser range of funds | October 2013 12

Dividend income is resilientManagement teams avoid cutting dividends

-60%

-50%

-40%

-30%

-20%

-10%

0%1970s 1980s 1990s TMT 2009

Fall in Earnings Dividend cuts Dividend cuts ex financials

Dividend cuts vs. earnings cuts in five European recessions

Page 14: Citywire event presentation oct 13 final updated

Why invest for yield?To generate total returns!

Page 15: Citywire event presentation oct 13 final updated

High-yielding stocks out-performLong-term evidence from the UK

Cumulative value (log scale)

Based on UK equity market. Source: Elroy Dimson, Paul Marsh and Mike Staunton, Triumph of the Optimists, Princeton University Press, 2002, and updates by the authors in 2012.

Schroders' Maximiser range of funds | October 2013 14

Page 16: Citywire event presentation oct 13 final updated

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

Jun-

90M

ar-9

1D

ec-9

1Se

p-92

Jun-

93M

ar-9

4D

ec-9

4Se

p-95

Jun-

96M

ar-9

7D

ec-9

7Se

p-98

Jun-

99M

ar-0

0D

ec-0

0Se

p-01

Jun-

02M

ar-0

3D

ec-0

3Se

p-04

Jun-

05M

ar-0

6D

ec-0

6Se

p-07

Jun-

08M

ar-0

9D

ec-0

9Se

p-10

Jun-

11M

ar-1

2D

ec-1

2

Q1 Q2 Q3 Q4 Q5 Universe

814 9.5%*

High-yielding stocks out-performLong-term evidence from Europe

15

* Figures show the CAGR.Source: Factset. Schroder analysis. Data taken from constituents of FTSE World Europe and S&P Europe as at 30 June 2013. The data shows relative performance of the different yield quintiles of European stocks since 1989. Note that trading costs are not considered

Schroders' Maximiser range of funds | October 2013

1,242 11.6%*

630 8.3%*525 7.5%*

271 4.4%*196 3.0%*

Page 17: Citywire event presentation oct 13 final updated

Equity investment philosophy

We believe:

High-yielding stocks out-perform, long-term;

Focussing on the drivers of dividends, allows us to identify undervalued businesses;

High-yield equity strategies can outperform in different market environments. We are not bear-

market investors.

We aim:

To outperform the MSCI benchmark index by 300 basis points per annum, gross of fees over a

3-year rolling period;

To deliver gross dividend income 100 basis points above the index.

16Schroders' Maximiser range of funds | October 2013

Improving total returns by focussing on income

Page 18: Citywire event presentation oct 13 final updated

We are honest to our beliefsDiversification within the yield universe

17

Source: Bloomberg. Schroder analysis. European universe: European stocks over EUR 500m market capitalisation. As at 07 October 2013. Weights exclude cash holdings.

Schroders' Maximiser range of funds | October 2013

Schroder ISF European Dividend Maximiser fund weight by European market yield quintile (trailing 12 months) 80% of the Schroder ISF

European Dividend Maximiser is invested in the highest two quintiles of dividend yield

The Schroder ISF Global Dividend Maximiser invests 87% in the highest two quintiles of dividend yield

Lower yielding stocks are held for their dividend growth and total return potential

We will never own a stock without medium-term dividend potential; this means a potential yield of ~5% within 3-5 years.

2%3%

16%

34%

46%

1 2 3 4 5

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0.0%1.0%2.2%3.2%4.7%

Lowest trailing dividend yield within each quintile

Page 19: Citywire event presentation oct 13 final updated

Diversification within the yield universeHigh-dividend indices tend to be sector-concentrated

18Schroders' Maximiser range of funds | October 2013

Source: Thomson Reuters Datastream, Schroders. MSCI Europe High Yield data as at 30 September 2013. Schroder ISF European Dividend Maximiser data as at 30 September 2013.

Schroder ISF European Dividend Maximiser sector exposure %

MSCI Europe High Yield Index sector exposure %

23.8

14.3

12.74.67.62.2

8.2

16.4

9.7

Financials UtilitiesTelecommunication Services Consumer StaplesIndustrials MaterialsConsumer Discretionary EnergyHealth Care Information Technology

21.7

3.5

13.0

8.113.9

5.9

8.4

12.2

13.3

0.6

Page 20: Citywire event presentation oct 13 final updated

Sector exposure (%)

19Schroders' Maximiser range of funds | October 2013

Source: Schroders. Data shown for Schroder ISF European Dividend Maximiser. As at 30 September 2013, ex cash, ex options. *Relative to MSCI Europe.

Relative sector exposure (%)*

-5.8%

-3.3%

-2.2%

-0.9%

-0.5%

0.0%

0.9%

2.1%

2.8%

7.0%

-10% -5% 0% 5% 10%

Consumer Staples

Info Tech

Materials

Consumer Disc

Utilities

Financials

Health Care

Industrials

Energy

Telecoms

Over/Underweight

Diversification does not mean passivitySector exposure driven by fundamental valuation opportunities

21.7

3.5

13.0

8.113.9

5.9

8.4

12.2

13.3

Financials UtilitiesTelecoms Consumer StaplesIndustrials MaterialsConsumer Discretionary EnergyHealth Care Information Technology

Page 21: Citywire event presentation oct 13 final updated

We are not bear-market investorsThe underlying equity book has out-performed in rising markets

Schroders' Maximiser range of funds | October 2013 20

Source: Morningstar. Performance data is based on ‘A’ class shares, bid to bid, net of fees from the 30 November 2010 – 30 September 2013. *Ian Kelly took over portfolio management responsibilities for the fund on the 01/11/2010.

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

Nov-10 Feb-11 May-11 Aug-11 Nov-11 Feb-12 May-12 Aug-12 Nov-12 Feb-13 May-13 Aug-13

= rising market

Relative monthly performance of Schroder ISF European Equity Yield versus MSCI Europe

Page 22: Citywire event presentation oct 13 final updated

Periods to 30 September 2013

Performance versus peersSchroder ISF European Dividend Maximiser & Schroder ISF European Equity Yield

21Schroders' Maximiser range of funds | October 2013

Source: Morningstar. Performance is based on bid to bid, net of fees. The broad peer group rankings are based on ‘A’ shares and are a combination of ‘Europe Equity Income’ ‘Europe Large Cap Blend’, ‘Europe Large Cap Growth’ and ‘Europe Large Cap Value’ funds, domiciled in Luxembourg. *The income peer group rankings are based on ‘A’ class shares and consist of ‘Europe Equity Income’ funds.*Income paid on distribution share class

Performance versus index in € % 1 year 2 years p.a. 3 years p.a. 5 years p.a. Income Paid*

Schroder ISF European Dividend Maximiser, A Acc +16.2 +21.2 +10.3 +6.8 8.0%

MSCI Europe Net TR +18.1 +20.2 +9.0 +6.8

Schroder ISF European Equity Yield, A Acc +20.6 +23.1 +11.4 +7.6 4.0%

Ranking versus income peers* 1 year 2 years p.a. 3 years p.a. 5 years p.a Income Paid*

Schroder ISF European Dividend Maximiser, A Acc 20 / 29 5 / 25 5 / 19 6 / 16 8.0%

Schroder ISF European Equity Yield, A Acc 3 / 29 4 / 25 3 / 19 4 / 16 4.0%

Page 23: Citywire event presentation oct 13 final updated

Periods to 30 September 2013

Performance versus peersSchroder ISF Global Dividend Maximiser and Schroder ISF Global Equity Yield

22

Source: Morningstar. Performance is based on bid to bid, net of fees in USD. The broad peer group rankings are based on ‘A’ class shares, Global Equity; Offshore and International Funds. *The income peer group rankings are based on ‘A’ class shares and consist of ‘Global Equity Income’ funds *Income paid on distribution share class

Schroders' Maximiser range of funds | October 2013

Performance versus index in US$ % 1 year 2 years p.a. 3 years p.a. 5 years p.a. IncomePaid*

Schroder ISF Global Dividend Maximiser, A Acc +10.1 +16.9 +9.2 +6.3 8.0%

MSCI World Net TR +20.2 +20.9 +11.8 +7.8

Schroder ISF Global Equity Yield, A Acc +11.6 +17.6 +9.7 +7.5 4.0%

Ranking versus Income peers* 1 year 2 years p.a. 3 years p.a. 5 years p.a. Income paid*

Schroder ISF Global Dividend Maximiser, A Acc 44 / 52 17 / 43 12 / 31 12 / 26 8.0%

Schroder ISF Global Equity Yield, A Acc 40 / 52 11 / 43 9 / 31 9 / 26 4.0%

Page 24: Citywire event presentation oct 13 final updated

Market context- What is the potential in high-yielding

stocks?

- Is a ‘dividend bubble’ forming?

Page 25: Citywire event presentation oct 13 final updated

Source: Factset, Societe Generale, Schroder analysis. As at 30 September 2013. Universe is constituents of FTSE World Europe Index Stocks are separated into quintiles based on 12-month trailing dividend yield. PE ratio is based on trailing earnings

PE ratio of European stocks in top quintile of dividend yield and market median PE

0

5

10

15

20

25

30

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Top quintile Market Median Top quintile Market Average

24Schroders' Maximiser range of funds | October 2013

No sign of a bubble in European high-yielding stocksHigh-yielding stocks still trading at attractive valuations

Page 26: Citywire event presentation oct 13 final updated

0

5

10

15

20

25

30

35

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Top quintile Market Median Top quintile Market AverageSource: Factset, Societe Generale, Schroder analysis. As at 30 September 2013. Universe is constituents of FTSE United States Index Stocks are separated into quintiles based on 12-month trailing dividend yield. PE ratio is based on trailing earnings

PE ratio of US stocks in top quintile of dividend yield and market median PE

25Schroders' Maximiser range of funds | October 2013

A dividend bubble might be emerging in the USHigh-yielded stocks have lost their P/E discount against the broader market

Page 27: Citywire event presentation oct 13 final updated

0

5

10

15

20

25

30

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Top quintile Market Median Top quintile Market AverageSource: Factset, Societe Generale, Schroder analysis. As at 30 September 2013. Universe is constituents of FTSE Asia Pacific ex Japan Index Stocks are separated into quintiles based on 12-month trailing dividend yield. PE ratio is based on trailing earnings

PE ratio of Asia Pac ex Japan stocks in top quintile of dividend yield and market median PE

26Schroders' Maximiser range of funds | October 2013

Asian high-yielding stocks still at a discountHigher growth reflected in higher valuations

Page 28: Citywire event presentation oct 13 final updated

Why have US investors driven valuations so high?US income investors are limited to a small universe

Source: Societe Generale, 30 August 2013.

Schroders' Maximiser range of funds | October 2013 27

0

10

20

30

40

50

60

70

80

Dec

-04

Jun-

05

Dec

-05

Jun-

06

Dec

-06

Jun-

07

Dec

-07

Jun-

08

Dec

-08

Jun-

09

Dec

-09

Jun-

10

Dec

-10

Jun-

11

Dec

-11

Jun-

12

Dec

-12

Jun-

13

UK US Japan Europe ex UK Asia ex Japan

Fraction of regional market capitalisation with a trailing dividend yield above 4%

Page 29: Citywire event presentation oct 13 final updated

5

10

15

20

25

30

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45

50

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

MSCI Europe S&P500 MSCI Asia-Pac ex Japan

Broad equities look very attractiveAttractive total return potential, as well as income

Source: Thomson Datastream, UBS. Data until 19 August 2013

-10

-5

0

5

10

15

20

25

10–15 15–20 20–25 25–30 30–35

Graham & Dodd P/E MSCI Europe MSCI Europe 1 year average returns by starting G&D PE range 1980–2010

PE x

Schroders' Maximiser range of funds | October 2013 28

Page 30: Citywire event presentation oct 13 final updated

Fundamental valuation drives our regional allocationWe focus where there is greatest opportunity

Schroders' Maximiser range of funds | October 2013 29

-4.2%

-0.7%

2.4%

3.3%

-21.9%

25.3%

-40% -30% -20% -10% 0% 10% 20% 30%

North America

Japan

Asia/Pacific exJapan

UK

EmergingMarkets

Europe ex UK

Over/Underweight

Source: Schroders. Data shown for Schroder ISF Global Dividend Maximiser. As at 30 September 2013, ex cash, ex options. *Relative to MSCI World

Regional exposure (%)Relative regional exposure (%)*

31.5

43.8

11.7

4.64.9

3.5

North America Europe ex UK

UK Asia Pacific ex Japan

Japan Emerging Markets

Page 31: Citywire event presentation oct 13 final updated

Overweight European listings, not European growthTop 20 holdings: Schroder ISF Global Dividend Maximiser

30Schroders' Maximiser range of funds | October 2013

Top 20 holdings Weight (%) Analyst Grading FY1 P/E Yield (%)

Microsoft 3.7 1 12.5 2.7Legal & General 2.4 2 12.6 4.1Deutsche Telekom 2.3 N/A 17.3 6.5Prudential 2.2 2 14.5 2.7

Roche 2.0 2 15.9 3.0Mitsui & Co 2.0 1 6.6 3.0JPMorgan Chase & Co 1.9 2 9.1 2.5Repsol 1.8 2 11.0 5.0Hugo Boss 1.8 N/A 18.7 3.3

Time Warner Cable 1.8 3 17.5 2.3Sanofi 1.7 2 13.9 3.7Novartis 1.7 2 14.8 3.3Deutsche Boerse 1.7 N/A 15.4 3.8Deutsche Post 1.7 N/A 16.0 2.9

CNOOC 1.7 2 8.9 3.6General Electric 1.7 2 14.5 3.2Credit Suisse 1.6 1 11.2 0.4Daimler 1.6 2 11.5 3.8

LyondellBasell Industries 1.6 1 12.2 2.5International Paper 1.6 N/A 13.4 2.7

Source: Schroders/FactSet as at 30/09/13. P/E (FY1) and Yield sourced from FactSet as at 30/09/13. Averages use simple averages

Stock concentration

Number of holdings 72Top 10 holdings 22%Top 20 holdings 38%

Market cap split

Over $20 bn 73%$10 bn to $20 bn 14%$5 bn to $10 bn 5%$1 bn to $5 bn 8%

Characteristics of top 20

20% Graded 150% Graded 25% Graded 30% Graded 425% Not GradedAverage P/E 13.4Average Yield 3.3%

Page 32: Citywire event presentation oct 13 final updated

Schroders' Maximiser range of funds | October 2013

Source: Schroders/FactSet as at 30/09/13. P/E (FY1) and Yield sourced from FactSet as at 30/09/13. Averages use simple averages

High-yielding, international franchisesTop 20 Holdings: Schroder ISF European Dividend Maximiser

Top 20 holdings Weight (%) Analyst Grading FY1 P/E Yield (%)

Deutsche Telekom 4.7 N/A 17.3 6.5

Vodafone 4.7 1 14.2 4.7

Roche 4.3 2 16.9 3.0

Sanofi 3.8 2 13.9 3.7

Novartis 3.6 2 14.8 3.3Total 3.4 2 8.6 5.5BAE Systems 3.3 3 10.6 4.3

Reed Elsevier 3.1 N/A 15.2 3.2

Legal & General 3.1 2 12.6 4.1Ageas 3.1 N/A 9.7 4.0Statoil 3.0 1 9.2 5.0

Tesco 2.9 2 11.3 4.1Swedbank 2.7 1 11.8 6.6SNAM 2.6 N/A 13.6 6.7

ENI 2.6 3 11.9 6.4Wolters Kluwer 2.5 2 12.3 3.6BNP Paribas 2.5 1 10.9 3.0Saint-Gobain 2.5 N/A 19.4 3.4

Swiss Re 2.5 N/A 8.4 4.7DNB 2.4 1 9.9 2.3

Stock concentration

Number of holdings 49Top 10 holdings 35%Top 20 holdings 61%

Market cap split

Over €10 bn 70%€5 bn to €10 bn 18%€1 bn to €5 bn 9%Less than €1 bn 3%

25% Graded 135% Graded 210% Graded 30% Graded 430% Not GradedAverage P/E 12.6Average yield 4.4%

Characteristics of top 20

31

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World leader in semiconductors

Slipped-up by focussing on processor speed instead of power-efficiency

Now focussing on power-saving: R&D budget is 50% of ARM market cap.

New Silvermont chips use half the power of previous generations

According to anandtech.com (May 6th 2013):‘it’s extremely likely that with Silvermont Intel will be able to drive down to far lower power levels than anything we’ve ever measured’

Net cash balance sheet

4% dividend yield, 10% ‘normalised’ FCF yield

Investment thesis

Our latest additionIntel

Source: Graph from Intel, 10 May 2012. Yield data Bloomberg, as at 06 September 2013

Schroders' Maximiser range of funds | October 2013 32

Page 34: Citywire event presentation oct 13 final updated

Equity conclusions

High-yielding stocks have out-performed over the long term; focussing on dividends directs us to profitable sections of the market

The high-yield stock universe has large sector concentrations, we are diversified

We are not bear-market investors, and have provided attractive capital returns, as well as income

We still see attractive valuations in Europe-listed high-yielding stocks, while US-listed high-yielding stocks look expensive

European equities are the also cheapest region globally on a cyclically-adjusted P/E, suggesting attractive totally returns, not just income

33Schroders' Maximiser range of funds | October 2013

Page 35: Citywire event presentation oct 13 final updated

Asian equities

Page 36: Citywire event presentation oct 13 final updated

Asian income opportunities in most markets2013E: Quartile distribution of dividend yield by country

35Schroders' Maximiser range of funds | October 2013

Source: JPMorgan, 12 August 2013Forecast risk warning: Please refer to the important information slide at the end of the presentation

0

1

2

3

4

5

Aus

tralia

Chi

na

Hon

g K

ong

Indo

nesi

a

Kore

a

Mal

aysi

a

Phi

lippi

nes

Sin

gapo

re

Taiw

an

Thai

land

Weighted average Median

(%)

Page 37: Citywire event presentation oct 13 final updated

20

30

40

50

60

70

80

90

100

0

5

10

15

20

25

30

35

40

05 06 07 08 09 10 11 12 13

Trailing earnings Dividend Payout (rhs)

Asian income – comfortable payout ratiosPayout ratios rose as earnings fell

36Schroders' Maximiser range of funds | October 2013

Source: Bloomberg, 30 June 2013

Page 38: Citywire event presentation oct 13 final updated

Foreign debt and equity holdings in Asia2

Expectations for Asian equities subdued – less so for bonds

0%

5%

10%

15%

20%

25%

30%

35%

Debt Equity

1 Source: MSCI, Citi Research, June 2013 2 Source: Emerging Advisors Group, June 2013

Foreign holdings (%, sample avg)

Asian outlook

-3.2

-2.4

-1.6

-0.8

0.0

0.8

1.6

2.4

3.2

-80

-60

-40

-20

0

20

40

60

80

92 94 96 98 00 02 04 06 08 10 12

MSCI AC Asia ex-Japan 6-m forward returnAsia ex-Japan Risk-love (RHS)

Citigroup Asian risk-love indicator1

Euphoric

Distress

Schroders' Maximiser range of funds | October 2013 37

Page 39: Citywire event presentation oct 13 final updated

0%20%40%60%80%

100%120%140%160%180%200%220%240%

Kore

a

Mal

aysi

a

Thai

land

Indo

nesi

a

Phi

lippi

nes

Vie

tnam

Indi

a 19

90

Kore

a

Mal

aysi

a

Thai

land

Indo

nesi

a

Phi

lippi

nes

Vie

tnam

Indi

a 19

90

Pre-Crisis Year 2012

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

Vie

tnam

Thai

land

Mal

aysi

a

Phi

lippi

nes

Indo

nesi

a

Hon

g K

ong

Kore

a

Indi

a 19

90

Chi

na 1

993

Japa

n 19

89

Taiw

an 1

989

Sin

gapo

re

1995-96 2012

Foreign debt metrics (select crisis countries) Current account balance as % of GDP

Most of Asia looks in good shape to weather stormsAsian outlook

Source: DSG Asia, May 2013

370% 1990 695% 1990

External Debt as % Goods & Services Exports

Short Term External Debt as % FX Reserves

Schroders' Maximiser range of funds | October 2013 38

Page 40: Citywire event presentation oct 13 final updated

Portfolio by geography Portfolio by sector

Schroder ISF Asian Dividend Maximiser PortfolioDiversified portfolio by geography and sector

39Schroders' Maximiser range of funds | October 2013

Source: PRISM, as at 30 September 2013, based on un-audited data*Thailand, Indonesia, PhilippinesThe above is for illustrative purposes only and is not a recommendation to buy or sell

Australia 26.0% New Zealand 1.1% HK/China 28.7%

South Korea 6.6% TIP* 8.6% Malaysia 0.9%

Taiwan 13.3% Singapore 11.7% Cash 3.1%

Real Estate 15.1% Banks 15.5%Other Financial 3.9% Consumer Disc 6.4%Telecoms 13.8% Health Care 0.0%Consumer Staples 1.2% Materials 10.8%Energy 3.5% Industrials 13.8%Information Technology 12.9% Utilities 0.0%Cash 3.1%

Malaysia and TIP* not overwritten

Page 41: Citywire event presentation oct 13 final updated

VolatilitySo why are investors cautious about equities?

Page 42: Citywire event presentation oct 13 final updated

Source: Global Financial Data, Thomson Datastream, Schroders, 31 December 2012

193120081937

20021974193019171907

20011973196619571941194019201903

1893189018841876

2000199019811977196919621953194619391934193219291914191319101887188318771873

20112007200519941992198719841978197019601956194819471923191619121911190619021899189618951892188918881882188118751874

20092003199919981996198319821976196719631961195119431942192519241922191919181898189118851880

199719951991198919851980197519551950194519381936192719151904

19581935192819081879

19541933

20112007200519941992198719841978197019601956194819471923191619121911190619021899189618951892188918881882188118751874

1894

Schroders' Maximiser range of funds | October 2013 41

The challengeUnderstanding and accepting equity volatility risk

Distribution of US S&P 500 returns since 1870

1871

20102006200419931988198619791972197119681965196419591952194919441926192119091905190119001897188618781872

20102006200419931988198619791972197119681965196419591952194919441926192119091905190119001897188618781872

2012

1871

20102006200419931988198619791972197119681965196419591952194919441926192119091905190119001897188618781872

20102006200419931988198619791972197119681965196419591952194919441926192119091905190119001897188618781872

2012

-50 -40 -30 -20 -10 0 10 20 30 40 50 60Nominal % total return

Page 43: Citywire event presentation oct 13 final updated

Mean reversion – another way to address volatility?Investing for yield, value and quality plays to mean reversion

Source: Global Financial Data, Thomson Datastream, Schroders, 31 December 2012

193120081937

20021974193019171907

20011973196619571941194019201903

1893189018841876

2000199019811977196919621953194619391934193219291914191319101887188318771873

2011200720051994199219871984197819701960195619481947192319161912191119061902189918961895

1894

1892188918881882188118751874

201020062004199319881986197919721971196819651964195919521949194419261921190919051901190018971886187818721871

20092003199919981996198319821976196719631961195119431942192519241922191919181898189118851880

199719951991198919851980197519551950194519381936192719151904

19581935192819081879

19541933

-50 -40 -30 -20 -10 0 10 20 30 40 50 60Nominal % total return

2001

2000

20021974

1975

2003

1931

1930

42

2012

Schroders' Maximiser range of funds | October 2013

Page 44: Citywire event presentation oct 13 final updated

2012

Understanding and accepting equity volatility riskDistribution of US S&P 500 returns since 1870

Source: Global Financial Data, Thomson Datastream, Schroders, 31 December 2012

193120081937

20021974193019171907

20011973196619571941194019201903

1893189018841876

2000199019811977196919621953194619391934193219291914191319101887188318771873

20112007200519941992198719841978197019601956194819471923191619121911190619021899189618951892188918881882188118751874

201020062004199319881986197919721971196819651964195919521949194419261921190919051901190018971886187818721871

20092003199919981996198319821976196719631961195119431942192519241922191919181898189118851880

199719951991198919851980197519551950194519381936192719151904

19581935192819081879

19541933

-50 -40 -30 -20 -10 0 10 20 30 40 50 60Nominal % total return

2007

2008

2009

2010

2011

1894

Invest for longer periods to reduce the volatility of outcomes

1974

1973

1977

1978

1976

1975

43

20062005

2002

2003

2004

2001

2000

1999

1997

19981996

1995

1994

1993

2012

Schroders' Maximiser range of funds | October 2013

Page 45: Citywire event presentation oct 13 final updated

2012

Understanding and accepting equity volatility riskUnderstanding mean reversion

Source: Global Financial Data, Thomson Datastream, Schroders, 31 December 2012

193120081937

20021974193019171907

20011973196619571941194019201903

1893189018841876

2000199019811977196919621953194619391934193219291914191319101887188318771873

20112007200519941992198719841978197019601956194819471923191619121911190619021899189618951892188918881882188118751874

201020062004199319881986197919721971196819651964195919521949194419261921190919051901190018971886187818721871

20092003199919981996198319821976196719631961195119431942192519241922191919181898189118851880

199719951991198919851980197519551950194519381936192719151904

19581935192819081879

19541933

-50 -40 -30 -20 -10 0 10 20 30 40 50 60Nominal % total return

2007

2008

1894

44

fear?

the case for confidence?

This is NORMAL behaviour

Schroders' Maximiser range of funds | October 2013

Page 46: Citywire event presentation oct 13 final updated

The Maximiserstrategy

Page 47: Citywire event presentation oct 13 final updated

Schroders’ Maximiser strategyExchanging some uncertain potential gain for a regular income

Schroders' Maximiser range of funds | October 2013

Potential capital growth that is sold for upfront payment*

Initial equity value

We retain the first amount of potential capital growth

Dividend income: circa 4% p.a.**

Option premium: circa 4% p.a.**

8% yield p.a.**We repeat this process on a rolling 3 monthly basisThe repeated application of the overlay over three-monthly periods will increase the income paid to investors and reduce volatility, but there is the potential the performance or capital value may be eroded* Only some upside is sold, in order to preserve the potential for capital growth over the option period **The gross target yield quoted is an estimate and is not guaranteed. Please note, Schroder ISF Asian Dividend Maximiser targets a distributable income of 7% per annum.

46

100%100%

Sto

ck p

rice

Strike price

Page 48: Citywire event presentation oct 13 final updated

What can investors expect?

47Schroders' Maximiser range of funds | October 2013

1 This is the weighted average based on the individual strike prices if all stocks are overwritten. Maximum growth is an indication only, based on an equity market cycle, and may change.

Likely fund performance– Strongly rising stocks – likely to underperform– Gently rising, flat or declining stocks – potential to outperform

The strategy involves the repeated application of the overlay over three-monthly periods which will increase the income paid to investors and reduce volatility, but there is the potential the performance or capital value may be eroded

To get 8% income, maximum capital gain on any individual stock in the portfolio is expected to be around 10% on average1 per three-month option term across a market cycle –sacrificing some potential growth enables us to boost the income available

Page 49: Citywire event presentation oct 13 final updated

Schroder ISF European Dividend MaximiserA stable, enhanced yield with less volatility

Yield amount distributed per EUR 1,000 invested from 5/10/07, being launch date of Schroder ISF European Dividend Maximiser

Funds selection shown in the chart comprises: BNL Azioni Europa Dividendo; UniDividendenAss A; BNP Paribas Comfort Equity High Dividend Europe; Allianz RCM High Dividend Discount - A – EUR; Henderson Horizon Pan European Dividend Equity Fund; Deka-DividendValue Europa CF; Parvest Equity High Dividend Europe; 8. Dexia Equities L - Europe High Dividend; HI-DividendenPlus Europa-Fonds; Lyxor ETF DJ Stoxx Select Dividend 30; iShares DJ STOXX Select Dividend 30 (DE). Source: Bloomberg , as at 31 March 2013

48Schroders' Maximiser range of funds | October 2013

Page 50: Citywire event presentation oct 13 final updated

Example: Auction conducted 21 March 2013 for Schroder ISF European Dividend Maximiser

Risk controlSale of call options via competitive auction – we select the highest prices

No counterparty risk – cash settlement two days after trading

No leverage employed – we never sell potential upside unless we own the underlying stock

Source: Schroders, 31July 2013

Notional amount overwritten was 39.4% of NAV

Stock Counterparty A Counterparty B Counterparty C Counterparty D Price on expiry

Option premium

BNP Paribas 109.00% 110.70% 107.73% 108.00% 99.46% 1.80%

Solvay 107.30% 108.25% 106.51% 107.00% 99.95% 1.60%

Ageas 105.80% 105.45% 103.49% 105.50% 106.61% 1.60%

Swedbank 107.10% 107.43% 106.63% 108.25% 101.43% 1.20%

St Gobain 106.00% 106.80% 105.11% 106.00% 104.12% 1.80%

49Schroders' Maximiser range of funds | October 2013

Page 51: Citywire event presentation oct 13 final updated

Strike price set at 110.70% on 21/03/13 for 1.80% premium

The Maximiser overlayExample: BNP Paribas in Schroder ISF European Dividend Maximiser

Source: Schroders, share price up to 31 July 2013. Stock examples are for illustrative purposes only and are not a recommendation to buy or sell

Schroders' Maximiser range of funds | October 2013 50

Option expires without payment to counterparty

Page 52: Citywire event presentation oct 13 final updated

Stock purchased

The Maximiser overlayExample: BNP Paribas in Schroder ISF European Dividend Maximiser

Source: Schroders, share price up to 30 September 2013 Stock examples are for illustrative purposes only and are not a recommendation to buy or sell

Schroders' Maximiser range of funds | October 2013 51

21/3/13

Page 53: Citywire event presentation oct 13 final updated

The Maximiser overlayExample: BMW in Schroder ISF Global Dividend Maximiser

Source: Schroders, share price up to 30 August 2013 *Contributions based on portfolio return, calculated internally, unaudited and gross of fees, as at 30 August 2013. Stock examples are for illustrative purposes only and are not a recommendation to buy or sell

52

Stock purchased

Schroders' Maximiser range of funds | October 2013

Stock price capped by options in some trades during this year’s rally

Total equity return in 2013 so far (to 31 Aug) of 17%

Total contribution to portfolio performance in 2013 so far (to 31 Aug): +0.25%*

Contribution due to options in 2013 so far (to 31 Aug): 0.00%*

Page 54: Citywire event presentation oct 13 final updated

Source: Schroders, 30 September 2013, in EUR. The target yield quoted is an estimate and not guaranteed. *The yield is calculated by dividing the quarterly distribution by the unit price on the record date (which is the day prior to the ex-dividend date)Note: change of accounting date affects line end Q4 2011 and Q1 2012

Schroder ISF European Dividend Maximiser Income and price history – A Distribution shares

Price on record date* (EUR) EUR per unit

Distribution is a function of capital value

Schroders' Maximiser range of funds | October 2013 53

Page 55: Citywire event presentation oct 13 final updated

USD per unitPrice on record date* (USD)

Schroder ISF Global Dividend Maximiser Income and price history – A Distribution shares

Source: Schroders, 30 September 2013, in USD. The target yield quoted is an estimate and not guaranteed. *The yield is calculated by dividing by the quarterly distribution by the unit price on the record date (which is the day prior to the ex-dividend date).** Increased payment in March 2012 accounts for reduced payment in Q4 2011 as a result of a change in accounting date.

Distribution is a function of capital value

**

Schroders' Maximiser range of funds | October 2013 54

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Comparable fund, Schroder Asian Income Maximiser, has delivered yield to target since launch

Schroder ISF Asian Dividend MaximiserTarget 7%1 distribution, payable monthly

Schroder ISF Asian Dividend Maximiser will distribute monthly– Monthly yield calculated as amount distributed per month divided by the price at the end of the month– Annual yield calculated as the simple sum of the 12 monthly yields

55Schroders' Maximiser range of funds | October 2013

Source: Schroders, 8 August 2013. 1 The target yield quoted is an estimate and not guaranteed. Price and distribution shown are for A Income units of Schroder Asian Income Maximiser. The yield is calculated by dividing the quarterly distribution by the fund price from the ex-dividend date at the beginning of the quarter. The annual yield is the simple sum of four quarterly yields. **Annualised – the first year only includes two payments covering the 7 month period from launch on 1 June 2010 to end December 2010.

0

1

2

3

4

5

6

0

10

20

30

40

50

60

70

Dec 09 Dec 10 Dec 11 Dec 12

Quarterly mid-price, GBP (lhs) ppu (rhs)

7.60%** 7.75% 7.50%

Pence per unit

Page 57: Citywire event presentation oct 13 final updated

Distinctive, high yield funds with an attractive proposition and investor appeal

Two sources of yield, independent of interest rates

Summary

56Schroders' Maximiser range of funds | October 2013

Equities, and European equities in particular, offer extremely attractive yields in comparison to other asset classes

Sale of some, but not all the potential upside on a rolling 3-month basis to obtain extra yield (>~110% depending on level of volatility)

Only potential upside of actual holdings is sold – the fund only ever sells what it owns

Competitive auction process, with no broker or extra fund management charges

No counterparty risk

Maximiser fund range started in 2005, now with USD 3.9 billion* under management

Distinctive funds with a high target yield

* As of 31 August 2013

Page 58: Citywire event presentation oct 13 final updated

AppendixVolatility - where does it come from?

Page 59: Citywire event presentation oct 13 final updated

Where does the volatility come from?Example: Proctor & Gamble

Source: Based on Bloomberg data, PG UN Equity, 31 December 2009 – 31 December 2011Securities shown are for illustrative purposes only and not a recommendation or buy or sell

US dollar

50

52

54

56

58

60

62

64

66

68

70

01/2010 04/2010 06/2010 09/2010 12/2010 03/2011 06/2011 09/2011 12/2011

Schroders' Maximiser range of funds | October 2013 58

Page 60: Citywire event presentation oct 13 final updated

4.0%3.5%3.0%2.5%2.0%1.5%1.0%

0.0%0.5%

-0.5%-1.0%-1.5%-2.0%-2.5%-3.0%-3.5%-4.0%

What exactly is volatility?Proctor & Gamble daily price changes

01/2010 04/2010 06/2010 09/2010 12/2010 03/2011 06/2011 09/2011 12/2011

%

Source: Based on Bloomberg data, PG UN Equity, 31 December 2009 – 31 December 2011

Schroders' Maximiser range of funds | October 2013 59

Page 61: Citywire event presentation oct 13 final updated

What exactly is volatility?Proctor & Gamble daily price changes

%4.0%3.5%3.0%2.5%2.0%1.5%1.0%

0.0%0.5%

-0.5%-1.0%-1.5%-2.0%-2.5%-3.0%-3.5%-4.0%

Source: Based on Bloomberg data, PG UN Equity, 31 December 2009 – 31 December 2011

Schroders' Maximiser range of funds | October 2013 60

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-4.0% -3.5% -3.0% -2.5% -2.0% -1.5% -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0%

A familiar pattern emergesProctor & Gamble daily price changes

%4.0%3.5%3.0%2.5%2.0%1.5%1.0%

0.0%0.5%

-0.5%-1.0%-1.5%-2.0%-2.5%-3.0%-3.5%-4.0%

Source: Based on Bloomberg data, PG UN Equity, 31 December 2009 – 31 December 2011

Schroders' Maximiser range of funds | October 2013 61

Page 63: Citywire event presentation oct 13 final updated

-4.0% -3.5% -3.0% -2.5% -2.0% -1.5% -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0%

This is no coincidenceWe don’t have to wait 140 years to observe the emerging pattern

Source: Market data from Global Financial Data, Thomson Datastream, Schroders, 31 December 2012. Stock data: Bloomberg, PG UN Equity, 31 December 2009 – 31 December 2011

193120081937

20021974193019171907

20011973196619571941194019201903

1893189018841876

2000199019811977196919621953194619391934193219291914191319101887188318771873

2011200720051994199219871984197819701960195619481947192319161912191119061902189918961895

1894

1892188918881882188118751874

201020062004199319881986197919721971196819651964195919521949194419261921190919051901190018971886187818721871

20092003199919981996198319821976196719631961195119431942192519241922191919181898189118851880

199719951991198919851980197519551950194519381936192719151904

19581935192819081879

19541933

Schroders' Maximiser range of funds | October 2013 62

2012

Page 64: Citywire event presentation oct 13 final updated

The distribution stretches with timeBy trading small amounts daily you can trade the final outcome

Source: Global Financial Data, Thomson Datastream, Schroders, 31 December 2012

193120081937

20021974193019171907

20011973196619571941194019201903

1893189018841876

2000199019811977196919621953194619391934193219291914191319101887188318771873

20112007200519941992198719841978197019601956194819471923191619121911190619021899189618951892188918881882188118751874

201020062004199319881986197919721971196819651964195919521949194419261921190919051901190018971886187818721871

20092003199919981996198319821976196719631961195119431942192519241922191919181898189118851880

199719951991198919851980197519551950194519381936192719151904

19581935192819081879

19541933

-50 -40 -30 -20 -10 0 10 20 30 40 50 60Nominal % total return

1894

63

2012

Schroders' Maximiser range of funds | October 2013

Page 65: Citywire event presentation oct 13 final updated

Schroders’ Maximiser strategy

Step 2: Enhancing the yield by selling some of the potential upside

Source: Based on Bloomberg data, PG UN Equity, 31 December 2009 – 31 December 2012

Step 1: Investing in an actively managed equity portfolio for the asset return

A two-step strategy

64Schroders' Maximiser range of funds | October 2013

Page 66: Citywire event presentation oct 13 final updated

Drivers of recent Global equity portfolio performance

Page 67: Citywire event presentation oct 13 final updated

95

100

105

110

115

120

125

Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13

STXE 600 ($) STXE 600 € S&P 500

S&P 500 vs Stoxx Europe 600Divergence since end of January 2013

Schroders' Maximiser range of funds | October 2013

Source: Thomson Datasream. 30 September 2013. Information: Total Return index used.

66

Page 68: Citywire event presentation oct 13 final updated

100

102

104

106

108

110

112

114

116

118

120

Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13

MSCI World Schroder ISF Glbl Eq Yield A

Recent fund performance: Schroder ISF Global Equity YieldYear to date to 30 September 2013

Schroders' Maximiser range of funds | October 2013

Source: Morningstar. Performance data is based on ‘A’ class shares, bid to bid, net of fees, In USD.

67

Page 69: Citywire event presentation oct 13 final updated

Important InformationThe views and opinions contained herein are those of Thomas See and Ian Kelly, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds.

Important Information:This presentation does not constitute an offer to anyone, or a solicitation by anyone, to subscribe for shares of Schroder International Selection Fund (the “Company”). Nothing in this document should be construed as advice and is therefore not a recommendation to buy or sell shares. Subscriptions for shares of the Company can only be made on the basis of its latest Key Investor Information Document and prospectus, together with the latest audited annual report (and subsequent unaudited semi-annual report, if published), copies of which can be obtained, free of charge, from Schroder Investment Management (Luxembourg) S.A. An investment in the Company entails risks, which are fully described in the prospectus.Past performance is not a reliable indicator of future results, prices of shares and the income from them may fall as well as rise and investors may not get the amount originally invested.

Any forecasts in this document 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.

Risk considerations:The capital is not guaranteed. The fund intends to make regular yield payments to investors and, if its income is insufficient to cover these payments, these payments may reduce the fund's capital. Investments denominated in a currency other than that of the share-class may not be hedged. The market movements between those currencies will impact the share-class. The Fund will not hedge its market risk in a down cycle. The value of the fund will move similarly to the markets. The derivative strategy is applied repeatedly over three-monthly periods. This strategy will increase the income paid to investors and reduce the volatility of returns, but there is the potential the performance or capital value may be eroded.

Third party data is owned or licensed by the data provider and may not be reproduced or extracted and used for any other purpose without the data provider's consent. Third party data is provided without any warranties of any kind. The data provider and issuer of the document shall have no liability in connection with the third party data. The Prospectus and/or www.schroders.com contains additional disclaimers which apply to the third party data.

FTSE International Limited (“FTSE”) © FTSE (2013). “FTSE®” is a trade mark of London Stock Exchange Plc and The Financial Times Limited and is used by FTSE International Limited under licence. All rights in the FTSE indices and / or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and / or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

This presentation is issued by Schroder Investment Management Ltd., 31, Gresham Street, EC2V 7QA, who is authorised and regulated by the Financial Conduct Authority. For your security, all telephone calls are recorded.

Schroders' Maximiser range of funds | October 2013 68