[PPT] - Schroder ISF* Global Corporate Bond Portfolio positioning & PowerPoint Presentation

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For professional advisors only. Not suitable for retail clients. *Schroder International Selection Fund is referred to as Schroder ISF

Schroder ISF* Global Corporate Bond

Portfolio positioning & global credit market outlook

March 2013 Wesley Sparks, CFA Head of US Fixed Income Lead Fund Manager, Schroder ISF Global Corporate Bond

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Topics for discussion

Global Credit market review

– A brief recap of 2012

Global Credit market outlook

– Opportunities & risks in 2013 – The macro backdrop – Assessing the corporate bond market today

Schroder ISF Global Corporate Bond

– Portfolio positioning – Performance & performance attribution

Schroders approach to Global Credit

– Team & process

Appendix

– Biographies of investment professionals – Compliance disclosures

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Global Credit market review

A brief recap of 2012

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16.35 10.35 10.26 13.29 4.64 4.49 5.30 5.72 16.00 18.23 18.14

5 10 15 20

Global Aggregate Global Treasury Global Agg Agencies Global Agg Securitized Global Agg Covered Bonds Global Agg Credit* Global Agg Sovereigns Global Emerging Markets Global High Yield** S&P 500 Russell 2000

Performance of broad market indices in 2012

Investment grade corporate bonds performed well, in-line with their beta profile

3

2012 total return by asset class (in %)

*Barclays Capital Global Aggregate Credit Index, USD Hedged ** Barclays Capital Global High Yield Corporate ex CMBS &EMG 2% Issuer Capped Bond Index, USD Hedged Note: All fixed income sectors reflect Barclays Capital indices; total returns for equity indices include the reinvestment of dividends; all total returns are expressed in USD for the 2012 year-to-date period through 31 December 2012 Source: Barclays Capital Live, Bloomberg

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Returns across the credit quality spectrum in 2012

Lower quality credit outperformed higher-rated bonds

* Barclays Capital Global Aggregate Credit Index, USD Hedged ** Barclays Capital Global High Yield Corporate 2% Issuer Capped Bond Index, USD Hedged Note: Total returns for all quality tiers reflect Barclays Capital indices; YTW is the average yield-to-worst of each quality tier Source: Barclays Capital Live; 2012 data through 31 December 2012 Past performance is no guarantee of future results

6.08 7.23 10.37 13.66 17.94 17.18 20.89 32.54

5

5 10 15 20 25 30 35 40

AAA AA A BBB BB B CCC CC GAC Index* = +10.35% GHY Index** = +18.23% YTW: 1.33% 1.73% 2.26% 3.28% 4.80% 6.00% 9.42% 22.07% OAS: +38 +81 +123 +208 +367 +502 +834 +1927 4

2012 total return (in %)

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Returns across investment grade sectors in 2012

Insurance & banking were star performers; technology and non-corporates lagged

4.9 10.1 13.3 7.7 7.2 8.7 10.0 10.4 11.1 9.1 12.0 11.7 17.7 14.4 10.7 8.4 10.0 7.2 7.1 8.9 3.4 10.7 8.3 8.5

5 10 15 20

Basic Industry Capital Goods Communications Consumer Cyclical Cons Non-Cycl Energy Technology Transportation Other Industrial Electric Natural Gas Other Utility Banking Brokerage Finance Co's Insurance REITS Other Financial Gov't Guarantee Gov't Owned Gov't Sponsored Local Authority Sovereign Supranational

2012 total return by sector (in %)

Global Aggregate Credit Index = +10.35%

Note: Data reflect the total returns of the sectors of the Barclays Capital Global Aggregate Credit Index, USD Hedged, for the full year 2012 through 31 December 2012 Source: Barclays Capital Live

5

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Various macro risks flared up at different times during 2012

Macro risks sparked a wave of volatility in Q2, but cleared the way for a Q3 rally

 US fiscal policy mismanagement (falling over the “fiscal cliff” in 2013) ▲  Spain & renewed European contagion crisis ▲  Eurozone austerity measures  Soft patch (“growth scare”) in US in Q2/Q3 ▲  China hard landing & slowdown across EM ▲  French election & policy rift with Germany on policy issues for fiscal unity in Eurozone ▼  Oil price spike & rising gasoline prices ▼… then ▲ …and then… ▼  Surge in corporate bond supply and shareholder friendly activities ▲ 6

As some of the macro risks dissipated in recent months, credit rallied significantly

The views contained herein are those of the Fund Manager; comments as of 31 December 2012; direction of arrows indicate whether risks were ascendant or descendant Forecast risk warning: Please refer to the important information slide at the end of the presentation

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Global Credit market outlook

Opportunities & risks in 2013

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3.39 2.39 1.80 2.42 2.13 1.33 1.41 1.70 2.24 6.13 4.28

2 4 6 8

Global Aggregate Global Treasury Global Agg Agencies Global Agg Securitized Global Agg Covered Bonds Global Aggregate Credit Global Agg Sovereigns Global Emerging Markets Global High Yield S&P 500 DAX

Yield as a starting point to estimate total returns in 2013

Coupon income will likely be the predominant driver of total returns this year

8

Yield (in %)

Yields for all fixed income sectors reflect the yield-to-worst of the respective Barclays Capital index; yields for equity indices reflect the dividend yield; The Global Credit index is the Barclays Capital Global Aggregate Credit Index, and the Global HY index is the Barclays Capital Global High Yield Corporate ex CMBS & EMG 2% Issuer Capped Bond Index ;all data as of year-end 31 December 2012 Sources: Barclays Capital Live, Bloomberg

Aa1/Aa2 Aa1/Aa2 Aaa/Aa1 Aa1/Aa2 A2/A3 A3/Baa1 Baa3/Ba1 B1/B2 average ratings of index

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Investors contend with a low yield world in 2013

In seeking positive real returns, investors will take various risks to pick up yield

 Extend duration  Go down the credit quality  Go down in liquidity  Accept worse bond structures (less call protection, less covenant protection)  Go down the capital structure 9

These risks must be managed as the market environment changes

The views and opinions contained herein are those of the Fund Manager; comments as of 31 January 2013 Forecast risk warning: Please refer to the important information slide at the end of the presentation

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Investment grade returns exceeded expectations in 2012

2013 has gotten off to a tougher start than last year did for several reasons

2013 year-to-date total return (in %)

Data reflect the total returns of the Barclays Capital Global Aggregate Credit USD Hedged Index; data through 28 February 2013 Source: Barclays, Bloomberg

2012 total return (in %)

2

2 4 6 8 10 12 Jan-12 May-12 Aug-12 Dec-12

2

2 4 6 8 10 12 01-Jan-13 31-Jan-13 02-Mar-13 YTD 2013 total return

0.07% as at 28 Feb

2012 total return +10.36% 10

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120 140 160 180 200 220 240 260 Okt-11 Nov-11 Dez-11 Jan-12 Feb-12 Mrz-12 Apr-12 Mai-12 Jun-12 Jul-12 Aug-12 Sep-12 Okt-12 Nov-12 Dez-12 Jan-13 Feb-13

Global Aggregate Credit OAS*

Time for a potential pause after a 7-month rally?

A key question is whether this is a healthy consolidation or the start of a correction

*OAS reflects the option-adjusted spread of the Barclays Global Aggregate Credit Index Source: Barclays, Bloomberg; data through 28 February 2013

+130 bps as at 28 Feb

(in basis points)

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Global Credit market outlook

The macro backdrop

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Policy stimulus & muted volatility support tighter spreads

Accommodative policies worldwide can dampen volatility and tighten spreads

Monetary & fiscal stimulus surged in 2012

13

10 20 30 40 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12

Number of stimulative policy initiatives globally

Source: ISI, Daily Economic Report, 13 September 2012; Schroders comments through 31 December 2012

Global stimulus supports risk sentiment

– There were 275 policy easings worldwide in 2012 – The Fed, ECB, UK, Japan & China were all active – Monetary stimulus already announced is likely to boost growth in coming quarters

ECB actions under Mario Draghi represented a departure from former policy approach

– Reflects increased willingness to use ECB balance sheet to address peripheral funding needs

The Fed’s unconventional policies work in several ways to boost high yield valuations

– Low rates encourage the reach for yield – Fed asset purchases in MBS & Treasuries cause investors to redeploy cash into other asset classes – Lower mortgage and consumer rates encourage refinancing activity as well as fresh borrowing – Higher asset prices contribute to the wealth effect

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Interest Rate volatility is measured by the MOVE Index which is calculated as the weighted average of implied volatility of 1 month option expirations on the current 2-, 5-, 10- and 30-year Treasuries; Equity Volatility is measured by the VIX Index which is an exchange traded contract on the CBOE based on real-time prices of options on the S&P 500 Index Sources: Bloomberg, Bank of America Merrill Lynch and Chicago Board of Options Exchange; daily data through 14 February 2013

Monetary policy in action…reducing market volatility

Volatility waves are less severe as central banks have become more active

Measures of Implied Volatility

European break- up fears and global slowdown VIX (in %) US downgrade by S&P and European contagion Greek debt crisis US financial crisis MOVE (in basis points)

Latest data (14 Feb 2013): MOVE 59.1 VIX 12.6

14

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Unemployment Rate

US monetary policy to remain extremely accommodative

Dec FOMC statement: The Fed will be patient before removing the punch bowl

15 1 2 3 4 5 6 7 8 9 10 11 12 Dec-88 Dec-90 Dec-92 Dec-94 Dec-96 Dec-98 Dec-00 Dec-02 Dec-04 Dec-06 Dec-08 Dec-10 Dec-12 Dec-14 December 2012: 7.8%

avg. UE rate since 1989 = 6.0%

(US unemployment rate total in labor force, SA)

FOMC stated threshold = 6.5% ?

Personal Consumption Expenditure Core Index

1 2 3 4 5 6 Dec-88 Dec-90 Dec-92 Dec-94 Dec-96 Dec-98 Dec-00 Dec-02 Dec-04 Dec-06 Dec-08 Dec-10 Dec-12 Dec-14 November 2012: 1.5%

Avg. Core PCE since 1989 = 2.24%

(US PCE Deflator Core, year-over-year change, SA)

FOMC stated threshold = 2.5% ?

Fed Threshold: 6.5% UE Rate Fed Threshold: 2.5% Core PCE Deflator

Sources: Federal Open Market Committee statement, 12 December 2012, and Bloomberg; data through 31 December 2012

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US Labor Participation Rate

US monetary policy to remain extremely accommodative

Better growth will draw back workers, tepid consumption will restrain inflation

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62 63 64 65 66 67 68 Dec-88 Dec-90 Dec-92 Dec-94 Dec-96 Dec-98 Dec-00 Dec-02 Dec-04 Dec-06 Dec-08 Dec-10 Dec-12 Dec-14

December 2012: 63.6% 20 year average prior to 2009 = 66.5%

(Percent of US population in labor force, SA)

?

Consumer Credit

10
5

5 10 15 20 25 Dec-88 Dec-90 Dec-92 Dec-94 Dec-96 Dec-98 Dec-00 Dec-02 Dec-04 Dec-06 Dec-08 Dec-10 Dec-12 Dec-14

October 2012: 1.05%

(Revolving consumer credit, year-over-year, SA)

Credit growth is barely positive ?

Lower participation = ~3.0% lower u/e rate Lower credit creation restraining inflation

Sources: Federal Reserve, Bureau of Labor Statistics

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Latest data

(14 Feb 2013): G10 +12.8 US

5.0

EM

10.8

Citigroup Economic Surprise Index (CESI)

Sources: Citigroup and Bloomberg; daily data from 2007 through 14 February 2013 The Citigroup Economic Surprise Indices (CESI) are objective and quantitative measures of economic news defined as weighted historical standard deviations of data surprises (actual releases versus the median of Bloomberg surveys); a negative reading of a CESI indicates that economic releases have been below consensus on balance. CESI data are calculated daily in a rolling 3-month window. The weights of economic indicators are derived from relative high-frequency spot FX impacts of 1 standard deviation data

surprises. The indices also employ a time decay function to replicate the limited memory of markets. The Bloomberg tickers for the three data series are CESIUS <Index>,

CESIG10 <Index>, and CESIEM <Index>

The latest data isn’t reassuring…

Downtrends in the CESI have led to “risk off” periods & eventual policy response

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ECB balance sheet has shrunk over the past 6 months – accelerating since beginning of year Falling by 10% since July 2012 (including the recent LTRO repayment)

Central bank balance sheets

Sources: Bloomberg, Credit Suisse

Modest liquidity withdrawal in Europe

50 100 150 200 250 300 350 400 450 2008 2009 2010 2011 2012 2013 ECB Fed BoE BoJ

Normalised from Jan-2008

12.5% 8.7% 5.1%

9.6%
15%
10%
5%

0% 5% 10% 15% BoE BoJ Fed ECB

% change in balance sheet since July 2012

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Global Credit market outlook

Assessing the corporate bond market today

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The outlook for Global Credit in 2013

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Key market drivers appear balanced this year, after the rally in 2012

Credit fundamentals are solid, but are no longer improving

– Credit ratios starting to deteriorate as shareholder-friendly activities increase – Management teams remain cautious and continue to protect their liquidity profile – Slow economic growth and persistent macro headwinds will keep monetary policy extremely accommodative

Technical conditions are supportive of spreads at current or tighter levels

– New institutional mandates in IG credit continue to fuel demand for corporate bonds – IG mutual funds continue to experience consistent net inflows even during market volatility – Dealer inventories remain light – Net supply will be quite low over the next 12 months, especially after accounting for coupon payments

Valuations remain attractive on a relative basis

– Spreads still have room to tighten further, based on fundamental valuation frameworks – Yields are still attractive relative to cash equivalents and government bonds – Investment grade corporate bonds have much lower volatility than equities or high yield bonds

The views and opinions contained herein are those of the Fund Manager; please note these are forecasted views; views as of 28 February 2013 Refer to the end of this presentation for important information

Total returns in investment grade corporate bond are likely to be in mid- single digits … not much more than the current yield of ~2.5%, but better than cash & governments

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The outlook for Global Credit in 2013

What risks are most likely to upset the market…or drive spreads tighter yet?

Key market drivers

Interest rate risk
Default risk (and fallen angel risk)
Event risk
Changes in the risk premium

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Changes in the risk premium will be the key driver of returns in credit in 2013

The views and opinions contained herein are those of the Fund Manager; comments as of 28 February 2013 Forecast risk warning: Please refer to the important information slide at the end of the presentation

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Corporate governance and accounting standards in “newly” developed markets
Corporate fundamentals are deteriorating
U.S. companies are re-leveraging
New issues quality is worsening (dividends, share buybacks)
Equity holders are increasingly favoured over bondholders
Valuation gap between acquirers and targets is closing as equity prices have rallied
Unintended effects of QE
European consumer squeeze to continue for the next couple of years
Currency war and loss of competitiveness
Inflation in real asset prices across the globe

Key market hurdles for 2013

Several mid-cycle themes could surface in the first half of the year

The views and opinions contained herein are those of the Fund Manager; please note these are forecasted views; views as of 28 February 2013 Refer to the end of this presentation for important information

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Surveys on bank lending standards

US corporate lending conditions improved in 2012

Fed bank survey showed net easing in Q2 & Q3, and loan volumes are up >10%

(percentage of banks tightening standards)

23

Bank lending volume growth

(12-month percentage change)

Sources: Federal Reserve, ECB, IIF, Bank of America Merrill Lynch Global Research, High Yield Credit Chartbook, 4 December 2012; data through 30 November 2012

Compared to US bank lending conditions, EU conditions remain much worse: ■ The ECB survey of EU lending conditions has shown tightening in each of the past 6 quarters ■ EU corporate lending volumes have contracted by -2.1% yoy

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Fundamental backdrop is one of slow growth

Earnings reports are showing slow growth on both the top line & bottom line

Revenue growth (S&P500 ex-financials*)

(year-over-year growth)

Earnings growth (S&P500 ex-financials*)

(year-over-year growth)

*Data through 4Q 2012 earnings reports for S&P500 companies; Q4 data include 318 companies (ex-financials) which have reported so far through Thursday, 14 February 2013 Sources: Standard & Poor’s, Compustat, First Call, Worldscope, FactSet and UBS; UBS 4Q Earnings Season Summary, 15 February 2013

■ 71% of companies beat consensus on Earnings, and 22% of companies missed in Q4 ■ 54% of companies beat consensus on Revenues, and 26% of companies missed so far in Q4

24

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Revenues & EPS growth are slowing down Leverage has ticked up in recent quarters Corporates are spending more cash

Balance sheet re-leveraging in investment grade credit

Earnings have flat-lined; leverage is ticking up; cash is being spent but not on capex

25

CapEx has slowed in 2H12

1.00 1.25 1.50 1.75 2.00 2.25 3Q05 3Q06 3Q07 3Q08 3Q09 3Q10 3Q11 3Q12 Gross Leverage Net Leverage 12% 14% 16% 18% 20% 22% 24% 26% 3Q05 3Q06 3Q07 3Q08 3Q09 3Q10 3Q11 3Q12 Cash as % Tot Debt

5

5 10 15 20 25 30

1'500 1'700 1'900 2'100 2'300 2'500 2'700 2'900 3'100 4Q07 4Q08 4Q09 4Q10 4Q11 ($) ($bn) Revenue EPS

6.2 6.4 6.6 6.8 7.0 7.2 7.4 7.6 7.8 8.0 8.2

92 94 96 98 100 102 104 106 108 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 % Index Leading Indicators Capex as a % of GDP S&P 500 EPS Sources: Barclays 2013 Investment Grade Supply Outlook, January 2013

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500 1'000 1'500 2'000 2'500 3'000 3'500

100 200 300 400 500 600 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 # deals ($bn) Volume Deal Count

Corporates are looking to create value for shareholders ($bn) S&P Dividend Yld vs. avg industrial long YTM Global announced M&A volumes

Re-leveraging likely to be a driver of IG industrial issuance

More shareholder-friendly activities could threaten the US IG market in 2013

26 100 200 300 400 500 600 700 800 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 Dividends Share Repurchases

3.5 4.5 5.5 6.5 7.5 8.5 9.5

1.5 2.5 3.5 4.5 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Index Yield Dividend Yield Dividend Yield (Gross) (SPX Index) (R1)

Invest. Grade: Industrial - Long - Yield to Maturity

M&A activity has the potential to significantly impact industrial supply

M&A volumes 4Q10: $659 1Q11: $595 2Q11: $651 3Q11: $547 (in $ billions) 4Q11: $418 1Q12: $491 2Q12: $567 3Q12: $484 Sources: Barclays 2013 Investment Grade Supply Outlook, January 2013

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(US$ billions)

Total spread product net issuance and Fed adjusted supply

With the Fed actively buying Treasuries & MBS, net supply for the private sector will be negative

Net supply across all spread product will be negative!

There will be a dearth of bonds with any yield for the private sector in 2013

27

Note that in 2013, the Fed will be buying $40 billion per month in MBS and $45 billion per month in Treasuries, versus a forecasted total of $93 billion per month in total net spread product supply & Treasury supply; there were no Fed purchases of securities during the 2004-2008 period Source: JP Morgan, 14 December 2012

364

116
800
400

400 800 1,200 1,600

2004 2005 2006 2007 2008 2009 2010 2011 2012 F2013

Total spread product net issuance Fed-adjusted total spread product net issuance

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Note: Mutual fund sectors are listed in order of the % change in total net fund flows during 2012 Source: EPFR Global, Bank of America Merrill Lynch; data through 31 December 2012

Mutual fund net flows (including ETFs) – various asset classes

Mutual fund flows: A key barometer of investor demand

There’s plenty of “dry powder” left for a continued shift out of cash & gov’t bonds

28

Quantitative easing and financial repression should drive cash out of money market funds in 2013 Mutual Fund Sector 2012 YE Assets (in $mn) 2012 Change (in $mn)

2012 Net Fund Flows by Sector as a % of Asset Base

Non-US High Yield 207,635 40,135 EM Debt (Global) 303,561 56,595 Leveraged Loans 75,307 10,755 US High Yield 313,129 32,219 High Grade Corporates 1,735,715 166,141 All Fixed Income 3,385,695 327,706 Munis 638,870 51,609 Commodities 167,646 12,105 Money Markets 2,655,934 21,063 Equities 6,427,534

26,762

36.7 30.8 20.3 13.3 9.7 8.1 0.8

0.5

12.2 11.9

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($ billions)

US Investment Grade mutual fund flows – 2012-2013

Investment grade mutual funds continue to have net inflows

Demand was strong in 2012 and inflows have remained positive in 2013

Source: EPFR Global, Bank of America Merrill Lynch; data through 27 February 2013

29

+$1.7 billion net inflows in latest week – ending February 27th

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The "Great Rotation" is unlikely to be the reality in 2013

Sources: Federal Reserve Flow of Funds, Barclays Capital; graphs based on annual observations since 1955 and the flows reflect the sum of life insurance, property & casualty insurance, private pension fund, and state & local pension fund categories; data through 31 December 2012

Many investors can’t shift asset allocation from Fixed Income & HY into equities

30

Demand for corporate bonds by Insurance Companies and Pension Funds versus changes in the 10-Year Treasury yield

Net flows into Credit T10 Yield

Historically there has been virtually zero correlation between changes in 10-year Treasury yields and institutional demand

Flows into Credit – annual data since 1955 ■ Regulatory & risk constraints will prevent some investors from rotating into equities ■ There were only two instances in the past 60 years when insurance co’s & pension funds were net sellers of credit – in 2000 and 2008 – both of which were periods of falling interest rates and “risk off”

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100 200 300 400 500 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 1 2 3 4 5 6 7 8 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13

(in basis points)

+129 bps OAS as at 31 Jan 2013 average OAS since 2003 = +139

(in %)

average yield since 2003 = 4.32 % 2.55% yield as at 31 Jan 2013

Global Credit Index yield* Global Credit Index spread**

Investment grade credit market valuations

Corporate bond spreads remain relatively attractive even after the recent rally

*Yield” reflects the yield-to-worst of the Barclays Capital Global Aggregate Credit Index; data available since January 2001 ** Spread” is the Option-Adjusted Spread (OAS) Source: Barclays Capital; data through 31 January 2013

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The Fed will keep short-term rates extremely low into 2014…investors will seek yield

Yield

Investment grade credit market valuations

Corporate bond yields are compelling relative to cash equivalents

1 2 3 4 5 6 7 8 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Barclays Global Aggregate Credit Index 3-month LIBOR 3-month T-bills

(in %) 0.30% 3m LIBOR 0.07% 3m T-bills 2.55% yield at 31 Jan 2013

“Yield” reflects the yield-to-worst for the Barclays Capital Global Aggregate Credit Index; data available since January 2001 Source: Barclays Capital; data through 31 January 2013

32

The last time the Fed normalized rates

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EM corporates are an area of opportunity in 2013

Source: JPMorgan, Bloomberg; data through 7 January 2013 33

EM IG Corp Relative to US IG Corp Spreads

20 40 60 80 100 120 140 50 100 150 200 250 300 350 400 450 Jan 2010 Apr 2010 Jul 2010 Okt 2010 Jan 2011 Apr 2011 Jul 2011 Okt 2011 Jan 2012 Apr 2012 Jul 2012 Okt 2012 Jan 2013 Difference (RHS) CEMBI BD IG (LHS) JULI Ex-EM (LHS)

EM IG Corporate spread basis to US IG remains wide

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0.0 1.0 2.0 3.0 4.0 A BBB BB B 50 100 150 200 250 300 350 A BBB BB B

Investors are well compensated for balance sheet leverage in EM

EM corporates are an area of opportunity in 2013

Note: Leverage is debt / EBITDA, and the leverage multiple is expressed in the number of turns of leverage (“x”) Source: Bank of America Merrill Lynch; data as of August 2012 34

Turns of net leverage Spread per turn of leverage

EM Corporates US Corporates Basis points / x Net leverage, x

EM Corporates have lower leverage than similarly rated US Corporates EM Corporates provide more compensation per unit of leverage than do US credits

SLIDE 36

Outlook for Global Credit: Possible shifts in sentiment

35



Monetary policy loses its potency and concerns of recession re-emerge



Global trade slows – no regional engine of growth



Corporate earnings expectations prove difficult to meet – costs grow but pricing power deteriorates



Zombies fail – losses escalate, banks foreclose, defaults rise



Growth/inflation trade-off tips toward inflation over growth – stagflation is bad for nominal asset prices



Exchange rate battles turn to war – many nations attempt to boost their competitive landscape



Social unrest destabilises political norm – high unemployment, negative real income growth leaves people irritable and hungry



Supply starts to overwhelm demand



Household & business confidence improves



Improving household balance sheets and/or improving new order to sales ratio for businesses



Investment intentions rise



Global trade accelerates



Employment accelerates, real incomes rise, corporate profits increase through orders rather than cost cutting



Decreased need for austerity measures



Monetary policy remains accommodative

Indicators for risk avoidance Indicators for risk seeking

Signposts to monitor for potential market turns & the need for tactical hedges

The views and opinions contained herein are those of the Fund Manager; comments as of 28 February 2013 Forecast risk warning: Please refer to the important information slide at the end of the presentation

SLIDE 37

Outlook for Global Credit: Possible shifts in sentiment

Schroders Global Quant Scorecard – monthly update at 7 Feb 2013: HIGHER

36 Sources: Schroders Fixed Income Quantitative team; data as of 5 February 2013

Credit Index is going up – Fund flows have been positive in January, the decrease of positive flows has stopped so the score is still negative (but less so from -2 to -1) – On the contrary, custody flow in HY bonds are extremely strong (mutual bond funds have been buying a lot of HY bonds at an increasing pace), the last time we had such a level of buying was in Jul-12 and prior to that Jan-11 (the score goes from -1 to +2) – Equity sentiment and valuation are stable

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Outlook for Global Credit in 2013

Summary of key trends likely to dominate this year

■ Dispersion of returns across issuers and across industries becomes greater over the next year ■ Event risk will become a greater risk as the year progresses ■ The Emerging Markets share of the global credit universe will continue to grow ■ Market segmentation will prevent a major asset allocation rotation out of credit into equity ■ A punctuated volatility market environment may require tactical hedging & nimble repositioning

37 The views and opinions contained herein are those of the Fund Manager; comments as of 28 February 2013 Forecast risk warning: Please refer to the important information slide at the end of the presentation

Changes in the risk premium will be the key driver of returns in credit in 2013

SLIDE 39

Schroder ISF Global Corporate Bond

Portfolio positioning

SLIDE 40

Schroder ISF Global Corporate Bond

Active management in the face of changing market conditions is key

– the majority of the portfolio’s total assets will be invested in corporate bonds at all times – up to 20% of the portfolio may be invested in High Yield – no currency speculation; focus is on picking best credit opportunities anywhere globally –

This is a “pure play” corporate bond fund

– cash & cash equivalents may be held (no specific limitation) – government bonds (up to 20% of total portfolio assets) – a portfolio management focus on maintaining liquidity of fund investments

Defensive tools

use of credit default swaps to hedge exposure and tail risk: – single-name CDS (both long risk and short risk positions) – CDS indices (iTraxx in Europe and CDX in the US) – options on CDS indices (typically, buying a payer option with a 3-month expiry)

CDS can provide protection

– use of interest rate futures to manage duration exposure – yield curve positioning is coordinated with Schroders government specialists based on

utlook for changes in monetary policy and technical factors impacting curve shape

Duration management can also help

39 The views and opinions contained herein are those of the Fund Manager; comments as of 28 February 2013 Forecast risk warning: Please refer to the important information slide at the end of the presentation

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“Fund” is Schroder ISF Global Corporate Bond, and “Benchmark” reflects the Barclays Capital Global Aggregate Credit Index The number of cash bond holdings excludes cash and cash equivalents and derivatives positions (CDS, interest rate futures, and f/x forwards) “OAS” reflects the option-adjusted spread vs Treasuries Sources: Schroders Fixed Income Analytics, Barclays Capital; all data as of 28 February 2013

Schroder ISF Global Corporate Bond

The portfolio provides greater income than the index

■ We own <20% of the total number of issuers and only <6% of the bonds in the index ■ The Fund provides a pick-up in yield and in spread relative to the benchmark ■ We extended portfolio duration in February after the yield back-up ■ DTS overweight reflects our outlook for lower-rated, higher-yielding credit to

utperform and for spread compression

among mid-duration corporate bonds

40

Summary statistics

Fund Benchmark Difference

Number of issuers 416 2229 Number of cash bond holdings 496 9336 Market value $ 3.75 bn $ 9.50 tn

Avg. credit rating

A- A

Avg. effective yield (in %)

2.94 2.43 +0.51

Avg. OAS (in bps)

+187 +129 +57

Avg. convexity

0.76 0.68 +0.08

Avg. effective duration (years)

6.23 6.02 +0.21

Avg. spread duration (years)

6.34 5.98 +0.36 Duration-times-spread (DTS) 11.92 8.30 +3.62 Fund spread beta 1.44x

SLIDE 42

3.3 6.4 17.3 1.8 10.0 39.1 7.5 4.2 0.2 3.3 7.1 14.0 38.5 33.9 0.0 0.8

20

20 40 60 Cash & T-bills Treasuries AAA AA A BBB BB B CCC NR Net Derivatives Offset

Fund Benchmark

Credit quality composition (in market value %)

Fund positioning by credit quality

We are positioned with a credit barbell to avoid the event risk of AA/A credits

Fund data represent Schroder ISF Global Corporate Bond holdings of bonds and net CDS exposure in each ratings category “Benchmark” is the Barclays Capital Global Aggregate Credit Index Note: the quality composition is based on the middle credit ratings of Moody’s, S&P, and Fitch (benchmark classification rules) Sources: Schroders Fixed Income Analytics, Barclays Capital; all data as of 28 February 2013 41

very underweight AA & A credit 11.9% High Yield exposure conservative leg

f credit barbell
verweight

BBBs

SLIDE 43

54.1 15.0 19.0 4.0 3.4 1.9 0.2 0.2 2.3 42.5 7.8 22.9 3.9 2.6 8.3 0.3 2.3 9.3 20 40 60 80 North America United Kingdom Europe Peripheral Europe South America Asia Africa Oceania Supra- nationals

Fund Benchmark

Portfolio positioning by geography & currency bloc

Avoiding regions with tight valuations or structural headwinds

Regional exposure (in market value %)

65.7 14.7 17.9 1.7 60.4 24.1 7.0 3.0 5.4 20 40 60 80 USD GBP EUR JPY Other

42 “Fund” refers to Schroder ISF Global Corporate Bond; “Benchmark” is the Barclays Capital Global Aggregate Credit Index “Peripheral Europe” includes Spain, Italy, Greece, Ireland & Portugal; “Other “ in currency exposure for the Fund includes P&L from FX forwards Sources: Schroders Fixed Income Analytics, Barclays Capital; all data as of 28 February 2013

all currency exposures are hedged to USD in the Fund

Currency allocation (in market value %)

Fund’s total exposure in EM (by country of risk): 9.8%

SLIDE 44

Duration (in years)

The Fund’s duration has been managed neutral to short duration since 2009

43

“Fund” refers to Schroder ISF Global Corporate Bond; “Benchmark” is the Barclays Capital Global Aggregate Credit Index Source: Schroders Fixed Income Analytics; data through 28 February 2013

4.0 4.5 5.0 5.5 6.0 6.5 Nov 09 Feb 10 Mai 10 Aug 10 Nov 10 Feb 11 Mai 11 Aug 11 Nov 11 Feb 12 Mai 12 Aug 12 Nov 12 Feb 13

Fund Benchmark

Portfolio positioning – managing interest rate risk

Portfolio duration has been neutral to short duration, …but spread duration (and DTS) has been overweight

SLIDE 45

Portfolio positioning – key drivers of portfolio construction

Our recent trading activity is aligned with our investment themes

Positioning comments are as of 28 February 2013; please note that portfolio holdings can change at any time

44

■ Maintaining exposure to credits that should fare well in a slow growth environment ■ Avoiding event risk: selling (or buying protection in CDS on) credits vulnerable to re-leveraging ■ Carrying ~7-10% exposure to High Yield credits in sectors with favorable industry dynamics ■ Allocating toward Emerging Markets ■ Executing relative value swaps along the credit curve or within the capital structure ■ Managing interest rate risk, especially in the 7-10-year duration range ■ Utilizing CDS as tools to navigate volatility and capitalize on pricing anomalies ■ Continuing to favour liquid issues and preserve fund liquidity

SLIDE 46

0.1 2.5 0.2 0.1 1.8 0.1 0.6 0.5 1.6 0.6 0.8 0.3 0.1 0.7 0.7 0.2 0.2 0.0 0.9 0.1 0.2 0.1 0.1 1.6 0.1 0.2 0.0 0.7 0.1 0.4 0.2 0.8 0.4 0.6 0.4 0.1 0.2 0.2 0.5 0.3 0.1 0.0 0.0 0.5 0.3 0.0 0.4 0.1

0.5

0.0 0.5 1.0 1.5 2.0 2.5 3.0

Covered Banking Brokerage Finance Co's Financial Other Insurance Reits Basic Industry Capital Goods Communications Consumer Cycl Consumer Non-Cycl Energy Industrial Other Technology Transportation Electric Natural Gas Utility Other Gov't Guarantee Gov't Sponsored Gov't Owned Local Authorities DM Sov'n EM Sov'n Supranational Whole Business Fund Benchmark

Portfolio positioning by sector

We carry the most credit exposure in financials and communications

45

Sector allocation (in DTS)

“Fund” refers to Schroder ISF Global Corporate Bond; “Benchmark” is the Barclays Capital Global Aggregate Credit Index; ”DTS” is duration-times-spread; “o/w” denotes those sectors that the Fund is overweight on a DTS basis versus its benchmark; CDS positions are reflected above in the appropriate sector classification Sources: Schroders Fixed Income Analytics, Barclays Capital; all data as of 28 February 2013

SLIDE 47

0.1 0.9

0.1

0.0 0.1 1.1 0.0 0.3 0.2 0.7 0.3 0.2

0.1
0.6
0.1

0.5 0.1

0.1

0.2 0.0 0.0 0.5

0.2

0.0

0.3
0.1

0.1

1.0
0.5

0.0 0.5 1.0 1.5

Covered Banking Brokerage Finance Co's Financial Other Insurance Reits Basic Industry Capital Goods Communications Consumer Cycl Consumer Non-Cycl Energy Industrial Other Technology Transportation Electric Natural Gas Utility Other Gov't Guarantee Gov't Sponsored Gov't Owned Local Authorities DM Sov'n EM Sov'n Supranational Whole Business

Portfolio positioning by sector

We carry the most credit exposure in financials and communications

46

Active risk by sector (Fund DTS overweight or underweight vs. benchmark)

“Fund” refers to Schroder ISF Global Corporate Bond; “Benchmark” is the Barclays Capital Global Aggregate Credit Index; ”DTS” is duration-times-spread Positive numbers denote those sectors that the Fund is overweight on a DTS basis versus its benchmark; CDS positions are reflected above in the sector classifications Sources: Schroders Fixed Income Analytics, Barclays Capital; all data as of 28 February 2013

SLIDE 48

Schroder ISF Global Corporate Bond

Top 10 largest bond holdings reflect the conservative leg of our credit barbell

Source: Schroders Fixed Income Analytics; note that the list excludes derivatives; data as of 28 February 2013 Securities mentioned are for illustrative purposes only and should not be viewed as a recommendation to buy/sell; please note that portfolio holdings can change at any time

Total number of bonds held by fund: 496 (versus 9336 bonds in the benchmark) Total number of issuers held by fund: 416 (versus 2229 issuers in the benchmark)

47

# Issuer Ticker Coupon Maturity Moody’s rating S&P rating Sector Yield (%) Weight (%) 1 US Treasury Note

T 1.63 15 Nov 2022

Aaa AA+ Treasuries

1.86 2.96

2 Goldman Sachs Group Inc

GS 3.63 22 Jan 2023

A3 A- Banking

3.51 1.88

3 Toronto-Dominion Bank

TD 1.50 13 Mar 2017

Aaa NR Covered

0.89 1.59

4 Bank of America Corp

BAC 3.30 11 Jan 2023

Baa2 A- Banking

3.32 1.58

5 JPMorgan Chase & Co

JPM 3.25 23 Sep 2022

A2 A Banking

3.12 1.50

6 FMS Wertmanagement AoeR

FMSWER 1.00 18 Jul 2017

Aaa AAA Government Guarantee

0.75 1.35

7 Bank of Montreal

BMO 1.95 30 Jan 2017

Aaa NR Covered

0.88 1.25

8 RWE AG

RWE 7.00 29 Mar 2049

Baa2 BBB- Electric

5.20 1.12

9 Morgan Stanley

MS 5.50 26 Jan 2020

Baa1 A- Banking

3.24 1.11

10 Bank of Montreal

BMO 1.30 31 Oct 2014

Aaa NR Covered

0.42 1.06 Total - top 10 bond holdings 15.40

SLIDE 49

Note: “o/w” denotes those issuers that the portfolio is overweight versus its benchmark; “u/w” denotes the underweights; underweights exclude the CDS index options positions Source: Schroders Fixed Income Analytics; the Fund’s benchmark is the Barclays Capital Global Aggregate Credit USD Hedged Index; data as of 28 February 2013 Securities mentioned are for illustrative purposes only and should not be viewed as a recommendation to buy/sell; please note that portfolio holdings can change at any time

Issuer overweight exposures (in DTS) Issuer underweight exposures (in DTS)

48

Schroder ISF Global Corporate Bond

The Fund's largest active risk exposures by issuer reflect our conviction views

Ticker: Issuer name Portfolio Benchmark DTS

/w

OLDMUT: Old Mutual

0.41

0.41

TENN: Tennet

0.33

0.33

GS: Goldman Sachs

0.35 0.12 0.22

RWE: RWE

0.24 0.03 0.21

EDF: Electricite de France

0.25 0.05 0.20

CMCSA: Comcast

0.26 0.06 0.20

VOTORA: Votorantim Cimentos

0.19 0.01 0.18

BAC: Bank of America

0.27 0.09 0.18

C: Citigroup

0.28 0.10 0.18

MS: Morgan Stanley

0.24 0.07 0.17

Total – top 10 DTS overweights

2.81 0.54 2.27

Ticker: Issuer name Portfolio Benchmark DTS u/w

XTALN: Xstrata

0.05

0.02

0.07

MEX: Mexico Government

0.07
0.07

TELEFO: Telefonica

0.00 0.06

0.06

RABOBK: Rabobank

0.01 0.06

0.06

VZ: Verizon

0.06
0.06

PETBRA: Petrobras

0.05
0.05

BACR: Barclays

0.05
0.05

EIB: European Investment Bank

0.03 0.08

0.05

AXASA: AXA

0.05
0.05

TITIM: Telecom Italia

0.02 0.07

0.05

Total – top 10 DTS underweights

0.00

0.57

0.57

SLIDE 50

Sample credit picks: Tennet BV

Go down in the capital structure of credits with solid fundamentals

49

Credit stats are based on Schroders analysis of company financial statements through HY 2012; Schroders Credit Analyst – Charlotte Peat, Recommendation = “2-S” Source: Bloomberg all bond data as of 29 January 2013

– High voltage electricity grid owner and transmission system operator in the Netherlands and owns 40% of the high voltage grid in Germany – Low risk regulated monopoly with a supportive framework – Owned by Kingdom of the Netherlands – More than 95% of earnings are regulated – The security is a perpetual but it has coupon step-ups in 2017 of 5-yr swaps + 360 bps and in 2022 of 6-month EURIBOR + 460 bps – There is an incentive to redeem at first call due to lack of equity recognition from ratings agencies after that date Credit stats – Operating profit HY12 €134 – 43% net debt to fixed assets

1 2 3 4 5 6 7 8 Feb-10 Sep-10 Apr-11 Nov-11 Jun-12 Jan-13

TENN 6.655 Perp TENN 4½ 2022

TENN 6.655 Perp (Baa3/BBB) versus TENN 4.50 2022 (A3/A-)

Going down the capital structure provides a pickup in yield versus the senior dated bond: +167 bps in yield as at January 29th Yield (in %)

Bond issue Issue size Rating Price Yield-to-Worst Duration TENN 6.655 Perp $500 mn Baa3/BBB $109.4 4.24% 4.13 TENN 4.50 2022 $500 mn A3/A- $116.6 2.43% 7.46

SLIDE 51

Sample credit picks: KPN

Go long risk via CDS at wider spreads than the cash bonds

50

Credit stats are based on Schroders analysis of company financial statements Source: Barclays Capital index pricing; all bond data as of 29 January 2013

– Dutch telecom operator with good market share in

verseas mobile businesses (#3 in both Germany

and Belgium) – Recent spectrum auctions (the Dutch LTE/4G auctions in mid-December) proved expensive, and KPN paid up to beat T-Mobile and Vodafone to defend its incumbent position and integrated services offering – KPN’s mid-BBB ratings from all 3 rating agencies were put on review for downgrade but downgrades are unlikely to be more than 1 notch – The company subsequently cut its dividend, which caused credit spreads to tighten – KPN CDS has better relative value than the KPN 5-year bonds, and is attractive versus comps DT and Ziggo – KPN then announced a rights offering during the first week of February, which caused CDS and senior bond spreads to tighten

70 90 110 130 150 170 190 210 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13

KPN 4 ¾ 2017 KPN senior 5-year CDS

KPN 4.75 2017 z-spread versus KPN CDS 5YR

We sold protection on KPN on Jan 4th & 10th at +167 Spread (in bps)

KPN senior 5-year CDS (Baa3 / BBB CW-neg / BBB-) – sold protection @ +167bps +150

SLIDE 52

Investment opportunities along the yield curve

Taking advantage of volatility and supply/demand technicals in Citigroup ( C )

“Spread” is the Option-Adjusted Spread (OAS); the “curve” represents the OAS differential of the Citi 2022 maturity bond versus the Citi 2017 maturity bond Source: Barclays Capital; data through 15 February 2013

Citigroup bond spreads – 10yr vs. 5yr curve

51

Swap trade on Citi curve 24 May 2012 23 Aug 2012 Current Short maturity Citi bond Bot C 4.45% ‘17@ +298/T5 Sold C 4.45% ‘17 @ +199/T5 C 4.45% ‘17 @ +93/T5 Longer mat Citi bond Sold C 4.50% ‘22 @ +258/T10 Bot C 4.50% ‘22 @ +224/T10 C 4.50% ‘22 @ +118/T10 The trade we executed We shortened from C 2022 to C 2017 @ +40 bps We extended from C 2017 to C 2022 @ +25 bps We currently prefer 10-year maturities

– We typically own more than one issue across the curve for large issuers, and we shift or concentrate our exposure when dislocations occur from market stress or technically-driven anomalies – As the market recovered in early 2012, most bank sector spread curves began to normalize (steepen), and then Citigroup starved the market of 10-year issuance and focused supply in the 5-year part of the curve in mid-2012 – This eventually created the opportunity to pick up incremental spread while shortening duration because of the strong technical bid for Citi 10-yr paper vs. a saturation of 5-yr paper – The curve normalized once again as many holders of the 10-year switched into the 5-year and as Citigroup issued more

f the 2022 bond to take advantage of the curve anomaly itself

A reversal of 65 bps in the spread curve generated nearly 500 bps

f excess return

(OAS in basis points)

60
40
20

20 40 60

Dez-11 Jan-12 Feb-12 Mrz-12 Apr-12 Mai-12 Jun-12 Jul-12 Aug-12 Sep-12 Okt-12 Nov-12 Dez-12 Jan-13

We extended from 5yr to 10yr Citi bonds We shortened from 10yr to 5yr Citi bonds

SLIDE 53

Insurance

Industry overweight

“Fund” is Schroder ISF Global Corporate Bond; “DTS” is duration-times-spread Sources: Schroders, and Bloomberg for Bank of America Merrill Lynch Global Corporates Indices; all data as at 31 December 2012

52

Top DTS overweights in insurance in the Fund

Ticker Ratings Schroders Rec/Opinion* OAS (bps) Fund DTS Active DTS

OLDMUT

Baa3/BB

2 – S

+213 +511

0.24 0.24 RSALN

Baa1/A

1 – S

+246

0.13 0.12 DLGLN

Baa1/BBB+

1 – S

+506

0.12 0.12 WLP

Baa2/A-

1 – S

+195

0.12 0.10 SRENVX

A1/AA- Baa1/A

2 – S

+151 +294

0.08 0.08

Investment thesis

– The insurance sector is attractive versus banking with individual stock selection reliant on inflation and interest rate views

Key industry trends & fundamental outlook

– Liabilities are stable, predictable and long term – Lack of capital recognition from ratings agencies after the first call date means that rollover risk is low when compared to the banking sector – A recent deflationary backdrop has meant that P&C firms have been booking positive reserve releases

Valuations

– The spread differential between insurance and the broader global corporate market is still high compared to historical levels; there is still room for convergence here

200 400 600 800 1000 Dec-02 Dec-04 Dec-06 Dec-08 Dec-10 Dec-12

Difference Insurance Index Global Corporate Index**

OAS (in bps)

SLIDE 54

CDS index receiver

Tactical portfolio positioning via CDS index options

Buying options can produce attractive, asymmetric payoff profiles

We can pay a small premium to either offset existing credit exposure or provide active risk with an asymmetric payoff profile that

puts a floor on the downside risk

When implied volatility has fallen because of a rally in risk assets, purchasing an option is a good way to hedge a credit portfolio

against widening spreads should volatility rise again

However, in times of more certainty, purchasing (or selling) the index outright could prove a more efficient way of expressing a

view due to the small performance drag incurred by the option premium

53

CDS index payer

P&L option position P&L index position Probability Spread Sell protection on CDS index Option premium Buy protection on CDS index Option premium Spread

SLIDE 55

Schroder ISF Global Corporate Bond

USD I Shares Performance & Performance attribution

SLIDE 56

Schroder ISF Global Corporate Bond

Fund performance as at 31 December 2012

55

Schroder ISF Global Corporate Bond USD I Class Accumulation Shares

Note: performance shown is net of all management fees and fund expenses for the Fund’s USD I class of shares (ticker SCHHGIA LX) Sources: Schroders, Barclays Capital Past performance is no guarantee of future results. The value of an investment may go down as well as up and is not guaranteed. Please see the performance notes at the end

f this presentation for more information. Performance for periods longer than one year are annualized

2.02% 10.86% 7.05% 7.64% 6.92% 1.65% 10.36% 7.39% 6.51% 6.18%

0% 2% 4% 6% 8% 10% 12% 3 months 1 year 3 year p.a. 5 year p.a. 10 year p.a.

Schroder ISF Global Corporate Bond USD I Acc Shares Barclays Capital Global Aggregate Credit Index, USD Hedged

Alpha: +37 bp +50 bp –34 bp +112 bp +75 bp

(I-shares)

SLIDE 57

Schroder ISF Global Corporate Bond

Quarterly performance attribution summary over the past year

Schroder ISF Global Corporate Bond USD I Class Accumulation Shares

“Fund” refers to Schroder ISF Global Corporate Bond USD I Accumulation class of shares (ticker SCHHGIA LX); returns shown are net of all fund expenses “Benchmark” is the Barclays Capital Global Aggregate Credit Index, USD Hedged; “o/w” denotes Fund overweights versus its benchmark and “u/w” denotes underweights Sources: Schroders, Barclays Capital; data through 31 December 2012. Past performance is no guarantee of future results. The value of an investment may go down as well as up and is not guaranteed. Please see the performance notes at the end of this presentation for more information. 56

SLIDE 58

Schroder ISF Global Corporate Bond

Gross total returns and excess returns vs benchmark – 2012

57 Note: performance shown is gross of management fees and fund expenses, not based on the Funds USD I class of shares (ticker SCHHGIA LX). Performance attribution results are calculated relative to the benchmark using gross performance based on end of day pricing. Returns are calculated internally by Schroders based on index pricing or other 3rd party vendor pricing for securities not in the benchmark. If fees and expenses were reflected, performance figures would be lower. Performance calculations are not adjusted for the effect of taxation and assume reinvestment of dividends and capital gains. Index returns do not incur management fees, transaction costs, or other expenses. Sources: Schroders, Barclays Capital; data for periods during 2012.

SLIDE 59

Schroder ISF Global Corporate Bond

Performance attribution by gross total returns vs benchmark – 2012

58 Headings terminology:

“Issue Selection” is based on a given security’s idiosyncratic return after accounting for the credit sector allocation by currency, ratings, sector, and duration; Sector Allocation

and Issue Selection figures should be considered together since much of the decision to buy a security is based on the factors that contribute to its sector classification

“Valuation Effect” represents the difference between the Schroders pricing methodology and the Barclays Capital index pricing methodology
“Trading Impact” represents transaction costs (bid/offer) as well as pricing differential between executed prices on portfolio transactions and the end-of-day index prices

Note: performance shown is gross of management fees and fund expenses, not based on the Funds USD I class of shares (ticker SCHHGIA LX) Sources: Schroders; data for periods during 2012. Past performance is no guarantee of future results; please refer to prior page for more information.

SLIDE 60

Schroder ISF Global Corporate Bond

USD A Accumulation Shares Performance & Performance attribution

SLIDE 61

Schroder ISF Global Corporate Bond

Fund performance as at 31 December 2012

60

Schroder ISF Global Corporate Bond USD C Class Accumulation Shares

Note: performance shown is net of all management fees and fund expenses for the Fund’s USD C class of shares (ticker SCHHGCA LX) Sources: Schroders, Barclays Capital Past performance is no guarantee of future results. The value of an investment may go down as well as up and is not guaranteed. Please see the performance notes at the end

f this presentation for more information. Performance for periods longer than one year are annualized

1.76% 10.17% 6.41% 6.98% 6.17% 1.65% 10.36% 7.39% 6.51% 6.18%

0% 2% 4% 6% 8% 10% 12% 3 months 1 year 3 year p.a. 5 year p.a. 10 year p.a.

Schroder ISF Global Corporate Bond USD C Acc Shares Barclays Capital Global Aggregate Credit Index, USD Hedged

Alpha: +11 bp +19 bp -98 bp +47 bp -1 bp

(C-shares)

SLIDE 62

Schroder ISF Global Corporate Bond

Fund performance as at 31 December 2012

61

Schroder ISF Global Corporate Bond USD A Class Accumulation Shares

Note: performance shown is net of all management fees and fund expenses for the Fund’s USD A class of shares (ticker SCHHGBA LX) Sources: Schroders, Barclays Capital Past performance is no guarantee of future results. The value of an investment may go down as well as up and is not guaranteed. Please see the performance notes at the end

f this presentation for more information. Performance for periods longer than one year are annualized

1.69% 9.67% 5.97% 6.54% 5.67% 1.65% 10.36% 7.39% 6.51% 6.18%

0% 2% 4% 6% 8% 10% 12% 3 months 1 year 3 year p.a. 5 year p.a. 10 year p.a.

Schroder ISF Global Corporate Bond USD I Acc Shares Barclays Capital Global Aggregate Credit Index, USD Hedged

SLIDE 63

Schroder ISF Global Corporate Bond

Quarterly performance attribution summary over the past year

Schroder ISF Global Corporate Bond USD A Class Accumulation Shares

“Fund” refers to Schroder ISF Global Corporate Bond USD A Accumulation class of shares (ticker SCHHGBA LX); returns shown are net of all management fees & fund expenses “Benchmark” is the Barclays Capital Global Aggregate Credit Index, USD Hedged; “o/w” denotes Fund overweights versus its benchmark and “u/w” denotes underweights Sources: Schroders, Barclays Capital; data through 31 December 2012. Past performance is no guarantee of future results. The value of an investment may go down as well as up and is not guaranteed. Please see the performance notes at the end of this presentation for more information. 62

SLIDE 64

1 2 3 4 5 6 7 8 9 10 2 4 6 8 10 12 14

Schroder ISF Global Corporate Bond

The Fund provides attractive risk-adjusted performance after fees

Schroder ISF Global Corporate Bond USD A Class Accumulation Shares vs. Funds in the Morningstar peer universe – 5 years through 31 December 2012

Note: performance shown is net of all management fees and fund expenses for the Fund’s USD A Accumulation class of shares (ticker SCHHGBA LX) “Benchmark” is the Barclays Capital Global Aggregate Credit Index, USD Hedged *Peer Group average is based on the Morningstar USD Corporate Bond universe with 24 funds with 5-year data Sources: Schroders, Barclays Capital, Morningstar. Past performance is no guarantee of future results. The value of an investment may go down as well as up and is not

guaranteed. Please see the performance notes at the end of this presentation for more information.

Average Annual Total Return (in %) Volatility (annualized standard deviation of monthly returns, in %) Schroder ISF Global Corporate Bond USD A Accum Shares

2008 – 20012

Avg. Annual

Total Return Stnd Dev (Ann’l) Sharpe Ratio

SCHHGBA 6.54 5.05 1.73 Peer Group average* 6.14 6.70 1.27 Benchmark 6.51 4.95 n/a

Benchmark

*Peer Group average is based on the Morningstar USD Corporate Bond universe with 24 funds with 5-year data 63

SLIDE 65

Schroders approach to Global Credit

Team & process

SLIDE 66

Summary of recent developments

65

What’s changed in the past year?

Significant resource additions and upgrades across the global team
Enhanced integration and collaboration between the credit analysts and portfolio managers
Sarang Kulkarni, Pan-European Credit Portfolio Manager and a member of the London portfolio

management team for the past 4 years, was named Co-Fund Manager of the Fund

Performance across portfolios was solid – ahead of benchmarks
Continuing to see strong client interest & inflows in investment grade credit

What hasn’t changed?

Our overall philosophy and process remains consistent
Our team-based approach to portfolio management, capitalizing on regional sector specialists
Our focus on fundamental research

Schroder Global Credit team and process

Source: Schroders; as of 31 January 2013

SLIDE 67

Resources: Specialist Fixed Income Portfolio Management Teams Multi Sector US European Credit Australia Asia (EM+DM) Latin America Quant Research /

Systematic Macro 9 portfolio managers and analysts 14 portfolio managers and analysts* 7 portfolio managers* 6 portfolio managers and analysts 10 portfolio managers and analysts 9 portfolio managers and analysts 5 portfolio managers and analysts

European Credit Research Americas Credit Research Asia & Australia Credit Research Patrick McCullagh Jack Davis Richard Brown 7 credit analysts 14 credit analysts 9 credit analysts Global Credit Portfolio Managers Sarang Kulkarni, Co-Lead Mgr (15 years) Wes Sparks, Lead Manager (24 years) Chris Tackney, EM Corporates (17 years) Lucette Yvernault, European IG (13 years) Gregg Moore, US IG (16 years) Ryan Mostafa, US IG (10 years)

66

Schroder Global Credit portfolio management team

A core group of 6 portfolio managers, supplemented by the full credit team

Source: Schroders; as of 31 January 2013

SLIDE 68

C. Ames (NY)
E. Fitzpatrick (NY)
D. Harris (NY)
L. Hornby (NY)
T. Hui (NY)
M. Metcalf (NY)
G. Moore (NY)
R. Mostafa (NY)

L.Patterson (NY)

W. Sparks (NY)

Fund Management Assistants Risk Management

R. Brown (SIN)
T. Cha (NY)
R. Chia (SIN)
C. Croteau (NY)
J. Davis (NY)
R. Doig (LN)
E. Friedland (NY&PHL)
H. Fullam (NY)
P. Fullerton (SYD)
A. Harnetty (LN)
B. Hill (NY)
E. Kelly (PHL)
S. Kiran (LN)
S. Kong (SIN)
N. Krol (LN)
A. Low (SYD)
V. Maniar (LN)
H. Mason (SYD)
P. McCullagh (LN)
T. Nagato (TYO)

P.F. Ng (HKG)

S. Park (NY)
C. Peat (LN)
A. Quadri (NY)
E. Richter* (NY)
L. Tiphanie (BA)
H. Thomas (NY)
J. Widener (NY)
M. Wong (SIN)
M. Yee (NY)
P. Yudhana (JAK)
N. Adatia (NY)
W. Clayton-

Howe (LN)

A. Finlayson

(SYD)

T. Hoffer (NY)
B. Khoo (SIN)
A. Lee (HKG)
M. Smith (LN)
C. Su (SIN)
P. Vespa (LN)
R. Warr (LN)
B. Wu (NY)

H.L. Yu (HKG)

A. Arthur (NY)
H. Choon (SIN)

T Stephane (BA)

J. Stewart (LN)
H. Webb (LN)
A. Burt (LN)
G. Canavan (LN)
K. Chow (SYD)
S. Dow (NY)
D. Enlund (SIN)
M. George (LN)
A. Gendron-Judd (LN)
J. Harris (LN)

N.G. Kim (SEL)

B. Lee (TPE)
S. Mead (LN)
T. Miyata (TYO)
I. Morita (TYO)
R. Omensetter (PHL)
E. Reilly (LN)
S. Scott (NY)
M. Shankar (NY)
W. Sweeney (PHL)
C. Tams (LN)
M. Tolcher (LN)
A. Wang (TPE)
D. Welch (NY)
V. Yong (SIN)
L. Binns (LN)
D. Bristow (LN)
M. Lynch (LN)
A. Patel (LN)

Schroder Global Credit team and resources

67

Karl Dasher Head of Fixed Income

B. Bahra (LN)
A. Blair (LN)
F. Bourgoin

(LN)

S. Dear (SYD)
S. Doyle (SYD)
S. Gray (SYD)
M. Kase (SYD)
S. Stevenson

(SYD)

K. Wood (SYD)
S. Beck (PHL)
D. Darling (PHL)
R. Haynes (PHL)
D. Scholl (PHL)
P. Albina (BA)
J. Barrineau (NY)
M. De Callis (SP)
M. Fiorito (BA)
F. Grisales (NY)
A. Moseley (NY)
J. Seixas (SP)
C. Tackney (NY)

Research & Systematic Macro US Taxable Fixed Income Australian Fixed Income Asian Fixed Income Europe & UK Credit US Tax-Exempt Fixed Income EMD Relative & Latin American Fixed Income

Philippe Lespinard Fixed Income CIO

C.Y. Ang (SIN)

D. Carrell (SIN)
L. Chua (SIN)
R. de Mello (SIN)
S. Hartawan (JAK)
J. Ho (SIN)
A. Hui (HKG)
T. Kanemaru

(TYO)

N.K.Kim (SEL)

B. Lee (TPE)
P. van der

Schaft (HKG)

A. Wang (TPE)

Other Resources available to the investment team. This also includes an Equity Research team of over 90 analysts globally Source: Schroders as at January 2013; Names in bold are team leaders, and names in orange are the portfolio managers for Schroder ISF Global Corporate Bond; note that professionals in offices

ther than London are indicated by city codes after their names;
S. Bense (LN)
N. Biggs (LN)
A. Coy (LN)
S. Doyle (LN)
A. Hassan (LN)
C. Jankowski (PHL)
C. Kirby (LN)
J. Lauder (LN)
C. Matthew (LN)
A. Moscow** (LN)
R. Patel (LN)
G. Povey (LN)
A. Pryce-Robertson (LN)
A. Rawlinson (LN)
D. Sharrad (LN)
S. Stewart (NY)
F. Walfridsson (LN)

Economics Fixed Income Dealers

J. Bilson (LN)
T. Fong (LN)
K. Wade (LN)
A. Zangana (LN)
J. Baulch (NY)
G. J. Choi (SEL)
D. Fenwick (LN)
M. Field (LN)
W. Lee (SIN)
P. Meakin (LN)
K. Ow (SIN)
N. Robinson (LN)
T. Ukim (JAK)

Product Management Fixed Income IT & Operations Credit Research S.Kulkarni (LN)

K. Leidman(LN)

D Manek (LN)

M. Scott (LN)
A. Stewart (LN)
R. Shah (LN)
P. Vogel (LN)
L. Yvernault

(LN)

F.I. Derivative Operations Global, UK & Euro Multi Sector

B. Choda (LN)
J. Fairest (LN)
E. Halley (LN)
G. Isaac (LN)
B. Jolly (LN)
B. Popovici (LN)
T. Sartain (LN)
D. Scammell (LN)
J. Tisserand (LN)

SLIDE 69

 Jim Barrineau – Co-Head of Emerging Markets Relative Return Strategies as EM sovereigns specialist  Fernando Grisales – Senior Portfolio Manager, Emerging Markets  Alec Moseley – Senior Portfolio Manager & Emerging Markets Sovereign Research Analyst  Chris Tackney – Emerging Markets corporate bond trading specialist with more than 15 years of experience  Alix Stewart – Lead Portfolio Manager, UK Credit  Konstantin Leidmann – Lead Portfolio Manager, Pan-European High Yield  Patrick Vogel – Head of European Credit and Lead Portfolio Manager, European Credit

We have added to our roster of senior investment professionals with recent hires



Note: Professionals listed above have joined the Schroders Global Fixed Income team within the past year as of 31 December 2012

We have deepened our skill base in key areas

Schroder Global Fixed Income – team evolution

68

SLIDE 70

Schroder Global Fixed Income

Global integration of resources facilitates sharing of ideas

Meeting description Timing Participants Issues discussed and focus of meeting

Quarterly Investment Forum Quarterly – PMs – Quantitative Analysts – Economists – Long-term economic direction – Debates on market outlook and special topics – Development of strategy roadmap; signposts to monitor Macro Economic Monthly – PMs – Quantitative Analysts – Economists – Near term economic direction – Quantitative model review Global Fixed Income Weekly – PMs – Credit Analysts – Economists – Global fixed income views, macro themes and strategy Fixed Income Strategy (US / Pan-European / Asian) Weekly: Tuesdays – PMs – Economists – Regional bond market investment themes & outlook – Asset allocation across broad fixed income sectors, duration bias and curve preferences Credit Strategy: Top-Down Weekly: Wednesdays – PMs – Credit Analysts – Quantitative Analysts – Credit strategy themes, macro market outlook and regional credit market technical factors, and also quantitative tool input Credit Strategy: Bottom-Up Weekly – PMs – Credit Analysts – Credit analysts’ top ideas and changes to credit views or industry views – Navigator tool discussion of sector & industry views Trading Update (US) Daily – All US investment professionals – Latest market-moving news and implications for valuations and equity & fixed income portfolio positioning

Frequent meetings foster discussion and promote accountability

69

SLIDE 71

Schroder Global Credit investment process

Our focus on six alpha drivers can lead to strong performance

1) Sector and industry selection – by overweighting or underweighting specific market segments out of the of 18 sectors and 50 industries that comprise the index 2) Quality tilt – by overweighting or underweighting BBBs versus higher-rated credit, as well as allocations to high yield credit 3) Issue selection – by picking specific issuers, and relative value decisions across such alternatives as bonds vs CDS, secured vs unsecured, senior vs subordinated, covenant protection vs covenant-light bonds, bonds with or without change of control put provisions, fixed-rate vs floating rate notes, and callable vs non-callable bonds 4) Geographic region – by country exposure and currency selection (hedged) 5) Duration and curve positioning 6) Liquidity management and net credit risk exposure – by use of cash holdings, active government bond duration management, and net CDS exposure

70

SLIDE 72

Schroder Global Credit investment process

Three different levels of strategy analysis shape overall portfolio construction

Macro Strategy – Global investment themes – Quantitative valuation tools – Country risk analysis – Duration and yield curve management Sector Strategy – PM & Analyst 1-3 Sector View – IG and HY Navigator tool – Credit sector Z-scores – Portfolio manager input on technicals Single Name Strategy – Analyst Opinion (fundamental credit direction) – Analyst 1-4 Issuer Recommendation – Movers & Shakers report – Valuation screens by PMs

Expected returns Geographic bias Quality tilt Duration & curve Portfolio hedges Issue selection Schroder ISF Global Corporate Bond portfolio

Bottom-up input Top-down input

Sector allocation Industry selection

71

SLIDE 73

Risk budgeting and risk management drives overall portfolio construction

Schroder Global Credit investment process

Q3: How do we monitor overall portfolio risk? Q2: What risks need to be managed? Q1: What risks do we want to take?

(Risks where we are well compensated)

Beta VaR ICLs Tracking Error Currency Regions Sectors Curve Structure Tactical hedges Industry Views Investment Themes Analyst Issuer Recommendations

72

SLIDE 74

Macro strategy – use of both qualitative and quantitative tools

Various tools contribute to our outlook on the macroeconomic backdrop

Economics Valuation Models Technicals

Fundamental sector scorecards Quantitative credit scorecard

Equity market Non-farm payrolls Industrial production Retail sales Personal income

– Disciplined monthly framework for discussion and validation of investment themes – – Common process across regions and markets enables useful comparison –

73

SLIDE 75

0% 25% 50% 75% 100% Dec '07 Jun '08 Dec '08 Jun '09 Dec '09 Jun '10 Dec '10 Jun '11 Dec '11 Jun '12 Source: Schroders internal quantitative risk aversion indicator, the Schroders Panic Index; data through 31 December 2012

Quant tools can guide when to use tactical hedges as market shifts to “risk off”

Schroders Panic Index

Panic scale Latest data (31 Dec 2012): Panic scale 0%

Our own indicator of risk aversion includes >30 financial market data series worldwide

74

Macro strategy – use of quantitative indicators

SLIDE 76

Issuer selection

Three facets of our approach guide the credit selection process

75

* Note: The portfolio’s benchmark is Barclays Capital Global Aggregate Credit Index, USD hedged Source: Schroders

View Angle Scale Description

Opinion

Credit quality direction Improving Moderately Improving Stable Moderately Declining Declining – Fundamental view on the expected direction of credit based on a 6 to 12 month outlook – Not a measure of absolute quality – Trajectory of the issuer is the key focus to determine the fundamental credit opinion, not just a snapshot analysis

f credit metrics at one point in time

Recommendation

within each analyst’s Issuer Universe Credit view versus market expectations

1 “buy” 2 “overweight” 3 “underweight” 4 “sell”

– Measure of relative strength of Schroders’ view versus the market consensus – in both magnitude and direction – Rating based on potential undervaluation compared to market expectations – Cannot go long issuers ranked “4 – D” – Cannot be short issuers ranked “1”

Issuer Concentration Limits

Maximum issuer weightings determined by current ratings and potential volatility Maximum overweight vs benchmark* – Issuer Concentration Limits (ICL %) are based on current credit ratings and potential downside price volatility – For any credit owned that experiences substantial downside price volatility, we assemble Special Credit Situation (“SCS”) swat teams to objectively analyze such an issuer’s prognosis – Risk management step applies to total portfolio; in addition to Issuer Concentration Limits to force diversification, we actively manage overall portfolio Tracking Error Volatility (TEV) A – AAA, stable credits B C D E – Low-rated, volatile credits 5.00% 3.00% 1.80% 1.20% 0.60%

SLIDE 77

Issuer selection

Fundamental credit analysis – multiple inputs to our credit opinion

Source: Schroders

– Financial policy – Profitability – Cash flow – Capital structure – Financial flexibility / maturity profile of debt

Financial profile

– Industry prospects – Market position – Management strategy – Operating efficiency

Business profile

Current ability of company to generate cash flow

Credit Opinion

Future ability of company to generate cash flow

Analyst’s experience and judgment

76

SLIDE 78

Sector strategy

Collaborative process with both fundamental & quantitative inputs

77 *Horizon used to evaluate Industry Views (or Sector Views) is over the next 3-month period, and these views are comprehensively reviewed on a bi-monthly basis during the weekly Credit Strategy Meetings; Industry Views are jointly determined by credit analysts and portfolio managers Source: Schroders

Industry View* macroeconomic and fundamental credit trends

1 = Sectors expected to outperform Index 2 = Sectors expected to perform in-line with Index 3 = Sectors expected to underperform Index

Analyst Portfolio Manager

Fundamental sector opinion

(Positive, Stable or Negative)

Analysis of sector valuations

valuation metrics such as yields, spreads (OAS, STW),

spreads per unit of leverage, spreads per unit of duration

Relative value of issuers in sector
Sector performance
Sector and industry trends
Sector performance and beta
Relative value across sectors
Inputs from quantitative analysis
Index composition and characteristics
Technical market conditions

discussion

SLIDE 79

Portfolio construction

Our credit matrix combines Issuer Recommendation and Industry Views

Source: Schroders a These issuer/industry combinations can be good candidates to be used as a short leg on a CDS paired trade b These issuer/industry combinations must be re-evaluated quickly at major market turning points

1

utperform

2

in-line

3

underperform

1

buy

strong buy buy hold b

2

verweight

buy hold avoid / reduce b

3

underweight

hold b avoid / reduce a sell a

4

sell

avoid a sell a strong sell a

Industry View Issuer Recommendation

Issuer Recommendation

1 = strongest (buy) 2 (overweight) 3 (underweight) 4 = weakest (sell) 4D = toxic (cannot own)

Industry View

1 = strongest (outperform index) 2 = neutral (expect in-line performance) 3 = weakest (underperform index)

Legend of color codes

= overweight bias = underweight bias / avoid = sell / buy protection in CDS

78

SLIDE 80

Portfolio construction

Sample credit matrix – Tom Cha – North American investment grade TMT

Data as of 31 January 2013; at that time, Tom Cha had 60 issuers under his Investment Grade Primary Coverage Universe, 16 of which were 1s, 17 were 2s, 19 were 3s, and 8 were 4s (for a distribution of 27%, 28%, 32%, and 13%, respectively, versus the idealized distribution of 20%, 30%, 30%, and 20%) Securities mentioned are not necessarily holdings in any portfolio, and the views and opinions expressed in this presentation may change

79

SLIDE 81

Europe

INDEX FUND INDEX FUND INDEX FUND INDEX FUND DIFF INDEX FUND DIFF INDEX FUND DIFF CHEMICALS 105

3.77
28
0.52

0.00 (0.52) 0.02 0.00 (0.02) 0.02 0.00 (0.02) METALS_AND_MINING 396 351 4.86 6.64 81 53 0.29 0.56 0.27 0.01 0.04 0.02 0.06 0.11 0.06 PAPER 110

3.18
35
0.01

0.00 (0.01) 0.00 0.00 (0.00) 0.00 0.00 (0.00) AEROSPACE/DEFENSE 295

5.13
58
0.09

0.00 (0.09) 0.00 0.00 (0.00) 0.01 0.00 (0.01) BUILDING_MATERIALS 154 331 4.78 3.90 32 85 0.38 0.45 0.07 0.02 0.02 (0.00) 0.03 0.06 0.03 CONSTRUCTION_MACHINERY 118 458 4.42 2.28 27 201 0.11 0.07 (0.04) 0.01 0.00 (0.00) 0.00 0.01 0.00 DIVERSIFIED_MANUFACTURING 120

5.51
22
0.49

0.00 (0.49) 0.03 0.00 (0.03) 0.03 0.00 (0.03) ENVIRONMENTAL

868
2.01
433

0.00 0.07 0.07 0.00 0.00 0.00 0.00 0.01 0.01 PACKAGING

356
0.48
738

0.00 0.14 0.14 0.00 0.00 0.00 0.00 0.00 0.00 TECHNOLOGY 189

5.07
37
0.05

0.00 (0.05) 0.00 0.00 (0.00) 0.00 0.00 (0.00) MEDIA_CABLE 177 340 0.98 1.17 180 291 0.01 0.26 0.25 0.00 0.00 0.00 0.00 0.01 0.01 MEDIA_NONCABLE 140 285 4.19 7.55 33 38 0.31 0.26 (0.05) 0.01 0.02 0.01 0.01 0.06 0.04 WIRELINES 221 280 5.75 6.79 38 41 1.96 1.07 (0.89) 0.11 0.07 (0.04) 0.25 0.18 (0.07) WIRELESS

748
4.52
166

0.00 0.21 0.21 0.00 0.01 0.01 0.00 0.07 0.07 AUTOMOTIVE 121 3.18 1.89 38 1.14

0.05

(1.19) 0.04 0.00 (0.04) 0.03 0.00 (0.03) CONSUMER_CYCLICAL_SERVICES 171 284 3.40 1.76 50 161 0.07 0.14 0.07 0.00 0.00 0.00 0.00 0.01 0.00 ENTERTAINMENT 310

6.41
48
0.01

0.00 (0.01) 0.00 0.00 (0.00) 0.00 0.00 (0.00) GAMING

1915
2.24
856

0.00 0.06 0.06 0.00 0.00 0.00 0.00 0.02 0.02 HOME_CONSTRUCTION

LODGING

153

2.99
51
0.01

0.00 (0.01) 0.00 0.00 (0.00) 0.00 0.00 (0.00) RESTAURANTS

RETAILERS

108

2.94
37
0.03

0.00 (0.03) 0.00 0.00 (0.00) 0.00 0.00 (0.00) TEXTILE

OAS

OASD OAS / OASD MV % CTOASD CTDTS United Kingdom

INDEX FUND INDEX FUND INDEX FUND INDEX FUND DIFF INDEX FUND DIFF INDEX FUND DIFF CHEMICALS

METALS_AND_MINING

158 138 5.81 8.02 27 17 0.18 0.30 0.12 0.01 0.02 0.01 0.02 0.03 0.02 PAPER 204

5.33
38
0.01

0.00 (0.01) 0.00 0.00 (0.00) 0.00 0.00 (0.00) AEROSPACE/DEFENSE 170

6.03
28
0.07

0.00 (0.07) 0.00 0.00 (0.00) 0.01 0.00 (0.01) BUILDING_MATERIALS 152

8.89
17
0.01

0.00 (0.01) 0.00 0.00 (0.00) 0.00 0.00 (0.00) CONSTRUCTION_MACHINERY

DIVERSIFIED_MANUFACTURING

186

6.16
30
0.01

0.00 (0.01) 0.00 0.00 (0.00) 0.00 0.00 (0.00) ENVIRONMENTAL

PACKAGING
TECHNOLOGY
MEDIA_CABLE

286 380 4.45 6.16 64 62 0.05 0.44 0.39 0.00 0.03 0.02 0.01 0.10 0.09 MEDIA_NONCABLE 165 192 4.97 6.70 33 29 0.15 0.93 0.78 0.01 0.06 0.06 0.01 0.11 0.10 WIRELINES 157 6.53 2.12 24 0.16

0.04

(0.20) 0.01 0.00 (0.01) 0.02 0.00 (0.02) WIRELESS 103 241 5.41 4.73 19 51 0.37 0.12 (0.25) 0.02 0.01 (0.01) 0.02 0.01 (0.01) AUTOMOTIVE 174

2.76
63
0.03

0.00 (0.03) 0.00 0.00 (0.00) 0.00 0.00 (0.00) CONSUMER_CYCLICAL_SERVICES 129 200 5.30 6.21 24 32 0.12 0.07 (0.05) 0.01 0.00 (0.00) 0.01 0.01 0.00 ENTERTAINMENT

GAMING
HOME_CONSTRUCTION
LODGING

140 196 1.80 3.57 78 55 0.02 0.31 0.29 0.00 0.01 0.01 0.00 0.02 0.02 RESTAURANTS

RETAILERS

244 225 5.49 6.43 45 35 0.04 0.32 0.28 0.00 0.02 0.02 0.01 0.04 0.04 TEXTILE

CONSUMER_PRODUCTS
FOOD_AND_BEVERAGE

97 171 4.83 5.64 20 30 0.22 0.17 (0.04) 0.01 0.01 (0.00) 0.01 0.02 0.00

OAS OASD OAS / OASD MV % CTOASD CTDTS

Portfolio construction

Industry views are comprehensively reviewed with the aid of our Navigator Tool

This is an excerpt from Navigator Tool report from the Credit Meeting on 16 November 2012; the Global Credit Navigator shows portfolio positioning vs. index by industry and sector by region. Sources: Schroders, Barclays Capital; data as of 16 November 2012 Sectors are shown for illustrative purposes only and should not be viewed as a recommendation to buy/sell

N

rth America

INDEX FUND INDEX FUND INDEX FUND INDEX FUND DIFF INDEX FUND DIFF INDEX FUND DIFF CHEMICALS 129 178 6.38 8.66 20 20 0.67 0.62 (0.05) 0.04 0.05 0.01 0.07 0.10 0.03 METALS_AND_MINING 224 232 7.63 8.03 29 29 0.63 0.92 0.29 0.05 0.07 0.03 0.12 0.20 0.08 PAPER 195 199 7.26 5.91 27 34 0.17 0.30 0.13 0.01 0.02 0.01 0.03 0.03 0.01 AEROSPACE/DEFENSE 112 117 7.41 7.69 15 15 0.34 0.15 (0.19) 0.03 0.01 (0.01) 0.03 0.01 (0.02) BUILDING_MATERIALS 267 721 6.83 5.14 39 140 0.06 0.01 (0.05) 0.00 0.00 (0.00) 0.01 0.00 (0.01) CONSTRUCTION_MACHINERY 68 191 5.79 4.38 12 44 0.44 0.38 (0.06) 0.03 0.02 (0.01) 0.02 0.05 0.03 DIVERSIFIED_MANUFACTURING 103 117 7.90 16.59 13 7 0.77 0.31 (0.45) 0.06 0.05 (0.01) 0.07 0.07 0.00 ENVIRONMENTAL 160 148 8.07 7.41 20 20 0.14 0.14 0.00 0.01 0.01 (0.00) 0.02 0.01 (0.01) PACKAGING 189 583 8.04 1.39 24 420 0.02 0.16 0.14 0.00 0.00 0.00 0.00 0.01 0.01 TECHNOLOGY 135 135 6.26 7.99 22 17 1.67 3.56 1.89 0.10 0.28 0.18 0.16 0.33 0.17 MEDIA_CABLE 168 217 8.24 7.23 20 30 0.99 1.44 0.45 0.08 0.10 0.02 0.17 0.26 0.10 MEDIA_NONCABLE 160 240 8.29 12.12 19 20 0.63 1.55 0.91 0.05 0.19 0.13 0.10 0.42 0.32 WIRELINES 154 190 8.14 13.67 19 14 1.48 0.15 (1.32) 0.12 0.02 (0.10) 0.22 0.04 (0.18) WIRELESS 138 170 6.98 6.69 20 25 0.62 1.55 0.94 0.04 0.10 0.06 0.07 0.14 0.08 AUTOMOTIVE 189 305 4.43 4.72 43 65 0.51 0.74 0.23 0.02 0.03 0.01 0.05 0.11 0.06 CONSUMER_CYCLICAL_SERVICES 163 578 6.70 5.74 24 101 0.11 0.38 0.26 0.01 0.02 0.01 0.01 0.12 0.11 ENTERTAINMENT 144 180 8.17 15.39 18 12 0.45 0.09 (0.35) 0.04 0.01 (0.02) 0.06 0.03 (0.04) GAMING 324 860 4.30 5.18 75 166 0.01 0.04 0.03 0.00 0.00 0.00 0.00 0.02 0.02 HOME_CONSTRUCTION 211

8.11
26
0.01

0.00 (0.01) 0.00 0.00 (0.00) 0.00 0.00 (0.00) LODGING 178 265 4.69 8.15 38 33 0.05 0.14 0.09 0.00 0.01 0.01 0.00 0.03 0.03 RESTAURANTS 106 181 8.43 11.85 13 15 0.17 0.05 (0.12) 0.01 0.01 (0.01) 0.02 0.01 (0.01) RETAILERS 117 131 8.73 8.62 13 15 1.31 1.86 0.56 0.11 0.16 0.05 0.16 0.23 0.07 TEXTILE 130

10.61
12
0.01

0.00 (0.01) 0.00 0.00 (0.00) 0.00 0.00 (0.00) CONSUMER_PRODUCTS 89

6.91
13
0.45

0.00 (0.45) 0.03 0.00 (0.03) 0.03 0.00 (0.03) FOOD_AND_BEVERAGE 110 129 6.84 7.57 16 17 1.47 1.65 0.18 0.10 0.13 0.02 0.14 0.18 0.04 HEALTHCARE 121 225 6.27 7.72 19 29 0.82 0.87 0.05 0.05 0.07 0.02 0.07 0.16 0.09

CTDTS OAS / OASD OAS OASD MV % CTOASD

80

SLIDE 82

Portfolio construction

Fixed Income Analytics provides custom reports for insights into portfolio risks

81 Source: Schroders

SLIDE 83

Equity & debt analysts share common research platform

An integrated approach to company analysis

Source: Schroders as at November 2012

Company Name Schroders Equity Analyst’s view Schroders Credit Analyst’s view

82

SLIDE 84

Schroder Global Credit investment process

We actively manage the Fund – our buy & sell discipline

 Buys

– Evaluate investment ideas with credit analysts

– “Opportunities now” – “Opportunities waiting to happen” – “Cheap for a reason” (leads to our decision to pass on investing in an issuer) – Identify positive catalysts that may shift market sentiment

 Sells

– To trim credit exposure when bonds are appreciating through “fair value”

– To capitalize on relative value trading opportunities (swap for a yield pick-up, or dollar take-out, for comparable credit risk, etc.) – To manage either credit-specific or overall portfolio risk*

*Note: Schroders assembles Special Credit Situations (“SCS”) swat teams to determine prognosis on credits with bad news developments

83

SLIDE 85

Schroder Global Credit investment process

A few final comments about portfolio management

 How size of new position is determined

– Analyst Credit Opinion and Issuer Recommendation are primary drivers of positioning – Several other key factors influence the sizing of a position – such as liquidity, availability/source-ability in secondary trading, available cash, conviction in total return opportunity in the trade – Issuer Concentration Limit caps the maximum percentage allowed to be owned

 How portfolio is reviewed on an on-going basis

– On a daily basis by the US and European portfolio management & trading desks – On a weekly basis in two weekly credit strategy meetings and in two other portfolio management meetings (different meetings cover different topics)

 Role of analysts

– Each analyst covers approximately 50-70 credits in each analyst’s “Primary Coverage Universe” – Analysts’ annual bonuses are partially determined by the outperformance of credits rated 1 & 2 versus their credits rated 3 & 4 (underweight or sell) – Analysts have “skin in the game” – they feel an ownership stake in portfolio performance

84

SLIDE 86

Risk management & compliance

Risk control is as much about philosophy as it is about the specific systems used

Fixed income Analytics*

Position monitoring Allocation by: – Market value percent – Duration – rate & spread – Yield curve – Country exposure – Currency – Sector – Rating – OAS & ASW – Credit beta – DTS Portfolio liquidity monitoring

Charles River

Execution and compliance – Online pre-trade compliance – Trade execution system – On-going portfolio compliance – Derivative team sheet application

Barclays Capital POINT

Risk analysis Detailed tracking error analysis: post trade Tracking error contribution: – Credit & EMG spreads – Default risk – Idiosyncratic risk – Swap spread – Yield curve – Volatility – FX – Other

*Proprietary to Schroders

Fixed Income Risk Committee

85

SLIDE 87

Risk management – utilizing a multi-factor model

Portfolio and Index Tool (POINT) provides flexibility to monitor many risk metrics

Barclays Capital’s Global Risk Model*

– allows portfolio managers to quantify expected performance (tracking error volatility) between a portfolio and

benchmark – allows managers to find optimal transactions to reflect specific views – includes well-tested modeling techniques that are widely viewed as the industry standard

Applications of the risk model and the POINT system

– structuring efficient active portfolios in fixed income

– evaluating proposed trades and how they would impact aggregate portfolio risk exposures – defining plausible market scenarios for stress testing – risk budgeting, what-if analysis, total return projections based on historical price volatilities & correlations across securities

*Note that prior to November 2008, this Global Risk Model was branded under the Lehman Brothers name Access to the model is provided through the Barclays Capital Portfolio and Index Tool (POINT) Source: The Lehman Brothers Global Risk Model: A Portfolio Manager’s Guide, April 2005

86

SLIDE 88

Risk management – utilizing the Barclays POINT system

Portfolio risk report summary

Source: Barclays Capital POINT

Risk factors and their contribution to Tracking Error Volatility Idiosyncratic risk attributable to specific issuers – based on both

verweights and

underweights vs benchmark

87

SLIDE 89

Risk management

Monitoring Issuer Concentration Limits on Schroders FIA

Source: Schroders Fixed Income Analytics (FIA)

Monitoring exposure to individual issuers to avoid outsized idiosyncratic risk

This report identifies the Fund’s exposures to individual issuers and flags any tickers that are in breach of the Issuer Concentration Limits Issuer Concentration Limit (ICL%) (an internal risk system) Maximum issuer weightings are determined by current ratings of Moody’s and S&P, as well as by the potential for downside price volatility

88

SLIDE 90

Risk management

Special Credit Situations (SCS) – Handling bad news on a company

Special Credit Situations defined

– whenever there is material adverse news on an issuer we own in portfolios

– and/or when an individual bond sells off materially relative to the general market

SCS swat team (task force)

– An ad hoc team is assembled & a thorough review of the credit situation is conducted – SCS swat team involves the original credit analyst and the original portfolio manager involved in buying the bond, as well as the regional Head of Credit Research and at least one other portfolio manager and one other analyst with relevant expertise to the industry and credit being scrutinized – The motivation is to remove any inclination of analysts to “dig in their heels” and continue recommending a credit that is materially underperforming, and to avoid “doubling down” on losing bets that don’t have prospects

f recovering

– After the facts are reviewed, various viewpoints are solicited amongst the SCS team members and a decision is made as to whether to cut the position in half, sell it all, or hold it – A determination is made of what additional information may need to be gathered, and the credit analyst covering the issuer is required to provide high frequency communication to the team on continuing news developments

Our SCS approach to troubled credits fosters an early exit before a potential default

89

SLIDE 91

Why Schroders for Global Credit?

90

Fundamental approach

research-driven, bottom-up approach to portfolio construction with top-down strategy input

Global platform, local presence

– strength of presence in both Europe and Asian credit markets – optimal size in the “sweet spot” of institutional corporate credit investing

Active fund management

rientation

– benchmark aware, but not a quasi- index fund – credit specialists with concentrated focus – medium sized positions creates advantages (we’re nimble)

Big toolbox

use of CDS to tail risk and generate alpha from credit selection – single-name CDS (both long risk and short risk) – CDS indices (iTraxx in Europe; CDX in the US) and options on indices

Focus on risk management

strong risk management – use of issuer concentration limits, special credit situations task force teams, and active management of the portfolio’s tracking error volatility

You choose your currency

we don’t mix currency speculation with our management of corporate bond portfolios – all non-USD bond positions are hedged to USD in the portfolio

– you choose your currency share class: USD, SGD hedged, AUD, GBP, or EUR hedged shares

SLIDE 92

Appendix

DTS: A preferred measure of credit risk Biographies of key professionals

SLIDE 93

DTS: A preferred measure of credit risk

Duration Times Spread (DTS) is a useful metric to compare credit beta

Spread volatility of credit securities is proportional to spread level across a wide range of spreads

 A long-dated bond with a wide spread would be more volatile than a short-dated bond with a tight spread

Example: Long-dated Bank of America Corp versus short-dated JP Morgan Chase Bank NA – BAC 5.875% Jul 2042 has a DTS of 2449 (spread duration 14.40 x spread 170) – JPM 6.00% Jan 2017 has a DTS of 460 (spread duration 4.11 x spread 112)

 During a period of credit market weakness, the bonds with the higher DTS can be expected to sell off more than the bond with the

lower DTS but would outperform during a period of strength

Excess return volatility is proportional to DTS

 For every 100 bps of increase in DTS there is a 9 bps pickup in excess return volatility, based on historical evidence

 Exposures to both credit sectors and individual issuers should be measured in terms of contributions to DTS rather than to duration

alone

 The DTS concept is applicable to corporate bonds, emerging markets bonds, European sovereign bonds, and CDS

Sizing of positions in a credit portfolio may be based on DTS

A 1% market value exposure to an 8-year duration bond at a spread of +100 bps will tend to exhibit similar price volatility as a 0.5% exposure to a 4-year duration bond with a spread of +400 bps

Source: Barclays Capital (formerly Lehman Brothers) Quantitative Portfolio Strategies publications on DTS from 2005 to 13 April 2011; data for example as of 28 February 2013 92

SLIDE 94

Schroder Global Credit

Biographies of the portfolio managers

93 Ryan Mostafa, CFA

US Credit Portfolio Manager 2005 Schroders 2004 Blackrock, Portfolio Analytics Analyst and Risk Management Analyst 2002 JP Morgan Chase, Credit Derivatives Analyst and P&L Analyst BSc, Duke University General Course Degree Economics, London School of Economics 10 years of investment experience 7 years with Schroders

Gregg Moore, CFA

US Credit Portfolio Manager 2001 Schroders 1999 Aeltus Investment Management, Inc., Quantitative Research Analyst 1998 CIGNA Investment & Management, Quantitative Research Analyst 1996 CIGNA Investment & Management, Financial Analyst BA, University of Connecticut 16 years of investment experience 11 years with Schroders

Wesley A. Sparks, CFA

Head of US Fixed Income Lead Fund Manager, Schroder ISF Global Corporate Bond 2000 Schroders 1999 Aeltus Investment Management, Inc., Vice President and Portfolio Manager 1996 Trust Company of the West, Vice President and Portfolio Manager 1994 Fischer Francis Trees & Watts, Assistant Portfolio Manager 1989 Goldman Sachs Asset Management, Associate 1988 Goldman, Sachs & Co., Financial Analyst The Wharton School, University of Pennsylvania, MBA Northwestern University, BA 24 years of investment experience 12 years with Schroders

Sarang Kulkarni, CFA

Co-Lead Fund Manager, Schroder ISF Global Corporate Bond 2008 Schroders 2002 Aerion Fund Management, Senior Portfolio Manager 2000 Anderson Corporate Finance, Investment Banker, specialising in structured debt financing for utilities and infrastructure projects IIM Calcutta, Post Graduate Diploma in Management University of Bombay, BE 15 years of investment experience 4 years with Schroders

SLIDE 95

Schroder Global Credit

Biographies of the portfolio managers

94 Lucette Yvernault

Global Credit Portfolio Manager 2005 Schroders 2003 CAM Global Credit, Vice President 2001 Citigroup, Fund Manager, currencies and investment grade credit 2000 CMG First State Investment Hong Kong, Associate Fund Manager EPF Sceaux, Mastaire of Engineering in Management and Financial Analysis 13 years of investment experience 7 years with Schroders

Christopher Tackney, CFA

Senior Portfolio Manager, Emerging Markets Fixed Income 2012 Schroders 2010 Credit Suisse, Director, Trader – Asia Credit 2005 Black-River Asset Management, MD of Emerging Market Corporate Credit 1995 TIAA-CREF, Director of Emerging Market Debt Portfolio Manager New York University, MBA Bucknell University, BA 17 years of investment experience <1 year with Schroders

SLIDE 96

Important information

95

Schroder ISF Global Corporate Bond: Investments in debt securities are primarily subject to interest rate, credit and default risks and, potentially, to currency exchange rate risk. This fund may use financial derivative instruments as a part of the investment process. This may increase the fund’s price volatility by amplifying market events. 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 presentation 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 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. The forecasts included in this presentation 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. Schroders has expressed its own views and opinions in this presentation and these may change. Source for rating: Morningstar as at July 2012 This presentation is issued in January 2013 by Schroder Investment Management Limited, 31, Gresham Street, EC2V 7QA, who is authorised and regulated by the Financial Services Authority. For your security, all telephone calls are recorded. UK03427