Schroders

Equity Income: Opportunities for today, and the long-termIan KellyIncome Fund Manager

November 2012 | For professional investors or advisors only

The time is right for equity income Performance is strong

Cash is a risky asset

Government bonds – not an option

Dividends are resilient

Maximiser strategy generates additional income

Periods to 30 September 2012

Schroders’ European and Global Equity Yield FundsStrong performance vs. all peers

2Citywire Event | November 2012

Source: Morningstar. Performance is based on ‘A Acc’ shares, bid to bid, net of fees. The peer group rankings in the top table are based on Global Equity; Offshore and International Funds & the peer group rankings in the bottom table are based on a combination of ‘Europe Large Cap Blend’, ‘Europe Large Cap Growth’ and ‘Europe Large Cap Value funds, domiciled in Luxembourg *Schroder International Selection Fund is referred to as Schroder ISF throughout this presentation

Performance in US$% YTD 1 year 2 years p.a. 3 years p.a. IncomePaid

Schroder ISF Global Equity Yield +15.9 +23.8 +8.7 +8.0 4.0%

MSCI World Net TR +13.0 +21.6 +7.9 +7.5

Peer group ranking Q1 Q1 Q1 Q1

Schroder ISF* Global Dividend Maximiser +14.7 +24.1 +8.8 +7.7 8.0%

Performance in EUR% YTD 1 year 2 years p.a. 3 years p.a. Income Paid

Schroder ISF European Equity Yield +15.1 +25.7 +7.1 +7.4 4.0%

MSCI Europe Net TR +12.3 +22.3 +4.8 +6.5


Schroder ISF European Dividend Maximiser +15.5 +26.4 +7.4 +7.3 8.0%


Schroders’ European and Global Equity Yield FundsStrong performance vs. value and income peers


Source: Morningstar. Performance is based on ‘A Acc’ shares, bid to bid, net of fees. The peer group rankings in the top table are based on Global Equity Large Cap Value; Offshore and International Funds domiciled in Luxembourg & the peer group rankings in the bottom table are based on ‘Europe Large Cap Value’ funds, domiciled in Luxembourg

Performance in US$% YTD 1 year 2 years p.a. 3 years p.a. Income Paid


Peer Group Average +9.2 +15.1 +3.5 +4.0

Fund relative to universe average +6.7 +8.7 +5.2 +4.0

Ranking 1/84 2/83 8/76 10/71



Peer Group Average +11.4 +19.5 +1.9 +3.2

Fund relative to universe average +3.7 +6.2 +5.2 +4.2

Ranking 10/72 2/83 4/67 3/63

Central banks are choosing inflation over default

Spending power of £100,000 at various rates of inflation

Cash is a risky assetInvestors need returns to fight inflation


Source: Schroder analysis

£90,573

2%, £82,035 £82,193

4%, £67,556

£74,726

6%, £55,839

£40,000

£50,000

£60,000

£70,000

£80,000

£90,000

£100,000

£110,000

0 1 2 3 4 5 6 7 8 9 10Years

Why buy government bonds with negative real returns?

Government bonds are not an option10-year yields at 30-year lows


Source: Datastream. As at 22 October 2012

0

4

8

12

16

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Germany UK US

%

Government bonds are not an optionGovernment bonds have already appreciated

The current 10-year US Treasury was issued in 1992 at $99 and pays $7.25 per annum

Investors have received $150 in coupons, and the price has risen to $152


Source: Bloomberg. US Treasury is 7¼ bond issued 15 August 1992. Dividends and coupons reinvested. As at 6 September 2012

Government bonds are not an optionLimited return potential with capital risk

We only get this 1.7% return if we commit our money for 10 years. If we sell earlier, we could lose or gain substantially

Over one year, our total return will depend on the prevailing interest rates:


Source: Bloomberg and Schroder calculations. As at 14 May 2012. Return sensitivities are approximations. Not a recommendation to buy or sell any security

Total return

Movement in rates

10 year bond (1.7% yield)

30 year bond (3.0% yield)

-1.00% 9% 26%

+0.50% -2% -5%

+2.00% -11% -27%

+3.00% -16% -37%

+4.00% -21% -45% -50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

-1.00% +1.00% +3.00%

10 year bond 30 year bond

Global markets: Yield spectrumYield to maturity and earnings yield


Source: Bloomberg and IShares website. Latest Yields available as at 24 October 2012. Earnings Yield is based on FY1 P/E

0 2 4 6 8 10 12 14 16 18Russia EquityChina EquityBrazil Equity

Italy EquityFrance Equity

Germany EquityUK Equity

Sweden EquitySwitzerland Equity

US EquityJapan EquityIndia Equity

iBoxx Euro High Yield BondiBoxx $ High Yield Corp Bond Fund

Italian 10 Year BondUS 30 Year Bond

iBoxx $ Inv Grade Corp Bond FundBrazilian 10 Year Bond

Bar Cap Euro CorpFrance 10 Year Bond

UK 10 Year BondUS 10 Year Bond

Germany 10 Year BondJapan 10 Year Bond

Germany 2 Year BondSwiss 2 year Bond

Yield Schroders Global CPI Target 2012 %

-0.29%

High-yield bonds or high-yield stocks?

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

Investors paying a premium for the safety of credit assetsThe yield pickup of high-yield credit is close to record lows


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

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Dec

-90

Dec

-91

Dec

-92

Dec

-93

Dec

-94

Dec

-95

Dec

-96

Dec

-97

Dec

-98

Dec

-99

Dec

-00

Dec

-01

Dec

-02

Dec

-03

Dec

-04

Dec

-05

Dec

-06

Dec

-07

Dec

-08

Dec

-09

Dec

-10

Dec

-11

Default rate of high-yield corporate credit (%)

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


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

0%

2%

4%

6%

8%

10%

12%

14%

16%

Dec

-90

Dec

-91

Dec

-92

Dec

-93

Dec

-94

Dec

-95

Dec

-96

Dec

-97

Dec

-98

Dec

-99

Dec

-00

Dec

-01

Dec

-02

Dec

-03

Dec

-04

Dec

-05

Dec

-06

Dec

-07

Dec

-08

Dec

-09

Dec

-10

Dec

-11

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


Source: Bloomberg, Societe Generale, Schroder analysis. As at 17 September 2012

0%

5%

10%

15%

20%

25%

AA

A/A

aa

AA

+/A

a1

AA

/Aa2

AA

-/Aa3

A+/

A1

A/A

2

A-/A

3

BB

B+/

Baa

1

BB

B/B

aa2

BB

B-/B

aa3

BB

+/B

a1

BB

/Ba2

BB

-/Ba3

B+/

B1

B/B

2

B-/B

3

CC

C+/

Caa

1

CC

C/C

aa2

CC

C-/C

aa3

CC

/Ca

C/C

NR

/Oth

er

iShares iBOXX EUR Liquid High Yield SISF European Equity Yield

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


Source: Bloomberg, Societe Generale, Schroder analysis. As at 17 September 2012Note: Subsidiary rating was used for Zurich Insurance Company (AA-), as the parent is not rated

0%

5%

10%

15%

20%

25%

AA

A/A

aa

AA

+/A

a1

AA

/Aa2

AA

-/Aa3

A+/

A1

A/A

2

A-/A

3

BB

B+/

Baa

1

BB

B/B

aa2

BB

B-/B

aa3

BB

+/B

a1

BB

/Ba2

BB

-/Ba3

B+/

B1

B/B

2

B-/B

3

CC

C+/

Caa

1

CC

C/C

aa2

CC

C-/C

aa3

CC

/Ca

C/C

NR

/Oth

er

IShares IBOXX Global HY (GHYG) Schroder ISF Global Equity Yield

Dividend cuts vs. earnings cuts in five European recessions

Dividend income is resilientManagement teams avoid cutting dividends


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

-60%

-50%

-40%

-30%

-20%

-10%

0%1970s 1980s 1990s TMT 2009

Fall in Earnings Dividend cuts Dividend cuts ex financials

10 year CAGR dividend growth (%)

Dividend income is resilientDividends have grown, despite the crisis


Source: Datastream, MSCI, Morgan Stanley Research. As at 31 December 2011

8.9%

5.5%

4.0% 3.9%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

Asia US Europe UK

2011 dividend growth

US 18.2%

UK 18.1%

Europe 17.9%

Asia 11.7%

Dividends are not just for a crisisDividends and growth are the key to equity returns


Source: Société Générale Cross Asset Research, MSCI. Data from 31 December 1969 to 31 January 2012

Real returns (%)

4.85.4 5.3

4.13.5

5.3

2.3

-5.0

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

UK US France Germany Australia Canada Japan

Dividend Yield Dividend Growth Multiple Expansion Total Annualised Returns

Equity Income Investment Philosophy

Investment philosophyFocus on long-term outperformance

Aim To deliver a gross dividend income 100 bps above the MSCI benchmark To outperform the MSCI benchmark index by 300 bps per annum over 3 years (gross of fees)Philosophy We believe that high-yielding stocks deliver superior long-term total returns to the

broader market We believe that high-yield equity strategies can outperform the index in different market

environments. We are not bear-market investorsExecution We believe through detailed fundamental analysis we are able to identify the most important

drivers of a business. By asking ourselves where we differ from the market either financially or operationally we are able to articulate our investment thesis and clearly identify what we believe will drive the share price

Identifying shares where our investment thesis is not priced in enables us to buy shares below their intrinsic value


European stock returns by quintile of dividend return, market cap weighted, December 1989 to June 2012

Long-term outperformanceTotal returns are strongly influenced by dividend yields


Source: Factset. Schroder analysis. Data taken from constituents of FTSE World Europe and S&P Europe as at 30 June 2012. The chart illustrates the total return of portfolios which are rebalanced every six months into stocks ranging from the highest (1) to the lowest (5) dividend yielding stocks in Europe. Note that trading costs are not considered

Annualised returns (%)

0

2

4

6

8

10

12

1 2 3 4 5

Long-term outperformanceWe aim to outperform through different market conditions


Source: Factset. Schroder analysis. Data taken from constituents of FTSE World Europe and S&P Europe as at 30 June 2012. The data shows relative performance of the different yield quintiles of European stocks since 1989. Note that trading costs are not considered

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

Jun-

90

Mar

-91

Dec

-91

Sep

-92

Jun-

93

Mar

-94

Dec

-94

Sep

-95

Jun-

96

Mar

-97

Dec

-97

Sep

-98

Jun-

99

Mar

-00

Dec

-00

Sep

-01

Jun-

02

Mar

-03

Dec

-03

Sep

-04

Jun-

05

Mar

-06

Dec

-06

Sep

-07

Jun-

08

Mar

-09

Dec

-09

Sep

-10

Jun-

11

Mar

-12

Q1 Q2 Q3 Q4 Q5 Universe

685

1,085

534443

228151

Fund weight by European market yield quintile (trailing 12 months)

Fund weight by global yield quintile (trailing 12 months)

We are honest to our beliefsDiversification within the yield universe


Source: Bloomberg. Schroder analysis. Global universe: Global stocks over $1bn market capitalisation. European universe: European stocks over EUR 500m market capitalisation. As at 30 August 2012. Weights exclude cash holdings. Funds are Schroder ISF European Equity Yield (left-hand chart), and Schroder ISF Global Equity Yield (right-hand chart)

1%6%

8%

50%

35%

1 2 3 4 5

0%

10%

20%

30%

40%

50%

60%

0.0%1.3%2.5%3.7%5.3%

Lowest trailing dividend yield within each quintile

0.0%0.0%

19%

35%

46%

1 2 3 4 5

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0.0%0.7%1.7%2.7%4.2%

Lower bound of dividend yield within each quintile

Dividend investing imposes discipline upon the fund manager

Investment philosophyDividends impose discipline upon profitable companies


High yielding stocks

= Stable income

Capital discipline

=Higher ROE and margins

Balance between payout and investment

=Strong capital

discipline

Income and

quality

=Reduced risk and volatility

of returns

Reduced downside risk

in weak markets

=Potentialfor out-

performance

Local analysts provide in depth quality fundamental research and provide stock ranks information accessed efficiently through the GRID

Tools Company meetings

(12,000+ p.a.) Proprietary valuation model

(DCF, sum-of-the-parts, earnings forecasts)

Common macro inputOutput Style-neutral, quality-biased

fundamental research available on a common platform

Stocks graded 1 – 4 vs. local peers and Fair Market Values

Fundamental researchIn depth analysis on a local basis


Use of the GRiD is for illustrative purposes only and information is subject to change at any timeAny securities mentioned are for illustrative purposes only and should not be viewed as a recommendation to buy/sellAt Schroders, globally, the local analysts rates stocks from 1 – 4 (1 being a strong buy and 4 being a strong sell)The ratings are used as a starting point when focusing the international and global equity team's research

Sembcorp Marine is the marine and offshore engineering arm of Sembcorp Industries, which holds a 61% stake in the company. Sembcorp Marine's forte is in rig building, offshore conversions and ship repair. It also has a 30% stake in Cosco Shipyard Group and a 5% stake in Cosco Corp

Sembcorp Marine is very well positioned in the high growth areas of rig building and offshore conversions, with proven expertise and execution track record, 3 and 5 year earnings growth of >100% and >300% respectively

Strong commitment to shareholder returns: 5 year dividend growth 37%, 3 year dividend growth 60.3% (including special dividends)

Future growth well underpinned by increased global offshore drilling, in particular Brazil

Sembcorp Marine relative to MSCI World Investment thesis

Stock example: High growth and high yield potentialStock example: Sembcorp Marine – Analyst graded 2


Source: Datastream. As at 3 September 2012. Data in USD

Dividend yield: 2.2%

5 year dividend growth: 16.2% p.a.

80

100

120

140

160

180

200

220

240

Apr

-09

Jul-0

9

Oct

-09

Jan-

10

Apr

-10

Jul-1

0

Oct

-10

Jan-

11

Apr

-11

Jul-1

1

Oct

-11

Jan-

12

Apr

-12

Jul-1

2

Sembcorp Marine relative to MSCI World

Tate & Lyle PLC is a provider of speciality food ingredients and solutions. The Company and its subsidiary and associated undertakings together with its joint ventures develops, manufactures and markets food and industrial ingredients made from renewable resources

Tate & Lyle is a 142 year-old company. When the company appointed a new CEO from Reckitt Benckiser it was apparent that the market had underestimated the inefficiencies which had built up, and his ability to cut costs

Mr Ahmed integrated Tate & Lyle’s sales into the R&D efforts to ensure that ideas for new products feed into the R&D process

Why we sold our position

Around the 2011 half-year results, management’s tone changed, and indicated that future investment would hinder dividend growth potential

Investment thesis

Stock example: Dividend investing provides disciplineStock example: Tate & Lyle – Analyst graded 1


Source: Bloomberg and Thomson Reuters. Performance based on total return and is updated to 31 August 2012

Dividend yield: 4.1%

5 year dividend growth: 3.0% p.a.

-20-10

0102030405060

Jun-10 Dec-10 Jun-11 Dec-11 Jun-12Tate & Lyle relative performance % to MSCI Europe

3.03.54.04.55.05.56.0

Jun-10 Dec-10 Jun-11 Dec-11 Jun-12Tate & Lyle Dividend Yield %

Exited Position

3% of Fund NAV

Initiated position

29.4

39.2

10.7

6.1

13.5

1.1

North America Europe ex UK

Asia/Pacific Ex Japan Emerging Markets

UK Cash

Regional exposure (%) Sector exposure (%)

How it’s invested

26

Schroder ISF Global Equity Yield

Citywire Event | November 2012

Source: Schroders. As at 30 September 2012

21.7

3.7

8.7

6.6

12.610.7

10.8

10.6

10.13.4

1.1

Financials Utilities Telecoms Con Staples

Industrials Materials Con Disc Energy

Health Care Technology Cash

Country exposure (%) Sector exposure (%)

How it’s invested

27

Schroder ISF European Equity Yield


Source: Schroders, as at 30 September 2012

8.7

26.9

1.710.78.3

16.2

11.5

11.8

4.3

Italy UK IrelandGermany Switzerland FranceBenelux Scandinavia Cash

20.2

2.2

12.3

9.5

11.95.7

7.3

13.0

13.7

4.3

Financials Utilities Telecoms Con StaplesIndustrials Materials Con Disc EnergyHealth Care Cash

Schroders’ Maximiser Strategy

Schroders’ Maximiser strategyTwo independent sources of income not linked to interest rate policy

Two layers of fund management, but only one layer of fees1The gross target yield quoted is an estimate and is not guaranteed2Only some upside is sold, in order to preserve the potential for capital growth over the option termSource: Schroders, 31 August 2012

8% target yield1

Step 1 Step 2

Dividends from around 50–80 stocks in actively managed equity income portfolio c.

4.0%1 p.a.

Premium from selling covered call options2

c.4.0%1 p.a.+

Citywire Event | November 2012 29

Schroders’ Maximiser strategyExchanging some uncertain potential gain for certainty of income

Potential capital growth that is sold for upfront payment*

Initial equity value

We retain the first amount of potential capital growth

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

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

100%

8% yield p.a.**

Sto

ck p

rice

We repeat this process on a rolling 3 monthly basis

Strike price

The repeated application of the overlay over three-monthly periods will increase the income paid to investors and reduce volatility, but there is the potential the performance or capital value may be eroded*Only some upside is sold to preserve the potential for capital growth over the option term. **The gross target yield quoted is an estimate and is not guaranteed


Example: Auction on 2 May 2012 for Schroder ISF European Dividend Maximiser

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

No counterparty risk – cash settlement two days after trading

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

Source: Schroders, 31 August 2012

Average weighted strike price was 110.10%. Notional amount overwritten was 83.6% of NAV

Stock Counterparty A Counterparty B Counterparty C Price on expiry Option premium

Sampo 109.32% 109.00% 109.30% 107.68% 1.00%

Admiral 105.71% 107.00% 106.50% 93.95% 2.10%

British Land 105.96% 107.50% 106.00% 108.85% 1.00%

Tecnicas Reunidas 111.53% 113.00% 114.70% 126.14% 1.05%

Swedbank 114.03% 113.00% 114.75% 105.97% 1.30%


The Maximiser overlayExample: BASF

Source: Schroders, Bloomberg, 31 August 2012


30

40

50

60

70

80

Dec

10

Feb

11

Apr 1

1

Jun

11

Aug

11

Oct

11

Dec

11

Feb

12

Apr 1

2

Jun

12

Aug

12

BASF share price

09/05/12 2.00%

20/07/11 2.00%

01/02/12 1.65% 28/10/11 1.20%

11/1/11 1.50%

15/04/11 1.00%

14/08/12 1.85%

%

Schroder ISF European Dividend Maximiser How has the overlay performed?

Source: Schroders, 30 September 20111Gross Premium as a % of NAV2Strategy adjusted for fast rising markets – greater proportion of the portfolio left uncapped

Start of quarter

Notional overwritten as % of NAV

Holdings with call option

Average strike price

Option premium1

Option strategy contribution1

Holdings capped

Fund price growth (A Acc)

Oct ’07 97.2% 58 110.5% 1.29% 0.88% 5 -9.59%

Jan ’08 97.1% 56 114.0% 1.17% 1.11% 0 -8.87%

Apr ’08 95.7% 58 114.7% 1.11% 0.86% 2 -10.41%

Jul ’08 88.1% 51 114.4% 1.20% 0.72% 4 -5.45%

Oct ’08 77.0% 51 123.3% 1.10% 1.08% 0 -15.03%

Jan ’09 90.7% 53 124.5% 1.16% 1.13% 0 -9.97%

Apr ’09 87.8% 51 120.9% 1.10% 0.10% 1 9.48%

Jul ’09 59.7%2 52 110.6% 1.19% -2.85% 34 12.40%

Oct ’09 63.4%2 48 108.9% 1.09% 0.00% 17 5.94%

Jan ’10 59.1%2 43 108.6% 0.93% 0.10% 10 1.71%

Apr ’10 60.8%2 49 103.6% 1.09% 0.75% 5 -5.58%

Jul ’10 78.5%2 51 110.6% 1.00% 0.16% 12 6.13%

Oct ’10 72.6%2 49 107.8% 0.99% -1.27% 19 6.20%


Schroder ISF European Dividend Maximiser How has the overlay performed?

Source: Schroders, 30 August 20121Gross Premium as a % of NAV

Start of quarter

Notional overwritten as % of NAV

Holdings with call option

Average strike price

Option premium1

Option strategy contribution1

Holdings capped

Fund price growth (A Acc)

Jan ’11 86.8% 50 108.9% 1.07% 0.19% 13 1.11%

Apr ‘11 92.2% 54 109.3% 1.20% 1.08% 4 -3.35%

Jul ‘11 94.6% 54 109.8% 1.38% 1.14% 4 -5.87%

Oct ‘11 80.0% 52 114.2% 1.11% 0.64% 9 8.34%

Jan ‘12 82.4% 49 111.2% 1.01% -0.15% 11 3.47%

May ‘12 83.6% 45 110.1% 1.06% 0.28% 7 2.31%

Aug ‘12 83.0% 45 108.8% 1.01% - - -


Performance in USD% YTD 1 year 2 years p.a. 3 years p.a. IncomePaid


MSCI World Net TR +13.0 +21.6 +7.9 +7.5


Schroder ISF Global Dividend Maximiser +14.7 +24.1 +8.8 +7.7 8.0%



MSCI Europe Net TR +12.3 +22.3 +4.8 +6.5


Schroder ISF European Dividend Maximiser +15.5 +26.4 +7.4 +7.3 8.0%


Schroders’ Global and European Equity Yield FundsStrong performance vs. all peers


Source: Morningstar. Performance is based on ‘A Acc’ shares, bid to bid, net of fees. The peer group rankings in the top table are based on Global Equity; Offshore and International Funds and the peer group rankings in the bottom table are based on a combination of ‘Europe Large Cap Blend’, ‘Europe Large Cap Growth’ and ‘Europe Large Cap Value funds, domiciled in Luxembourg

SummaryOpportunities for today and the long-term

36

Hiding in cash is dangerous – inflation will erode clients’ assets

Government bond yield are at historic lows (and if yields ‘recover’ then by definition you are losing capital)

Equities offer attractive real yields, and dividends are surprisingly resilient

Performance is strong in the European and Global equity yield funds

Schroder’s Maximiser strategy can generate additional income


Appendix

Top 20 holdingsSchroder ISF Global Equity Yield


Source: Schroders/FactSet as at 30 September 2012. P/E (FY1) and Yield sourced from FactSet as at 30 September 2012. Averages use simple averages

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

Microsoft 3.4 1 9.9 2.7Time Warner Cable 2.5 3 17.3 2.3Sanofi 2.5 2 11.1 4.0Merck & Co 2.3 2 12.2 3.7Pfizer 2.1 2 11.6 3.5CNOOC 2.1 2 8.8 2.7Prudential 2.1 2 12.3 3.2Vodafone 2.0 1 10.9 5.4Legal & General 2.0 2 9.5 5.1Newmont Mining Corp. 2.0 n/a 13.6 2.5Roche 1.9 2 13.7 3.9JPMorgan Chase & Co 1.9 2 8.6 2.7General Electric 1.8 2 14.6 3.0Telecom Italia 1.8 2 6.6 7.9Michelin 1.8 2 7.7 3.4Rio Tinto 1.8 3 8.4 3.6Volkswagen 1.8 3 6.6 2.2Arkema 1.7 1 9.9 4.9Deutsche Telekom 1.7 2 13.8 7.3Marathon Oil 1.7 n/a 11.2 2.2

Characteristics of top 20

17% Graded 167% Graded 216% Graded 30% Graded 4Average P/E 10.9Average yield 3.8%

Stock concentration

Number of holdings 64Top 10 holdings 23%Top 20 holdings 41%

Market cap split

Over $5bn 92%$1bn to $5bn 8%Less than $1bn 0%

Top 20 holdingsSchroder ISF European Equity Yield


Source: Schroders/FactSet as at 30 September 2012. P/E (FY1) and Yield sourced from FactSet as at 30 September 2012. Averages use simple averages

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

Sanofi 4.5 2 11.3 4.0Vodafone 4.1 1 11.2 5.4Statoil 3.9 1 8.4 4.4Deutsche Telekom 3.8 2 13.5 7.3Roche 3.8 2 13.8 3.9Royal Dutch Shell 3.8 2 8.2 4.9Bayer 3.0 2 12.7 2.5Total 2.8 2 7.4 5.9BAE Systems 2.7 3 7.7 5.8Imperial Tobacco 2.7 4 11.6 4.3Novartis 2.5 2 12.2 3.9DNB 2.5 1 9.0 2.9Swedbank 2.4 1 10.0 4.3Tesco 2.2 3 9.9 4.5SNAM 2.2 n/a 12.5 7.0Legal & General 2.2 2 9.7 5.1Ageas 2.1 2 8.1 4.3Swiss Re 2.0 n/a 9.8 5.0ENI 2.0 3 8.4 6.2Atlantia 1.8 2 11.4 5.9

Characteristics of top 20

22% Graded 156% Graded 217% Graded 35% Graded 4Average P/E 10.3Average yield 4.9%

Stock concentration

Number of holdings 51Top 10 holdings 37%Top 20 holdings 59%

Market cap split

Over $5bn 90%$1bn to $5bn 8%Less than $1bn 2%

Ian is the fund manager of the Schroder ISF European Equity Yield and the co-manager of the Schroder ISF European Dividend Maximiser

Ian has been working with Sonja Laud in the management of yield products since February 2010 and has had sole responsibility for the European Yield portfolios since December 2010

Joined Schroders in May 2007 as an analyst specialising in European insurance and automobiles

Ian completed a PhD in Biophysics at Newcastle University and a Masters degree in Investment Management at Cass Business School, London

Chartered Financial Analyst (CFA) charter holder

Fund Manager

40

Ian Kelly – Income Fund Manager


Sonja is the fund manager of the Schroder ISF Global Equity Yield and the co-manager of the Schroder ISF Global Dividend Maximiser

Sonja joined Schroders in 2005

Investment career commenced in 2001 on joining DWS Investment GmbH, Frankfurt where she was a senior fund manager in global equities, running the successful DWS ‘Top Dividende’ Global Yield Fund

Sonja qualified as a Master of Science at the European School of Management

Chartered Financial Analyst (CFA) charter holder

Fund Manager

41

Sonja Laud – Income Fund Manager


Source for DWS track record: Standard & Poors, German registered, Equity Global, cumulative returns in USD *Inception date 30 April 2003

Track record at DWS

Inception* to 31 August 2005 2004

DWS top dividend 61.7 19.8MSCI World index 38.8 6.5Difference +22.9 +13.3Peer group rank 34/444 6/453

Having been part of the team that conceived, structured and launched Schroders’ Maximiser range of funds, Thomas now has responsibility for the range as Head of Schroders’ Structured Fund Management team. Thomas has been closely involved with the management of the funds and the communication of the investment strategy to the investing public since inception.

Thomas has 23 years of investment experience, having joined Schroders’ Investment Banking division in 1988. Thomas worked in structured investments, project financing, tax and property financing, until the investment bank was sold to Citibank in 2000. Thomas rejoined Schroder Investment Management in 2005 to build the open ended structured funds business.

BA (Double First with Distinction); PhD in Engineering at Cambridge University

Co-Manager for Schroder ISF European & Global Dividend MaximiserThomas See, Head of Structured Fund Management


Risk Warnings: Investments in equities are subject to market risk 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 document should be construed as advice and is therefore not a recommendation to buy or sell shares.

Subscriptions for shares of the Company can only be made on the basis of its latest 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.

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

FTSE International Limited (“FTSE”) © FTSE 2012. “FTSE®” is a trade mark of London Stock Exchange Plc and The Financial Times Limited and is used by FTSE International Limited under licence. All rights in the FTSE indices and / or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and / or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Schroders has expressed its own views and opinions in this document and these may change. This presentation is issued by Schroder Investment Management, 31 Gresham Street, London, EC2V 7QA, who is authorised and regulated by the Financial Services Authority. Registration No 1893220, England.

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