Schroder UK Growth Ord SDU

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1 Page 1 of 5 Morningstar Research Report Text as of 08/09/2014, Data as of 13/10/2014 Morningstar Analyst Rating Analyst Rating Spectrum ˆ Œ Á Morningstar Rating TM QQQ 100k 80k 60k 40k 20k 10k Returns Price NAV Category Index Last Closing Price GBP Last Closing NAV GBP Discount/Premium % Latest Published NAV Latest Published NAV Date 13/10/2014 Traded Currency GBX Yield 2.94 Dividend Frequency Semi-Annual Total Assets Mil Net Assets Mil Market Cap Mil Net Gearing % 0 Avg Daily Shares Traded Mil (3 month) 0.12 Inception Date 11/03/1994 Morningstar Analyst: Jackie Beard Executive Summary People: The Business Cycle Investment team has seen some key departures recently. Parent: The acquisition of Cazenove brings quality investors but also challenges in terms of integration. Board: The board has a good mix of backgrounds and tenures. Process: The team follows their business cycle philosophy. Performance: The business-cycle approach has only been in use here for a short period thus far. Fees: The fund is competitively priced. Role in Portfolio Supporting Player. The fund often carries a large mid-cap bias and substantial sector bets, making it more suitable as a supporting player. 4k 0 Discounts -5 Premium Discount -10 Average Line YTD Performance % Fund Price Fund NAV Category Benchmark Morningstar Opinion 08 Sep 2014 We have placed the Silver rating at Schroder UK Growth under review. Shareholders have seen two changes in the fund's management in just 14 months. From 2002 to June 2013, it was managed to excellent effect by Richard Buxton. On his departure from the firm, it was transferred to Julie Dean, who had recently joined Schroders through its acquisition of Cazenove Capital Management. However, in early September Dean resigned from the firm. The board has stated its intention to continue with the Business Cycle Investment team at Schroders, of which Dean was the head, but there is no lead manager appointment as yet. Since Dean's appointment in July 2013 to 31 Aug, the fund underperformed both its category peers and its benchmark by some margin. While the latter half of 2013 was strong, in 2014 the former manager's attempt to move into large caps was too little and too late the key detractors this year comprise some of the strongest performers from last year. The fund's strong mid-cap bias and substantial sector bets mean it will look out of step with its peers at times and shareholders should be prepared to stomach occasional shortterm underperformance. The UK Business Cycle Investment team at Schroders comprises six, and this team has seen some key departures since the announcement of Cazenove's acquisition by the firm. New head of the team Matt Hudson joined Cazenove in 2001 so he's well-versed in the team's process, though. Indeed, the business cycle process is tried-andtested over the long term. It combines both topdown and bottom-up analysis in order to anticipate changes in the business cycle and their impact on stock prices. Top-down factors include GDP growth, interest rates, and inflation, with the direction rather than the magnitude generally having greater importance. At the stock level the team believes the key driver of returns is relative earnings growth. In identifying the forward earnings growth potential, the team assesses the outlook for each particular industry, the company's relative position within the industry, and how that relates to the stages of the business cycle. Over the long term the team's philosophy has been proven in UK equities and at other strategies managed by the Cazenove pan- European equity team. However, the board has indicated its intention to consult with shareholders before making a further announcement regarding the fund's management and until such clarity is received, we are minded to be cautious here. We have placed the Silver rating under review until we have absolute clarity on the future management of the fund from the board.

2 Page 2 of 5 Morningstar Research Report Text as of 08/09/2014, Data as of 13/10/2014 People Manager Team Managed Manager Start 08/09/2014 Avg. Manager Tenure 0.1 Years Other Funds Managed Schroder UK Opportunities C Acc Shareholders have seen two changes in management here in just 14 months. Until July 2013, the fund had been run for nearly 11 years by Richard Buxton. Upon his departure from Schroders, the management passed to Julie Dean. Dean joined Cazenove in 2002 and came to Schroders through the firm's acquisition of Cazenove in Prior to Cazenove, she worked at HSBC Asset Management (Europe) Ltd where she was responsible for UK equity funds--although they were managed in a growth style--and also institutional portfolios. Dean had used the business cycle approach since 2002 and had led that team at Schroders. New head Matthew Hudson joined that team at Cazenove in 2001 so is very familiar with its investment approach, but his personal focus has been on UK equity income. The board has confirmed that the management will remain with the UK Business Cycle Investment team, comprising six investment managers, but they have yet to confirm a specific name. That team can also draw on their European equity colleagues to provide a European context when looking at UK equities, as well as the wider resources at Schroders. Parent Fund Advisor Domicile Subadvisor Website Schroder Investment Management Ltd UK PricewaterhouseCoopers LLP (London) m Schroders has benefited from stable ownership since it was founded more than 200 years ago and the Schroder family still holds nearly half of the company's listed shares. At 30 Sept 2013, following completion of the Cazenove acquisition, the company's assets under management surpassed GBP 250 billion. Schroders' current strength lies in its equity funds. The firm also manages fixed income, alternatives, and multi-asset funds; the acquisition of Cazenove Capital helps to extend the product range further, particularly within the pan-european equities, fixed income and multi-manager investment areas. Cazenove, like Schroders, is focussed on asset management and the acquisition brought some quality fund managers, such as Julie Dean, to the firm; that said, the two companies are yet to be fully integrated, which might result in a potential product rationalisation. We also have seen some departure from Cazenove following the acquisition. On a positive note Schroders has become in recent times more adept at managing capacity issues with some of its more popular funds, where previously it had over-marketed already hot-performing products. Fund managers' remuneration is based on the performance of their funds over one- and three-year periods and generally more weight is placed on three-year returns, but there are teams, such as GEM, that put more emphasis on one-year results. Board of Directors Discount Target 5% Tender Offer No Buyback Authorization Yes Following the appointment of Carolan Dobson in March 2014, the board briefly numbered six members--but this was just a temporary state given the board's succession planning. Indeed, David Ritchie stepped down in Aug 2014, taking the board back to five members. Dobson's arrival helps to counterbalance some long-standing directorships and bring fresh ideas to the table. The current chairman, Alan Clifton, is one of the longest-serving members on the board, having been appointed in June Before that he was a managing director of Morley Fund Management (now Aviva Investors). His fellow members bring a range of experience, spanning both investment and industry, and we like to see this broad mix. Four of the directors sit on the boards of other listed companies. Four of the five are shareholders in the fund, which we also like to see, as we believe this helps to align their interests with their shareholders'. Following the departure of Keith Niven from the board in late 2011, all board members are deemed to be independent. Niven was on the board of another Schroder trust as well as on the board of Schroder Investment Management itself. The board meets at least five times each year more regularly when deemed necessary, and they hold separate audit, nomination and management engagement committee meetings.

3 Page 3 of 5 Morningstar Research Report Text as of 08/09/2014, Data as of 13/10/2014 Process: Investment Approach Investment Objective: To achieve capital growth from investment in UK equities, including convertibles and derivatives, with total return in excess of the FTSE All-share Index. No Holdings Range Max Position Size Min Position Size Sector Constraints Max 30% any one sector Regional Constraints UK Yield Requirement Hedging Policy Unhedged Tactical Use of Cash No The investment process is founded on the philosophy that the business cycle has an important impact on future investment returns. Thus it combines both top-down and bottom-up analysis in order to anticipate changes in the business cycle and their impact on stock prices. This approach provides a framework to consider how stocks behave in different stages of the cycle and enables the team to blend their investment style accordingly. Top-down factors include GDP growth, interest rates, and inflation, with the direction rather than the magnitude generally having greater importance, and the team is able to draw upon the firm's strategy and economics resource in formulating its view. At the stock level, the team believes the key driver of returns is forward-looking earnings--particularly relative earnings growth. They look to understand the key drivers of a company's profitability and part of this analysis involves assessing the outlook for each particular industry, the company's relative position within the industry, and how that relates to the different stages of the business cycle. The team invests across the market-cap scale and holds between 35 and 65 stocks. Process: Portfolio Positioning Morningstar Holdings Based Style Map Deep Val Val Grw High Grw Giant Large Mid Small Micro World Regions Assets % Greater Europe United Kingdom Europe-Developed 1.30 Europe-Emerging 0.00 Africa/Middle East 2.83 Americas 4.94 North America 4.94 Latin America 0.00 Greater Asia 0.00 Japan 0.00 Australasia 0.00 Asia-Developed 0.00 Asia-Emerging 0.00 Not Classified 0.00 Asset Allocation Top 10 Holdings 30/04/2014 % Assets Long Short Net Cash Equity Bond Other % Assets Rio Tinto PLC 4.90 Legal & General Group PLC 4.59 Royal Dutch Shell PLC Class A 4.27 BP PLC 4.02 Reed Elsevier PLC 3.84 Sage Inc 3.78 Melrose PLC 3.74 Pearson PLC 3.73 GlaxoSmithKline 2.68 Ashmore Group PLC 2.49 Julie Dean built the portfolio in line with seven style groupings and weighted them to reflect the team's view on the business cycle--we expect this approach to continue. The groupings are commodity cyclicals, consumer cyclicals, industrial cyclicals, growth, financials, growth defensives, and value defensives. Shareholders can expect the fund's sector and market-cap positioning to differ significantly from the category norm and benchmark, and the exposures can be quite dynamic over time. In terms of market cap, the team can move around the cap scale and it's common to see a reasonable exposure to midcaps. That said, the scale of assets being run by the team in UK equities is likely to hamper this. Sector Weightings % Equity h Cyclical 47.7 r Basic Materials 7.3 t Consumer Cyclical 28.7 y Financial Services 10.4 u Real Estate 1.3 j Sensitive 41.7 i Communication Services 0.9 o Energy 9.6 p Industrials 19.6 a Technology 11.6 k Defensive 10.7 s Consumer Defensive 4.1 d Healthcare 6.6 f Utilities 0.0

4 Page 4 of 5 Morningstar Research Report Text as of 08/09/2014, Data as of 13/10/2014 NAV Performance Analysis Data as of Trailing Returns Price Total Rtn % Bmark 3 month Month Year Year Ann Year Ann Trailing Returns NAV Total Rtn % Bmark Cat %Rnk In Cat 3 month Month Year Year Ann Year Ann Since Dean's appointment in July 2013 to 31 Aug, the fund has returned some 8.6%, while its benchmark--the FTSE All-Share--and its Morningstar Category average fund has gained nearly 13% and 15%, respectively. Perform Group and RSA were two of the largest detractors under Dean's tenure. Perform Group's drive for growth via acquisitions has led costs to build ahead of profits and the stock's price plunged more than 50% in Dec In early 2014, she tried to move into larger caps but it was the defensive names that performed the best, whereas she had bought into cyclicals. Further, a couple of the strongest performers from 2013 have been the biggest detractors in Calendar Total Returns Fund(price) Fund(NAV) YTD -20 Discount / Premium Data as of Discount / Premium % 6 Mo 1Yr 3Yr High Average Low Z-Statistic In Nov 2006 the board introduced a target to keep the discount below 5% over the long term and has been proactive in buying back shares in the market over time to keep the discount tight and within the target range, other than at moments of extreme volatility. Granted, the discount widened on the news of former manager Richard Buxton's departure and, whilst we saw it narrow soon after, the disappointing performance thus far in 2014 has caused it to widen once again. Risk & Return Data as of Morningstar Rating Return Risk Rating 3 Year Avg Above Avg QQQ 5 Year Avg Above Avg QQQ 10 Year Avg High QQ Overall Avg High QQQ Volatility Ratios 3 Yr NAV 5 Yr NAV Standard Deviation Mean Sharpe Ratio Sortino Ratio The business-cycle approach has only been in use at this fund since July 2013 and, given the change in management already since its adoption, it's too early to make any formal assessment of its success. Risk vs Index 3 Year 5 Year Alpha NAV Beta NAV R-Squared NAV Treynor Ratio NAV

5 Page 5 of 5 Morningstar Research Report Text as of 08/09/2014, Data as of 13/10/2014 Fees Management Fee % 0.60 Ongoing Charge ex Perf Fee % 0.47 Schroders takes an annual fee of 0.6% of net assets. This means the fund is competitively priced, especially when compared with its open-end counterparts. There is no performance fee levied on this fund. Schroders waived its management fee for a six-month period following the change in fund manager on 1 July Gearing Total Assets Mil Net Assets Mil Dividends Dividend History YTD Dividend Special Dividend Total Under Richard Buxton, gearing was deployed on a tactical basis. When Julie Dean took over, its use became more strategic. Given Hudson is part of the business-cycle team, we expect consistency from hereon. Gearing here is in the form of a GBP 25 million loan from ING, and a modest overdraft of GBP 5 million. The team's approach is to focus on getting the stock selection right, rather than be distracted with trying to time the market, so shareholders can expect to see net gearing in the region of 10% as standard. The manager aims for total return without any specific income target from the fund. theless, the board has been able to pay a modest dividend in every financial year since the fund's launch, on a semiannual basis.

Schroder Asia Pacific Ord SDP

Schroder Asia Pacific Ord SDP Page 1 of 5 Morningstar Research Report Text as of 15/04/2014, Data as of 09/04/2015 Morningstar Analyst Rating Analyst Rating Spectrum Œ Á Morningstar Rating TM QQQQ 100k 80k 60k 40k 20k 10k Returns Price