Standard Life Investments

New Model Adviser Conference

January 2010

A Standard Life Investments presentation

This communication is intended for investment professionals only and must not be relied on by anyone else.

Michael BeveridgeHead of Intermediary Sales

Tam McVieInvestment Director

Standard LifeInvestments

In the coming year do you envisage using AR funds?…

a) The same as last year

b) More than last year

c) Less than last year

d) Not at all – don’t use them

e) Considering using them

Question


What do you consider to be the biggest risk of using absolute return funds?

a) Missing out on an equity bull market

b) Your understanding of how they work

c) Your clients understanding of how they work

d) Its another marketing spin from investment houses

Question

Standard LifeInvestments Global Absolute Return Strategies Fund

• Objective Cash benchmark +5% Performance target over rolling 3 year basis

• Low volatility Expect 1/3 to 1/2 the risk of equity investment Expected range: 4% to 8%

• Launched to the institutional market in June 2006

• Launched to the retail market May 2008

• AUM £2.2bn (as at 31/12/09)

• Commonly asked questions What are the risk? How does it work? How does it fit into a portfolio?

Standard LifeInvestments Absolute return and the investment journey

6


Global Absolute Return Strategies performance

Source: Standard Life Investments (12/6/2006 to 1/1/2010)Fund performance is based on the institutional pooled pension fund gross of charges

70

80

90

100

110

120

130

140

Cash (Libor) Target Return GARS (Gross) Global Equities (Gross)

* Source: Datastream (net of tracker fund fee) (12/6/2006 to 1/1/2010)Fund performance is based on the institutional pooled pension fund gross of charges

Standard LifeInvestments Performance

Monthly returns

Source: Standard Life Investments and Thomson Datastream, gross performance, unless otherwise stated, to 1 January 2010

-15%

-10%

-5%

0%

5%

10%

15%

Jun-

06

Jul-0

6

Aug

-06

Sep

-06

Oct

-06

Nov

-06

Dec

-06

Jan-

07

Feb-

07

Mar

-07

Apr

-07

May

-07

Jun-

07

Jul-0

7

Aug

-07

Sep

-07

Oct

-07

Nov

-07

Dec

-07

Jan-

08

Feb-

08

Mar

-08

Apr

-08

May

-08

Jun-

08

Jul-0

8

Aug

-08

Sep

-08

Oct

-08

Nov

-08

Dec

-08

Jan-

09

Feb-

09

Mar

-09

Apr

-09

May

-09

Jun-

09

Jul-0

9

Aug

-09

Sep

-09

Oct

-09

Nov

-09

Dec

-09

GARS (net) Libor Global Equities

Up months

30/43 v’s 25/43Upside Capture

39.0%Downside Capture

6.9%

Standard LifeInvestments What are the risks?

Market risk the uncertainty of future returns on market securities

Credit risk the uncertainty of the extent to which counterparties to

transactions will meet their financial obligations

Operational risk the uncertainty of future operational expenses

Standard LifeInvestments Question

Value at risk measures:

a) The absolute maximum amount that could be lost

b) The expect monthly loss

c) The deviation from the benchmark

d) The value that might be lost during normal market conditions

Standard LifeInvestments How does it work?

Market Returns

• Equities, Bonds & Property

• Good long term return expectations

• But can be negative returns over shorter periods

Relative Value

• Seek highly correlated markets or segments

• Where their relative valuation is strained

• We exploit their realignment

A broad range of approaches

Stock Selection

• Active stock selection

• Added value through our approach

• Overall contribution 1%

Opportunistic

• Specific directional investment ideas

• Aim to deliver positive return on 3 yr view

• No required long term risk premium

Standard LifeInvestments Isolating a view

Example

Don’t know We believe

Which directions the equity markets will move

The large companieswill out perform

the medium companies

Standard LifeInvestments Question

I believe that large companies will outperform medium sized companies, but I am unsure about the direction of the UK equity market.

Which trade will be most appropriate?

a) Go overweight FTSE 100, underweight FTSE 250

b) Buy the FTSE 100 future and sell the FTSE 250 future

c) Buy the FTSE 100 future

d) Sell the FTSE 250 future

Standard LifeInvestments Maths

When do you lose money on this position?

-30%

-20%

-10%

0%

10%

20%

30%

FTSE 100 FTSE 250-30%

-20%

-10%

0%

10%

20%

30%

Long FTSE 100 Short FTSE 250 Profit

-30%

-20%

-10%

0%

10%

20%

30%

Long FTSE 100 Short FTSE 250 Profit

-30%

-20%

-10%

0%

10%

20%

30%

FTSE 100 FTSE 250


For illustrative purposes only

Source: Lipper, 1 December 2009

UK Equities Overseas Equities

UK Bonds Overseas Bonds

Alternatives Cash

GARS

Increase Alternatives exposure to 20%

Reduce Fixed Interest exposure by 20%

Reduce Equity

exposure by 20%

11.7%

8.0%

18.2%

24.6%

9.3%

8.2%

20.0%

23.5%

16.2%

18.2%

24.6%

9.3%

8.2%

23.5%

16.2%

9.7%13.1%

9.3%

8.2%

20.0%

20.7%

14.3%

16.1%21.7%

9.3%

7.2%

10.7%

IMA Cautious Managed sector

How does it fit into a portfolio?

Standard LifeInvestments Risk v. return

For illustrative purposes only

Composite portfolios calculated using the following indices: FTSE All Share (UK Equities), MSCI World ex UK (Overseas Equities), Barclays Sterling Aggregate Bond (UK Bonds), JPM Traded World ex UK Bond (Overseas Bonds), Composite index comprising 1/3 FTSE All UK Property Index, 1/3 HFRX Global Hedge Fund Index and 1/3 Dow Jones AIG Index (Alternatives) and overnight sterling LIBOR (Cash).

Source: Thomson Datastream, Lipper Hindsight and Standard Life Investments. Calculated using total returns, in sterling terms, monthly data points, for period 31/12//06 to 31/12/09. GARS performance is based on institutional pooled pension fund, net of charges.

IMA Cautious Managed sector

IMA Balanced Managed sector

IMA Active Managed sector

Portfolio 1

Portfolio 2

Portfolio 3

GARS

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

0% 2% 4% 6% 8% 10% 12% 14% 16% 18%

Ann. Standard Deviation

An

n.

Ret

urn


Remember – past performance is no guarantee of future performance.

Past performance is not a guide to future performance. The value of investments and any income from them may go down as well as up and cannot be guaranteed.

Standard Life Investments Limited, tel. +44 131 225 2345, a company registered in Scotland (SC 123321) Registered Office 1 George Street Edinburgh EH2 2LL.

The Standard Life Investments group includes Standard Life Investments (Mutual Funds) Limited, SLTM Limited, Standard Life Investments (Corporate Funds) Limited and SL Capital Partners LLP. Standard Life Investments Limited acts as Investment Manager for Standard Life Assurance Limited and Standard Life Pension Funds Limited.

Standard Life Investments may record and monitor telephone calls to help improve customer service. All companies are authorised and regulated by the Financial Services Authority.

©2010 Standard Life Investments.

www.standardlifeinvestments.com

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