For Professional Investors or Advisers only Schroders Multi-Asset funds Multi-Asset Mastered www.schroders.com/multi-asset
We dynamically manage our portfolios over the economic cycle, to balance opportunity and risk. Our clients prefer outcome-oriented rather than benchmark-oriented solutions: every investment has to earn its place either by increasing returns or by reducing risk. Nicolaas Marais, Head of Multi-Asset Investing & Portfolio Solutions
Philosophy Property Equity Investment grade bonds Convertibles Infrastructure Private equity Cash High yield debt Commodities Absolute return Emerging markets debt Our key multi-asset investment principles Diversify broadly: by asset type, risk source and investment vehicle Target superior returns at a given risk level; don t focus on benchmarks Adjust asset allocation dynamically throughout the economic cycle Act with high conviction; implement decisions quickly Manage risk robustly. 1
Funds Our multi-asset funds have been designed to harness the power of diversification and smooth investment returns over time. Many traditional investment funds rely on just one or two asset classes. In doing so, they often increase their level of risk unnecessarily while missing out on investment opportunities. At Schroders, we take a much broader approach. Our multi-asset funds invest across a wide range of traditional and alternative asset classes including specialist areas such as private equity, hedge funds and infrastructure and allocate money directly to some of the world s leading investment managers. Through combining different asset classes, as well as different sources of risk, we are able to reduce volatility while still targeting strong returns. The mix of investments is managed actively over the market cycle to take advantage of opportunities as they emerge. Investors have a choice of two multi-asset funds which are designed to meet the investment needs of investors with different objectives. As well as offering exposure to investment areas that are often hard for individual investors to access, these funds are very good value, as we pay the management fees of outside funds on behalf of our clients. STS Schroder Global Diversified Growth Fund The Schroder Diversified Growth Fund is designed for investors who want to enjoy the growth benefits associated with investing in equity markets, but with significantly lower risk. STS Schroder Global Dynamic Balanced Fund The Schroder Dynamic Balanced Fund is designed for investors who want to participate in rising markets with a reduced risk of suffering significant losses when markets fall back. Strategic Solutions is referred to as STS. 2
How can our multi-asset funds be used? 1. On their own. The funds have been designed as standalone investments, which can meet the overall needs of many investors within a single fund. 2. Together. The funds work very well alongside each other. Investors are free to switch between funds if their investment objectives change. Investors in the Schroder Diversified Growth Fund who would like to reduce the risk of their investment can switch to the Schroder Dynamic Balanced Fund. And investors in the Schroder Dynamic Balanced Fund who would like to boost their potential returns over the long term and are prepared to increase their risk exposure can switch to the Schroder Diversified Growth Fund. 3. Alongside other investments. The funds can blend well with other investment holdings within a portfolio, either as core or satellite holdings. % Returns 40 20 0-20 -40 1999 2000 2001 2002 2003 2004 Source: Schroders, Datastream, to December 2010. All total return indices. Global Equities: MSCI World (local currency), Commodities: DJ UBS-One Month Forward Index, World Government Bonds: Citigroup WGBI All Maturities (local currency). 2005 2006 2007 2008 2009 Global Equities World Government Bonds Commodities Bear Market 2010 The power of diversification Different assets perform well at different points in the economic cycle, as recent history shows. The best performing asset class in one year is rarely the best performer in the following year. Diversification and active asset allocation are therefore key sources of investment returns. In some years growth assets such as equities and commodities will shine; this happened in 2009, for example. In others, defensive assets such as government bonds will offer more protection and provide better returns, which happened in 2008. 3
STS Schroder Global Diversified Growth Fund Representative asset allocation 2% 2% 5% 4% 11% 15% 6% 45% Equities Emerging Market Debt High Yield Debt Commodities Property Infrastructure Hedge Funds Private Equity Cash 10% Source: Schroders. The representative asset allocation shown is an illustration of how the fund would expect to invest across asset classes in normal market conditions. It does not show the actual asset allocation of the fund. This will vary within a range dependent on the manager s current views on markets. Aim Target Investment overview Risk profile Dealing frequency ISIN Bloomberg Annual management fee Base currency To generate equity-like returns over the medium term by investing in a broad range of growth assets A return 5% p.a. above the rate of inflation* at a risk level significantly below the equity market over market cycle of typically 5 years Invests in a mix of active and passive vehicles, from Schroders and other leading providers Typically, entirely invested in growth assets, but can also invest in more defensive assets to control volatility Dynamic asset allocation over the cycle to take advantage of opportunities Suitable for investors with a medium to high risk appetite Daily LU0314807875 (A Acc shares) STSGDAA LX (A Acc shares) 1.5% (A Share Class) Euro Launch date May 2006 * Inflation measure used is the Harmonised Index of Consumer Prices (HICP), an internationally comparable measure of inflation calculated by each Member State of the European Union (EU). It is the core measure of inflation excluding energy, food, alcohol and tobacco. 4
STS Schroder Global Dynamic Balanced Fund Representative asset allocation according to the investment season When winter is setting in When summer is returning 20% 40% 60% 80% Aim Target Investment overview Risk profile Dealing frequency ISIN Bloomberg Annual management fee Base currency Growth (such as equities and commodities) Defensive (such as bonds and cash) Source: Schroders. The representative asset allocation shown is an illustration of how the fund would expect to invest across asset classes in different market conditions. It does not show the actual asset allocation of the fund. This will vary within a range dependent on the manager s current views on markets. To participate in rising markets while limiting downside risk To keep any capital losses below 10% over any 12 month period Invests in a mix of active and passive vehicles, from Schroders and other leading providers Will always maintain at least 40% of assets in defensive investments such as government and corporate bonds To target higher returns, can invest up to a maximum of 60% in growth assets, such as equities Suitable for investors with a low to medium risk appetite Daily LU0451417645 (A Acc shares) STSGDYA LX (A Acc shares) 1.25% (A Share Class) Euro Launch date September 2009 * Inflation measure used is the Harmonised Index of Consumer Prices (HICP), an internationally comparable measure of inflation calculated by each Member State of the European Union (EU). It is the core measure of inflation excluding energy, food, alcohol and tobacco. 5
Process We follow a sophisticated and disciplined multi-asset investment process with three key stages. Transparency is a key principle throughout the process. Stage 1: Information gathering Each quarter, Schroders Cyclical Market Forum brings together more than forty senior investment professionals. The Forum explores the outlook for each major asset class, discusses economic scenarios and provides views and analysis on specialist investment areas. Stage 2: Investment policy The views of the Cyclical Market Forum inform the decisions of the Global Asset Allocation Committee, which meets each month. The Committee has five independent multi-asset specialists who are collectively responsible for setting investment policy and agreeing asset class preferences. The discussions between Committee members are robust and recommendations are always challenged. The Committee has a high-conviction approach and to be adopted a recommendation must be co-sponsored by two Committee members. This provides personal responsibility and accountability for all investment recommendations. Stage 3: Portfolio construction and management Over 30 multi-asset fund managers and analysts are responsible for the ongoing management and construction of investment portfolios. Their responsibilities include determining the size of investment positions, selecting investment funds and vehicles, and monitoring both risk and return. Source: Schroders as at December 2010. 6
S c h r o d e r s M u l t i - A ss e t F u n d s
Team Schroders has a well-established, independent multi-asset team of over 60 investment professionals which draws on the full global investment resources of Schroders. The team manages over 5 billion in diversified strategies. Risk Management Team Responsible for risk management within the multi-asset funds using the Schroder Multi-Asset Risk Technology (SMART) system Investment Strategy Team Responsible for setting the cyclical asset allocation for the multi-asset funds Portfolio Management Team Responsible for multi-asset portfolio management, quantitative analysis, research trading and support Manager Selection Team Responsible for internal and external fund selection Structured Investments Team Specialist expertise in derivatives used in multi-asset portfolio management Source: Schroders as at December 2010. 8
Johanna Kyrklund Manager of STS Schroder Global Diversified Growth Fund Johanna joined Schroders in 2007. She is responsible for investment on behalf of all UK Multi-Asset clients and is a voting member of Schroder s Global Asset Allocation Committee. Before joining Schroders, Johanna worked at Insight Investment as the manager of the Absolute Insight Tactical Asset Allocation Fund, a global macro absolute return fund. From 1997 to 2005 Johanna worked at Deutsche Asset Management, where she specialised in asset allocation. Johanna holds a BA (Hons) in Philosophy, Politics & Economics from Christ Church, Oxford and has been a Chartered Financial Analyst since 2001. Gregor Hirt Manager of STS Schroder Global Dynamic Balanced Fund Gregor joined Schroders in 2006. He is responsible for investment on behalf of all European Multi-Asset clients and is a voting member of Schroder s Global Asset Allocation Committee. Before joining Schroders, Gregor was Department Head of Portfolio Management for Institutional Clients with Credit Suisse Asset Management in Zurich and New York. He has 14 years investment experience and holds a Masters (MSc) in Economy from the University of Lausanne and a Masters (MA) in International Relations from the University of Geneva. He is also a Chartered European Financial Analyst (CEFA) and a Certified Alternative Investment Analyst (CAIA). Source: Schroders, as at December 2010. 9
Trusted heritage Advanced thinking Schroders is an independent, dedicated asset manager with a strong heritage and culture based on over 200 years experience of investment markets. Listed in the UK, we benefit from a strong balance sheet and a stable ownership structure which allows us to focus entirely on delivering results for our clients. With nearly 230 billion funds under management and an international network spanning 32 offices in 25 countries, Schroders has the perspective and expertise to identify major investment potential wherever it is located. Schroders Multi-Asset Investing uses investment insight and specialist techniques to create value for our customers. It is this kind of innovative thinking, supported by our trusted heritage, that makes Schroders Schroders. Source: Schroders as at 31 December 2010. For the latest views and information on global investing, go to www.schroders.com To find out more about these funds, speak to your local Schroders representative or go to www.schroders.com/multi-asset. The views and opinions contained herein are those of the Schroders Multi-Asset team, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. Investments: No Guarantee, may lose value. Strategic Solutions, (the Company ), may not be sold in the United States nor to citizens or residents of the United States. Risk warnings: Indirect investment in commodities and/or real estate may cause the fund to face market risk from the value of the underlying asset together with geopolitical, supply, currency exchange rate and interest rate risks. Important Information: These portfolios are fund-of-funds investment vehicles; therefore, trade settlement differs from that of traditional mutual funds. Please consult your financial professional or the fund prospectus for more detailed information. This document does not constitute an offer to anyone, or a solicitation by anyone, to subscribe for shares of the Company. Nothing in this document should be construed as advice and is therefore not a recommendation to buy or sell shares. Subscriptions for shares of the Company can only be made on the basis of its latest prospectus together with the latest audited annual report (and subsequent unaudited semi-annual report, if published), copies of which can be obtained, free of charge, from Schroder Investment Management (Luxembourg) S.A. Investors should consider the portfolio s investment objectives, risks, charges and expenses carefully before investing. Investors need to read the prospectus carefully before investing. The Company is a Luxembourg-registered UCITS. Past performance is not a reliable indicator of future results, prices of shares and the income from them may fall as well as rise and investors may not get the amount originally invested. Third party data is owned or licensed by the data provider and may not be reproduced or extracted and used for any other purpose without the data provider s consent. Third party data is provided without any warranties of any kind. The data provider and issuer of the document shall have no liability in connection with the third party data. The Prospectus and/or www.schroders.com contains additional disclaimers which apply to the third party data. This document may not be distributed to any unauthorised persons. This document is issued by Schroder Investment Management Limited, 31 Gresham Street, London EC2V 7QA, who is authorised and regulated by the Financial Services Authority. For the Middle East only: Schroder Investment Management Limited is regulated by the Dubai Financial Services Authority and entered on the DFSA register under Firm Reference Number: F000513. The fund is not subject to any form of regulation or approval by the DFSA. This document is intended for professional investors only as defined by the DFSA rules which can be accessed from their website www.dfsa.ae w35733