High Yield Opportunities - Schroders · Jonathan Golan and Alix Stewart £237 Dec 2007 All...

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Schroders Investment Conference 2018, Manchester

22 May 2018

Jonathan Harris, Investment Director

High Yield Opportunities

#SICM18

@Schroders_UK

High Yield Opportunities

Source for ratings: Fund Calibre, Rayner Spencer Mills, Trustnet and Morningstar as at 30 April 2018, Citywire as at 31 March 2018. Source of award: Investment Week, as at April 2018.

SchrodersOrganisational strengths

Source: Schroders, as at 31 December 2017. AUMA is Assets Under Management and Administration. Investment offices in green.

Schroders offices

Dubai

Buenos AiresSâo PauloChile

AmsterdamCopenhagenFrankfurtGenevaGibraltar

GuernseyJerseyLondonLuxembourgMadrid

MilanParisRomeStockholmZurich

BermudaCayman IslandsMexico CityNew YorkPhiladelphia

BeijingHong Kong

JakartaSeoul

ShanghaiSingapore

SydneyTaipeiTokyo

Established in 1804Schroder family controls 48% of voting equity

Independent

Strong balance sheet and stable ownership structureWe can invest in our business through the market cycle

Stable

Asset management is our sole businessWe have no conflicts of interest

Focused

Global investment resources £447.0bn AUMA across the major asset classes

Able tosupport you

Schroders Fixed Income

3

£447.0 billion AUMA1

Funds under management

Source: Schroders, as at 31 December 2017. 1Data represents global assets under management and administration, pie chart shows split of AUM by product sold. 2Data represents AUM by investment desk. 3Comprised of Buy & Maintain assets in the US, Europe, and Asia. 4Other includes Convertibles. The charts may not add to 100% due to rounding. The sectors, regions and countries shown above are for illustrative purposes only and are not to be considered a recommendation to buy or sell.

£102.9 billion fixed income division AUM2

31 December 2017 31 December 2017

41%

18%

23%

10%8%

EquitiesFixed IncomeMulti AssetWealth ManagementPrivate Assets & Alternatives

25%

7%

5%3%

18%

23%

15%4%

US AsiaAustralia Emerging MarketsUK & European Credit Global Multi-SectorAdvanced Bond Beta³ Other⁴

Schroders: global credit capabilities

4

Schroders’ investment offices with credit expertise

Local expertise delivered globally

Source: Schroders, as at 30 March 2018. 1ESG is Environmental, Social and Governance.

Amsterdam: LoansLondon: DM and EM Credit, SovereignParis: Infrastructure debtZurich: Convertibles, Insurance-Linked Securities (ILS)

New York: Developed Market (DM) and Emerging Market (EM) Credit, Asset-Backed Securities (ABS), SovereignPhiladelphia: Municipals

Buenos Aires: Credit, SovereignSâo Paulo: Credit, Sovereign

Hong Kong: Credit, SovereignJakarta: Credit, SovereignSingapore: Credit, SovereignSydney: Credit, SovereignTaipei: Credit, SovereignPlus extensive

global resources across:

Equities

Commodities

ESG1

Emerging Markets

Multi-Asset

Private Assets

Schroder European credit

5

Your investment team – integrated investment and research

Source: Schroders, as at 30 March 2018.1Includes municipals, securitised and convertibles.

Investment Grade High Yield Investment Directors

Patrick VogelAlix Stewart

Jonathan GolanMartin Coucke

Peter HarveyKonstantin Leidman

Michael Scott

Jonathan HarrisElizabeth Murphy

Financials Communications Utilities Industrials Quantitative Strategy

Stephen HunnisettRobert Kendrick Patrick McCullagh Charlotte Peat

Carter HolloranBartek PastwaDan Pearson

Alex StephansenSimoni Mittal

Rajeev ShahSzevak Nzsdejan

Yow Tzu LimFrancois Carrie

Specialist Fixed Income Portfolio Management

Teams (no. portfolio managers)

Specialist Analyst Teams(no. analysts)

Specialist Product Team (no.

specialists)

Credit Rates EMD Extended sectors1

European Credit

North American

Credit

Asia, Australia and EMD

Credit

Quant, Strategy

and Economy

Portfolio-specific

Multi-Sector

and EMD

Credit and Securitised

17 23 8 12 9 16 10 17 12 17 11

A common approach applied across credit strategies

6

Fund range

Targets are not guaranteed over this or any other period.

Source: Schroders, as at 29 March 2018. 1Internal targets only that are subject to change. 2BofAML is Bank of America Merrill Lynch. 3Indicates that index is used for reference only.

Gross target over a cycle1 Benchmark Lead PM(s) AUM

(millions) Inception

Benchmarked Strategies

EURO Corporate Bond BM +100bp p.a. ICE BofAML2 Euro Corporate Patrick Vogel €8,931 Jun 2000

EURO Credit Conviction BM +200bp p.a. iBoxx Euro Corporate BBB Patrick Vogel €1,760 Dec 2013

EURO High Yield BM +150bp p.a. ICE BofAML Euro High Yield Constrained Konstantin Leidman €1,366 Nov 2012

Sterling Corporate Bond 1st/2nd quartile in peer group ICE BofAML Sterling Corporate and Collateralised Jonathan Golan and Alix

Stewart £237 Dec 2007

All Maturities Corporate Bond BM +75bp p.a. ICE BofAML Sterling Non-Gilt Alix Stewart £827 Feb 2001

Long Dated (+15 years) Corporate BM +75bp p.a. ICE BofAML 15+ Year Sterling Non-Gilt Alix Stewart £358 Jan 2001

Unconstrained Total Return Strategies

High Yield Opportunities 6-8% p.a. Ref3: ICE BofAML European Currency High YieldConstrained Michael Scott £606 Feb 2000

Strategic Credit LIBOR +300bp p.a. 3-Month GBP LIBOR Peter Harvey £2,405 Apr 2006

Strategic Bond 4–6% p.a. 3-Month GBP LIBOR Michael Scott £141 Mar 2012

Global Multi-Credit Ref index +3–4% p.a. Ref: Barclays Multiverse ex Treasury A+ to B- USD Hedged Patrick Vogel $571 Jun 2016

Global Credit Income Income Ref: Barclays Multiverse ex Treasury A+ to B- USD Hedged Michael Scott and Patrick Vogel $709 Nov 2016

Global Credit Value 7–9% p.a. Unconstrained Konstantin Leidman $25 Jan 2017

Absolute Return Strategies

Euro Credit Absolute Return EURIBOR +300bp p.a. 3-Month EURIBOR Patrick Vogel €406m Nov 2015

Credit composite performance

7

Competitive performance across the range

Past performance is not a guide to future performance and may not be repeated. The returns may increase or decrease as a result of currency fluctuations.

Source: Schroders, as at 30 March 2018. GIPS composite data, gross of fees. Please refer to the Important Information slide showing the effect of fees and the Composite Disclosure Statements at the end of the presentation for further details. Rankings based on Morningstar peer group data as at 30 March 2018. 1Inception dates: Global Multi-Credit, June 2016; Global Credit Income, November 2016; Global Credit Value, January 2017; Euro Credit Absolute Return, November 2015. 2Denotes since inception cumulative performance.

Composite Currency 1yr ExcessReturn (%)

2yr ExcessReturn p.a. (%)

3yr ExcessReturn p.a. (%)

3yr InformationRatio

1yr/3yr Peer Group Ranking

Benchmarked Strategies

EURO Corporate Bond EUR 2.14 2.67 2.12 1.90 1/1

EURO Credit Conviction EUR 2.60 3.70 2.91 2.13 1/1

EURO High Yield EUR -0.10 1.34 1.95 1.64 1/1

Sterling Corporate Bond GBP 3.78 2.76 1.93 2.12 1/1

All Maturities Corporate Bond GBP 0.91 1.56 1.04 1.42 3/2

Long-Dated (+15 Years) Corporate Bond GBP 1.11 1.23 1.04 1.30 1/1

Unconstrained Total ReturnStrategies Currency 1yr Total

Return (%)2yr Total

Return p.a. (%)3yr Total

Return p.a. (%)3yr Sharpe

Ratio1yr/3yr Peer Group

Ranking

High Yield Opportunities GBP 6.19 10.89 8.46 1.72 1/1

Strategic Credit GBP 3.02 5.20 4.54 1.77 2/1

Strategic Bond GBP 4.74 7.11 4.85 1.12 1/1

Global Multi-Credit1 USD 5.51 6.222 – – 2/-

Global Credit Income1 USD 5.65 7.072 – – 1/-

Global Credit Value1 USD 5.36 6.602 – – 2/-

Absolute Return Strategies

Euro Credit Absolute Return1 EUR 3.06 4.03 3.862 – 1/-

Schroder EURO Corporate Bond Composite

8

Discrete 5-year performance

Source: Schroders, as at dates specified, based on composite performance gross of fees in EUR.

2017 2016 2015 2014 2013

Schroder EURO Corporate Bond Composite 5.67 6.88 1.82 9.97 5.03

ICE BofAML Euro Corporate 2.42 4.75 -0.43 8.25 2.39

The capital is not guaranteed Non-investment grade securities will generally pay higher yields than more highly rated securities but will be subject to greater market,

credit and default risk A security issuer may not be able to meet its obligations to make timely payments of interest and principal. This will affect the credit

rating of those securities Currency derivative instruments are subject to the default risk of the counterparty. The unrealised gain and some of the desired market

exposure may be lost Investments denominated in a currency other than that of the share-class may not be hedged. The market movements between those

currencies will impact the share-class Investment in bonds and other debt instruments including related derivatives is subject to interest rate risk. The value of the fund may go

down if interest rate rise and vice versa It may be difficult to sell quickly positions of one or more companies to meet redemption requests upon demand in extreme market

conditions. The fund may hold indirect short exposure in anticipation of a decline of prices of these exposures or increase of interest rate The fund may be leveraged, which may increase its volatility

Past performance is not a guide to future performance and may not be repeated. The return may increase or decrease as a result of currency fluctuations. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. Please refer to the Important Information slide showing the effect of fees and the Composite Disclosure Statement at the end of the presentation for further details.

What are the risks?

Schroder EURO Credit Conviction Composite

9


Source: Schroders, as at dates specified, based on composite performance gross of fees in EUR. 1The fund launched in December 2013 so performance data prior to this date is not available.

Since inception (18 December 2013) – 31 December 2017 2017 2016 2015

Schroder EURO CreditConviction Composite1 6.87 7.60 8.16 2.43

iBoxx Euro Corporate BBB 3.66 3.35 5.40 -0.91

The capital is not guaranteed Non-investment grade securities will generally pay higher yields than more highly rated securities but will be subject to greater market,

credit and default risk A security issuer may not be able to meet its obligations to make timely payments of interest and principal. This will affect the credit

rating of those securities Currency derivative instruments are subject to the default risk of the counterparty. The unrealised gain and some of the desired market

exposure may be lost Investments denominated in a currency other than that of the share-class may not be hedged. The market movements between those

currencies will impact the share-class Investment in bonds and other debt instruments including related derivatives is subject to interest rate risk. The value of the fund may go

down if interest rate rise and vice versa The fund may hold indirect short exposure in anticipation of a decline of prices of these exposures or increase of interest rate. The fund may be leveraged, which may increase its volatility


What are the risks?

Schroder EURO High Yield Composite

10


Source: Schroders, as at dates specified, based on composite performance gross of fees in EUR.

2017 2016 2015 2014 2013

Schroder EURO High Yield Composite 7.93 10.84 4.41 6.10 10.06

ICE BofAML Euro High Yield Constrained 6.72 9.10 0.73 5.35 10.04

The capital is not guaranteed The capital may be subject to circumstances and periods where returns could be negative. Therefore the capital is not guaranteed and

may decrease The fund intends to make regular fixed distributions to investors and, if its income is insufficient to cover these payments, these payments

may reduce the fund's capital Non-investment grade securities will generally pay higher yields than more highly rated securities but will be subject to greater market,

credit and default risk A security issuer may not be able to meet its obligations to make timely payments of interest and principal. This will affect the credit rating

of those securities Investments in money market instruments and deposits with financial institutions may be subject to price fluctuation or default by the

issuer. Some of the amounts deposited may not be returned to the fund Currency derivative instruments are subject to the default risk of the counterparty. The unrealised gain and some of the desired market

exposure may be lost The share-class is not denominated in the base currency of the fund and therefore will be subject to the market movements between

these currencies Investment in bonds and other debt instruments including related derivatives is subject to interest rate risk. The value of the fund may go

down if interest rate rise and vice versa The fund may hold indirect short exposure in anticipation of a decline of prices of these exposures or increase of interest rate The fund may be leveraged, which may increase its volatility


What are the risks?

Schroder Sterling Corporate Bond Composite

11


Source: Schroders, as at dates specified, based on composite performance gross of fees in GBP.

2017 2016 2015 2014 2013

Schroder Sterling Corporate Bond Composite 9.21 12.25 0.39 11.67 2.86

ICE BofAML Sterling Corporate and Collateralised 4.91 11.69 0.62 12.34 0.76

The fund can be exposed to different currencies. Changes in foreign exchange rates could create losses High yield bonds (normally lower rated or unrated) generally carry greater market, credit and liquidity risk A rise in interest rates generally causes bond prices to fall A decline in the financial health of an issuer could cause the value of its bonds to fall or become worthless A failure of a deposit institution or an issuer of a money market instrument could create losses In difficult market conditions, the fund may not be able to sell a security for full value or at all. This could affect performance and could

cause the fund to defer or suspend redemptions of its shares Failures at service providers could lead to disruptions of fund operations or losses The counterparty to a derivative or other contractual agreement or synthetic financial product could become unable to honour its

commitments to the fund, potentially creating a partial or total loss for the fund A derivative may not perform as expected, and may create losses greater than the cost of the derivative When interest rates are very low or negative, the fund's yield may be zero or negative, and you may not get back all of your investment The fund uses derivatives for leverage, which makes it more sensitive to certain market or interest rate movements and may cause above-

average volatility and risk of loss


What are the risks?

Schroder All Maturities Corporate Bond Composite

12



2017 2016 2015 2014 2013

Schroder All Maturities Corporate Bond Composite 6.62 11.72 0.60 12.15 2.64

ICE BofAML Sterling Non-Gilt 4.34 10.59 0.74 12.33 0.81

As a result of fees being charged to capital, the distributable income of the fund may be higher but there is the potential that performance or capital value may be eroded






What are the risks?

Schroder Sterling Over 15 Years Corporate Bond Composite

13



2017 2016 2015 2014 2013

Schroder Sterling Over 15 Years Corporate Bond Composite 8.08 18.34 -0.53 19.30 0.62

ICE BofAML 15+ Year Sterling Non-Gilt 5.73 17.52 -0.76 18.76 -0.69







What are the risks?

Schroder High Yield Opportunities Composite

14


Source: Schroders, as at dates specified, based on composite performance gross of fees in GBP. 1Prior to 31 August 2008, the benchmark was 40% ICE BofAML Sterling Corporate and Collateralised Index and 60% ICE BofAML European Currency High Yield Constrained Index GBP hedged.

2017 2016 2015 2014 2013

Schroder High Yield Opportunities Composite 10.10 13.23 7.07 6.89 10.28

ICE BofAML European Currency High Yield Constrained1 7.64 10.20 1.91 5.72 10.70



cause the fund to defer or suspend redemptions of its shares Failures at service providers could lead to disruptions of fund operations or losses Mortgage or asset-backed securities may not receive in full the amounts owed to them by underlying borrowers The counterparty to a derivative or other contractual agreement or synthetic financial product could become unable to honour its




What are the risks?

Schroder Strategic Credit Composite

15


Source: Schroders, as at dates specified, based on composite performance gross of fees in GBP. 1Prior to 31 July 2017, the benchmark was 3-Month UK Treasury Bills.

2017 2016 2015 2014 2013

Schroder Strategic Credit Composite 5.11 6.93 4.11 3.76 5.13

3-Month GBP LIBOR1 0.29 0.35 0.45 0.42 0.38



commitments to the fund, potentially creating a partial or total loss for the fund A derivative may not perform as expected, and may create losses greater than the cost of the derivative When interest rates are very low or negative, the fund's yield may be zero or negative, and you may not get back all of your investment The fund uses derivatives for leverage, which makes it more sensitive to certain market or interest rate movements and may cause

above-average volatility and risk of loss


What are the risks?

Schroder UK Strategic Bond Composite

16



2017 2016 2015 2014 2013

Schroder UK Strategic Bond Composite 7.82 7.24 1.66 4.72 7.65

3-Month GBP LIBOR 0.36 0.48 0.56 0.54 0.51






What are the risks?

Schroder Global Multi-Credit USD Hedged Composite

17


Source: Schroders, as at dates specified, based on composite performance gross of fees in USD. 1The fund launched in June 2016 so performance data prior to this date is not available.

Since inception (8 June 2016) – 31 December 2017 2017

Schroder Global Multi-Credit Composite (USD Hedged)1 8.06 9.85

Barclays Multiverse ex Treasury A+ to B- USD Hedged 4.94 6.66

Mortgage or asset-backed securities may not receive in full the amounts owed to them by underlying borrowers A failure of a deposit institution or an issuer of a money market instrument could create losses A decline in the financial health of an issuer could cause the value of its bonds to fall or become worthless The fund can be exposed to different currencies. Changes in foreign exchange rates could create losses A derivative may not perform as expected, and may create losses greater than the cost of the derivative Emerging markets, and especially frontier markets, generally carry greater political, legal, counterparty and operational risk High yield bonds (normally lower rated or unrated) generally carry greater market, credit and liquidity risk A rise in interest rates generally causes bond prices to fall The fund uses derivatives for leverage, which makes it more sensitive to certain market or interest rate movements and may cause above-

average volatility and risk of loss In difficult market conditions, the fund may not be able to sell a security for full value or at all. This could affect performance and could

cause the fund to defer or suspend redemptions of its shares Failures at service providers could lead to disruptions of fund operations or losses


What are the risks?

Schroder Global Credit Income Composite

18


Source: Schroders, as at dates specified, based on composite performance gross of fees in USD. 1The fund launched in November 2016 so performance data prior to this date is not available.

Since inception (30 November 2016) – 31 December 2017 2017

Schroder Global Credit Income Composite1 9.22 8.64

Unconstrained – –

Mortgage or asset-backed securities may not receive in full the amounts owed to them by underlying borrowers Because the fund intends to pay dividends regardless of its performance, a dividend may represent a return of part of your investment The counterparty to a derivative or other contractual agreement or synthetic financial product could become unable to honour its

commitments to the fund, potentially creating a partial or total loss for the fund A failure of a deposit institution or an issuer of a money market instrument could create losses A decline in the financial health of an issuer could cause the value of its bonds to fall or become worthless The fund can be exposed to different currencies. Changes in foreign exchange rates could create losses A derivative may not perform as expected, and may create losses greater than the cost of the derivative Emerging markets, and especially frontier markets, generally carry greater political, legal, counterparty and operational risk High yield bonds (normally lower rated or unrated) generally carry greater market, credit and liquidity risk A rise in interest rates generally causes bond prices to fall The fund uses derivatives for leverage, which makes it more sensitive to certain market or interest rate movements and may cause above-

average volatility and risk of loss In difficult market conditions, the fund may not be able to sell a security for full value or at all. This could affect performance and could



What are the risks?

Schroder Global Credit Value Composite

19


Source: Schroders, as at dates specified, based on composite performance gross of fees in USD. 1The fund launched in January 2017 so performance data prior to this date is not available.

Since inception (18 January 2017) – 31 January 2018 31 January 2017 – 31 January 2018

Schroder Global Credit Value Composite1 8.48 8.48

Unconstrained – –

Mortgage or asset-backed securities may not receive in full the amounts owed to them by underlying borrowers The fund may be significantly invested in contingent convertible bonds. If the financial strength of a bond's issuer (typically a bank or an

insurance firm) falls in a prescribed way the bond may suffer substantial or total losses of capital When interest rates are very low or negative, the fund's yield may be zero or negative, and you may not get back all of your investment The counterparty to a derivative or other contractual agreement or synthetic financial product could become unable to honour its

commitments to the fund, potentially creating a partial or total loss for the fund A failure of a deposit institution or an issuer of a money market instrument could create losses A decline in the financial health of an issuer could cause the value of its bonds to fall or become worthless The fund can be exposed to different currencies. Changes in foreign exchange rates could create losses A derivative may not perform as expected, and may create losses greater than the cost of the derivative Emerging markets, and especially frontier markets, generally carry greater political, legal, counterparty and operational risk High yield bonds (normally lower rated or unrated) generally carry greater market, credit and liquidity risk A rise in interest rates generally causes bond prices to fall The fund uses derivatives for leverage, which makes it more sensitive to certain market or interest rate movements and may cause

above-average volatility and risk of loss In difficult market conditions, the fund may not be able to sell a security for full value or at all. This could affect performance and could



What are the risks?

Schroder EURO Credit Absolute Return Composite

20


Source: Schroders, as at dates specified, based on composite performance gross of fees in EUR. 1The fund launched in November 2015 so performance data prior to this date is not available.

Since inception (11 November 2015) – 31 December 2017 2017 2016

Schroder EURO Credit Absolute Return Composite1 4.46 4.79 4.56

3-Month EURIBOR -0.29 -0.33 -0.26

The capital is not guaranteed. Non-investment grade securities will generally pay higher yields than more highly rated securities but will be subject to greater market, credit and

default risk A security issuer may not be able to meet its obligations to make timely payments of interest and principal. This will affect the credit rating of those

securities Investments in money market instruments and deposits with financial institutions may be subject to price fluctuation or default by the issuer. Some of

the amounts deposited may not be returned to the fund Investment in bonds and other debt instruments including related derivatives is subject to interest rate risk. The value of the fund may go down if

interest rate rise and vice versa It may be difficult to sell quickly positions of one or more companies to meet redemption requests upon demand in extreme market conditions The issuer of Mortgage or Asset backed securities may have a limited ability to recover amounts due if the underlying borrowers become insolvent or

their collateral drops in value Emerging equity markets may be more volatile than equity markets of well established economies. Investments into foreign currencies entail exchange

risks The fund's operations may depend on third parties in countries where operational oversight standards are less developed The fund may hold indirect short exposure in anticipation of a decline of prices of these exposures or increase of interest rate The fund may be leveraged, which may increase its volatility. The fund enters into financial derivative transactions. If the counterparty were to default,

the unrealised profit on the transaction and the market exposure may be lost There is no guarantee that a financial derivative contract will achieve its intended outcome, even if the terms of the contract are completely satisfied


What are the risks?

Performance as of 30 March 2018


Guidelines1

Total Assets: £601 million Inception Date: March 2000

Investment objective 3 years ending 30 March 2018

Strategy performance vs. Reference Index2

Overall portfolio duration: Reference benchmark +/- 3 yearsMinimum 80% in high yieldMin 50% in Pan European issuers, Max 50% in USD denominated bondsMaximum 10% in cash, maximum 20% in cash and government bondsHedged to Sterling

Past performance is not a guide to future performance and may not be repeated.Performance is shown gross of fees. 1This 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. 2Reference index is the BofA ML European Currency High Yield Index (HPC0) (100% GBP hedged). *Since current management team was in place.

Statistics Composite

Rate of return % (annualized) 8.46

Standard deviation % 4.68

Excess Return % (annualized) 3.12

Tracking Error 1.71

Information ratio 1.82

1.09%

6.19%

8.46%

10.31%

0.75%

5.22% 5.35%

8.53%

0%

2%

4%

6%

8%

10%

12%

6 Months 1 Year 3 Years Since July 2012*High Yield Opportunities Composite BofA Merrill Lynch European Currency HY Constrained Index

Total return of 6–8% p.a. over a business cycle


22


Source: Schroders, as at dates specified, based on composite performance gross of fees in GBP. 1Prior to 31 August 2008, the benchmark was 40% ICE BofAML Sterling Corporate and Collateralised Index and 60% ICE BofAML European Currency High Yield Constrained Index GBP hedged.

2017 2016 2015 2014 2013

Schroder High Yield Opportunities Composite 10.10 13.23 7.07 6.89 10.28

ICE BofAML European Currency High Yield Constrained1 7.64 10.20 1.91 5.72 10.70

As a result of fees being charged to capital, the distributable income of the fund may be higher but there is the potential thatperformance or capital value may be eroded



commitments to the fund, potentially creating a partial or total loss for the fund A derivative may not perform as expected, and may create losses greater than the cost of the derivative When interest rates are very low or negative, the fund's yield may be zero or negative, and you may not get back all of your investment The fund uses derivatives for leverage, which makes it more sensitive to certain market or interest rate movements and may cause



What are the risks?

Investment process

Why Schroders for credit?

24

Aim: premium risk-adjusted performance

Source: Schroders. 1Please refer to slide 6.

Integrated global investment framework that maximises skills from the global fixed income group and beyond

Innovative themes-based research and investment approach

Strong consistent track record through bull and bear markets1

– Themes-based investment process combined with market strategy meeting– Implementing forward looking themes within the context of current market conditions

Thematic investment process

25

Innovative approach to credit

Source: Schroders. For illustrative purposes only and should not be considered a recommendation to buy or sell.

Them

es

RegulatoryEnvironment

Consumer TrendsDemographics

TechnologyInvestor Trends

EconomicsHorizon

Innovation in credit research

26

Themes direct focus, understanding business models to pick the winners


– Credit research is fully aligned with credit themes which promotes deeper understanding of business models, and the reaction to credit themes.

– Forward-looking analysis focuses on understanding the 1st, 2nd and 3rd order effects of themes on companies

ThemesAsia revenues

Bank deleveraging

Internet trade

Income gap

Company A

Ties with multiple themes: high conviction

Company D

Company B

Company E

Company C

Company F

Investment process

27

Themes

Source: Bloomberg Z-spread, Renault 3.625% 19 September 2018 was traded on issue date 11 September 2013. Updated on 08 May 2014. Any references to securities, sectors, regions and/or countries are for illustrative purposes only.

– Multiple, forward-looking themes diversified by style and time horizon– Regular discussion and formulation of credit themes likely to drive markets – Diversity of themes and horizons aid risk management– Recognise real value by identifying second and third order effects of themes

Illustration: Theme: Europe is going through a cyclical recovery, which will benefit European consumers.

Theme: the Yen has faced a sharp devaluation. This will benefit Nissan, of which Renault holds a 40% stake, as exports to the US accelerate, aided by improving consumer demand in the US.

Theme: growing US energy self-sufficiency. The shale gas revolution is likely to switch America’s role into becoming a net energy exporter. This will put downward pressure on petrol prices and will boost car sales.

Theme: growing income gap. Renault has a very strong range at the budget end of the market – Romanian manufactured Dacia – appealing to consumers with a lower disposable income.

120

140

160

180

200

220

240

Sep2013

Oct2013

Nov2013

Dec2013

Jan2014

Feb2014

Mar2014

Apr2014

Renault 3.625% 2018

Investment process

28

Illustration: New issue purchased at 140bp spread vs. swaps

Themes

Source: Bloomberg Z-spread, Vonovia Finance 1.625% 2020 was bought on issue date 15 September 2015. Updated on 03 November 2016. Any references to securities, sectors, regions and/or countries are for illustrative purposes only.

Theme: unintended consequences of QE. Increase of real asset valuations including property. Financing costs for companies, including real estate is historically cheap.

Theme: urbanisation. Young people continue to be drawn into regional cities for employment, education and cultural reasons. They tend to live in cheap rented apartments.

Theme: immigration. The stronger European economies are attracting cheap labour from other regions within the EU and immigrants from the Middle East. This should continue to support demand for cheap property rental.

20

40

60

80

100

120

140

160

Dec

201

5

Jan

2016

Feb

2016

Mar

201

6

Apr 2

016

May

201

6

Jun

2016

Jul 2

016

Aug

2016

Sep

2016

Oct

201

6

Vonovia Finance 1.625% 2020

Global Credit scorecards

29

Regional credit reviews

Source: Schroders. Any references to securities, sectors, regions and/or countries are for illustrative purposes only and are not to be considered a recommendation to buy or sell.

Value in subordinated insurance in a rising rates environment

Cross-currency adjusted comparison

30

– Screening tool that covers 95% of global universe with over 60 statistical fields to identify momentum or mean reversion

– A two dimensional process over time horizons and across investment universes– Ability to create both market neutral strategies and take advantage of market timing– Extensive curve analysis to determine opportunity value across CDS tenor and bond maturities– Decomposition into alpha and beta adjusted performance versus index and Schroders bespoke “Super Sectors”


Investment processProprietary tools for quantitative credit and relative value analysis

Credit research

31

Integrated within the investment team


– Integrated credit team aligned with investment process is a major differentiator

– No sector silo approach to investment or research

– Understanding business models and the relationship between issuers

– Working together to understand the supply chain and revenue relationships across sectors

– Identify the under-researched bond issuers that lie outside the scope of standard research processes

Industrials

Financials

Utilities

Telco/Media

Consumer

Investment process overview

32

Themes-driven process


Multiple credit investment themesDiversified by theme

Diversified by horizon

Security selectionOver 40 credit analysts

Fully aligned research process

Credit strategy

InputCredit Scorecard

Risk management

– Fundamentals– Valuations– Systemic– Technical

OutputCross market relative value

Risk bias

Positioning and outlook

Schroder High Yield Opportunities Fund

34

Sector allocation (% market value)

Positioning as at 30 March 2018

Portfolio refers to Schroder High Yield Opportunities ; Reference Index is Bank of America Merrill Lynch European Currency HY Constrained Index (Bloomberg Ticker: HCP0). Source: Schroders Fixed Income Analytics. Based on un-audited data as at 30 March 2018.1Number of issuers is based on cash bond and CDS holdings only. 2Other includes CHF.Note: The chart may not sum to 100 as unclassified securities, futures, IRS, forwards, TRS, cash synthetic and CDS float (non-active leg of CDS) are excluded.

Currency denomination, % market value

EUR 43.60

GBP 30.24

USD 26.42

61

10 7 7 4 3 1

-1

76

13

07

0 40

-10

0

10

20

30

40

50

60

70

80

Indu

stria

ls

Sub.

Fin

anci

als

Sov/

Qua

si S

ov

Snr.

Fin

anci

als

Cash

/M.M

kts

Util

ity

Secu

ritiz

ed

CDS

Bask

et

Portfolio Reference Index

Statistics Portfolio Reference Index

AUM £606.11mn £301.92bn

Average effective yield, % 5.09 3.27

Average effective duration, years 4.20 3.84

OAS, basis points 496 320

Number of issuers1 136 355

Average credit rating BB- BB-

High yield, % MV 81.71 –

-1

30

4

1 10

5

1 10

3

9

30 1 0 0

21 0

-5

0

5

10

Banking- SNR

Banking- LT2

Banking- UT2

Banking- T1

Insurance -SECR

Insurance -SENR

Insurance -SUB

Insurance -JSUB

FinancialServices -

SECR

FinancialServices -

SENR

FinancialServices - SUB

FinancialServices - UT2


129 9 8

64 4 4 3 2 2 1

0

11

3

8

12

5 52 2 1

810

7

-5

0

5

10

15

Services Energy Cons.Cyclical

Telecoms Media Healthcare Tech &Electronics

Cons. Non-Cyclical

Real Estate CapitalGoods

BasicIndustry

Industrials -CONV

Automotive



35

Sector allocation within financials (% market value)

Positioning as at 30 March 2018

Portfolio refers to Schroder High Yield Opportunities ; Reference Index is Bank of America Merrill Lynch European Currency HY Constrained Index (Bloomberg Ticker: HCP0). Sectors shown are for illustrative purposes only and should not be viewed as a recommendation to buy or sell.Source: Schroders Fixed Income Analytics. Based on un-audited data as at 30 March 2018. Breakdown of Industrials and financials is based on Bank of America Merrill Lynch classification level 3.

Sector allocation within industrials (% market value)

Rating (% market value) Country of risk (% market value)

Asset swap spread (% market value) Duration breakdown (% market value)

36

30

13 127 7 5 4 3 3 2 2 2 1 1 1

18

1016

116 8

2 1

94 2 1 1 2

05

101520253035

UK

USA

Ital

y

Fran

ce

Luxe

mbo

…

Spai

n

Braz

il

Mex

ico

Arge

ntin

a

Ger

man

y

Net

herla

n…

Irel

and

Switz

erla

nd

Russ

ia

Isra

el

16 4

1923

20

27

1

12

2826

14

812

0

5

10

15

20

25

30

<0 0-100 100-200 200-300 300-400 400-500 >500


64

-46

37 256 4 78

32 31 235 1 0

-100

-50

0

50

100

0-1Y 1-3Y 3-5Y 5-7Y 7-10Y 10-15Y 15-20Y


Portfolio refers to Schroder High Yield Opportunities ; Reference Index is Bank of America Merrill Lynch European Currency HY Constrained Index (Bloomberg Ticker: HCP0). Countries shown are for illustrative purposes only and should not be viewed as a recommendation to buy or sell. Source: Schroders Fixed Income Analytics. Based on un-audited data as at 30 March 2018. Rating: chart will not add up to 100 as it does not include futures, IRS, forwards, TRS, cash synthetic or the CDS float (non-active leg of the CDS). Country of risk: exposures <1% have been excluded.

Schroder High Yield Opportunities Fund Portfolio characteristics as at 30 March 2018

-1

4

31 36

131 5 41

71

24

4 0 0

-100

1020304050607080

AAA/

AA/A

BBB BB B

CCC CC NR

Cash


37

Top 10 overweight/underweight positions vs reference index (MV%)

Source: Schroders FIA at 30 March 2018, Based on un-audited data. The above is for information only and is not a recommendation to buy or sell.Overweights and underweights by market value (%) versus the benchmark (including single name CDS but excluding bunds and CDS indices). Stocks shown are for illustrative purposes only and should not be viewed as a recommendation to buy or sell.

Ticker Name (%)

TITIM Telecom Italia -3.00

ISPIM Intesa Sanpaolo -2.30

MWDP Wendel SA -2.29

TTMTIN Jaguar Land Rover -2.19

COFP Casino Guichard Perrachon -1.66

SOFTBK Soft Bank Group -1.51

UCGIM Unicredit -1.43

TKAGR Thyssen Krupp -1.43

BAMIIM Banco Popolare di Milano -1.33

AREVAF Areva -1.18

Ticker Name (%)

ARGENT Republic of Argentina 1.96

WFSGLB WFS Global Holding 1.96

ALMAIN Almaviva The Itali 1.87

RBS Royal Bank of Scotland 1.79

PEMEX Petroleos Mexicanos 1.57

ICELTD Iceland Ltd 1.49

GAZPRU Gaz Prom 1.45

WINTRE Wind Tre Spa 1.38

JCP JC Penney 1.35

SCHMAN Schuman Spa 1.29

Macro credit clock

38

Source: Schroders, OECD, April 2018. For illustrative purposes only and should not be considered a recommendation to buy or sell.

a

97. 0

97 .0

Positive Momentum Negative Momentum

AccelerationAbove trend growthPositive momentum

Default rate falls

StabilizationBelow trend growthPositive momentumDefault rate peaks

DecelerationAbove trend growth

Negative momentumDefault rate troughs

Above Trend

Below Trend

SlowdownBelow trend growth

Negative momentumDefault rate rises

Eurozone

39

Sources: Bloomberg, April 2018. For illustrative purposes only and should not be considered a recommendation to buy or sell.

Corporate fundamentals

40

The median European corporate has continued to deleverage in 2Q17 across IG and HYNet leverage (x)

Source: Morgan Stanley Research, January 2018 and FT 10 January 2018. For illustrative purposes only and should not be considered a recommendation to buy or sell.

Shareholder rewards programmes (Gross dividends per share by major stock index, June 1998=100)

S&P 500 Euro Stoxx 50Nikkei 225

Valuations

41

Eurozone Consumer confidence and econ sentiment vs. € credit spreads

Source: Bloomberg, Bank of America Merrill Lynch March 2018. For illustrative purposes only and should not be considered a recommendation to buy or sell.

Appendix

Schroders Credit team – Your PM

43

Michael Scott

Source: Morningstar, 19 April 2018. Starts when Michael Scott took over as fund manager from 1 July 2012. Blue line: fund’s performance of the Z share class, net of fees Green line: peer group average. Source for ratings: Fund Calibre, Rayner Spencer Mills, Trustnet and Morningstar as at 30 April 2018, Citywire as at 31 March 2018. Source of award: Investment Week, as at April 2018.Past performance is not a guide to future performance and may not be repeated.

Michael Scott, CFACredit Portfolio Manager

Cumulative Total Return Growth – Fund vs. £ High Yield Peer Group

– Investment career started in 2005– Joined Schroders in 2006 as a European Industrials

credit analyst– Prior to Schroders Michael worked at Cazenove

Capital Management in 2005– BA (Hons) in Geography, Oxford University– CFA Charterholder

Past performance is not a guide to future performance and may not be repeated.


44


Source: Schroders, as at dates specified. Performance is shown for Schroder High Yield Opportunities Z Accumulation share class (%) in GBP. Share class performance calculated NAV to NAV (Bid to Bid), adjusted for dividends, net of ongoing charges. 1Prior to 31 August 2008, the benchmark was 40% ICE BofAML Sterling Corporate & Collateralised Index UC00 and 60% ICE BofAML European Currency High Yield Constrained Index GBP hedged HPC0.

2017 2016 2015 2014 2013

Schroder High Yield Opportunities Z Acc 9.92 11.38 5.01 5.05 8.35

100% HPCO £ Hedged1 7.64 10.20 1.91 5.72 10.70


The fund can be exposed to different currencies. Changes in foreign exchange rates could create losses High yield bonds (normally lower rated or unrated) generally carry greater market, credit and liquidity risk A rise in interest rates generally causes bond prices to fall A decline in the financial health of an issuer could cause the value of its bonds to fall or become worthless A failure of a deposit institution or an issuer of a money market instrument could create losses In difficult market conditions, the fund may not be able to sell a security for full value or at all. This could affect performance and could cause the

fund to defer or suspend redemptions of its shares Failures at service providers could lead to disruptions of fund operations or losses Mortgage or asset-backed securities may not receive in full the amounts owed to them by underlying borrowers The counterparty to a derivative or other contractual agreement or synthetic financial product could become unable to honour its commitments

to the fund, potentially creating a partial or total loss for the fund A derivative may not perform as expected, and may create losses greater than the cost of the derivative When interest rates are very low or negative, the fund's yield may be zero or negative, and you may not get back all of your investment The fund uses derivatives for leverage, which makes it more sensitive to certain market or interest rate movements and may cause



What are the risks?

Schroder global research team

45

Deep and experienced team of investment professionals

1The entire Asia credit research team covers Emerging Market Debt, High Grade and High Yield issuers. Names in bold are team leaders. Location in parenthesis denotes physical location. Region beneath name indicates investment coverage. NY is New York, LN is London, SYD is Sydney, HK is Hong Kong, SIN is Singapore, JAK is Jakarta, BA is Buenos Aires, PHL is Philadelphia, ZRH is Zurich. As of January 31, 2018.

Larry Bellinger (NY)North AmericaMunicipals

Thomas Butcher (NY)North AmericaSecuritized

Tom Cha (NY)North AmericaTelecom, Media, Tech

Raymond Chia (SIN)1

AsiaConsumer Food & Retail, Industrials

Chris Croteau (NY)North AmericaIndustrials

Holly Fullam (NY)North AmericaIndustrials (consumer)

Peter Fullerton (SYD)AustraliaGeneralist

Emily Gervasi (PHL)North AmericaMunicipals

Autumn Graham (NY)North AmericaEM Corporates

Carter Holloran (LN)EuropeIndustrials

Bridget Hu (NY)North AmericaSecuritized

Stephen Hunnisett (LN)EuropeFinancials, Property

Robert Kendrick (LN)EuropeFinancials

David Knutson (NY)North AmericaFinancials

Steve Kong (SIN)1

AsiaConglomerates, Oil & Gas, Transportation, SEA Prop.

Jeannette Leong (SIN)1

AsiaGreater China (China & HK) & Singapore Prop.

Dr. Yow Tzu Lim (LN)EuropeQuantitative Analyst

Helen Mason (SYD)AustraliaGeneralist

Liyun Ma (NY)North AmericaQuantitative Analyst

Patrick McCullagh (LN)EuropeCommunications

Simoni Mittal (LN)EuropeEnergy, Metals & Mining

Till Moewes (NY)Latin AmericaEM Corporates

Drake Morgan (NY)North AmericaEM Corporates

Szevak Nzsdejan (LN)EuropeQuantitative Analyst

Sunny Park (NY)North AmericaSecuritized

Susan Park (NY)North AmericaTelecom, Media, Tech

Bartek Pastwa (LN)EuropeIndustrials

Daniel Pearson (LN)EuropeIndustrials

Charlotte Peat (LN)EuropeUtilities

Afsah Quadri (NY)North AmericaREITS, Healthcare

Sagar Regmi (NY)North AmericaSecuritized

Rajeev Shah (LN)EuropeQuantitative Analyst

Alex Stephansen (LN)EuropeIndustrials

Paul Tice (NY)North AmericaEnergy

Harold Thomas (NY)North AmericaFinancials

Lucila Tiphanie (BA)Latin AmericaEM Corporates

Philip Villaluz (NY)North AmericaMunicipals

Dong’er Wang (HK)AsiaFinancials

Jorie Widener (NY)North AmericaIndustrials (consumer)

Marcus Wong (SIN)1

AsiaNatural Resources, TMT, Utilities & SEA Prop.

Yusi Xie (NY)North AmericaQuantitative Analyst

Mona Yee (NY)North AmericaEnergy, Utilities

Economics

Craig Botham (LN)Economics

Tina Fong (LN)Multi-Asset & Economics

Keith Wade (LN)Economics

Azad Zangana (LN) Economics

Piya Sachdeva(LN) Economics

Firat Tecirli (LN) Economics

Irene Lauro (LN)Economics

Research


46

Composite disclosure as at 31 December 2017

Definition of the Firm The Firm is defined as all accounts managed by Schroder Investment Management in the UK, US and Switzerland by wholly owned subsidiaries of Schroders PLC. Prior to 1st January 2007 SIM London & SIM North America existed as two separate Firms which were compliant & verified as separate entities until 31st December 2006. The consolidation of these two Firms was made as part of a move towards creating one global Firm. Composite and Firm assets reported prior to 1st January 2007 represent those of the legacy firm which managed the product. Prior to 1st January 2011 the SREIM (Schroder Real Estate Investment Management Limited) Firm existed separately to the Schroder Investment Management UK and US Firm, from 1st January 2011 these Firms have been combined into a single firm. On April 2, 2013, Schroder U.S. Holdings Inc., a subsidiary of Schroders plc, purchased STW Fixed Income Management LLC (STW) and on July 2, 2013, Schroders plc, purchased Cazenove Capital Holdings; assets managed by STW and Cazenove are included in the Firm from 1st January 2014. Prior to 1st January 2015 the SIMSAG (Schroder Investment Management (Switzerland) AG) Firm existed separately to the Schroder Investment Management UK and US Firm, from 1st January 2015 these Firms have been combined into a single firm. Assets Managed against a liability driven mandate or invested in direct property are excluded from the GIPS Firm. On September 19, 2016, Schroder U.S. Holdings Inc., a subsidiary of Schroders plc, purchased a securitized products team from another manager, assets managed by the securitized products team are included in the Firm from 31st December 2016.

Composite Definition The Euro Corporate Bond Composite (the "Composite") is comprised of all Schroder Investment Management (UK & US), fully discretionary accounts which seek to achieve returns above the Merrill Lynch EMU Corporate Index ER00 (GDR) by investing in bonds and other fixed and floating rate securities denominated in Euro issued by governments, government agencies, supranational and corporate issuers. A minimum of 80% of net assets will be held in non-sovereign securities. In February 2007 the Composite changed name from the Schroder Lux Euro Corporate Composite to Euro Corporate Bond Composite. This change does not affect the Composite history, investment decisions or strategy used. Derivatives may be used to achieve the investment objective and to reduce risk or manage the fund more efficiently. The fund may use leverage and take short positions.

Composite Construction New accounts are included from the beginning of the first full month of management on a discretionary basis. Terminated accounts are excluded from the end of the last full month of discretionary management. This Composite has no minimum asset level for inclusion. The composite currency is EURO.

Composite Inception Date: 30/06/2000Composite Creation Date: 04/04/2002

Calculation Methodology The portfolio returns are time-weighted rates of return that are adjusted for cash flows. Portfolio returns are combined using beginning of period asset weights to produce the composite return. Periodic returns are geometrically linked to produce annual returns. Dividends on equities are recognised net of irrecoverable withholding tax. Since January 1999 dividends have been recognised as of the ex-dividend date having previously been recognised on a cash basis. Performance results are presented before the deduction of management fees and custodian fees but after trading expenses. Dispersion The dispersion of annual returns is measured by the asset weighted standard deviation of portfolio returns represented within the composite for the full year provided a minimum of 5 portfolios are available.

Fee Schedule The fee scale applied to the composite is 0.45% p.a.

GIPS Compliance and Verification Schroder Investment Management (UK, US and Switzerland) claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. Schroder Investment Management (UK, US and Switzerland) has been independently verified for the periods 1st January 1996 to 31st December 2016. The verification report(s) is/are available upon request. Verification assesses whether (1) the Firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the Firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation. A complete list of all composites and their descriptions is available upon request. Additional information regarding policies for calculating and reporting returns is available upon request.

Additional information The exchange rates used are provided by WM. Each currency is valued at 4 pm on the last business day of the month. Additional information regarding policies for valuing portfolios, calculating and reporting returns and a description of all composites are available on request.


47

Composite performance as at 31 December 2017


48



Composite Definition The Euro Credit Conviction Composite (the "Composite") is comprised of all Schroder Investment Management (UK & US), fully discretionary accounts which seek to achieve returns above the IBOXX Euro Corporate BBB Index by investing in bonds and other fixed and floating rate securities denominated in Euro issued by governments, government agencies, supranational and corporate issuers worldwide. A maximum of 20% of the net assets will be invested in securities issued by governments and government agencies. Accounts may also invest in derivatives and may create short or long exposure to the underlying assets of the derivatives


Composite Inception Date: 31/01/2014 Composite Creation Date: 18/02/2014


Fee Schedule The fee scale applied to the composite is 1% p.a.




49



50



Composite Definition The Euro High Yield Composite (the "Composite") is comprised of all Schroder Investment Management (UK & US), fully discretionary accounts which seek to achieve returns above the Bank of America Merrill Lynch Euro High Yield Constrained Index (HEC0) by investing in bonds and other fixed and floating rate securities denominated in Euro issued by governments, government agencies, supranational and corporate issuers worldwide. A minimum of 70% of the net assets will be invested in securities with a credit rating below investment grade.




Fee Schedule The fee scale applied to the composite is 1% p.a.




51



52


Definition of the Firm Definition of the Firm The Firm is defined as all accounts managed by Schroder Investment Management in the UK, US and Switzerland by wholly owned subsidiaries of Schroders PLC. Prior to 1st January 2007 SIM London & SIM North America existed as two separate Firms which were compliant & verified as separate entities until 31st December 2006. The consolidation of these two Firms was made as part of a move towards creating one global Firm. Composite and Firm assets reported prior to 1st January 2007 represent those of the legacy firm which managed the product. Prior to 1st January 2011 the SREIM (Schroder Real Estate Investment Management Limited) Firm existed separately to the Schroder Investment Management UK and US Firm, from 1st January 2011 these Firms have been combined into a single firm. On April 2, 2013, Schroder U.S. Holdings Inc., a subsidiary of Schroders plc, purchased STW Fixed Income Management LLC (STW) and on July 2, 2013, Schroders plc, purchased Cazenove Capital Holdings; assets managed by STW and Cazenove are included in the Firm from 1st January 2014. Prior to 1st January 2015 the SIMSAG (Schroder Investment Management (Switzerland) AG) Firm existed separately to the Schroder Investment Management UK and US Firm, from 1st January 2015 these Firms have been combined into a single firm. Assets Managed against a liability driven mandate or invested in direct property are excluded from the GIPS Firm. On September 19, 2016, Schroder U.S. Holdings Inc., a subsidiary of Schroders plc, purchased a securitized products team from another manager, assets managed by the securitized products team are included in the Firm from 31st December 2016.

Composite Definition The Sterling Corporate Bond Composite is comprised of all Schroder Investment Management (UK & US), fully discretionary accounts that are managed in a similar manner and seek to achieve a high income return together with capital growth by investing in fixed income securities including corporate bonds, preferences shares and convertibles. Accounts in the composite will invest primarily in UK based securities but may extend to any economic sector or geographic area. The benchmark changed on the 3rd January 2012, previously the Merrill Lynch Gilt 5-15 Years. There has been no change to the investment objective or strategy. The fund manager Alex Smitten invests in predominantly investment grade corporate bonds. Account in the composite aim to outperform the benchmark, BofA Merrill Lynch Sterling Non-Gilt index over the medium term.

Composite Construction New accounts are included from the beginning of the first full month of management on a discretionary basis. Terminated accounts are excluded from the end of the last full month of discretionary management. This Composite has no minimum asset level for inclusion. The composite currency is Pound Sterling.


Calculation Methodology The portfolio returns are time-weighted rates of return that are adjusted for cash flows. Portfolio

returns are combined using beginning of period asset weights to produce the composite return. Periodic returns are geometrically linked to produce annual returns. Dividends on equities are recognised net of irrecoverable withholding tax as of the ex-dividend date. Unless otherwise stated performance results are presented before the deduction of management fees and custodian fees but after trading expenses. Dispersion The dispersion of annual returns is measured by the asset weighted standard deviation of portfolio returns represented within the composite for the full year provided a minimum of 5 portfolios are available.

Fee Schedule Net returns have been calculated based on the highest fee rate charged to each account in the composite. The highest fee applied to the composite was 0.75% p.a. from inception to 31/03/02, 1% p.a. thereafter


Additional information Prior to January 1st 2014, this composite was part of the Cazenove Capital Holdings GIPS firm. Cazenove Capital Holdings was independently verified for the periods 1st January 2008 to 31st December 2013. The verification report(s) are available upon request.

Returns after August 2013 are shown gross of CT61 tax. The composite was restated in November 2017 to show the historic returns on this basis, all data was previously shown net of this tax.


53



54



Composite Definition The Schroder All Maturities Corporate Bond Composite comprises of all Schroder Investment Management (UK & US), fully discretionary accounts which seek to achieve returns above the Merrill Lynch Sterling All Stocks, Non-Gilts Index. The Fund's investment objective is to provide capital growth and income primarily through investment in non-government debt securities. Composite accounts may also invest in a wide range of investments including transferable securities, derivatives, cash, deposits, collective investment schemes and money market instruments. None of the accounts in the Composite uses leverage.







The benchmark was changed from UNP0 - BofA Merrill Lynch Sterling Non Gilts - All Stocks (GBP) NTR from 01/07/2017. There was no change in strategy and the reason for change was because ML discontinued the use of the existing benchmarks.


55



56



Composite Definition The Schroder Sterling Over 15 Yrs Corporate Bond Composite (the "Composite") is comprised of all Schroder Investment Management (UK & US), fully discretionary accounts which seek to achieve returns above the ML > 15 Yr Non Gilts TL UN08 index by investing in bonds and other fixed and floating rate securities denominated in GBP and other currencies issued by governments, government agencies, supra-national and corporate issuers worldwide. None of the accounts in the composite use leverage.








57



58



Composite Definition The Schroder High Yield Opportunities Composite (the "Composite") is comprised of all Schroder Investment Management (UK & US), fully discretionary accounts that seek to achieve a total return in excess of the 100% HPCO £ Hedged, prior to 31/8/08 40% UC00 + 60% HPC0 100% £ hedged was used index. Composite account's objective is to achieve a high level of income from a diversified portfolio of debt securities. The full spectrum of available securities, including unrated issues and those of non-investment grade, will be utilised. Investments will be in directly held tranferable securities. The fund may also invest in collective investment schemes, warrants and money market instruments. None of the accounts in the Composite use leverage. On 31/07/2014, the composite was restated for the periods 31/01/04-30/06/2014 so that returns were reported gross of CT61 tax.








59



60

Composite disclosure as at 31 December 2017Definition of the Firm The Firm is defined as all accounts managed by Schroder Investment Management in the UK, US and Switzerland by wholly owned subsidiaries of Schroders PLC. Prior to 1st January 2007 SIM London & SIM North America existed as two separate Firms which were compliant & verified as separate entities until 31st December 2006. The consolidation of these two Firms was made as part of a move towards creating one global Firm. Composite and Firm assets reported prior to 1st January 2007 represent those of the legacy firm which managed the product. Prior to 1st January 2011 the SREIM (Schroder Real Estate Investment Management Limited) Firm existed separately to the Schroder Investment Management UK and US Firm, from 1st January 2011 these Firms have been combined into a single firm. On April 2, 2013, Schroder U.S. Holdings Inc., a subsidiary of Schroders plc, purchased STW Fixed Income Management LLC (STW) and on July 2, 2013, Schroders plc, purchased Cazenove Capital Holdings; assets managed by STW and Cazenove are included in the Firm from 1st January 2014. Prior to 1st January 2015 the SIMSAG (Schroder Investment Management (Switzerland) AG) Firm existed separately to the Schroder Investment Management UK and US Firm, from 1st January 2015 these Firms have been combined into a single firm. Assets Managed against a liability driven mandate or invested in direct property are excluded from the GIPS Firm. On September 19, 2016, Schroder U.S. Holdings Inc., a subsidiary of Schroders plc, purchased a securitized products team from another manager, assets managed by the securitized products team are included in the Firm from 31st December 2016.

Composite Definition The Strategic Credit Composite is comprised of all Schroder Investment Management (UK & US), fully discretionary accounts that are managed in a similar manner and seek to generate a total return above sterling cash interest rates. Accounts in the composite invest primarily through a flexible allocation to investment grade bonds, noninvestment grade bonds and derivative instruments. It invests in rated and unrated securities including bonds, notes of fixed variable interest, preference shares, equities, convertible and other securities issued by government, quasigovernment, supranational, bank and corporate entities, and derivative instruments. The fund manager, has the flexibility to invest across the credit spectrum, depending on where he sees the most relative value. Accounts in the composite invest in predominantly UK and Euro issuers, aiming to generate a gross return substantially above cash over the medium term. The composite benchmark is the 3 Month GBP LIBOR from 31/07/2017, prior to this date it was the UK Treasury Bills 3 Month. The change was made due to the discontinuation of the old index.


Composite Inception Date: 31/12/2007 Composite Creation Date: 23/12/2013

Calculation Methodology The portfolio returns are time-weighted rates of return that are adjusted for cash flows. Portfolio returns are combined using beginning of period asset weights to produce the composite return. Periodic returns are geometrically linked to produce annual returns. Dividends on equities are recognised net of irrecoverable withholding tax as of the ex-dividend date. Unless otherwise stated performance results are presented before the deduction of management fees and custodian fees but after trading expenses. Dispersion The dispersion of annual returns is measured by the asset weighted standard deviation of portfolio returns represented within the composite for the full year provided a minimum of 5 portfolios are available.

Fee Schedule Net returns have been calculated based on the highest fee rate charged to each account in the composite. The highest fee applied to the composite is 1% p.a.


Leverage Derivative instruments (including but not limited to: forward foreign exchange transactions, credit default swaps, interest rate and government bond futures) may be used for the purposes of efficient portfolio management and/or meeting the investment objectives of the fund. Such derivative contracts have the potential to significantly increase the Fund’s risk profile and may create leveraged exposure to the credit market. The Manager will employ a risk management process to manage any derivative exposure achieved for the purposes of efficient portfolio management.


Prior to January 1st 2014, this composite was part of the Cazenove Capital Holdings GIPS firm. Cazenove Capital Holdings was independently verified for the periods 1st January 2008 to 31st December 2013. The verification report(s) are available upon request.

Returns after August 2013 are shown gross of CT61 tax. The composite was restated in November 2017 to show the historic returns on this basis, all data was previously shown net of this tax.


61



62



Composite Definition The UK Strategic Bond (the "Composite") is comprised of all Schroder Investment Management (UK & US), fully discretionary accounts which invest at least 80% of their assets in Sterling denominated (or hedged back to Sterling) fixed interest securities. This includes convertibles, preference shares and permanent interest bearing shares (PIBs). At any point in time the asset allocation of these funds could theoretically place the fund in one of the other Fixed Interest sectors. The funds will remain in this sector on these occasions since it is the Manager's stated intention to retain the right to invest across the Sterling fixed interest credit risk spectrum.

Composite Construction New accounts are included from the beginning of the first full month of management on a discretionary basis. Terminated accounts are excluded from the end of the last full month of discretionary management. This Composite has no minimum asset level for inclusion. The composite currency is Pound Sterling







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64



Composite Definition The Global Multi-Credit - USD Hedged Composite (the "Composite") is comprised of all Schroder Investment Management (UK & US), fully discretionary accounts which seek to achieve a total return through a combination of income and capital growth by investing in fixed and floating rate securities issued by governments, government agencies, supranationals and corporates worldwide, including emerging market countries. At least two thirds of the assets will be invested in investment grade and high yield securities. Up to 20% of assets may be invested in asset backed and mortgage backed securities and 30% in convertible bonds. Financial derivatives may be used. Accounts will be hedged to USD. This strategy has no benchmark as it is a total return strategy.






65



66




Composite Definition The Global Multi-Credit - USD Hedged Composite (the "Composite") is comprised of all Schroder Investment Management (UK & US), fully discretionary accounts which seek to achieve a total return through a combination of income and capital growth by investing in fixed and floating rate securities issued by governments, government agencies, supranationals and corporates worldwide, including emerging market countries. At least two thirds of the assets will be invested in investment grade and high yield securities. Up to 20% of assets may be invested in asset backed and mortgage backed securities and 30% in convertible bonds. Financial derivatives may be used. Accounts will be hedged to USD. This strategy has no benchmark as it is a total return strategy.





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68



The Global Credit Income Composite Global Credit Income is comprised of all Schroder Investment Management (UK & US), fully discretionary accounts which seek to achieve a total return through a combination of income and capital growth by investing in fixed and floating rate securities issued by governments, government agencies, supranationals and corporates worldwide, including emerging market countries. The fund aims to mitigate losses in falling markets. The mitigation of losses cannot be guaranteed. At least two thirds of the assets will be invested in investment grade and high yield securities. Up to 20% of assets may be invested in asset backed and mortgage backed securities and 10% in convertible bonds. Financial derivatives may be used.


Composite Construction

New accounts are included from the beginning of the first full month of management on adiscretionary basis. Terminated accounts are excluded from the end of the last full month ofdiscretionary management. This Composite has no minimum asset level for inclusion. Thecomposite currency is US Dollar.






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Composite Definition The Euro Credit Absolute Return (the "Composite") is comprised of all Schroder Investment Management (UK & US), fully discretionary accounts which seek to provide an absolute return of capital growth and income by investing in euro-denominated bond markets. At least two thirds of assets (excluding cash) will be exposed to euro-denominated fixed and floating rate securities issued by governments, government agencies, supranational and corporate issuers worldwide either directly or indirectly through derivatives. Accounts have has no bias to any particularcountry or industry and are not managed against any index Derivatives may be used to seek to achieve the investment objective, to reduce risk, to enhance returns, to preserve capital or to manage the fund more efficiently








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Important information

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The returns are presented as gross returns, including cash, reinvestment of dividends, interest and other income earned in the period and are calculated on a trade date basis after transaction charges (brokerage commissions), but before taxes and management and custody fees. Performance would have been reduced by such fees and the effect of these fees on performance compounds over time.As an illustration see the chart below. The value of a $5,000,000 account would be reduced by the following amounts due to the compound effect of the management fees. (This has been calculated assuming an assumed constant return of 10% per annum1 and a hypothetical management fee of 0.75% per annum, which has been applied on a simple average of opening and closing annual fund values).

1The assumed 10% return is hypothetical and should not be considered a representation of past or future returns. The actual effect of fees on the value of an account over time will vary with future returns, which cannot be predicted and may be more or less than the amount assumed in this illustration. Actual fees may differ from the assumed rate presented above. Please consult the Firm's Advisory Brochure (ADV Part 2) for a description of the fees.

Gross Value Net Value Compound Effect

1 Year $5,500,000 $5,460,625 $39,375

3 Years 6,655,000 6,513,090 141,910

5 Years 8,052,550 7,768,403 284,147

10 Years 12,968,712 12,069,617 899,095

Disclaimer

Marketing material for professional investors or advisers only. This material is not suitable for retail clients.

Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested.

Schroders has expressed its own views and these may change. The data contained in this document has been sourced by Schroders and should be independently verified before further publication or use. This presentation is intended to be for information purposes only. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The information provided is not intended to constitute investment advice, an investment recommendation or investment research and does not take into account specific circumstances of any recipient. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice. Information herein is believed to be reliable but Schroder Unit Trusts Limited (Schroders) does not warrant its completeness or accuracy. No responsibility can be accepted for error of fact or opinion. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions.

Source for ratings: Fund Calibre, Rayner Spencer Mills, Trustnet and Morningstar as at 30 April 2018, Citywire as at 31 March 2018. Source of award: Investment Week, as at April 2018.

Forecast Warning

The forecasts included should not be relied upon, are not guaranteed and are provided only as at the date of issue. Our forecasts are based on our own assumptions which may change. We accept no responsibility for any errors of fact or opinion and assume no obligation to provide you with any changes to our assumptions or forecasts. Forecasts and assumptions may be affected by external economic or other factors.

Issued in May 2018 by Schroder Unit Trusts Limited, 31 Gresham Street, London EC2V 7QA. Registered No: 4191730 England. Authorised and regulated by the Financial Conduct Authority. IF00442

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ContactAdvisory sales desk: +44 (0) 207 658 3894

Asset Manager sales desk: +44 (0) 207 658 3210

Schroder Investment Management Limited,

31 Gresham Street, London EC2V 7QA.

schroders.com

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