Fixed Income Roadshow Schroders by liaoqinmei

VIEWS: 25 PAGES: 52

									Schroders Road Show
           Fixed Income




        02 – 04 November 2011
                                                                                                                Opportunities in Macro

                                                                                                                Bob Jolly
                                                                                                                Head of Global Macro, Fixed Income




                                                                                                                                                         October 2011 | For professional investors or advisers only




    The perfect storm in August
    Macro concerns over the economy and battles in Washington & the Eurozone had a big
      impact
    Negative sentiment hit extreme levels in August                                                             The Fed is battling a crisis of confidence
    VIX index                                                                                                   University of Michigan Consumer Confidence indices
    80                                                                                                          120

    70                                                                                                          110

    60                                                                                                          100

    50                                                                                                           90

    40                                                                                                           80

    30                                                                                                           70

    20                                                                                                           60

    10                                                                                                           50

     0                                                                                                           40
     2006              2007              2008             2009              2010             2011                  2006               2007             2008                2009       2010           2011
                                                                                                                           Consumer Sentiment                    Current Conditions            Expectations
    Note: The VIX reflects implied volatility on options on the S&P500 equity index; the University of Michigan Index of Consumer Confidence Sentiment is a survey of US
    consumer attitudes concerning both the present situation as well as expectations regarding economic conditions
    Source: Bloomberg; data through 31 August 2011


2




                                                                                                                                                                              Schroders Road Show                     3
    The Eurozone experiment is faltering
    The ECB monetary stance does not look appropriate

    Dispersion between Eurozone countries continues to widen*
    %
    1.7
                                                                                                                                                                                                                                     Growth is diverging between core
                                                                                                                                                                                                                                         and peripheral countries

    1.5



    1.3



    1.1



    0.9



    0.7
     Apr 02                                                                                                             Aug 04                                                                                                   Dec 06                          Apr 09           Aug 11

                                                                                                                                                  Expected Growth Dispersion 1yr Fwd within the Eurozone

    * Schroders Eurozone growth dispersion analysis based on consensus economics data as at 30 August 2011



3




    If you don't have a structural problem, you get a different problem…
    A SURGING currency


        Purchasing Power Parity measure                                                                                                                                                                                          Swiss franc versus US$ adjusted for purchasing
        of currency value                                                                                                                                                                                                        power
     % over valued versus dollar (PPP basis)
                42%

                              39%

                                                36%

                                                                    31%




          50%
                                                                                   27%

                                                                                                   17%

                                                                                                                         17%

                                                                                                                                           11%

                                                                                                                                                  4%




           0%
                                                                                                                                                                  -37%




        -50%
                                                                                                                                                                                     Polish Zloty -68%

                                                                                                                                                                                                         New Turkish Lira -80%




     -100%
                                                                    Japanese Yen



                                                                                                   New Zealand Dollar
                              Norwegian Krone

                                                Australian Dollar




                                                                                                                                           Euro

                                                                                                                                                  British Pound
                                                                                   Swedish Krona



                                                                                                                         Canadian Dollar
                Swiss Franc




                                                                                                                                                                  South Korean Won




    Source: Bloomberg, OECD, Schroders, 26th October 2011
    PPPs are the rates of currency conversion that eliminate the differences in price levels between countries. Per capita volume indices based on PPP converted data reflect only differences in
    the volume of goods and services produced.


4




4         Schroders Road Show
     The Euro’s fundamental problem
     Real effective exchange rates diverge



2000=100, real effective exchange rates based on unit wage costs
     140

     130

     120

     110

     100

       90

       80

       70

       60

       50
            2000            2001           2002            2003         2004      2005       2006       2007          2008       2009            2010    2011

               Italy                 Spain                    France            Portugal            Germany                UK             US            Greece



     Source: OECD, Datastream, Bloomberg, Schroders, 2 September 2011



 5




     Risk on, risk off - The new normal

         10 year US Treasury vs S&P index
            Yields (p.a.)                                                                                                            S&P Index level

            6%                                                                                                                            1800
                                                                                                                Risk on                   1600
            5%                                                                             Risk on
                                                                                                                                          1400
            4%                                                                                                                            1200
                                                                                                                                          1000
            3%
                                                                                                                                          800
                                                                 Risk off
            2%                                                                                        Risk off                            600
                                                                                                                          Risk off
                                                                                                                                          400
            1%
                                                                                                                                          200
            0%                                                                                                                        0
             Sep-05                   Sep-06                  Sep-07           Sep-08        Aug-09             Aug-10           Aug-11
                                      UST yields – Schroders Panic index on (lhs)
                                       UST yields – Schroders Panic index off (lhs)                           S&P (rhs)

     Source: Schroders panic index and S&P index as at 29 August 2011



 6




                                                                                                                                        Schroders Road Show      5
Just how bad is it?
    “Credit buying is much like being drunk. The buzz happens immediately and gives you a
    lift...the hangover comes the day after.” … Joyce Brothers
    UK vs. US household leverage



                                                                                    161%
                                                                                    131%




    Source: IMF, Bloomberg, US Federal Reserve and the UK Office of National Statistics as at December 2010


7




    There is more to the fiscal story
    There are other promises that governments have made

    US fiscal fundamentals
            % of GDP

             100.0                                               93.4                                               88.0                     117.5
                                                                                           81.1
                                        54.5




                                                                                                                                                                       -38.9
                                       Gross Financing




                                                                                          Cyclically Adjusted
                                                                  Short Term Debt




                                                                                                                                               Health
                                                                                                                     Pensions
               Debt




                                                                                                                                                                      rates less growth
                                                                                                                                                                       Average interest
                                                                                           Primary Deficit
                                           Needs




    Sources: BIS; Bloomberg L.P.; and IMF staff estimates and projections
    Notes: The indicators reported are the seven with the best signalling power from Baldacci, McHugh, and Petrova (2011) (see also Box 5). Debt refers to gross general government debt in percent of GDP; GFN is
    gross financing needs in percent of GDP; ST Debt is short-term debt securities at remaining maturity as a percentage of total debt securities, as of end-2010 ,as reported by BIS (except for Canada and Japan; see
    note 1); CAPD is cyclically adjusted primary deficit in percent of potential GDP; Pensions is the change in long-term public pensions spending from 2010 to 2030 in percent of GDP; Health is the change in long-term
    public health spending from 2010 to 2030 in percent of GDP; and r-g is the average interest rate–growth differential from 2012 to 2016 in percent. As each indicator is expressed in different units, the size-of-the-bars
    differential is standardized.
    Debt refers to net debt

8




6      Schroders Road Show
Magnitude of fiscal adjustment needed
    How much of an adjustment do we need to make to reduce Debt to GDP to 60% by 2030?




                                                               If Italy has a problem…
                                                                …then what about the
                                                                          rest?




    Source: BCA Research and IMF, September 2011

9




    Conventional monetary response … exhausted
    Interest rates are at near ZERO

    Two year yields
    In % p.a.
    12


    10          UK

     8


     6


     4
                                           US

     2
                                                                Japan
     0
      Jan       Nov     Okt     Sep      Aug       Jun   Mai    Apr   Mrz    Jan   Dez    Nov    Sep   Aug   Jul     Jun   Apr    Mrz   Feb   Jan   Nov   Okt   Sep
       92       92      93       94       95        96   97     98    99      00    00    01      02    03   04       05   06     07     08    09   09    10     11

                                       UK 2 yr gilt yields                  US 2 yr treasury yields                Japan 2 yr bond yields



    Source: Bloomberg as at 30 September 2011


10




                                                                                                                                        Schroders Road Show           7
    Unconventional measures
    Just how much is enough / too much?

    US Federal Reserve assets on balance sheet

In US$ thousand billions

    3.0

    2.5

    2.0

    1.5

    1.0

    0.5
      Jan 02             Jan 03            Mrz 04            Mrz 05     Apr 06     Mai 07        Jun 08   Jul 09   Aug 10   Sep 11

                                                        US Federal Reserve assets on balance sheet

    Source: US Federal Reserve and Bank of England as at October 2011


11




    Clearly not enough…jobless recovery
    US GDP and jobs



    Index (Base 100 = 15/02/2008)

    102

    101

    100

      99

      98

      97

      96

      95

      94
           08                                09                         10                   11

                         US total civilian employment                        US real GDP level


    Source: Thomson Datastream, 06 September 2011


12




8      Schroders Road Show
Historical precedent
 The Great Depression …

 Long term US interest rates vs cyclically adjusted S&P 500 earnings yield
 In %

 16

 14

 12

 10

     8                                                                                                                                                      What
                                                                                                                                                          happened
     6                                                                                                                                                      next?


     4

     2

     0

     -2
          1921


                  1923


                              1925


                                          1926


                                                      1928


                                                                   1930


                                                                               1931


                                                                                           1933


                                                                                                        1935


                                                                                                                   1936


                                                                                                                           1938


                                                                                                                                       1940


                                                                                                                                                1941


                                                                                                                                                         1943


                                                                                                                                                                   1945


                                                                                                                                                                             1946


                                                                                                                                                                                    1948
                                                      Long term US interest rates                                     S&P500 earnings yield

 Source: Professor Robert Shiller, September 2011 (http://www.econ.yale.edu/~shiller/data.htm)


13




Risk assets got downgraded
 Historical precedent: The Great Depression

 Long term US interest rates vs Cyclically adjusted S&P 500 earnings yield
 In %

     16

     14

     12

     10

      8

      6

      4

      2

      0

     -2
       1921      1923      1925       1926       1928        1930      1931        1933          1935   1936       1938    1940   1941        1943     1945     1946      1948


                                                  Long term US interest rates                                  S&P500 earnings yield


 Source: Professor Robert Shiller, September 2011 (http://www.econ.yale.edu/~shiller/data.htm)


14




                                                                                                                                                              Schroders Road Show          9
 Corporate default risk is still benign
 Since banks are no longer tightening lending standards, the default rate has fallen fast

                                                                                                                                                    Trailing 12-month default rates
 Default rate (%)                                                                    Banks tightening lending standards (%)                         Global               2.2%
 18                                                                                                                                        100      U.S.                 2.6%
                                                                                                                                                    Europe               1.4%
 16
                                                                                                                                           80
 14                                                                                                                                                 Moody’s global high yield default
                                                                                                                                           60       rate peaked in at 13.5% in
 12
                                                                                                                                                    November 2009, and then fell for 17
 10                                                                                                                                        40       out of the past 18 months.
     8                                                                                                                                     20       Moody’s now forecasts that the
     6                                                                                                                                              global default rate will continue
                                                                                                                                           0        declining, to 1.7% by June 2012.
     4
                                                                                                                                           -20
     2
                                                  avg. over last 20 years = 4.9%
     0                                                                                                                                     -40
         90       92        94          96          98          00          02          04           06          08         10
                           LTM Global Speculative Grade Default Rate (LHS)
                           Moody's Forecast Default Rate (LHS)
                           Fed Senior Loan Officer's Opinion Survey, lagged 9 months (RHS)
 Note: Global high yield bond default rates are expressed on a last-twelve-months (LTM) basis as a percentage of the number of issuers (issuer-weighted default rate); data through 30 June 2011. Fed Senior Loan
 Officer’s Opinion Survey data reflect the percentage of domestic banks reporting tighter lending standards on commercial & industrial loans to large and middle-market firms in the prior 3 months; data through Q1’11.
 Sources: Moody’s, US Federal Reserve


15




The US is unlikely to fall into recession


     US ISM Manufacturing index*
          Index


     65

     60

     55
                                                                                                                        Growth
     50

     45
                                                                                                                    Recession
     40

     35

     30
      Mrz-2009         Jun-2009 Sep-2009 Dez-2009 Mrz-2010                                           Jun-2010 Sep-2010 Dez-2010 Mrz-2011                                            Jun-2011 Sep-2011

                                                                                     US ISM Manufacturing PMI SA



 Source: Bloomberg as at 30 September 2011
 * NAPMPMI Index & CONSSENT index


16




10        Schroders Road Show
 Europe more problematic, periphery concerns obvious
 Real GDP growth within the eurozone

 Core EurozoneY/Y GDP growth                                                                Peripheral Eurozone Y/Y GDP growth
     8%                                                                                     8%

     6%                                                                                     6%

     4%                                                                                     4%

     2%                                                                                     2%

     0%                                                                                     0%

 -2%                                                                                       -2%

 -4%                                                                                       -4%

 -6%                                                                                       -6%

 -8%                                                                                       -8%

-10%                                                                                       -10%

-12%                                                                                       -12%
               2007             2008             2009              2010             2011          2007         2008   2009       2010         2011
                                                                                                      Greece          Spain             Ireland
                     Germany                     Austria                 Finland                      Italy           Portugal

 Source: Eurostat, Thomson Datastream. Data up to Q2 2011. Updated: 07 September 2011


17




 Our crystal ball


         Growth to remain impinged by structural forces
           –   Deleveraging
           –   Fiscal austerity

         Further monetary policy accommodation over coming quarters/years
           –   Quantitative easing
           –   Dare we mention monetisation?

         Market sentiment to remain fragile
           –   Pro cyclical tightening of fiscal policy unusual
           –   Conventional monetary policy levers exhausted
           –   Politically driven resolution process = less clear/rational path
           –   Three policy levers are working at cross purposes (Monetary, Fiscal and Regulatory)

         Market valuations discount considerable bad news
           –   Growth recession in US & UK
           –   Outright recession in Eurozone




18




                                                                                                                          Schroders Road Show        11
 How we are aligning portfolios
     Strategy                     Strategic                                Thematic                                    Tactical
     Duration         Traditional valuation metrics do not      Eurozone crisis expected to exert       Considerable bad news still
                       apply in a deleveraging environment        downward pressure on growth,             discounted despite recent Eurozone
                      Maintain a long bias to Developed          upward pressure on volatility            news
                       Market rates                              Good news on the EZ policy front        Relief rallies in risk to cause periodic
                                                                  provide temporary relief for risk        sell-offs in Bunds and Treasuries
                                                                  assets
     Country          Short periphery vs. Long Core             Long UK versus US as relative           Asian duration most attractive as
                       Eurozone                                   calls for QE move in UK’s favour         need to raise falters


     Yield Curve      Restrict EU peripheral exposure           Flattening bias – good hedge of
                       through long-dated bonds to reduce         long credit bias
                       tail risk
     Currency         Long Asian FX: should continue                                                     EUR oversold against USD
                       secular appreciation based on                                                      Too early to be aggressive on EM
                       fundamentals
     Credit Beta      Prefer Corporates and Asset-Backed        Keep credits with strong                Overweight US high-yield through
                       to Sovereigns                              fundamentals and hedge credit            index derivatives
                                                                  beta in risk-off environments
     Credit           Underweight Europe versus US to           Financials cheap but too much tail
     Sector/           reduce tail risk                           risk to build more than a moderate
                       Overweight Industrials vs Financials       overweight
     Security      




19




                                                                          Schroder ISF*
                                                                          Strategic Bond




12    Schroders Road Show
     Schroder ISF Strategic Bond



                                                         The fund aims to achieve a positive return of LIBOR +3% (gross) per annum* over a interest rate
         Aim:                                             cycle


                                                            Top-down
                                                            Diversified
         Approach:                                          Team approach
                                                            Seeks to exploit opportunities in interest rates, FX and credit



                                                           Overall portfolio duration range: 0 years to 9 years
                                                           Government, Agency, Investment Grade Corporates, Securitised: up to 75% (each sector)
         Key parameters
                                                           High Yield: Up to 40%
         (internal guidelines):
                                                           Derivatives include, inter alia, interest rate futures and swaps, Currency forwards, Credit Default
                                                            Swaps


     *This target is for internal fund management purposes only, it is not a guarantee or indication of future fund returns
     This is not a complete set of fund rules and represents the typical internal, non mandatory limits under which the fund is managed.
     Please note that such limits may be deviated from and are subject to change without notice.
     Source: Schroders as at October 2011



 21




 Performance – Schroder ISF Strategic Bond
 30 September 2011

         EUR A Acc share class
         %
     7
                                                                                               6.1
     6
     5
     4                                                                                                                                            3.6

     3                                                                                                                                                         2.5

     2                                                                                                           1.3
                                                1.0
     1
     0
 -1
 -2
 -3                          -2.5

                                      YTD                                                        3 year (p.a)                                       5 year (p.a)




                                                          Schroder ISF Strategic Bond EUR A shares                            3 Month EUR LIBOR


 Source: Schroders, returns are based on A Acc share EUR (NAV to NAV)


22                                                                                                                                                                                22




                                                                                                                                                            Schroders Road Show        13
 Current portfolio positioning


         Government bond investment exposure in UK and Germany

         Credit focus in US

         Currency risk budget will increase to hedge tail risks




23




 Key exposures in Schroder ISF Strategic Bond
 Portfolio characteristics as of 30 September 2011

 Summary stats                                                                                             Ratings breakdown*
                                            Schroder ISF                     3 month EUR                   (in market value %)
                                           Strategic Bond                       LIBOR
                                                                                                           60                 Investment grade

     Effective yield                              4.51%                            1.50%                                                                              High yield
                                                                                                           40
     Interest rate duration                       4.54yrs                         0.25yrs                           23.6                         25.3
                                                                                                           20                             11.0
                                                                                                                                   7.1                    6.2   7.2
                                                                                                                                                                             1.8
                                                                                                                                                                                    0.4
                                                                                                             0
 Regional breakdown                                                                                                 AAA            AA       A    BBB      BB    B          CCC      NR
 (in market value %)
     60
                                                                                                                           49.3

     40


     20              18.2
                                                                                        11.0                                                                                 10.7
                                                                                                                                                    7.0
                                                      3.8
      0
               Europe ex UK                   Peripheral Europe                          UK                        North America                   Asia                     Other
 *Excludes cash, cash offsets, futures, forwards, CDS and IRS
 Peripheral Europe includes Portugal, Italy, Ireland and Spain. Ratings breakdown based on the average of S&P, Moody's and Fitch
 Sources: Schroders Fixed Income Analytics and Barclays Capital POINT; all data as at 31 September 2011


24




14        Schroders Road Show
     Key exposures in SISF Strategic Bond
     Portfolio characteristics as of 30 September 2011

     Sector breakdown (in market value %)
     40
                                                                                              37.3


     35

                                                        30.4                                   HY
                                                                                   12.0
     30


     25

                                            17.7
                                                                                                                                                        19.4
     20                                                 TBA
                                                                                                                  15.0
     15
                                                                                               IG                 HY           3.2
                                                                                    25.3

     10                                                                     7.9
                  5.7
                                            12.7                                                                   IG                                                           4.6
                                                                                                                              11.8
      5
                                      1.4                                                                                             0.5

      0
           DM Sovereign US Municipals                  MBS                 ABS              Developed     Emerging EM Sovereign  Cash and                                     Non-GBP
                                                                                           market credit market credit          equivalents*                                  currency
     Source: Schroders FIA using breakdown of fund sub-accounts (less cash, derivates and sovereign exposures) and UK Sch-BarCap Level 1 and Level 2 breakdowns. *Cash
     and equivalents includes cash, T-bills and P&L on derivatives positions which include TBA, futures, IRS, CDS and currency forwards


25




                                                                                                          Schroder ISF* Global
                                                                                                          Bond




                                                                                                                                                                  Schroders Road Show    15
Schroder ISF Global Bond


      Benchmark:                                           Barclays Capital Global Aggregate Bond Index


      Aim*:                                                Benchmark +75-100bps per annum


      Style:                                               A multi-asset approach to global fixed income
                                                            A qualitative framework supported by quantitative modelling
                                                            Top down driven investment process supported by bottom up analysis in security selection
                                                            Quick risk, proprietary pre-trade risk analysis
                                                            A global bond team of 13 supported by over 100 specialists worldwide


      Guidelines**:
                                                              Overall portfolio duration: Benchmark +/- 2 years
                                                              Max 20% in total in High Yield
                                                              Max 10% in Emerging Market Debt
                                                              Currency +/-10% in aggregate deviation versus benchmark
                                                              Full UCITSIII status
                                                              Derivatives allowed and used to hedge and obtain active risk in the fund. Derivatives used include: interest rate
                                                               futures, interest rate swaps, credit default swaps and currency forwards




 * This target is for internal fund management purposes only, it is not a guarantee or indication of future fund returns
 **This is not a complete set of fund rules and represents the typical internal, non mandatory limits under which the fund is managed


27




     Performance: Schroder ISF Global Bond
     30 September 2011

     Relative Returns                                                                                           Excess Returns
     %                                                                                                          %

     12.00                                                                                                      1.40
                                                                                                                                                    1.2
                                                                                                                1.20
     10.00
                                                     9.0
                                                                                                                1.00
                                                               7.8
      8.00                                                                                                      0.80
                                                                                     7.0      6.8
                                                                                                                0.60
      6.00            5.2      5.4
                                                                                                                0.40
      4.00                                                                                                      0.20                                                 0.1

                                                                                                                0.00
      2.00
                                                                                                               -0.20
                                                                                                                                        -0.2
      0.00                                                                                                     -0.40
                         YTD                      3 years (p.a.)                  5 years (p.a.)                                        YTD    3 years (p.a.)   5 years (p.a.)

                      Schroder Global Aggregate Bond A Acc shares

                      Barclays Capital Global Aggregate


 Source: Schroders, returns are based on A Acc share USD (NAV to NAV)



28




16       Schroders Road Show
 Current portfolio positioning


        Overweight government bond investment exposure in UK & Germany

        Overweight interest rate risk (ie duration)

        Credit focus in US

        We are long core Eurozone and underweight peripheral credit




29




     Key exposures vs. benchmark
     Portfolio characteristics as of 30 September 2011


     Summary stats                                 Portfolio*                    Benchmark*                              Credit quality breakdown (in market value %)
                                                                                                                 80
     Effective Yield (%)                               2.40                            2.41
                                                                                                                 60                            53.9
                                                                                                                                            47.8
     Effective Duration (yrs)                          6.23                            5.85                      40          32.1
                                                                                                                                    23.0
     OAS (bps)                                           85                             102                      20                                        13.6
                                                                                                                                                                                                                 7.7
                                                                                                                                                         2.6       8.3 7.1                  0.5 0.0
                                                                                                                                                                               0.9   0.8                1.7
                                                                                                                   0
                                                                                                                              AAA             AA           A            BBB      BB           B       NR         Net
     Regional breakdown (in market value %)                                                                                                                                                                   Derivatives
                                                                                                                                                                                                               & Cash
     50          44.1
                         39.3
     40
     30                                 24.6
                                               20.3                                                                                               22.8
                                                                                                                                           19.3
     20
     10                                                         7.1     5.6                  7.4
                                                                                     2.8                     0.4       0.9                                               0.3          1.4   1.5         0.1     1.7
                                                                                                                                                                  0.2
       0
              North America          Core Europe                   UK                Peripheral          South America                       Asia                  Africa             Oceania         Supranationals
                                                                                     Europe**

                                                    Schroder ISF Global Bond                                                                        Benchmark
     * Note: “Portfolio” refers to Schroder ISF Global Bond; “Benchmark” is the Barclays Capital Global Aggregate Index unhedged
     ** Peripheral Europe represents Portugal, Italy, Ireland and Spain. Portfolio exposure is to Spain, Italy and Ireland. Credit quality breakdown based on the lower of
     S&P, Moody's and Fitch and excludes derivatives. Regional breakdown based on country of risk Net derivatives include IRS, Futures, Forwards and CDS. Sources:
     Schroders Fixed Income Analytics; all data as at 30 September 2011




30




                                                                                                                                                                                 Schroders Road Show                    17
     Key exposures by broad sector
     Sector breakdown as of 30 September 2011
     Active Market value exposure by sector (%)
      10       8.1
       8
       6
       4                 2.5        2.3
                                              1.2    1.0             0.8
       2                                                                     0.5               0.4          0.1           0.0            0.0        0.0         -0.1
       0
      -2                                                                                                                                                                          -0.2            -0.8              -1.3        -1.6
      -4                                                                                                                                                                                                                                         -2.4                -2.8           -2.8
                                                                                                                                                                                                                                                                                                 -3.7
      -6                                                                                                                                                                                                                                                                                                         -5.1




                                                                                               REITS




                                                                                                                                                                                                                                                                                  CDS Basket
                                              CMBS




                                                                              Finance - LT2




                                                                                                                                                                                   Finance - T1
                                                                                                                                                                Capital Credit
             Cash & T-




                                    MBS
                         Covered




                                                                                                          Finance -



                                                                                                                        Finance -



                                                                                                                                       Finance -




                                                                                                                                                                                                                                                 Finance -
                                                                                                                                                                                                                     Utility
                                                     Industry




                                                                                                                                                                                                                                                                                                 Treasuries
                                                                                                                                                                                                                                 Supranational
                                                                                                                                                    Sovereign




                                                                                                                                                                                                  Sovereign
                                                                     ABS




                                                                                                                                                                                                                                                                    Authorities




                                                                                                                                                                                                                                                                                                                 Agency
                                                                                                                                        Surplus




                                                                                                                                                                                                                                                  Senior
                                                                                                                                                                 Finance -
                                                                                                                           UT2




                                                                                                                                                                                                    EMD




                                                                                                                                                                                                                                                                      Local
                                                                                                             Sub
               Bills




                                                                                                                                                                                                                                                                                    Main
     Active contribution to duration by sector (years)
     0.3
               0.2
     0.2                 0.1        0.1
     0.1                                      0.1    0.0             0.0      0.0                                          0.0
                                                                                                0.0          0.0                          0.0        0.0           0.0             0.0
     0.0
                                                                                                                                                                                                    0.0
     -0.1                                                                                                                                                                                                           -0.1
                                                                                                                                                                                                                                -0.1              -0.1                 -0.1
     -0.2
                                                                                                                                                                                                                                                                                     -0.2         -0.2
     -0.3
                                                                                                                                                                                                                                                                                                                 -0.3
                                                                     REITS




                                                                                                           CDS Basket
                                              CMBS



                                                     Finance - LT2




                                                                                                                                                                                                     Finance - T1
                                                                                                                                                                 Capital Credit
                                                                             Cash & T-
               MBS




                                    Covered




                                                                                              Finance -




                                                                                                                                       Finance -



                                                                                                                                                   Finance -




                                                                                                                                                                                                                                                                     Finance -
                         Industry




                                                                                                                                                                                                                                    Utility




                                                                                                                                                                                                                                                                                                    Treasuries
                                                                                                                                                                                                                                                    Supranational
                                                                                                                           Sovereign




                                                                                                                                                                                                                    Sovereign
                                                                                                                                                                                     ABS




                                                                                                                                                                                                                                                                                   Authorities




                                                                                                                                                                                                                                                                                                                  Agency
                                                                                                                                        Surplus




                                                                                                                                                                                                                                                                      Senior
                                                                                                                                                                  Finance -
                                                                                                 UT2




                                                                                                                                                                                                                      EMD




                                                                                                                                                                                                                                                                                     Local
                                                                                                                                                      Sub
                                                                               Bills




                                                                                                             Main




                                                                                                          Schroder ISF Global Bond
      Single-name CDS positions are reflected above in the appropriate sector classification.
      Sources: Schroders Fixed Income Analytics; all data as of 30 September 2011



31




                                                                                                                                                   Team




18          Schroders Road Show
     Multi sector portfolio management team



     Investment                                                                                                                                                            Fixed Income
                                                                     Philippe Lespinard                                         Bob Jolly
     Strategies*                                                     Fixed Income CIO                                      Head of Global Macro                            Investment
                                                                                                                                                                           Centres**

                                                                                                Multi Sector team
                                                                                                                                                                            London
                                           Systematic Macro                         Fundamental Rates                        Fundamental Credit            Investment
      Duration                                                                                                                                         Strategy Research    New York
      Country                                                                                                                                                               Philadelphia
      allocation                      Bhupinder           Frederick               David           Gareth Isaac             Lucette        Michael        Aurore Blair
                                        Bahra             Bourgoin              Scammell                                  Yvernault       Foggin                            Singapore
      Yield curve
                                                                                                                                                                            Tokyo
      Currencies                        Julien         Jamie Fairest           Tom Sartain        Carl Kleman
                                      Tisserand                                                                                                                             Sydney
      Credit beta
                                                   Emma                                                                                                                     Jakarta
      Credit sector                                Halley
                                                                                                                                                                            Sao Paolo
      Relative Value
                                                                                                                                                                            Buenos Aires



                      Multi sector investment team supported by 100+ including 30+ portfolio managers, 30+ credit analysts,
                                                        2 economists, 3 quantitative research specialists, 8 dealers
     * Does not represent the entire list of strategies available to the team.
     ** Investment centres in Italics feed through via Singapore and the Emerging Market Absolute Return debt team. As at October 2011



33




     Biographies

 Philippe Lespinard – Chief Investment Officer, Fixed Income

 – Appointed as Chief Investment Officer Fixed Income and head of the global multi-sector team, absolute return and global government
       strategies in November 2010. He took over as head of European and UK multi-strategy and government bond strategies in March 2011
       .
 – Philippe was a Partner and Head of Absolute Return Strategies at Brevan Howard Asset Management since 2008. He was previously
       Deputy Chief Executive Officer at Fisher Francis Trees & Watts (part of BNP Paribas Asset Management) with responsibility for
       investments, risk management and product strategy.

 – From 2002 to 2006, he was Chief Investment Officer at BNP Paribas Asset Management with responsibility for €150bn assets under
       management, across fixed income and equities. He was named CIO of the year by Funds Europe in 2005.




     Bob Jolly – Head of Global Macro

     – Joined Schroders Fixed Income team in September 2011 as Head of Global macro
     – Prior to joining Schroders Bob worked for UBS Global Asset Management his more recent                           responsibilities were Head of
         Currency, UK Fixed Income and Global Sovereign
     – Prior to UBS Bob spent 2 years with SEI investments developing customised solutions for institutional pension fund clients
     – The majority o Bob’s investment career was spent at Gartmore Investment Management where he held the following
         positions:


     2000 – 2005 Head of Fixed Income Portfolio Construction
     1989 – 2000 Head of Structured Fixed Income
     1982 – 1989 UK and Global Fixed Income Portfolio manager
     – CFA Charterholder


34




                                                                                                                                                           Schroders Road Show             19
        Biographies

Frederick Bourgoin, Global Multi                                                                 Bhupinder Bahra, Global Multi
Sector Portfolio Manager                                                                          Sector Portfolio Manager
– Global fixed income fund manager, based in London
                                                                                                 – Global fixed income fund manager, based in
– Joined Schroders in August 2006                                                                     London
– 2006 Barclays Global Investors Ltd, Fixed Income Quant
        Strategist (2005-2006)                                                                   – Joined Schroders in August 2006

– 1999 Barclays Global Investors Ltd, Global Fixed                                               – 1998 Barclays Global Investors Ltd, Senior Fixed
        Income Portfolio Manager (1999-2005)                                                          Income Research (Rates and Credit) (1998 – 2006)
– 1997 UBK AM, Quantitative Analyst
                                                                                                 – 1994 Bank of England, Financial Economist (1994 –
– 1996 MillenniuM Global Investments, Quantitative                                                    1998)
        Analyst
                                                                                                 – BSc, Mathematics and Management, Kings College
– Post-Graduate in Finance, ESSEC Business School
                                                                                                      London
– Post-Graduate in Econometrics and Mathematical
        Economics, Paris II University                                                           – MSc, Economics and Finance, University of
                                                                                                      Warwick

                                                                                                  Michael Foggin – UK & European
Emma Halley                                                                                       Multi Sector Portfolio Manager
Portfolio Analyst                                                                                 –     UK & European Credit fund manager, based in
–           Joined Schroders in April 2010                                                              London
–           MSc Financial Engineering and Risk management,                                        –     Joined Schroders in 2005
            Imperial College Business School, London                                              –     Prior to that, in 2004 he worked at Caxton Europe
–           BSc in Economics and Finance UCD, Ireland                                                   Asset Management Ltd as Trade Assistant. Prior to
                                                                                                        that, in 2003 he worked at Muzinich & Co. Ltd as
                                                                                                        Fixed Income Asset Manager/
                                                                                                  –     BSc, Manchester University




    35




        Biographies

        Gareth Isaac, CFA –                                                                      David Scammell –
        Senior Portfolio Manager, Multi Sector                                                   Head of European & UK Interest
        –     Global fixed income fund manager, based in London
                                                                                                 Rates Strategies
        –     Joined Schroders in 2011.                                                          –     UK & European Government Bond Fund Manager,
        –     In 2009 following their purchase of SGAM he joined GLG Partners where he was             based in London
              a Fixed Income Fund manager
        –     2007 he was a Senior Fixed Income Fund manager at Societe Generale Asset           –     Joined Schroders in 2004 as a UK Fixed Income fund
              Management in Paris                                                                      manager – Gilts and Index-Linked.
        –     2004 Fixed Income Fund Manager at Axa Investment Managers                          –     Prior to joining Schroders, David oversaw Global Fixed
        –     1998 Assistant Fund Manager then Fixed Income Manager at Newton Asset                    income and interest rate strategies at Anchorage Capital
              Management                                                                               Partners. Previously, David was Head of Global Fixed
        –     Prior to this, Gareth worked at Manulife Financial and Midland Security Services         Income at the United Bank of Kuwait.
        –     BSc, University of Glamorgan                                                       –     David spent 10 years working in reserve management
        –     Member of the United Kingdom Society of investment professionals                         for a number of Central Banks – The Bank of England,
                                                                                                       The Bank for International Settlements in Switzerland
                                                                                                       and the Central Bank of Finland


    Lucette Yvernault – UK & European                                                            Thomas Sartain - European and
    Multi Sector Portfolio Manager                                                               UK Rates, Portfolio Manager
    –        UK & European Credit Fund Manager, based in London                                  –     UK & European Money Market & Government Bond
    –        Joined Schroders in 2005 as a European Credit Fund                                        Fund Manager, based in London
             Manager                                                                             –     Joined Schroders in 2005 as fund manager’s
    –        Prior to that, she was responsible for CAM Global Credit                                  assistant on the global fixed income desk
             mandates from 2003, managing both institutional and                                 –     Financial Markets career commenced in 2003 upon
             retail European investment grade mandates for EUR,                                        joining Royal Bank of Scotland
             GBP and USD corporate strategies.
                                                                                                 –     BA (Hons) degree in Management and Business
    –        Investment career began in 2000 upon joining CMG First                                    Administration, University of Reading
             State Investment Hong Kong as an associate fund
             manager



    36




20             Schroders Road Show
 Biographies


 Julien Tisserand , Portfolio Analyst                                            Aurore Blair, Senior Strategist
 – Joined Schroders in June 2010 as a graduate trainee                           – Joined Schroders as a Senior Strategist in the Fixed
 – MSc in Quantitative Finance, ESSEC Business School                               Income Group in August 2011
      Paris-Singapore (expected March 2011)                                      – Prior to joining Schroders, Aurore worked as an analyst
 – MSc in Industrial Engineering, EIGSI Engineering School                          investing in funds at Hermes Fund Managers, a large
                                                                                    pension fund in the UK, and at Mesirow Financial
                                                                                    International, a fund of hedge funds. Aurore also worked
                                                                                    for Pacific Investment Management Company (PIMCO) as
                                                                                    a client portfolio manager, and as a structurer in the
                                                                                    relative value group at Deutsche Bank AG
                                                                                 – Masters in Business Administration at Harvard Business
                                                                                    School; Master in Business Science and Finance at Ecole
                                                                                    Superieure de Commerce de Paris (ESCP)
 Jamie Fairest, Portfolio Analyst
 – Global Fixed Income Fund Manager, based in
     London

 – Joined Schroders in 2006 as a Fund Managers
     Assistant. Moved to the global bond team in 2007

 – Finance career commenced in 2002 when he joined
     Barclays Investment Management

 – BA (Hons) Finance from Sheffield Hallam University




37




Important information


 Important Information:

 The views and opinions contained herein are those of the Karl Dasher and may not necessarily represent views expressed or reflected in other Schroders
 communications, strategies or funds. This document is intended to be for information purposes only and it is not intended as promotional material in any
 respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and
 should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but Schroder
 Investment Management Ltd (Schroders) does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. This
 does not exclude or restrict any duty or liability that Schroders has to its customers under the Financial Services and Markets Act 2000 (as amended from
 time to time) or any other regulatory system. Reliance should not be placed on the views and information in the document when taking individual investment
 and/or strategic decisions. Schroders has expressed its own views and opinions in this document and these may change. Issued by Schroder Investment
 Management Limited, 31 Gresham Street, London EC2V 7QA, which is authorised and regulated by the Financial Services Authority. For your security,
 communications may be taped or monitored.




 38




                                                                                                                                   Schroders Road Show                  21
            Opportunities in the corporate bond market
            Schroder ISF EURO Corporate Bond




            Adam Cordery, Head Euro Corporate Bond


             * Schroder International Selection Fund is referred to as Schroder ISF
                                                                                                                  For Professional Investors or Advisors Only




     Performance: Schroder ISF EURO Corporate Bond
     Adam Cordery took over as Fund Manager in July 2006

     Aim is to be first or high second quartile over a market cycle

     – The Fund had strong performance in the credit crunch when we adopted unfashionable views we believed were correct,
       and stuck with them when the market disagreed with us.
     – The Fund has underperformed in the current “sovereign “crisis because we have adopted unfashionable views we
       believe are correct and have stuck with them even though the market disagrees with us.
     – The Fund has in the past avoided corporate blow-ups, both in the credit crunch (the Fund was not hurt by holdings in
       Lehman, Northern Rock, Icelandic banks, etc.) and in the euro crisis (the Fund was not hurt by holdings in Greek, Irish,
       Portuguese bank or sovereign debt).
     Schroder ISF EURO Corporate Bond (%)
     At 30 September 2011                                                             3 months                 1 year           3 years (p.a)      5 years (p.a)

     Fund Return                                                                        -4.8                     -3.8                6.4                3.0

     Peer Group Average Return                                                          -2.2                     -2.3                5.0                1.7

     Difference                                                                         -2.6                     -1.5               1.4                1.3

     Quartile Ranking*                                                                   4th                      4th                1st                1st


     Source: Schroders, Morningstar
     Morningstar data as at 30/09/11 using A-Acc share class returns. Peer group sector: Fixed Income EUR-corporate bond.



40




22     Schroders Road Show
     Credit…
     … is what we don’t know




     Daily data, 10 May 2005 – 25 October 2011.
     Source Bloomberg. Data uses levels of the Generic EUR iTraxx Main and VIX based on daily data points.
     Line shown is a linear-log regression using Excel.
41




     Where is the bubble…and where is the opportunity today?
                 Yield %

                 9

                 8

                 7

                 6

                 5

                 4

                 3

                 2

                 1

                 0
                                                                Jul-08




                                                                               Dec-08




                                                                                              Jun-09




                                                                                                             Nov-09




                                                                                                                            May-10




                                                                                                                                           Oct-10
                     Feb-07




                                                 Jan-08




                                                                                                                                                                Sep-11
                                                                                                                                                       Apr-11
                                  Aug-07




                                                          Euro Corporate Bond             Euro Cash          5 Year German Government



     Source: Bank of America Merrill Lynch Indices using yield to worst (conventional) : ER00. Bloomberg 5 year government bond (GDBR5) BBA 1
     month LIBOR (EU0001M Index). As at September 2011


42




                                                                                                                                                    Schroders Road Show   23
     Slow growth? Fine for corporate bonds.

     Schroders Economists’ Forecasts for GDP Growth


                                                                               2011                            2012

                                              UK                               1.2%                           1.8%

                                           Europe                              1.7%                           1.0%

                                              US                               1.8%                           2.4%

                                            Japan                             -0.3%                           3.0%

                                            China                              9.0%                           8.5%




     Source: Schroders Economic Strategy Viewpoint, September 2011



43




     Government bonds are expensive
                bonds? Rich vs inflation

     German Government Bond Yields


   3.5%
 3.5%

   3.0%
 3.0%

   2.5%
 2.5%

   2.0%
 2.0%

   1.5%
 1.5%

   1.0%
 1.0%

   0.5%
 0.5%

   0.0%
 0.0%
                                     2 year
                                   2 year                                          5 year
                                                                                 5 year                                    1010 year
                                                                                                                             year

                                                     Eurozone CPI
                                                    EU Inflation Target         EU Inflation Target
                                                                                 German CPI           =       German CPI
                                                                                                          Eurozone CPI



             Bloomberg CTDEM2Y, CTDEM5Y, CTDEM10Y, Eurozone CPI (ECCPEMUY Index), German CPI –
     Source: Bloomberg CTDEM2YR, CTDEM5YR, CTDEM10Y, Eurozone CPI (ECCPEMUY Index), German CPI –
                   (GRCP2HYY                    3rd March 2011
     EU Harmonized (GRCP2HYY Index) Govt, as at 1st October 2011

44
44




24      Schroders Road Show
     Schroder ISF EURO Corporate Bond
     Positioning

       %      Sector Allocation
                                                                                                                                                                      Fund            Benchmark
      50
                                                                                                                           Assets under management                 €5.0 billion        €1.5 trillion
      45
                         41




      40                                                                                                                   Yield (to worst)*                          5.4%                4.3%

                                                           35                                                              Spread to 5-year bund yield                4.3%                3.2%
                                                  34
      35
                 31




      30                                                                                                                   Duration                                    3.2                 4.0

      25                                                                                                                   Number of issuers**                         237                 402

      20                                                                                                                   Ann. ex ante tracking error
                              18




                                                                                                                           (bps)***
      15
                                     12




                                                                      12


                                                                                                                                          Weighted                     288
      10                                                                    10




                                                                                           8
                                                                 7




                                                                                                                                          Unweighted                   220




                                                                                                         5
         5

         0
                                                                 Utility
                 financials




                                                   Industrials




                                                                                           Memo: High
                              Subordinated




                                                                            Cash & Govt




                                                                                                          CDS Indices
                                                                                           Yield *****
                   Senior



                               financials




                                                                             etc ****




                                             Schroder ISF EURO Corporate Bond
                                             Bank of America Merrill Lynch EMU Corporate
     Source: Schroders, Bank of America Merrill Lynch, Barclays Capital Point for Yield and Duration. Duration is the Option-Adjusted (OAS) Duration. Indicative spread is the difference between the
     fund yield and the 5 year bund yield (1.1%). Based on un-audited data as at 3 October 2011.
     *Includes implied carry on currency forwards, but excludes implied carry on futures.
     **Fund issuer number treats each CDS index as a single issuer and excludes the non-credit line items (Futures Fixed Income, Margin Cash Balance, SYN, Synthetic Cash Fixed Income, Currency).
     ***Monthly tracking error annualised by multiplying it by the square root of 12. Tracking error is an ex ante model estimate of portfolio risks vs benchmark, calculated for internal fund management
     purposes only; it is not a guarantee or indication of the future tracking error of the fund. The weighted TE gives more weight to more recent observations (i.e. the one year half life) and the
     unweighted TE gives equal weighting to the whole history of observations.
     ****Cash & Govt etc includes cash and unrealised derivative P&L as well as quasi & foreign governments
     *****High yield bonds are also included in the other sector breakdown in the rest of the chart.
45




     What next?
 Positioning
                                                                 via sector tilts in favour of subordinated financials, cyclical industrials and lower-rated bonds; spreads
 –           overweight credit beta                              are above-average, corporate default rates are likely to stay low, and companies – including the
                                                                 banks – are currently being run more for bondholders than shareholders


 –           underweight interest rate duration using short positions in bund futures and swaps; bund yields are priced for fear rather than value;
                                                everyone is fearful from time to time, but it is rarely a permanent state of mind


     Risks
                                                                 low confidence and fear can feed on themselves and cause expenditures to be delayed for so long that
     –       recession
                                                                 they create a recession – currently, we don’t see a recession coming in the data for the UK/EU/US, but
                                                                 rather in our opinion the data points to modest, variable but generally positive GDP growth for the next
                                                                 few years

     –       unmanaged Euro-zone sovereign                       sovereign defaults or debt restructurings in Europe would be a disaster for the banks and economies if
             defaults                                            they were wholly unmanaged, immediate and unexpected – currently, we believe that the political
                                                                 willingness and ability exists to ensure that any sovereign defaults in the Euro-zone are managed so as
                                                                 to be unlikely to cause a systemic crisis


     –       an emerging market recession                        a large number of UK and European corporate bond issuers have growth plans which are based on
                                                                 business development in the emerging markets – currently, we are assuming that emerging market
                                                                 growth does not slow significantly and there is no widespread re-appraisal in the foreseeable future of
                                                                 the case for investment in emerging markets


     –       accelerating inflation                              base rates in the UK/Euro-zone/US are at emergency levels; if base rates are kept at emergency levels
                                                                 forever, inflation will accelerate out of control eventually, and a recession could well be the result –
                                                                 currently, we assume that interest rates will go up in a manner that is sufficient to avoid stagflation


46




                                                                                                                                                            Schroders Road Show                        25
     Important information
     The views and opinions contained herein are those of the fund manager, and may not necessarily represent views expressed or
     reflected in other Schroders communications, strategies or funds.

     Risk warning: 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.

     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 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.

     This presentation is issued 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.




47




            Schroder Asian Fixed Income
            Asian Bond Investment Opportunities




            Rajeev De Mello – Head of Asian Fixed Income


                                                       For professional advisers only. This material is not suitable for retail clients.




26      Schroders Road Show
                                                                                                                                                    Business Summary


     Schroders Worldwide
     Focused, stable and well-resourced global asset manager

     Focus
     – An independent, pure asset                                                                                        Amsterdam      Rome
                                                                                                                         Copenhagen     Stockholm
       manager                                                                                                           Frankfurt      Zurich
     – 32 offices in 25 countries with over                                                                              Geneva
       2,600 employees                                                                           Bermuda                 Gibraltar
                                                                                                                         Guernsey                     Beijing
                                                                                                 Cayman Islands                                       Hong Kong
                                                                                                 Mexico City             Jersey
                                                                                                                         London                       Jakarta
                                                                                                 New York                                             Seoul
                                                                                                 Philadelphia            Luxembourg
     Long standing history                                                                                               Madrid                       Shanghai
                                                                                                                                                      Singapore
     – Established in 1804 by the Schroder                                                                               Milan
                                                                                                                                                      Sydney
                                                                                                                         Paris
       family who still retain 48% of voting                                                                                                          Taipei
                                                                                                                                                      Tokyo
       shares
     – Listed on the London Stock
       Exchange as a constituent of the
       UK FTSE 100 Index


     Financial stability
     – AUM of USD 328.7 billion globally
     – Over USD 1 billion in surplus cash
       with no debt
     – Fitch Asset Manager rating of M1

                                                                                                                                      Dubai
                                                                                                        Buenos Aires
                                                                                                        São Paulo
                                                                           Investment offices in blue

     Source: Schroders, as at 30 June 2011
49




                                                                                                                                                    Business Summary


     An established presence in Asia Pacific
     US$82.8 billion of AuM and 652 Schroders employees1

                                                                                                                       Japan: US$17.3bn
                                      China Joint Venture: US$7.2bn                                                    115 Schroders employees
                                      173 JV employees                                                                 Office opened in 1974
                                      Office opened in 2005
                                                                                                                  South Korea: US$5.8bn
                                                                       China: US$0.8bn                            43 Schroders employees
                                                                       9 Schroders employees                      Office opened in 1987
                                                                       Office opened in 1994
                                                                                                                   Taiwan: US$5.8bn
                                                                                                                   63 Schroders employees
                                                                        Hong Kong: US$11.6bn Office opened in 1989
                                                                        112 Schroders employees
                                                                        Office opened in 1971

                   Singapore: US$8.0bn
                   196 Schroders employees
                   Office opened in 1977
                                                            Indonesia: US$5.9bn
                                                              42 Schroders employees                                       Australia: US$27.6bn
                                                               Office opened in 1991
                                                                                                                           72 Schroders employees
                                                                                                                           Office opened in 1961



     Source: Schroders as at 30th June 2011
     1 Excludes China Joint Venture and a small private banking business in Singapore

50




                                                                                                                                          Schroders Road Show      27
                                                                                                                                                                       Business Summary


     Asian Fixed Income Assets Under Management
     More than US$6.0 billion under management in Asia ex Japan Fixed Income


                                                   Total Asia Total Asia ex Japan Assets under Management
                                                                                         US$6561m


                                      Asian Fixed Income Team                                                                            Other Local Bond Teams
                                                   US$4497m                                                                                             US$2064m


              Pan-Asian Bonds                                     Single-Country Bond Funds                                           Single-Country Bond Funds
                    US$2562m                                                    US$1935m                                                                US$2064m




     Absolute           Asian          Asian Local           Hong Kong            Singapore              RMB              Indonesian            Korean        Taiwan        Japanese
      Return           Credits          Currency               Bonds                Bonds               Bonds               Bonds               Bonds         Bonds          Bonds
     US$1446m        US$256m            US$860m               US$503m*             US$420m            US$1012m             US$1193m           US$105m        US$114m        US$652m




       * Includes USD Money Market products
       Source: Schroders as at 30 June 2011. For single country bond funds, includes the respective fixed income component of multi-asset portfolios.
51




 Investing in Asian Bonds




28     Schroders Road Show
                                                                                                                                                                                                                                                                                                                                                                               Investing in Asian Bonds


     Investment Rationale
     Solid fundamentals: Stronger sovereign balance sheets and higher growth prospects

     Asia’s Stronger Fiscal Position1                                                                                                                                                                                            Global GDP Growth Forecasts2
      Fiscal balance (% of GDP, 2010)                                                                                                                                                                                            % yoy

                                                                                                                                                                                                                                 10.0
     6
                Hong Kong
     4                                                                                                                                                                                                                               8.0

     2                                   Korea                                                                                                                                                                                       6.0

     0                                                                                                                                                                                                                               4.0
                                      Indonesia
     -2                      China                     Thailand        Germany                                                                                                                                                       2.0
     -4                                                  Philippines
                                                                   Austria Belgium Italy
                                                            Malaysia                                                                                                                                                                 0.0
     -6                                                                                  France
                                                                                          Portugal                                                                                                                                 -2.0
     -8                                                                                                                                                                          Japan
                                                 Spain                   India                                                                                                                                                     -4.0
-10                                                                                                   US                                          Greece

-12                                                                                                                                                                                                                                -6.0
                                                                                                                                                                                                                                                                   US                        Eurozone                             Japan                       Asia ex                           LatAm
          0                                            50                                            100                                          150                                              200                                                                                                                                                        Japan
                                                            Gross government debt (% of GDP, 2010)
                                                                                                                                                                                                                                                                              2009                    2010 (E)                                        2011 (F)                         2012 (F)



 1. Source: IMF, Credit Suisse, as at August 2011. Deutsche Bank, as at July 2011.
 2. Source: BoAML. JPMorgan forecasts for 2011 and 2012, as at 7 September 2011.
53                                                             This information on this page is for illustrative purposes only and should not be viewed as a recommendation to buy/sell.




                                                                                                                                                                                                                                                                                                                                                                               Investing in Asian Bonds


     Investment Rationale
     Asian structural growth should be higher than other regions
      Average Annual Growth: 2010 - 2020
          %                                                                                                                                                                                                                                                                                                                                                                                                              %
          8                                                                                                                                                                                                                                                                                                                                                                                                              8
                                                                                                                Working Population Growth                                                          Per Capita Growth                                                    GDP Projections
          7                                                                                                                                                                                                                                                                                                                                                                                                              7


          6                                                                                                                                                                                                                                                                                                                                                                                                              6

          5                                                                                                                                                                                                                                                                                                                                                                                                              5


          4                                                                                                                                                                                                                                                                                                                                                                                                              4

          3                                                                                                                                                                                                                                                                                                                                                                                                              3


          2                                                                                                                                                                                                                                                                                                                                                                                                              2

          1                                                                                                                                                                                                                                                                                                                                                                                                              1

          0                                                                                                                                                                                                                                                                                                                                                                                                              0


          -1                                                                                                                                                                                                                                                                                                                                                                                                             -1

          -2                                                                                                                                                                                                                                                                                                                                                                                                             -2
                                                                                                                                                                                                                                Ireland




                                                                                                                                                                                                                                                                                                      South Africa
                                      India




                                                               Iran




                                                                                                  Indonesia


                                                                                                                         Thailand




                                                                                                                                                                                                                                                                                                                                                                                               Japan


                                                                                                                                                                                                                                                                                                                                                                                                                Israel
                                                                                                                                                                                                                                                                                                                     Italy
                                              Turkey




                                                                                                                                                                                                                                                                  Australia
                                                                                                              Russia



                                                                                                                                     S.S. Korea


                                                                                                                                              Argentina
                                                                                                                                                          Poland


                                                                                                                                                                            Mexico




                                                                                                                                                                                                               Greece
                                                                                                                                                                                                                        Spain




                                                                                                                                                                                                                                                    Switzerland
                                                                      Colombia
                                                                                 Saudi Arabia




                                                                                                                                     Singapore




                                                                                                                                                                                       Hong Kong
                                                                                                                                                                                                   Venezuela




                                                                                                                                                                                                                                                                              Canada




                                                                                                                                                                                                                                                                                                                             Finland


                                                                                                                                                                                                                                                                                                                                                     Fance




                                                                                                                                                                                                                                                                                                                                                                                                       Sweden
                Malaysia
                            China




                                                                                                                                                                   Brazil




                                                                                                                                                                                                                                                                                                                                                                  Belgium
                                                                                                                                                                                                                                                                                                 UK




                                                                                                                                                                                                                                                                                                                                                             US
                                                       Egypt




                                                                                                                                                                                                                                                                                       Germany




                                                                                                                                                                                                                                                                                                                                       Netherlands




                                                                                                                                                                                                                                                                                                                                                                            Norway
                                                                                                                                                                                                                                                                                                                                                                                     Denmark
               Malaysia
                           China




                                                                                                                                                                                     Hong Kong




                                                                                                                                                                                                                                          Austria
                                    India




                                                                                                Indonesia


                                                                                                                       Thailand
                                                                                                                                        Korea
                                                                                                                                    Singapor
                                                                                                                                        e




      Source: The World in 2050, HSBC Global Research. As of 4 January 2011.
54                                                             This information on this page is for illustrative purposes only and should not be viewed as a recommendation to buy/sell.




                                                                                                                                                                                                                                                                                                                                                 Schroders Road Show                                                         29
                                                                                                                                                                                 Investing in Asian Bonds


     Investment Rationale
     Asia is underrepresented in Global Bond indices

     World Government Bond Index (WGBI)– Country Split1                                                         Total domestic debt securities outstanding by country2
                                                                                                                 US$67 trillion in total


                                       Other                                                                                                    LATAM, Other,
                             UK
                                        3%                                                                                                       3.0% 2.0%
                             6%                           US
                                                         27%
                                                                                                                                                                             Americas,
                                                                                                                                                                              41.0%
                                                                                                                            Europe,
                                                                                                                            25.0%



        Europe
         31%




                                                                                                                          Asia, 8.0%


                      Asia
                      1%                              Japan
                                                                                                                                                       Japan,
                                                       32%
                                                                                                                                                       21.0%




     1. Source: Bloomberg, Citigroup, as at 30 September 2011.
     2. Source: Bank for International Settlements, as at 30 June 2011.
55                                This information on this page is for illustrative purposes only and should not be viewed as a recommendation to buy/sell.




                                                                                                                                                                                 Investing in Asian Bonds


     Investment Rationale
     The Asian bond universe is mainly composed of highly rated countries

     HSBC Asian Local Bond Index1                                                                          Asian country characteristics2
                                                                                                             Country                    S&P Rating              GDP per capita      10-Yr Yield
                             Philippines,                                                                                                                         2010 US$
                                4.4%                 Singapore,
             Indonesia,                                15.1%
                                                                                                             Singapore                        AAA                   44,375              1.62%
               12.2%

                                                                                                             Hong Kong                        AAA                   31,759              1.27%

 India, 6.6%                                                       Hong Kong,                                Taiwan                           AA-                   18,588              1.38%
                                                                     13.7%

                                                                                                             South Korea                       A+                   20,546              3.95%
  Thailand,
    7.7%

                                                                  Taiwan, 5.7%                               China                            AA-                   4,389               3.93%

          Malaysia,                                                                                          Malaysia                           A                   8,453               3.70%
           9.3%

                                                     Korea, 15.9%
                   China, 9.5%                                                                               Thailand                          A-                   4,676               3.69%

                                                                                                             India                           BBB-                   1,347               8.43%

                                                                                                             Indonesia                        BB+                   3,024               6.92%

                                                                                                             Philippines                      BB+                   2,079               6.23%

1. Source: HSBC, as at 30 September 2011.
2. Source: Schroders, Bloomberg, HSBC. 10Yr yields as at 30 September 2011. S&P Rating indicates the long-term local currency sovereign debt rating.
56                                 This information on this page is for illustrative purposes only and should not be viewed as a recommendation to buy/sell.




30       Schroders Road Show
                                                                                                                                                                             Investing in Asian Bonds


     Investment Rationale
     Asian foreign reserves provide a cushion to foreign investors

  Foreign reserves held by Asian Countries (ex Japan)
 US$bn
     6000


     5000


     4000


     3000


     2000


     1000


        0
        Dec-99        Dec-00        Dec-01         Dec-02         Dec-03         Dec-04        Dec-05         Dec-06      Dec-07        Dec-08           Dec-09       Dec-10


                   China         Taiwan          South Korea           India       Hong Kong            Singapore        Thailand        Malaysia           Philippines




     Source: Bloomberg, as at 30 April 2011.

57                              This information on this page is for illustrative purposes only and should not be viewed as a recommendation to buy/sell.




                                                                                                                                                                             Investing in Asian Bonds


 Investment Rationale
     Strong ‘returns-versus-risk’ long term track record versus other asset classes

 Risk/return across various asset classes                                                                           10Y correlations of selective Asian local bond
                                                                                                                    markets and their respective equity markets2
                                           10 Yr Return           10 Yr Volatility         Return/
     Asset class1
                                            annualised             annualised             Risk ratio
                                                                                                                   Indonesia
     Asian Local Bonds                           8.1%                    6.5%                 1.23
     Asian USD Bonds                             7.6%                    7.5%                 1.01
                                                                                                                   Singapore
     US Treasuries                               5.5%                    4.8%                 1.14
     Emerging Market Debt                       10.5%                    9.5%                 1.10
     Global Government Bonds                     7.4%                    7.6%                 0.98                     Korea

     Emerging Market Equities                   13.4%                   24.1%                 0.55
     Asia ex Japan Equities                     11.2%                   23.3%                 0.48                  Thailand

     Global Equities                             2.5%                   17.2%                 0.14
                                                                                                                              -0.40          -0.20             0.00          0.20          0.40
     European Equities                           2.1%                   20.7%                 0.10
                                                                                                                                                          10Yr Correlation
 This information above is for illustrative purposes only. Past performance is not indicative of future returns.
                                                                                                                    Source: Schroders, Bloomberg, for the period 30/09/2001 – 30/09/2011, in local
 Source: Bloomberg, Schroders, as at 30 September 2011.                                                             currencies, based on weekly observations.
 1. Asset classes represented by the following indices:
    Asian Local Bonds – HSBC Asian Local Bond Index                                                                 2. Correlations for each country are based on the following indices:
    Asian USD Bonds – JPMorgan Asia Credit Index (chain-linked from 01/08/2006 to old JACI index)                   - Indonesia: HSBC Indonesia Local Bond Index and Jakarta Composite Index (in IDR)
    US Treasuries – Citigroup Treasury/Agency Index                                                                 - Singapore: HSBC Singapore Local Bond Index and FTSE Straits Times Index (SGD)
    Emerging Market Debt – JPMorgan Emerging Market Debt Index                                                      - Korea: HSBC Korea Local Bond Index and KOSPI Index (in KRW)
    Global Government Bonds – Citigroup World Government Bond Index                                                 - Thailand: HSBC Thailand Local Bond Index and Stock Exchange of Thai Index ( THB).
    Emerging Market Equities – MSCI Emerging Market Index
    Asia ex Japan Equities – MSCI AC Asia ex Japan Index
    Global Equities – MSCI World Index
    European Equities – MSCI AC Europe Index
58                           This information on this page is for illustrative purposes only and should not be viewed as a recommendation to buy/sell.




                                                                                                                                                            Schroders Road Show                      31
                                                                                                                                                                                         Investing in Asian Bonds


     Asian Local Currency Bonds
     Total return of Asian Local Bonds has been strong

            HSBC Asian Local Bond Index Total Return by Country
                            300


                            275

                                                                                                                                                                                            Philippines
                            250                                                                                                                                                             Indonesia


                            225
 Index (Base= 31.12.2004)




                            200

                                                                                                                                                                                            Thailand
                            175                                                                                                                                                             China
                                                                                                                                                                                            Singapore
                                                                                                                                                                                             Malaysi
                            150                                                                                                                                                             Overall
                                                                                                                                                                                                 a
                                                                                                                                                                                            Hong Kong
                                                                                                                                                                                                India
                            125                                                                                                                                                              Taiwan
                                                                                                                                                                                             South Korea

                            100


                             75
                                  Mar-05    Aug-05    Feb-06     Jul-06      Jan-07     Jul-07     Dec-07     Jun-08     Nov-08      May-09     Oct-09     Apr-10      Oct-10   Apr-11   Sep-11




                     Source: HSBC, as at 29 September 2011, in USD.
                     Past performance is not indicative of future returns.
59                                             This information on this page is for illustrative purposes only and should not be viewed as a recommendation to buy/sell.




                                                                                                                                                                                         Investing in Asian Bonds


 Asian Local Currency Bonds
     Currency appreciation and bond returns have contributed to performance

           Performance split from Jan 05 – Jul 11
                                                                                                                 Returns (%)
                                      -20               0                 20               40                 60                80               100                120            140            160

 Overall Index
   Indonesia
  Philippines
     Thailand
  Singapore
    Malaysia
        China
          India
 South Korea
      Taiwan
  Hong Kong


                                                                               Bond Return                                         Currency Return




 Source: Bloomberg, as at 31 July 2011. Overall index bond return is based on the weighted average of each of the individual country index returns,
 expressed in local currency, using country weights as at 31 July 2011.
 Past results are not indicative of future investment results.
60                                             This information on this page is for illustrative purposes only and should not be viewed as a recommendation to buy/sell.




32                          Schroders Road Show
                                                                                                                                                                               Investing in Asian Bonds


     Asian Local Currency Bonds
     The pick-up in Asian yields has significantly increased since the Financial Crisis


     US 5-year government bonds vs HSBC Asian Local Bond Index
       Bps                                                                                                                                                                                        %

     400                                                                                                                                                                                        7.0

     350                                                                                                                                                                                        6.0

     300
                                                                                                                                                                                                5.0
     250
                                                                                                                                                                                                4.0
     200
                                                                                                                                                                                                3.0
     150
                                                                                                                                                                                                2.0
     100

     50                                                                                                                                                                                         1.0


       0                                                                                                                                                                                        0.0
        Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Jun-04 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

                                  Yield Difference (LHS)           US 5-year Government Bond Yield                 HSBC Asian Local Bond Overall Average Yield




     Source: Bloomberg, as at 30 September 2011.

61                           This information on this page is for illustrative purposes only and should not be viewed as a recommendation to buy/sell.




                                                                                                                                                                               Investing in Asian Bonds


     Asian Credits
 Corporate fundamentals are stable

     Asian banks suffer from less bank credit losses1                                                        Asia corporate balance sheet solid2
                                                                                                                    Leverage for Corporate Asia remains mild
     US$ (Billion)

     2000                                                                                                    2.5                                                                                100%

     1800
     1600                                                                                                    2.0                                                                                80%

     1400
     1200                                                                                                    1.5                                                                                60%

     1000
       800                                                                                                   1.0                                                                                40%

       600
       400                                                                                                   0.5                                                                                20%

       200
           0                                                                                                 0.0                                                                                0%
                                                                                                                     2003

                                                                                                                             2004

                                                                                                                                     2005

                                                                                                                                             2006

                                                                                                                                                         2007

                                                                                                                                                                 2008

                                                                                                                                                                        2009

                                                                                                                                                                                2010E

                                                                                                                                                                                        2011E




            Prior    4Q07     2Q08      4Q08       2Q09     4Q09      2Q10       4Q10

                         US          Europe          Asia Incl Japan                                                     Debt/ Equity (RHS)                      Debt/EBITDA (LHS)




     1. Source: Bloomberg, as at end-March 2011.
     2. Source: UBS, as at November 2010.
62                           This information on this page is for illustrative purposes only and should not be viewed as a recommendation to buy/sell.




                                                                                                                                                                Schroders Road Show                   33
 Investment Process




                                                                                                Investment Process


     Investment Process Overview
     Combines top-down macro economic analysis with bottom-up security selection
                                                  Guidelines & Position Sizing




                                       Currency                                    Forwards
                             Global
                             Outlook




                                                        Yield Curve                Tenor
                                       Country
                          Regional                        Duration                 Issue
                          Outlook




                                                           Sector                   Issue
                                        Credit
                                                           Issuer                Convertibles




                                                        Risk Management

      Source: Schroders

64




34     Schroders Road Show
                                                                                                                                                                              Investment Process


      Investment Process Overview
      Expected sources of alpha

      Asian Local Currency Bond: Benchmark Relative Strategy
              Alpha (%)

         50


         40


         30


         20
                          30%
                                                    25%
         10
                                                                                15%
                                                                                                             10%                         10%                         10%
          0
                      Country                   Currency                   Yield Curve                   Sector                      Security                    Instrument
                     Allocation                 Allocation                 Positioning                  Allocation                   Selection                    Selection


        Source: Schroders

 65                              This information on this page is for illustrative purposes only and should not be viewed as a recommendation to buy/sell.




                                                                                                                                                                                 Investment Process


     Asian Local Currency Bonds
     Bond and currency selection require very distinct analyses
     HSBC Asian Local Bond Returns
                                                                                    Bond Returns

                Singapore          Hong Kong           Taiwan          South Korea           China         Malaysia          Thailand         India          Indonesia      Philippines
     25.0%
     20.0%
     15.0%
     10.0%
      5.0%
      0.0%
     -5.0%
 -10.0%
                     2008 - 2H                    2009- 1H                      2009 - 2H                    2010 - 1H                     2010 - 2H                     2011 - 1H

                                                                                   Currency Returns
     15.0%

     10.0%

     5.0%

     0.0%

     -5.0%

 -10.0%

 -15.0%

 -20.0%
                     2008 - 2H                    2009 - 1H                     2009 - 2H                     2010 - 1H                     2010 - 2H                    2011 - 1H



     Source: Schroders, Bloomberg, as at 30 June 2011.
66                              This information on this page is for illustrative purposes only and should not be viewed as a recommendation to buy/sell.




                                                                                                                                                             Schroders Road Show               35
                                                                                                                                                                                                                                                                   Investment Process


     Interest Rate Management
     Key duration exposures in Asia – Local Currency Strategy


 SGD Duration Positioning                                                                                        MYR Duration Positioning                                                                        THB Duration Positioning
                 % Deviation to BM                                                                                                % Deviation to BM                                                                               % Deviation to BM                                                    Yield %
                                                                                               Yield %                                                                                                Yield %

0.40                                                                                              3.0            0.30                                                                                   4.2      0.30                                                                                    4.2


                                                                                                  2.8            0.25                                                                                            0.25                                                                                    4.1
0.30                                                                                                                                                                                                    4.1
                                                                                                  2.6            0.20                                                                                                                                                                                    4.0
                                                                                                                                                                                                                 0.20
0.20                                                                                                                                                                                                    4.0
                                                                                                  2.4            0.15                                                                                                                                                                                    3.9
                                                                                                                                                                                                                 0.15
0.10                                                                                              2.2            0.10                                                                                   3.9                                                                                              3.8
                                                                                                                                                                                                                 0.10
                                                                                                  2.0            0.05                                                                                                                                                                                    3.7
0.00                                                                                                                                                                                                    3.8
                                                                                                                                                                                                                 0.05
                                                                                                  1.8            0.00                                                                                                                                                                                    3.6

-0.10                                                                                                                                                                                                   3.7      0.00
                                                                                                  1.6            -0.05                                                                                                                                                                                   3.5


-0.20                                                                                             1.4            -0.10                                                                                  3.6     -0.05                                                                                    3.4




                                                                                                                                                                                                                                                                    Jun-11

                                                                                                                                                                                                                                                                                 Jul-11
                                                                                                                                                                                                                         Dec-10

                                                                                                                                                                                                                                      Feb-11


                                                                                                                                                                                                                                                Mar-11

                                                                                                                                                                                                                                                          May-11




                                                                                                                                                                                                                                                                                            Sep-11
                                                                                                                                                                   Jun-11

                                                                                                                                                                                Jul-11
                                                            Jun-11

                                                                        Jul-11




                                                                                                                         Dec-10

                                                                                                                                     Feb-11

                                                                                                                                               Mar-11

                                                                                                                                                         May-11




                                                                                                                                                                                           Sep-11
        Dec-10

                     Feb-11


                                  Mar-11

                                               May-11




                                                                                     Sep-11




                      Deviation (LHS)                                  10-year yield                                               Deviation (LHS)                          10-year yield                                           Deviation (LHS)                          10-year yield




     Source: Schroders, Bloomberg, as at 30 September 2011. Positioning based on the SISF Asian Local Currency Bond as at 30 September 2011.

67                                                      This information on this page is for illustrative purposes only and should not be viewed as a recommendation to buy/sell.




                                                                                                                                                                                                                                                                      Investment Process


     Interest Rate Management
     Key duration exposures in Asia – Local Currency Strategy


     KRW Duration Positioning                                                                                     IDR Duration Positioning                                                                      PHP Duration Positioning
% Deviation to BM                                                                                      Yield %   % Deviation to BM                                                                    Yield %    % Deviation to BM
                                                                                                                                                                                                                                                                                                     Yield %

     0.20                                                                                                 5.0     0.20                                                                                    9.5   0.20                                                                                   45.0


                                                                                                                                                                                                          9.0
                                                                                                                                                                                                                                                                                                       44.5
     0.10                                                                                                         0.10                                                                                          0.10
                                                                                                                                                                                                          8.5
                                                                                                          4.5                                                                                                                                                                                          44.0
     0.00                                                                                                         0.00                                                                                          0.00
                                                                                                                                                                                                          8.0
                                                                                                                                                                                                                                                                                                       43.5
                                                                                                                                                                                                          7.5
     -0.10                                                                                                       -0.10                                                                                          -0.10
                                                                                                          4.0                                                                                                                                                                                          43.0
                                                                                                                                                                                                          7.0
     -0.20                                                                                                       -0.20                                                                                          -0.20
                                                                                                                                                                                                                                                                                                       42.5
                                                                                                                                                                                                          6.5


     -0.30                                                                                                3.5    -0.30                                                                                    6.0   -0.30                                                                                  42.0
                                                                     Jun-11

                                                                                 Jul-11




                                                                                                                                                                     Jun-11

                                                                                                                                                                                  Jul-11




                                                                                                                                                                                                                                                                   Jun-11

                                                                                                                                                                                                                                                                               Jul-11
                 Dec-10

                              Feb-11


                                           Mar-11

                                                        May-11




                                                                                              Sep-11




                                                                                                                          Dec-10

                                                                                                                                      Feb-11


                                                                                                                                                Mar-11

                                                                                                                                                          May-11




                                                                                                                                                                                             Sep-11




                                                                                                                                                                                                                        Dec-10

                                                                                                                                                                                                                                     Feb-11

                                                                                                                                                                                                                                               Mar-11

                                                                                                                                                                                                                                                         May-11




                                                                                                                                                                                                                                                                                          Sep-11




                              Deviation (LHS)                                 10-year yield                                         Deviation (LHS)                           10-year yield                                          Deviation (LHS)                          10-year yield




        Source: Schroders, Bloomberg, as at 30 September 2011. Positioning based on the SISF Asian Local Currency Bond as at 30 September 2011.

68                                                                   This information on this page is for illustrative purposes only and should not be viewed as a recommendation to buy/sell.




  36             Schroders Road Show
                                                                                                                                                                                                                                                                           Investment Process


                     Currency Analysis
                   Increases in Asian Real Effective Exchange Rates has plenty of potential
                                                                                                         200

                                                                                                         180
                                                       Real Effective Exchange Rate (31/12/1998 = 100)




                                                                                                         160

                                                                                                         140

                                                                                                         120

                                                                                                         100

                                                                                                          80

                                                                                                          60

                                                                                                          40
                                                                                                           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

                                                       Change in REER (Dec-1998 to Dec-2010)
                                                                                                          %
                                                                                                          80
                                                                                                          60
                                                                                                          40
                                                                                                          20
                                                                                                           0
                                                                                                         -20
                                                                                                         -40
                                                                                                               Indonesia        Thailand       Philippines        Malaysia           India            China         Singapore          Taiwan             Korea        Hong Kong

                                                      Source: Bloomberg, Westpac, as at 31 December 2010.
     69                                                                                                                       This information on this page is for illustrative purposes only and should not be viewed as a recommendation to buy/sell.




                                                                                                                                                                                                                                                                           Investment Process


                      Currency Analysis
                      Chinese Yuan: appreciation has been moderate so far

             CNY Nominal Effective Exchange Rate and USD/CNY Exchange Rate


                                                      120                                                                                                                                                                                                                           6.3
 Nominal Effective Exchange Rate Trade Weighted CNY




                                                                                                                                                                                                                                                                                    6.5
                                                      115
                                                                                                                                                                                                                                                                                    6.7
                                                      110
                                                                                                                                                                                                                                                                                    6.9
                                                                                                                                                                                                                                                                                          Exchange Rate USD/CNY




                                                      105
                                                                                                                                                                                                                                                                                    7.1

                                                      100                                                                                                                                                                                                                           7.3

                                                                                                                                                                                                                                                                                    7.5
                                                            95
                                                                                                                                                                                                                                                                                    7.7
                                                            90
                                                                                                                                                                                                                                                                                    7.9
                                                            85
                                                                                                                                                                                                                                                                                    8.1

                                                            80                                                                                                                                                                                                                      8.3
                                                             Dec-05                                                 Jun-06      Dec-06        May-07        Nov-07        Apr-08        Oct-08        Mar-09        Sep-09        Feb-10        Aug-10        Jan-11       Jul-11



                                                                                                                                                CNY Nominal Effective Exchange Rate (LHS)                     USDCNY Exchange Rate (RHS)



                                                       Source: Bloomberg, as at 16 September 2011.

70                                                                                                                           This information on this page is for illustrative purposes only and should not be viewed as a recommendation to buy/sell.




                                                                                                                                                                                                                                                     Schroders Road Show                        37
                                                                                                                                                                                                                                                                                Investment Process


      Currency Management
      Key Asian currency exposures – Local Currency Strategy

       SGD Currency Positioning                                                                                    MYR Currency Positioning                                                                                          THB Currency Positioning
                                                                                          USDSGD                                                                                                                  USDMYR                                                                           USDTHB
% Deviation to BM                                                                                             % Deviation to BM                                                                                                    % Deviation to BM                                               scale reversed
                                                                                          scale reversed                                                                                                          scale reversed
   2.0                                                                                         1.20           10.0                                                                                                   2.90           2.0                                                                   29.00

   1.0                                                                                                            8.0
                                                                                                                                                                                                                     2.95           1.5
                                                                                               1.22                                                                                                                                                                                                       29.50
                                                                                                                  6.0
   0.0
                                                                                                                                                                                                                     3.00           1.0
                                                                                               1.24               4.0                                                                                                                                                                                     30.00
  -1.0
                                                                                                                  2.0                                                                                                3.05           0.5
  -2.0                                                                                         1.26                                                                                                                                                                                                       30.50
                                                                                                                  0.0                                                                                                3.10           0.0
  -3.0
                                                                                               1.28           -2.0                                                                                                                                                                                        31.00
                                                                                                                                                                                                                     3.15          -0.5
  -4.0
                                                                                                              -4.0
                                                                                               1.30                                                                                                                                                                                                       31.50
                                                                                                                                                                                                                     3.20          -1.0
  -5.0                                                                                                        -6.0

  -6.0                                                                                         1.32           -8.0                                                                                                   3.25          -1.5                                                                   32.00




                                                                                                                                                                                                                                                                              Jun-11

                                                                                                                                                                                                                                                                                       Jul-11
                                                                                                                                                                                                                                          Dec-10

                                                                                                                                                                                                                                                   Feb-11

                                                                                                                                                                                                                                                            Mar-11

                                                                                                                                                                                                                                                                     May-11




                                                                                                                                                                                                                                                                                                Sep-11
                                                                                                                                                                                    Jun-11

                                                                                                                                                                                               Jul-11
                                                           Jun-11

                                                                       Jul-11




                                                                                                                           Dec-10

                                                                                                                                             Feb-11

                                                                                                                                                           Mar-11

                                                                                                                                                                        May-11




                                                                                                                                                                                                         Sep-11
          Dec-10

                      Feb-11


                                  Mar-11

                                              May-11




                                                                                    Sep-11




                        Deviation (LHS)                                      USDSGD                                                             Deviation (LHS)                                       USDMYR                                         Deviation (LHS)                        USDTHB




       Source: Schroders, Bloomberg, as at 30 September 2011. Positioning based on the SISF Asian Local Currency Bond as at 30 September 2011.

 71                                                    This information on this page is for illustrative purposes only and should not be viewed as a recommendation to buy/sell.




                                                                                                                                                                                                                                                                                Investment Process


      Currency Management
      Key Asian currency exposures – Local Currency Strategy

      IDR Currency Positioning                                                                                KRW Currency Positioning                                                                                              PHP Currency Positioning
                                                                                         USDIDR scale                                                                                                    USDKRW                                                                                      USDPHP
% Deviation to BM                                                                                             % Deviation to BM                                                                                                    % Deviation to BM
                                                                                         reversed                                                                                                        scale reversed                                                                              scale reversed

 3.0                                                                                         8400          4.0                                                                                                      1000            1.0                                                                   42.00

                                                                                                           3.0
                                                                                             8500                                                                                                                                   0.5
 2.0                                                                                                                                                                                                                                                                                                      42.50
                                                                                                           2.0
                                                                                                                                                                                                                    1050
                                                                                             8600                                                                                                                                   0.0
 1.0                                                                                                       1.0                                                                                                                                                                                            43.00

                                                                                             8700          0.0                                                                                                                     -0.5
 0.0                                                                                                                                                                                                                1100                                                                                  43.50
                                                                                             8800          -1.0                                                                                                                    -1.0

-1.0                                                                                                       -2.0                                                                                                                                                                                           44.00
                                                                                             8900                                                                                                                                  -1.5
                                                                                                                                                                                                                    1150
                                                                                                           -3.0
-2.0                                                                                                                                                                                                                                                                                                      44.50
                                                                                             9000                                                                                                                                  -2.0
                                                                                                           -4.0

-3.0                                                                                         9100          -5.0                                                                                                     1200           -2.5                                                                   45.00
                                                                                                                                                                                                                                                                              Jun-11

                                                                                                                                                                                                                                                                                       Jul-11
                                                                                                                                                                                 Jun-11


                                                                                                                                                                                             Jul-11
                                                        Jun-11

                                                                    Jul-11




                                                                                                                                                                                                                                          Dec-10

                                                                                                                                                                                                                                                   Feb-11

                                                                                                                                                                                                                                                            Mar-11

                                                                                                                                                                                                                                                                     May-11




                                                                                                                                                                                                                                                                                                Sep-11
                                                                                                                  Dec-10


                                                                                                                                    Feb-11


                                                                                                                                                      Mar-11


                                                                                                                                                                    May-11




                                                                                                                                                                                                        Sep-11
       Dec-10

                   Feb-11

                               Mar-11

                                           May-11




                                                                                Sep-11




                    Deviation (LHS)                                    USDIDR                                                          Deviation (LHS)                                        USDKRW                                                 Deviation (LHS)                        USDPHP




       Source: Schroders, Bloomberg, as at 30 September 2011. Positioning based on the SISF Asian Local Currency Bond as at 30 September 2011.

 72                                                    This information on this page is for illustrative purposes only and should not be viewed as a recommendation to buy/sell.




   38              Schroders Road Show
                                                                                                                                                                            Investment Process


     Credit Research Process
     Fundamental bottom-up credit research approach



         Credit Analyst                 Analysts follow the largest, most active issuers in their assigned sector coverage and region.


                                        * One-on-one management meetings / general ‘roadshows’
           Information
                                        * Original research using information sources
            gathering
                                        * Conference calls / web-casts

           Analysis of
           information                  Analysis of business and financial profile


      Credit opinion and                Credit Opinion: Improving, Moderately Improving, Stable, Moderately Declining or Declining
       recommendation                   Credit Recommendation: Rated 1, 2, 3, or 4


                                        * Credit Research Note                                  * Global emails
        Communication
                                        * Oral Discussions                                      * GRiD


                                        * Equity management meetings                            * Conference calls / web-casts
       Daily surveillance
                                        * General presentations                                 * Information sources


                                        * Daily email notes              * Oral discussions            * Recommendation lists                         * Relative rankings
        Communication
                                        * Weekly Credit Meeting          * Industry reviews            * Weekly Credit Update publication




73




                                                                                                                                                                            Investment Process


     Risk Management
     Risk Measurement – Ex-Ante Tracking Error

     Extract from Risk Report – Schroder ISF Asian Local Currency Bond
                          Positioning Relative to BM                                                               Tracking Error Contributions
     Country             Duration (CTD) Currency (%)                Duration             Term      Sectors         Quality      Other      Currency            Specific Risk      Totals
     China                   -0.06            2.55                     0.06              0.07        0.04            0.05         -            0.04                    0.25         0.27
     Hong Kong               -0.07            -8.8                     0.03              0.02        0.01            0.03        0.22          0.06                    0.12         0.25
     India                    0.05           -3.98                     0.09              0.23         -               -           -            0.26                    0.20         0.36
     Indonesia                0.03           -0.78                     0.04              0.14         -               -           -            0.04                    0.05         0.14
     Malaysia                  0             -1.86                     0.00              0.03        0.00            0.02         -            0.14                    0.05         0.16
     Philippines              0.09            0.08                     0.24              0.29         -               -           -            0.00                    0.02         0.10
     Singapore                -0.1           -2.12                     0.06              0.02        0.01            0.05         -            0.13                    0.07         0.18
     South Korea              0.09            2.97                     0.07              0.07         -               -           -            0.30                    0.04         0.30
     Taiwan                   -0.1           -1.33                     0.10              0.10         -               -           -            0.06                    0.10         0.12
     Thailand                 0.24            0.43                     0.17              0.26         -              0.00         -            0.02                    0.03         0.15
     United States            0.45           12.84                     0.17              0.35        0.11            0.21        0.22           -                      0.29         0.36
     Covariance                                                        0.07              0.09        0.05           (0.11)       0.21         (0.24)                    -          (0.28)
     Total                     0.62                0.00                0.39              0.61        0.13            0.19        0.37          0.38                    0.47         0.72




     Source: Wilshire Axiom, as at 30 September 2011. Past performance is not indicative of future returns.

74                              This information on this page is for illustrative purposes only and should not be viewed as a recommendation to buy/sell.




                                                                                                                                                        Schroders Road Show                 39
         Market Outlook and Strategy




                                                                                                                                                                      Market Outlook and Strategy


     Asian Interest Rates
     Slower growth ahead and peaking inflation has reduced expectations for rate hikes

     Asian CPI inflation                                                                                    Asian CPI inflation (India: WPI)
     % yoy                                                                                                  % yoy
10                                                                                                          20
                                                                                                            18
     8                                                                                                      16
                                                                                                            14
     6
                                                                                                            12
                                                                                                            10
     4
                                                                                                              8
                                                                                                              6
     2
                                                                                                              4

     0                                                                                                        2
                                                                                                              0
 -2                                                                                                          -2
     Dec-04       Dec-05      Dec-06      Dec-07      Dec-08       Dec-09      Dec-10                          Dec-04      Dec-05      Dec-06      Dec-07    Dec-08      Dec-09      Dec-10

                            China                       Hong Kong
                            Korea                       Malaysia                                                                      India         Indonesia          Philippines
                            Singapore                   Thailand



         Source: Bloomberg, as at 31 August 2011

76                               This information on this page is for illustrative purposes only and should not be viewed as a recommendation to buy/sell.




 40          Schroders Road Show
                                                                                                                                                                                                                Market Outlook and Strategy


     Asian Currencies
     Remain positive on a medium-term basis but careful of global uncertainty

     Negative US dollar downtrend should continue on a                                                                         Strong correlation to equities remains a risk for Asian
     medium term basis given fiscal problems in the US                                                                         currencies
                                                                                                                                                         Asian equity and Asian currency correlation
     130                                                                                                                       125                                                                                                          700
                                                                                                                                                                                                                                            650
     120
                                                                                                                               120                                                                                                          600
                                                                                                                                                                                                                                            550
     110
                                                                                                                               115                                                                                                          500
     100                                                                                                                                                                                                                                    450
                                                                                                                               110                                                                                                          400
      90
                                                                                                                                                                                                                                            350
                                                                                                                               105                                                                                                          300
      80
                                                                                                                                                                                                                                            250
      70                                                                                                                       100                                                                                                          200
           Jan-00

                    Mar-01



                                      Jun-03




                                                           Oct-05

                                                                    Dec-06

                                                                             Jan-08

                                                                                      Mar-09

                                                                                               May-10

                                                                                                        Jul-11




                                                                                                                                     Dec-08



                                                                                                                                                         Jul-09

                                                                                                                                                                  Oct-09

                                                                                                                                                                           Jan-10

                                                                                                                                                                                    May-10



                                                                                                                                                                                                       Nov-10

                                                                                                                                                                                                                 Feb-11

                                                                                                                                                                                                                          Jun-11

                                                                                                                                                                                                                                   Sep-11
                             Apr-02



                                                Aug-04




                                                                                                                                                Apr-09




                                                                                                                                                                                             Aug-10
                                                         US Dollar Index                                                                      Asian Dollar Index (LHS)                           MSCI Asia ex Japan (RHS)




     Source: Schroders, Bloomberg, as at 30 September 2011

77                                    This information on this page is for illustrative purposes only and should not be viewed as a recommendation to buy/sell.




                                                                                                                                                                                                                   Market Outlook and Strategy


     Asian Local Currency Corporate Bonds
     Selective corporate bonds offer good yield pick-up over government bonds

     Yield comparison of selective CNH bonds
     Yield (%)

       8.0                                                                   Shanshui Cement
                                                                             Zhongsheng Group
       7.0

       6.0

       5.0

       4.0
                                                                                                                                                                                                      China Development Bank
       3.0                                                     China Resources Power
                                      Caterpillar COFCO                 Volkswagen
                                                  Ping An Insurance                                                                                                                                        Asian Dev Bank
       2.0                                        British Petroleum
                        Agric Bank of China       Tesco
                                                  OCBC                  International Finance
       1.0                           China Devt Bank                             Corp
       0.0
                      2012                     2013                 2014                  2015                   2016         2017                   2018                  2019                   2020                    2021
                                                                                                                        Bond Maturity




     Source: Bloomberg, as at 21 September 2011
78                                     This information on this page is for illustrative purposes only and should not be viewed as a recommendation to buy/sell.




                                                                                                                                                                                               Schroders Road Show                                41
                                                                                                                                                                   Market Outlook and Strategy


Overall Asian Bond Strategy


        Asian currencies remain significantly undervalued due to much more robust economies. Strong
        and sustainable growth is backed by strong demographics, high productivity, sound government
        finances and functioning macro economic policy tools.


        Asian bonds should be supported by Central Banks which have tightened monetary policy to
        inflation and global demand for safer bonds. The yield gap between Asian bonds and US, German
        and Japanese bonds at its widest over the past 5 years.



       Asian corporate bonds remain attractive supported by a strong economic environment, low
        default rates and generally prudent management.



       Timing: the current stress on currencies and credit is driven by global factors. The Asian market
        overreaction should lead to attractive entry points once we see stabilization in Europe.




79                             This information on this page is for illustrative purposes only and should not be viewed as a recommendation to buy/sell.




                                                                                                                                                                     Market Outlook and Strategy


Current Preferences in Asian Fixed Income
Long duration and selective currency exposures


                                  FX                     3%-5% potential appreciation pace
China                            Local                   Expected growth and inflation moderation to lead to loosening of policy
                                Credits                  Some attractively priced High Yield and quasi-sovereign opportunities in USD, CNH and CB markets



                                  FX                     USD Peg to remain

Hong Kong                        Local                   Government bonds scarce and tracking US Treasury bonds

                                Credits                  Tactical opportunities in the BBB corporate and banking sectors



                                  FX                     Higher yielding currency but global investors positioning is heavy
Indonesia                        Local                   Inflation low, Bank Indonesia biased to further easing, Global investors positioned mainly in shorter maturity bonds

                                Credits                  Selective high yield IDR and USD resources/bank opportunities. Potential sovereign upgrade supports valuation



                                  FX                     High yielding currency, exports are increasing but equity flows are weak and current account is negative

India                            Local                   Reserve Bank of India is hawkish and aggressively fighting inflation, high yielding
                                Credits                  Good value corporates/ banks but risk of slowing economy and supply



                                  FX                    KRW recent weakening is an opportunity to buy but economy sensitive to global growth slowdown

South Korea                      Local                   Good hedge against macro risk events; BoK to lean towards currency appreciation to contain near-term inflation pressures

                                Credits                 Fair value currently. Primary issues offer better entry points ahead.



     Source: Schroders, as at 17 October 2011

80                                     This information on this page is for illustrative purposes only and should not be viewed as a recommendation to buy/sell.




42      Schroders Road Show
                                                                                                                                                                                            Market Outlook and Strategy


 Current Preferences in Asian Fixed Income
  Long duration and selective currency exposures


                                      FX                       Bank Negara Malaysia more tolerant of gradual MYR appreciation
 Malaysia                            Local                         Slowing growth, reasonable risk aversion proxy
                                     Credits                       No clear credit value



                                      FX                            Balance of payments remains positive, worker remittances continue to increase
 Philippines                         Local                         Inflation pressures still remain; yields are low
                                     Credits                       Selective low beta HY corporate opportunities supported by strong local bids. Limited value in the sovereign space



                                      FX                           Rising core inflation and MAS slower appreciation policy
 Singapore                           Local                         Slowing external growth, good risk aversion proxy

                                     Credits                       Selective good value in AAA/AA corporates



                                      FX                           Significant current account surplus, huge foreign reserves
 Taiwan                              Local                         Bonds are expensive

                                     Credits                       No clear credit value



                                      FX                           Recent laggard and underperformed due to floods
Thailand                             Local                         Positive on slower growth trajectory and priced in rate hikes but keeping a close watch on the govt’s new fiscal rhetoric
                                     Credits                       No clear credit value



       Source: Schroders, as at 17 October 2011

 81                                            This information on this page is for illustrative purposes only and should not be viewed as a recommendation to buy/sell.




                                                                                                                                                                                            Market Outlook and Strategy


 Portfolio Positioning
 Schroder ISF Asian Local Currency Bond
 Portfolio Characteristics                                                     Portfolio Country Allocation2 vs. Benchmark1
                                                                               % of total assets
                                       Fund            Benchmark1

      Average YTM                     4.00%               3.67%                  20%

      Average Credit
                                           A                  A-
      Rating

      Average Duration               6.03 years         5.41 years               15%




 Duration                                                                        10%
 % of total assets

         <3 years

                                                                                  5%
        3-5 years


        5-7 years


       7-10 years
                                                                                  0%
                                                                                                                                                       si a


                                                                                                                                                                ia




                                                                                                                                                                                               D


                                                                                                                                                                                                      uiv
                                                                                                                                                                                        n
                                                                                           rea




                                                                                                                                           ina
                                                                                                                         re


                                                                                                                                 ng
                                                                                                      nd


                                                                                                             sia




                                                                                                                                                                          es


                                                                                                                                                                                    iwa


                                                                                                                                                                                             US
                                                                                                                                                              Ind
                                                                                                                      po




        10+ years
                                                                                                                                Ko
                                                                                                  ila




                                                                                                                                                                                                    Eq
                                                                                                                                                    lay




                                                                                                                                                                          pin
                                                                                                                                         Ch
                                                                                                               e
                                                                                       Ko




                                                                                                            on


                                                                                                                      ga




                                                                                                                                                                                 Ta
                                                                                                    a




                                                                                                                                                  Ma




                                                                                                                                                                      ilip
                                                                                                                              ng
                                                                                                 Th




                                                                                                                                                                                                   &
                                                                                                           Ind


                                                                                                                   Sin




                                                                                                                                                                                                  sh
                                                                                                                            Ho




                                                                                                                                                                    Ph




                    0.0       10.0         20.0         30.0          40.0
                                                                                                                                                                                                Ca




                              Benchmark              Fund 3                                                                    Fund               Benchmark

  1 The   benchmark is the HSBC Asian Local Bond Index (from 1 September 2011).
  2   Classification by interest rate markets
  3   Excludes Cash and Equivalents

  Source: Schroders. Portfolio data as at 30 September 2011. Benchmark data as at 3 October 2011.
82 The information on this page is for illustrative purposes only. It does not constitute a recommendation to invest in the Fund. Past performance is not indicative of future returns.




                                                                                                                                                                          Schroders Road Show                     43
                                                                                                                                                                                                              Market Outlook and Strategy


     Portfolio Positioning
     Schroder ISF Asian Local Currency Bond
     Government / Corporate Split                                                                                            Portfolio Currency Allocation2 vs. Benchmark1
                                                                                                                             % of total assets
                                                   1%                                                                         20%
                         17%


                                                                                                                              16%




                                                                                                                              12%




                                                                                                                                8%




                                                                        82%                                                     4%




                                         Government                                                                             0%
                                                                                                                                     KRW         SGD     IDR     USD    THB     MYR      CNY     HKD     PHP      TWD      INR
                                         Corporate
                                         Cash
                                                                                                                                                                    Fund        Benchmark



     1 The    benchmark is the HSBC Asian Local Bond Index (from 1 September 2011).
     2   Includes outright currency exposures/ hedges via forwards

     Source: Schroders. Portfolio data as at 30 September 2011. Benchmark data as at 3 October 2011.

83 The information on this page is for illustrative purposes only. It does not constitute a recommendation to invest in the Fund. Past performance is not indicative of future returns.




                                                                                                                                                                                                              Market Outlook and Strategy


     Key Macro Risks
     China slowdown and contagion from peripheral European sovereign concerns

     China Credit Growth Slowing1                                                                                                                            European Sovereign stress2
         % yoy                                                                                                                                     (bps)
                                                                                                                                                                                     Sovereign CDS spreads
     40                                                                                                                                            3600


     35                                                                                                                                            3000

     30
                                                                                                                                                   2400

     25
                                                                                                                                                   1800
     20

                                                                                                                                                   1200
     15

     10                                                                                                                                                600


          5                                                                                                                                             0
              Jun-99

                       Jun-00
                                Jun-01

                                          Jun-02

                                                   Jun-03

                                                            Jun-04

                                                                     Jun-05
                                                                              Jun-06

                                                                                       Jun-07
                                                                                                Jun-08

                                                                                                         Jun-09

                                                                                                                  Jun-10
                                                                                                                           Jun-11




                                                                                                                                                        Jan-10    Apr-10    Jul-10     Oct-10   Jan-11       Apr-11   Jul-11


                                                                                                                                                                 Portugal             Spain            Greece              Italy
                                                      China Bank Loan Grow th


         1. Source: Bloomberg, as at 31 August 2011.
         2. Source: Bloomberg, as at 30 September 2011.
84                                                 This information on this page is for illustrative purposes only and should not be viewed as a recommendation to buy/sell.




 44             Schroders Road Show
     Schroders Asian Fixed Income Team




                                                                                                                                              Asian Fixed Income Team


     Schroders’ Asian Fixed Income Resources
     Integrated regional resources a distinct competitive advantage
                                                                         Rajeev De Mello
                                                                     Head of Asian Fixed Income
                                                                                  (24 yrs)


                Pan-Asian Bond Team                                              Other Regional Bond Teams
                                                                                                                                                     Dealers
                Singapore / Hong Kong                 Indonesia                Korea                  Japan                  Taiwan



      Chow Yang Ang               Angus Hui        Soufat Hartawan      Ryan (Nak Gyun) Kim     Tetsushi Nagato            Brian Lee                Willy Lee
     Portfolio Manager –     Portfolio Manager –   Indonesian Bond          Korean Bond         Portfolio Manager /   Taiwan Bond Portfolio    Fixed Income Dealer /
      Rates/ Currencies      Credits/ RMB Bonds    Portfolio Manager      Portfolio Manager       Credit Analyst           Manager               Technical Analyst
                                                        (17 yrs)               (10 yrs)               (16 yrs)              (17 yrs)                  (17 yrs)
           (12 yrs)                (14 yrs)

                               Richard Brown        Putu Yudhana                               Takeshi Kanamaru            Alex Wang                 Kell Ow
         Kevin Foo
                                Head of Credit      Credit Analyst                               Fund Manager /       Taiwan Bond Portfolio    Fixed Income Dealer
       Credit Analyst /
                                Research, Asia         (4 yrs)                                   Macro Research            Manager
      Portfolio Manager                                                                                                                               (8 yrs)
                                   (27 yrs)                                                          (8 yrs)                (16 yrs)
            (5 yrs)
                                 Li Ping Yeo                                                                            Pei-Ling Chang           Geon Joon Choi
                                Credit Analyst                                                                        Taiwan Bond Portfolio    Fixed Income Dealer
                                    (16 yrs)                                                                               Manager                Korean Bonds
                                                                                                                            (13 yrs)                  (2 yrs)
                                Peng Fong Ng
                               Credit Analyst /                                                                          Oscar Chuang              Tjutju Ukim
                              Portfolio Manager
                                    (5 yrs)                                                                             Taiwan FoF Bond        Fixed Income Dealer
                                                                                                                        Portfolio Manager       Indonesian Bonds
                                Marcus Wong                                                                                 (11 yrs)                  (17 yrs)
                                Credit Analyst
                                   (4 yrs)

       Source: Schroders, as at September 2011.
       ( ) show total years experience
86




                                                                                                                               Schroders Road Show               45
                                                                                                                                                                                    Global Fixed Income Team



 Schroders’ Global Fixed Income Team and Resources
                                                                             Karl Dasher
                                                                          Head of Fixed Income

        Philippe Lespinard
         Fixed Income CIO

                                                         Euro & UK      US Tax-Exempt                                                                                                             Latin America
                                      Global EMD                                               US Taxable Fixed Income             Australian Fixed
        Multi Sector Portfolios                            Credit        Fixed Income                                                                       Asian Fixed Income Portfolios         Fixed Income
                                      RV Portfolios                                                   Portfolios                  Income Portfolios
                                                         Portfolios        Portfolios                                                                                                              Portfolios*
      B. Bahra        E. Halley       W. Hyland         A. Cordery      S. Beck (Phil)      W. Sparks (NY)     M. Metcalf (NY)    S. Doyle (Syd)        R. De Mello (Sing)  N.G. Kim (Seoul)    M. De Callis (SP)
      A. Blair        C. Kleman       L. Chua           S. Kulkarni     D. Scholl (Phil)    C. Ames (NY)       G. Moore (NY)      M. Kase (Syd)         C.Y. Ang (Sing)     B. Lee (Taipei)     P. Albina (BA)
      F. Bourgoin     T. Sartain      B. Choda          D Manek         D. Darling (Phil)   E. Fitzpatrick     R. Mostafa (NY)    S. Stevenson (Syd)    P.L. Chang (Taipei) A. Wang (Taipei)    L. Tiphanie (BA)
      J. Fairest      D. Scammell                       M. Scott        R. Haynes (Phil)    (NY)               D. Sullivan (NY)   K. Wood (Syd)         O. Chuang (Taipei)
      M. Foggin       J. Tisserand                                      E. Friedland (NY)   D. Harris (NY)     D. Scholl (NY)     S. Gray (Syd)         S. Hartawan (Jak)
      B. Jolly        L. Yvernault                                                          T. Hui (NY)                                                 A. Hui (HK)
                                                                                                                                                        T. Kanemaru (Tokyo)



                                                          Fund
                                                                           Fixed Income          Risk              Economist                               Product          F.I. Derivative      Fixed Income
                    Credit Research                    Management                                                                 Equity Research
                                                                              Dealers         Management             Team                                Management          Operations         Analytics & Ops
                                                        Assistants
      J. Davis (US)           H. Mason (Syd)          W. Clayton-Howe    J. Baulch           H. Choon (Sing)     T. Fong          90+ analysts         A. Child (Phil)     L. Binns.           C. Addo
      R. Brown (Sing)         P. McCullagh            T. Hoffer (US)     G. Choi (Seoul)     S. Dupre            K. Wade          globally             G. Canavan          V. Dixit            S. Bense
      T. Cha (US)             T. Nagato (Tokyo)       L. Hornby (US)     D. Fenwick          S. Farral           A. Zangana                            D. Enlund (Sing)    A. Patel            N. Biggs
      C. De Young (US)        P.F. Ng (Sing)          B. Khoo (Sing)     M. Field            D. Hewitt                                                 M. George           S. Whitford         A. Coy
      R. Doig                 S. Park (US)            M. Smith           W. Lee (Sing)       J. Marshall                                               A. Gendron-Judd                         A. Daniels
      K. Foo (Sing)           C. Peat                 C. Su (Sing)       P. Meakin           A. Moscow                                                 J. Harris                               S. Doyle
      H. Fullam (US)          A. Quadri (US)          P. Vespa           K. Ow (Sing)        J. Seow (Sing)                                            S. Mead                                 A. Hassan
      P. Fullerton (Syd)      E. Richter (US)         R. Warr            N. Robinson         J. Stewart                                                T. Miyata (Tokyo)                       C. Jankowski (Phil)
      A. Harnetty             C. Tan (Sing)                              T. Ukim (Jak)       H. Webb                                                   I. Morita (Tokyo)                       J. Lauder
      T. Holland              H. Thomas (US)                                                                                                           L. Patterson (NY)                       R. Patel
      E. Kelly (Phil)         J. Widener (US)                                                                                                          S. Scott (NY)                           G. Povey
      S. Kiran                M. Wong (Sing)                                                                                                           W. Sweeney (Phil)                       A. Pryce-Robertson
      S. Kong (Sing)          M. Yee (US)                                                                                                              C. Tams                                 A. Rawlinson
      N. Krol                 L.P. Yeo (Sing)                                                                                                          M. Tolcher                              D. Sharrad
      A. Low (Syd)            P. Yudhana (Jak)                                                                                                         A. Wang (Taipei)                        S. Stewart (NY)
      V. Maniar                                                                                                                                        D. Welch (NY)                           F. Walfridsson


              Other Resources available to the investment team. Names in bold are team leaders

     Source: Schroders as at September 2011. * SP represents Sao Paolo and BA represents Buenos Aires.
87




46       Schroders Road Show
                                                                                                                                                                          Appendix


     Biographies
     Portfolio Managers

 Rajeev De Mello
 Head of Asian Fixed Income
 – Head of Asian Fixed Income, based in Singapore
 – Joined Schroders in July 2011
 – Previously worked at Western Asset Management as Senior Investment Officer, Country Head of Singapore, and member of the Global Investment Strategy
   Committee.
 – Prior to that, he was Head of Asian Fixed Income at Pictet Asset Management. Until 2005, he was Head of Fixed Income with specific responsibilities for
   European bonds and Global bonds. He joined Pictet in 1999 to manage European aggregate bond strategies.
 – Other positions held include Head of Asian Bond Trading at UBS (Warburg Dillon Read) Hong Kong, Consultant at McKinsey & Company and Trader in
   currencies and precious metals options at United Overseas Bank (BNP) and Credit Suisse First Boston.
 – MBA, Georgetown University
 – Bachelor of Science in Economics (Honors), London School of Economics




 Ang Chow Yang, CFA
 Portfolio Manager
     – Responsible for Asian interest rate and currency strategy formulation for pan-Asian bond portfolios, based in Singapore. He is the lead portfolio manager
       for Singapore dollar and Hong Kong dollar fixed income.
     – Joined Schroders in 2001 as an equity fund manager’s assistant and in August 2004 joined the Asian fixed income team.
     – Prior to joining Schroders, worked for JP Morgan as a Product Control Analyst for Treasury
     – Chartered Financial Analyst
     – Bachelor of Business Degree, Nanyang Technological University, Singapore




88




                                                                                                                                                                          Appendix


     Biographies
     Portfolio Managers and Head of Credit Research

 Angus Hui, CFA
 Portfolio Manager
 – Currently a portfolio manager responsible for credit investments in our pan-Asian fixed income portfolios, based in Hong Kong. He is also the
   lead portfolio manager for RMB fixed income.
 – Commenced Asian fixed income credit portfolio management in 2005
 – Joined Schroders in 2000, as a credit analyst researching Asian high yield and high grade credits with portfolio management responsibilities
   for Hong Kong and global bond portfolios
 – Prior to joining Schroders, worked for HSBC (Hong Kong) as a Credit Analyst
 – Investment career commenced in 1997 with Standard & Poor’s in Australia
 – Chartered Financial Analyst
 – Bachelor of Commerce and Master of Commerce (First Class Honors), University of Melbourne




 Richard Brown
 Head of Credit Research, Asia
 – Fixed income credit research analyst with responsibility for high grade and high yield issuers in Asia ex Japan, based in Singapore
 – Appointed to current role in October 2005. Prior to this role, was Head of Pan-European Credit Research. Joined Schroders in 2000.
 – Prior to joining Schroders, Richard worked at National Westminster Bank (1980-2000). Between 1990-2000, he undertook a series of credit-
   related roles involving high grade, high yield and leveraged loan assets in London and New York.
 – Associate Member of the Association of Corporate Treasurers (AMCT), Associate of the Chartered Institute of Bankers (ACIB)
 – MBA, Edinburgh Business School




89




                                                                                                                                                        Schroders Road Show   47
                                                                                                                                                                                            Disclaimer


 Disclosure Statement – Singapore

 This presentation is prepared exclusively for the benefit and internal use of the potential investor in order to indicate, on a preliminary basis, the feasibility of a possible transaction or
 transactions and does not carry any right of publication or disclosure to any other party. This presentation is incomplete without reference to, and should be viewed in conjunction with, the oral
 briefing provided by Schroder Investment Management (Singapore) Ltd.

 The information in this presentation is based on management forecasts and reflects prevailing conditions and our views as of this date, all of which are accordingly subject to change. In
 preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was
 provided to us by or on behalf of the potential investor or which was otherwise reviewed by us.

 Past performance and any forecasts are not necessarily a guide to future or likely performance. You should remember that the value of investments and income from them can go down as
 well as up and is not guaranteed. Exchange rate changes may cause the value of the overseas investments to rise or fall.

 Potential investors should be aware that such investments involve market risk and should be regarded as long-term investments.

 Derivatives carry a high degree of risk and should only be considered by sophisticated investors.

 This document is for information purposes only. It is not intended as promotional material in any respect and may not be circulated, published, reproduced or distributed to any other person
 without our prior written consent. This document is not an offer or solicitation for the purchase or sale of any financial instrument described herein, and is not intended to provide a basis for
 evaluation or assessment of the instruments described. This document is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment
 recommendations.

 Schroder Investment Management (Singapore) Ltd
 Co. Registration No.: 199201080H
 65 Chulia Street, #46-00, OCBC Centre
 Telephone: +65 6535 3411 Fax: +65 6535 3486




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                                                                                                                                                                                            Disclaimer


 Confidentiality Statement
 This content of this document and all confidential information relating to any Schroders plc group company must be treated by you in the strictest confidence. It may only be used for the
 purposes of assessing this proposal. Confidential information includes (but is not limited to):

 – Schroders’ proposed investment strategies, processes, know-how and details of the proposed investment mandate;

 – fee and commission arrangements;

 – information about other Schroders’ clients;

 – any third party information which are subject to confidentiality restrictions;

 – fund holdings data; and

 – our staff details.

 Confidential information should not be disclosed to any third party and should only be disclosed to those of your employees, agents and professional advisers who are required to see such
 information for the purposes of assessing the proposal. You should ensure that these persons are made aware of the confidential nature of such information and treat it accordingly.

 You acknowledge and agree that the unauthorized disclosure or use of confidential information would cause irreparable harm, damages would not be an adequate remedy and we shall be
 entitled to all forms of equitable relief.

 You shall return and/ or destroy all confidential information at our written request.

 Neither party shall disclose any information or make any announcement relating to this document or its subject matter without the prior written approval of the other party except as required by
 law or by any legal or regulatory authority.

 This document contains indicative terms for discussion purposes only and is not intended to provide the sole basis for evaluation of the model proposed/ investment.




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Schroders Road Show   49
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Schroder Investment Management (Switzerland) AG
Central 2 I CH-8001 Zurich I Tel. +41 (0)44 250 11 11
Rue d’Italie 8 I CH-1208 Geneva I Tel. +41 (0)22 818 41 11



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