Alex Breese CFA, UK Equity Fund Manager Marketing Material for Professional Investors Or Advisers Only

Schroder UK Equity Fund

Alex Breese CFA, UK Equity Fund Manager Marketing material for professional investors or advisers only. May 2019 UK Specialist Equity Centralised research, risk, reporting, trading functions

Pan European Product Team 8 Sector Analysts1 14 Alex Breese, CFA Schroder UK Equity Fund Manager

Fund Manager ESG Specialists Assistants 4 Tom Grady – UK Equity Analyst, CFA, ACA 15

Risk Analysts 4 Equity Traders 6 Boutique structure supported by extensive internal resource Source: Schroders, as at 31 March 2019. 1Includes two Global Analysts with full global sector coverage that make a significant contribution to UK and European equity portfolios.

1 Fund facts, risk framework and philosophy Schroder UK Equity Fund

To identify out of favour or misunderstood companies that have scope for positive change thereby Philosophy realising the valuation anomaly over the next 3–5 years

Schroder UK Equity Fund

Benchmark FTSE All-Share Index

Assets under management £546m

Typical number of stocks >35

Maximum stock weight 5% active position

Maximum sector weight +/- 20%

Market capitalisation Multi-cap

Investment time horizon 3 years +

Turnover (12 months) 21.4%

High conviction actively managed fund

Source: Schroders, as at 31 March 2019 (except assets as at 28 February 2019). Turnover calculated as lesser of purchases and sales divided by average market value over 12 months.

2 Cumulative performance – Alex Breese Performance versus benchmark and peer group

Cumulative performance, January 2007 to 31 March 2019 % (Total returns, re-based to zero) 140 120 100 80 60 40 20 0 -20 -40 -60 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16 Jan 17 Jan 18 Jan 19

Cumulative excess return vs. FTSE Neptune UK opportunities Manager's career break¹ Representative UK Equity strategy FTSE All Share IA UK All Companies Consistent process aiming to deliver strong compounding returns for the long-term investor 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 amounts originally invested. Source: Morningstar, Schroders, net of fees, bid to bid with net income reinvested GBP, 31 December 2006 to 31 March 2019. 1Dashed line indicates manager’s career break, during which time we have used the average IA UK Equity manager return.

3 Performance Periods to 31 March 2019

1 year 3 years 5 years 10 years Since manager In GBP p.a. % p.a. % p.a. % p.a. % p.a. %3 Schroder UK Equity Fund Z Acc 2.6 6.7 4.8 12.0 5.6 FTSE All-Share Index (TR) 6.4 9.5 6.1 11.1 6.2 Sector average1 2.8 7.6 5.4 11.8 6.3 Quartile1 3 3 3 2 3

1 year 3 years 5 years 10 years Since manager In GBP p.a. % p.a. % p.a. % p.a. % p.a. %3 Schroder ISF UK Equity Z Acc 2.7 6.6 4.7 11.5 5.5 FTSE All-Share Index (TR) 6.4 9.5 6.1 11.1 6.2 Sector average2 2.0 6.9 4.0 10.2 4.9 Quartile2 4 3 3 1 3

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 amounts originally invested. Source: Morningstar, net of fees, bid to bid with net income reinvested GBP, Z Acc units. 1Sector is IA UK All Companies Sector, sector average and rankings shown for Z Acc units. 2Sector is UK Large-Cap Blend Equity – offshore territories, sector average and quartile ranking shown for A Acc units. 3Alex Breese has managed the funds since 16 July 2013.

4 Calendar year performance Risk factors

2018 2017 2016 2015 2014

Schroder UK Equity Fund Z Acc -7.8 7.6 13.0 2.8 2.6 Schroder ISF UK Equity Z Acc -8.5 7.9 13.3 2.8 2.6 FTSE All-Share Index (TR) -9.5 13.1 16.8 1.0 1.2

Schroder UK Equity Fund – Risk Factors: Funds that invest solely in the companies of one country or region can carry more risk than funds spread over a number of countries or regions. The fund can be exposed to different currencies. Changes in foreign exchange rates could create losses. Equity prices fluctuate daily, based on many factors including general, economic, industry or company news. Investments in smaller companies can be less liquid than investments in larger companies and price swings may therefore be greater than in larger company funds. 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.

Schroder ISF UK Equity – Risk Factors: The capital is not guaranteed. The fund will not hedge its market risk in a down cycle. The value of the fund will move similarly to the markets. 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 amounts originally invested.

Source: Morningstar, net of fees, bid to bid with net income reinvested GBP, Z Acc units

5 Schroder UK Equity Fund Process Blueprint for stock selection Investment process

Identify Explore Idea upside downside Portfolio generation opportunity protection

– Unloved or – Management – Franchise quality – Typically 35–50 misunderstood turnaround – Balance sheet stocks companies – Unrecognised – Valuation – Target prices – Value and quality growth – Cash conversion screens – Cyclical recovery – Internal research – Management alignment

Hunting for asymmetric risk

Source: Schroders.

7 Lifecycle of a position in the fund Can market perception change for the better?

Negative sentiment Market recognising positive change Positive sentiment

(Sold)

Buy initial position Build position Reduce/Sell

A diversified portfolio with no fixed style + long-term investment horizon

Source: Schroders as at 31 March 2019. Stocks shown are for illustrative purposes only and should not be viewed as a recommendation to buy or sell.

8 Portfolio analysis Life cycle stages and stock classification

Stage 3 Stage 1 Cash Reduce/sell Initiate position Cash 13 6% (6%) companies 6 (15%) Unrecognised companies growth (14%) 17% 34% Cyclical recovery

22 companies 43% (65%) Management turnaround Stage 2 Build position

Substantial positive change yet to come through

Source: Schroders, as at 28 February 2019.

9 Stock example Management turnaround - stage 1

Easy to hate WPP relative to FTSE All-Share - Perceived FANG domination of the digital world 160 - Management issues - FMCG spend under zero-based budgeting pressure 140 New management, new client-centric approach 120 - Addressing key areas of underperformance

- Investing in new technology backbone 100 - Award winning global leading franchise Cash generative, improving balance sheet and low valuation 80 - Expectations have been reset and valuation is low 60 - Balance sheet strengthened with disposals (ongoing)

- Early signs of stabilisation 40 May 14 May 15 May 16 May 17 May 18 May 19

Quality business trading at substantial discount to intrinsic value

For illustrative purposes only and should not be viewed as a recommendation to buy or sell Source: Schroders, Thomson DataStream, 8 May 2014 to 8 May 2019, rebased to 100, 100 = 31 December 2013

10 Stock example Cyclical recovery – stage 2

Structural fears overdone… BP

– North American shale 160 100,000

– Electric vehicles 90,000 140 – Macondo cash drag + lower oil price led to dividend 80,000 cut concerns 120 70,000 100 … but supply response has been significant … 60,000

– Investment hiatus from oil majors 80 50,000

– Existing mature oil field decline rates c. 6% p.a. 40,000 60 … and BP is a better business 30,000 40 – Macondo pay-outs largely complete 20,000 20 – Significant cost reduction + use of technology driving down 10,000 breakeven oil price to c. $40 per barrel 0 0 – 6% dividend yield 08 09 10 11 12 13 14 15 16 17 18 19

BP relative to FTSE All-Share index BP share price total return

BP is now a simpler, stronger business with significant FCF growth potential

Securities shown are for illustrative purposes only and should not be viewed as a recommendation to buy or sell. Source: Schroders, Thomson DataStream Eikon, 1 January 2008 to 31 March 2019.

11 Stock example Unrecognised growth – stage 3 (sold)

Investment case clouded by short-term issues… Coats

– Large pension deficit and tPR investigation 180 1,000

– Australia/New Zealand de-listing 160 900

… but great core business with strong long-term growth 140 800 prospects… 700 120 – Global leader (3x size largest competitor) in industrial threads 600 100 – Innovation driving faster growth in performance materials 500 80 – Global manufacturing footprint fit for purpose 400 60 … and significant downside protection 300 – Cash on balance sheet broadly offset pension deficit 40 200 – Bought on adj. EV/EBITDA multiple <4x and PE 6x 20 100 0 0 08 09 10 11 12 13 14 15 16 17 18 19 Coats Group relative to FTSE All-Share index Coats Group share price total return Pension issue resolved driving valuation re-rating

Securities shown are for illustrative purposes only and should not be viewed as a recommendation to buy or sell. Source: Schroders, Thomson DataStream Eikon, 1 January 2008 to 31 March 2019.

12 Schroder UK Equity Fund Activity and fund positioning Portfolio activity last 12 months Recycling profits from portfolio winners into unloved value opportunities

Buy Significant additions Add

Reduce Significant reductions Sell

Process in action – disciplined capital allocation Securities shown are for illustrative purposes only and should not be viewed as a recommendation to buy or sell. Source: Schroders, 31 March 2018 to 31 March 2019.

14 Schroder UK Equity Fund Broadly diversified UK equity fund

Top ten overweight positions relative to the FTSE All-Share Index

+3.8% +3.4% +3.3% +3.3% +3.0% +2.7% +2.6% +2.6% +2.6% +2.5%

Attractive risk/reward characteristics combined with positive change drivers

Source: Schroders, FactSet as at 31 March 2019. The stocks mentioned above are shown for illustrative purposes only and are not a recommendation to buy or sell. Length of bars is illustrative and not a true representation of the overweight position.

15 Schroder UK Equity Fund Sector positioning

Relative to FTSE All-Share Index Sector Portfolio weight % Index Portfolio weight %

5.7 Food and drug retailers 7.5 FTSE 100 70.1

4.1 Media 7.8 FTSE 250 14.0

4.0 Banks 14.7 FTSE Small Cap 2.4

3.3 Aerospace and defense 5.4 ex Index1 7.2

1.9 General industrials 2.9 Cash 6.2

-2.4 Real Estate IT 0.0 100

-2.7 Personal goods 0.0

-3.0 Travel and leisure 1.7 Portfolio risk

-3.5 HH goods and home 0.0 Predicted tracking error p.a. 3.5%

-3.9 Beverages 0.0 Beta 0.9

6.3 Cash 6.3 Number of stocks 39

Underweight overvalued ‘defensive growth’ sectors For illustrative purposes only and not a recommendation to buy or sell shares. Source: Schroders, FactSet and PRISM, as at 31 March 2019. Sectors exclude Equity Investment Instruments. 1Ex Index: South 32, Daily Mail and General Trust, Sanofi, Sherborne Investors.

16 Schroder ISF UK Equity Portfolio relative to FTSE All-Share Index

Valuation Quality Balance sheet

PE Shiller PE Cash conversion CFROA Net debt/EBITDA Schroder ISF UK Equity 10.1x 12.8x 86% 12% 1.0x FTSE All-Share Index 13.2x 18.8x 79% 7% 1.3x

Lower valuation, higher quality and stronger balance sheets

Source: Schroders, Quest and Bloomberg as at 28 February 2019. Schroder ISF UK Equity is representative of the Schroder UK Equity Fund.

17 Factor risk analysis Predicted index relative performance for different economic scenarios

Impact (%) of 1 standard deviation move in a factor

UK Value outperforms 2.1 UK Financials outperform 2.0 GBP strengthens vs USD 1.3 10 year bond yields up 1.3 GBP strengthens vs EURO 1.2 2 year bond yields up 1.0 Oil price rises 0.8 Gov't yield curve steepens 0.8 UK Oil & Gas outperform 0.8 UK mid cap outperforms 0.7 Global EM Equity outperforms 0.6 Copper price rises 0.6 UK small cap outperforms 0.6 Broad market up 0.5 UK Consumer Services outperform 0.5 UK Basic Mats outperform 0.3 UK Industrials outperform 0.2 High yield bonds outperform 0.1 US implied volatility rises 0.0 UK Telecoms outperform -0.3 UK Tech outperform -0.5 Europe implied volatility rises -0.5 UK Utilities outperform -0.9 UK Consumer Goods outperform -2.0 UK Healthcare outperform -2.0 UK Growth outperforms -2.1 Portfolio has a clear value bias

Source: Schroders, as at 31 March 2019. Based on fund representative of this approach. For illustrative purposes only and not a recommendation to buy or sell shares

18 Schroder UK Equity Fund Market outlook Breaking down the UK market FTSE All-Share revenue by region

20%

28% 20%

27%

Macro and political uncertainty weighing heavily on circa 50% UK market

Source: Schroders, FactSet, as at 17 September 2018.

20 UK equities valuation discount to global peers MSCI UK versus MSCI World

-5

-10

-15

-20

-25

-30

-35

-40 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18

Average % premium on PE, PBV and DY Median

UK equities trade at 30% valuation discount to global peers – close to 30 year low

Source: MSCI, IBES, Morgan Stanley Research, 31 December1987 to 6 May 2019.

21 Relative equity market valuations Only Japan is cheaper versus its own 10 year history

Switzerland Netherlands France USA Italy Nordic Australia Spain Germany Canada United Kingdom Japan

0 10 20 30 40 50 60 70 80 90 100 Relative valuation percentile versus 10 year range (PE, PB and DY average)

UK equities cheap vs own valuation history

Source: MSCI, IBES, Morgan Stanley Research, March 2019

22 UK equities vs bonds UK equities offer over 300bps more yield than gilts

400

200

-200

-400

-600

-800

-1,000

-1,200 33 38 43 48 53 58 63 68 73 78 83 88 93 98 03 08 13 18 DY-BY Median

Excellent value relative to bonds

Source: Morgan Stanley, FTSE, Datastream, from 31 March 1933 to 31 March 2019.

23 UK equities for income investors Median stock in the UK offers c.4% dividend yield (trailing)

The median stock in UK offers a trailing dividend yield of 3.9%1

5.5

5.0

4.5

4.0

3.5

3.0

2.5

2.0 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19

Median stock dividend yield % Median

UK equity market is very attractive for income investors 1Source: Morgan Stanley, MSCI, from 2 April 1989 to 2 April 2019. 2Source: Lazurus 2013 to 2020 shown for FTSE All-Share ex Financials, updated as at September 2018. 2018-20 are estimates (Please refer to Important Information at the end of this presentation).

24 FTSE All-Share sub-sector valuations Shiller P/E – market median 18x

Cheapest Price-to-10yr average earnings Most expensive Price-to-10yr average earnings

Life insurance 8.2x Software 84.4x

Integrated oil 8.3x Online platforms 71.3x

E&P 8.7x Property 60.1x

Mining 9.0x Healthcare equipment 50.4x

Bus & rail 10.3x Luxury 33.2x

Telecoms 11.3x Beverages 33.1x

Multinational banks 11.6x Hotels 31.7x

Auto retail 12.9x Paper & packaging 29.3x

Food retail 12.9x Hardware 26.8x

Defence 13.9x FMCG 26.4x

Commodities Domestics Financials ‘Bond proxies’ Domestics, commodities and financials are cheap. ‘Bond proxies’ remain expensive

Source: Schroders, April 2019, median valuation. Sectors shown are for illustrative purposes only and should not be viewed as a recommendation to buy or sell.

25 UK sector correlation with bond yields UK sub-sector correlation with US 10 year treasury yields (volatility adjusted)

1.5 1.0 0.5 0.0 -0.5 -1.0 -1.5 -2.0 -2.5

-3.0

Banks

Media

Div Fin Div

Energy

Utilities

Tobacco

Retailing

Software

Telecoms

Transport

Insurance

Chemicals

Beverages

Real estate Real

Food Retail Food

Automobiles

Pulp & Paper & Pulp

Capital Goods Capital

Food Producers Food

Semiconductors

Metals & Mining & Metals

Pharmaceuticals

Healthcare Equip Healthcare

Consumer services Consumer

Consumer Durables Consumer

Household Products Household

Commercial Services Commercial

Technology Hardware Technology Construction Materials Construction

Source: Credit Suisse, as at September 2018. Correlation divided by standard deviation of the 12m rolling correlation of UK sectors relative performance versus US 10yr treasury yields (over 10 years) Sectors shown are for illustrative purposes only and should not be viewed as a recommendation to buy or sell.

26 Style factor analysis

Divergence in value, growth and momentum styles1 Quality/growth stocks highest negative correlation with bond yields over last 10 year2 16% Composite Quality 14% 12% 10% Composite Growth 8% 6% Defensive Value (DY) 4% 2% Composite Momentum 0% -2% Composite Value -4% Dec-18 Jan-19 Feb-19 Mar-19 -1.0 -0.8 -0.6 -0.4 -0.2 0.0 0.2 0.4 0.6 0.8

Growth Value Momentum Correlation with 10Y US Treasury Yields over last 10 years

Monetary policy driving market leadership 1Source: Bloomberg, MSCI factors 31 December 2018 to 31 March 2019. 2Source: Factset, Datastream, Morgan Stanley to 31 March 2019, Defensive value factor is synonymous with High Dividend Yield stocks as it is based on long/short returns of the Q1 vs Q5 for dividend yield and total yield (i.e. dividend yield plus net buyback yield).

27 Growth What is the growth premium?

Growth vs value average valuation premium1 US IPOs with negative earnings hit peak dotcom levels2 180 90 160 80 140 70

120 60 50 100 40 80 30 60 20 40 10

20 0

75 80 85 90 95 00 05 10 15

1982 1992 2002 2012 1980 1984 1986 1988 1990 1994 1996 1998 2000 2004 2006 2008 2010 2014 2016 2018

Growth vs Value (Avg % Premium On PE, PBV & PD) Median Percentage of IPOs with EPS<0

Clear parallels with the TMT bubble

1Source: Morgan Stanley Research, 1 January 1975 to 31 May 2019. 2Source: Jay Ritter, Initial Public Offerings: Updated Statistics, 9 April 2019

28 Quality How expensive are high quality stocks? 2 High quality style premium1 Market Value Of Global Negative Yielding Debt $trn 2.2 14

2.0 12

1.8 10

1.6 8

6 1.4

4 1.2

2 1.0 1992 1996 2000 2004 2008 2012 2016 0 Valuation ratio of stocks in Q1 vs Q5 of Composite Quality factor median Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Investors are paying a high price for safety

1Source: Factset, Morgan Stanley Research, 31 January 1992 to 31 March 2019. Note: the factor valuation is the long/short valuation of the top versus the bottom quintile from MSCI Europe. 2Source: Bloomberg, Morgan Stanley Research, 1 January 2014 to 7 May 2019

29 Value How cheap is value style in the UK?

Valuation of Value Factor Strategy - percentile

100 90 80 70 60 50 40 30 20 10 5 0 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 Percentile of Avg - median PEF & PB of Q1/Q5

Rarely has there been a better time to shift to a value strategy in the UK

Source: Morgan Stanley Research, 28 February 1990 to 31 March 2019.

30 Consumer goods Fundamentals

Technology has helped …combined with changing …allowing smaller competitors reduce barriers to entry… market trends… to take market share

Distrust of large brands

+ Emerging health and = wellness trend

Value for money

High quality companies but valuations full + competition rising

Source: Schroders. Stocks shown are for illustrative purposes only and should not be viewed as a recommendation to buy or sell.

31 Dissecting the UK equity market performance International vs domestic earners

UK exporters trade on substantial valuation premium UK exporters are seeing inferior ERR trends to to domestic UK names1 domestic UK2

40 50

30 40 30 20 20 10 10 0 0

-10 -10 -20 -20 -30 -30 -40 -40 -50 08 09 10 11 12 13 14 15 16 17 18 14 15 16 17 18 19 % Premium to MSCI UK N12M PE ERR 4W UK domestic valuation opportunities remains significant but plenty of reasons to remain cautious

Source: 1Morgan Stanley, from 31 July 2008 to 31 March 2019. Source: 2Morgan Stanley, Relative FY2 Earnings Revisions Ratio Of UK Exporters Basket vs UK Domestic Exposure Basket (%pt), 6 March 2014 to 21 March 2019.

32 Food retail sector Fundamentals

Aldi and Lidl new store planning applications Strategy focus

250 Scale

200 202 Down -62%

150 150 141 Vertical integration

100 113

77 50 68 M&A

0 13 14 15 16 17 18E

Low valuations + improving industry backdrop Source for chart: Barbour ABI, Bernstein analysis and estimates, as at September 2018. Stocks shown are for illustrative purposes only and should not be viewed as a recommendation to buy or sell. Forecast risk warning: Please see the information slide at the end of this presentation. 33 UK banks Fundamentals

Major UK banks’ capital ratios (%)2 Value leakage – conduct and litigation (£bn)1

20 16 30 (As a % of current market value)3 18 14 25 16 12 14 20 10 12 Basel II core Tier weight Basel III CETI weighted average (lhs) 8 15 10 average (rhs) (56%) 6 8 10 (65%) (61%) 4 6 (12%) 5 4 2

2 0 0 2007 2009 2011 2013 2015 2017 Lloyds RBS Barclays HSBC

So far (2010 – H1 2018) Expected (H2 2018 – 2020)

Valuations low, capital bases rebuilt and shareholder returns growing

1Source: PRA regulatory returns, published accounts and Bank calculations, Banks of England: Financial Stability Report, June 2018. 2Source: Schroders, company statements. Stocks shown are for illustrative purposes only and should not be viewed as a recommendation to buy or sell. 3Source: Thomson Reuters Datastream, Fines (so far and expected) as a % of market value as at close 14 September 2018. Market value = share price multiplied by the number of ordinary shares in issue.

34 Outlook UK equities

Significant Domestic value Focus on internal valuation skew opportunities emerging change/self-help

Negative sentiment creates excellent opportunities for longer-term investors

Source: Schroders.

35 Schroder UK Equity Fund Appendix Schroder UK Equity Fund Portfolio positioning

Top ten holdings

Stocks Portfolio weight %

BP 8.2

Royal Dutch Shell 6.8

GlaxoSmithKline 5.4

Tesco 4.8

Standard Chartered 4.1

Aviva 4.1

Imperial Brands 3.6

Anglo American 3.5

Lloyds Banking Group 3.4

Royal Bank of Scotland 3.2

Stocks shown are for illustrative purposes only and should not be viewed as a recommendation to buy or sell. Source: Schroders, FactSet, unaudited figures, 31 March 2019.

37 Performance attribution 12 months to 31 December 2018

Top 10 Bottom 10 Portfolio Total return Portfolio Total return Impact Top contributors Impact (%) Bottom contributors weight (%) (%) weight (%) (%) (%)

British American Tobacco 0.0 -37.7 1.8 TP ICAP 1.9 -40.8 -0.5

Pearson 3.6 30.4 1.2 Capita 0.9 -52.6 -0.5

Nex Group 0.7 70.0 0.7 Aviva 4.2 -21.5 -0.4

Anglo American 2.7 18.3 0.6 Diageo 0.0 14.6 -0.4

QinetiQ Group 1.8 27.1 0.5 Shire 0.0 25.5 -0.4

Drax Group 1.1 38.0 0.4 Standard Chartered 4.3 -20.6 -0.4

GlaxoSmithKline 4.7 19.1 0.4 AstraZeneca 1.7 19.3 -0.3

Prudential 0.0 -15.0 0.3 Sky 0.0 83.4 -0.3

BP 7.3 0.4 0.3 BHP Billiton 0.0 24.5 -0.3

Centrica 2.1 6.4 0.2 Royal Bank of Scotland 2.7 -21.4 -0.3

Past performance is not a guide to future performance and may not be repeated. For illustrative purposes only and not a recommendation to buy or sell shares. Source: Schroders, FactSet, 31 December 2017 to 31 December 2018. Portfolio weight is the average weight. Total return is the share price return. Impact is the contribution to performance relative to the FTSE All-Share.

38 Schroder ISF UK Equity Alex Breese, CFA Biography Fund Manager – Manager of Schroder ISF UK Equity – Joined Schroders in July 2013 – Previously Head of UK Equities and Investment Director at Neptune – Fund Manager of the Neptune UK Special Situations Fund since the end of 2006, and Assistant Fund Manager of the Neptune Income and Neptune Quarterly Income Funds – Investment career commenced at Neptune in 2005 as an Investment Analyst – Prior to this, gained nearly three years’ experience as an engineering consultant – Chartered Financial Analyst – First class honours in Mechanical Engineering, Cardiff University

39 Alex Breese performance track record Neptune UK Special Situations Fund

Performance to 31 March 2013, in GBP 1 year % 3 years % 5 years % Since inception1

Neptune UK Special Situations2 20.8 45.6 63.6 51.9 FTSE All-Share Index (TR) 16.8 28.7 38.5 31.5 Sector average 17.6 32.3 39.2 29.9 Quartile 1 1 1 1

Past performance is not a guide to future performance and may not be repeated. Source: Morningstar, net of fees, bid to bid, net income reinvested, as at 31 March 2013 (when Alex Breese left Neptune), based on A Units. Sector: IMA UK All Companies. 1Inception date and the start of Alex Breese’s tenure as fund manager 1 January 2007. 2Renamed Neptune UK Opportunities Fund after Alex Breese’s departure from Neptune. Past performance achieved by Alex Breese at Neptune is illustrative and does not mean that Schroder ISF UK Equity will enjoy the same performance.

40 Important information

Marketing material for professional investors or advisers only. 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. Exchange rate changes may cause the value of any overseas investments to rise or fall. Schroders has expressed its own views and opinions in this document and these may change. This information is not an offer, solicitation or recommendation to buy or sell any financial instrument or to adopt any investment strategy. Nothing in this material should be construed as advice or a recommendation to buy or sell. Information herein is believed to be reliable but we do not warrant its completeness or accuracy. Any data has been sourced by us and is provided without any warranties of any kind. It should be independently verified before further publication or use. Third party data is owned or licenced by the data provider and may not be reproduced, extracted or used for any other purpose without the data provider’s consent. Neither we, nor the data provider, will have any liability in connection with the third party data. The material is not intended to provide, and should not be relied on for accounting, legal or tax advice. Reliance should not be placed on any views or information in the material when taking individual investment and/or strategic decisions. No responsibility can be accepted for error of fact or opinion. The forecasts included in this presentation should not be relied upon, are not guaranteed and are provided only as at the date of issue. Our forecasts are based on our own assumptions which may change. We accept no responsibility for any errors of fact or opinion and assume no obligation to provide you with any changes to our assumptions or forecasts. Forecasts and assumptions may be affected by external economic or other factors. Any references to securities, sectors, regions and/or countries are for illustrative purposes only. Schroders will be a data controller in respect of your personal data. For information on how Schroders might process your personal data, please view our Privacy Policy available at www.schroders.com/en/privacy-policy or on request should you not have access to this webpage. For your security, communications may be recorded or monitored. Issued in May 2019 by Schroder Investment Management Limited, 1 London Wall Place, London EC2Y 5AU. Registered in England, No. 1893220. Authorised and regulated by the Financial Conduct Authority.

41 Important information

FTSE Third Party Data Disclaimer: FTSE International Limited (“FTSE”) © FTSE. “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.

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Morningstar: ©2019 Morningstar UK Ltd. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. For more detailed information about Morningstar's Analyst Rating, including its methodology, please go to: http://corporate.morningstar.com/us/documents/MethodologyDocuments/AnalystRatingforFundsMethodology.pdf