Marketing material for professional investors or advisers only.

Schroders Adviser Investment Forum

October 2019

Jonathan Golan, Portfolio Manager

Schroder Sterling Corporate Bond

Alpha not BetaStrong performance inbull and bear markets

Exploiting short-term volatility to create long-term value

Investment grade credit – the Schroders way

1

Source: Schroders.

Bottom upIdentifying opportunities through

in-depth fundamental credit research

Differentiated approach fromtop-down driven peers

Small is beautifulAccess to smaller issuers

No overlays, no hidden risks

Industry leading performance

2

Share class performance vs. peer group

Past performance is no guarantee of future results. The value of an investment may go down as well as up and is not guaranteed. Source: Morningstar/Schroders as at 30 August 2019. Performance is shown net of fees for Z Acc share class.

10.9%

5.8%

4.7%

8.7%

3.9%3.2%

9.8%

4.4%3.6%

0%

2%

4%

6%

8%

10%

12%

1 Year 2 Years (p.a.) 3 Years (p.a.)Schroder Sterling Corporate Bond Z Acc Median Manager 25th Percentile

1st quartile(11/91)

1st quartile(11/89)

1st decile(5/78)

Schroder Sterling Corporate Bond

3

What are the risks?

Discrete 5-year performance

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.Source: Schroders, as at dates specified, based on share class performance, net of fees in GBP.

– 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

2018 2017 2016 2015 2014

Schroder Sterling Corporate Bond Z Acc -1.65 8.43 10.86 -1.02 10.03

Schroder Sterling Corporate Bond Z Inc -1.70 8.44 10.89 -1.08 10.07

ICE BofAML Sterling Corporate & Collateralised -1.99 4.91 11.69 0.62 12.34

A tale of three asset classes

2

Cross-asset cumulative total returns%

Source: Bloomberg, ICE BofAML, FTSE and Barclays as of 30 August 2019.

-100

-50

0

50

100

150

200

250

300

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

FTSE 100 Index GBP and EUR High Yield Corporate Index Sterling Investment Grade Corporate Index

Jun 2007 – Mar 2009– UK Corp: -12.7%– Euro HY: -34.4%– FTSE 100: -36.2%

2011– UK Corp: +7.0%– Euro HY: -5.4%– FTSE 100: -2.1%

H1 2016– UK Corp: +7.5%– Euro HY: +3.6%– FTSE 100: +6.7%

Q4 2018– UK Corp: -0.2%– Euro HY: -3.6%– FTSE 100: -10.4%

Jan 2000 – Jan 2002– UK Corp: +17.5%– Euro HY: -7.0%– FTSE 100: -33.1%

Keep calm and carry on

5

Schroder Sterling Corporate Bond cumulative total return and income %

Past performance is no guarantee of future results. The value of an investment may go down as well as up and is not guaranteed. Source: Schroders, Bloomberg as of 28 June 2019. Data is based on CAZUCXI the Z Income share class, net of fees. Note: Cumulative total return includes re-investment of income.

0%

5%

10%

15%

20%

25%

30%

35%

40%

Jun

2013

Sep

2013

Dec

201

3

Mar

201

4

Jun

2014

Sep

2014

Dec

201

4

Mar

201

5

Jun

2015

Sep

2015

Dec

201

5

Mar

201

6

Jun

2016

Sep

2016

Dec

201

6

Mar

201

7

Jun

2017

Sep

2017

Dec

201

7

Mar

201

8

Jun

2018

Cumulative quarterly income (%) Cumulative total return (%)

Schroder Sterling Corporate Bond

6

Fund profile

Past performance is no guarantee of future results. The value of an investment may go down as well as up and is not guaranteed. Source: Schroders. Performance as at 30 August 2019. Source for rating: FE Trustnet and Morningstar as at August 2019. ¹Average portfolio credit rating is BBB+ as at 30 August 2019. ²Source: Bloomberg as of 28 June 2019. Income is not guaranteed. 3.9% is based on the past 12 month payments.

Jonathan GolanPortfolio Manager

External ratings1 year peer group rank 2 year peer group rank 3 year peer group rank

Top quartile (11/91) Top quartile (11/89) Top decile (5/78)

Industry leading performance

High grade credit portfolio1

Attractive and sustainable income of 3.9% paid out over the prior 12 months2

Bottom up investment style: Emphasis on disciplined and rigorous credit research

Quarterly Fund Update

Rigorous financial analysis

Models built in-house

Maximise cash flow transparency

Investment process

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

7

Business appraisal

Weekly meeting to capture secular themes

Top-line and margin sustainability

ESG Investment decision

Focus on the margin of safety

Invest with conviction

Actively harvest

Does your fund manager own GE debt? Why?

8

Outstanding corporate debt by issuer tickerOutstanding debt £m

Focus on fundamentals, express conviction and manage capacity

Source: Schroders. Mention of specific stocks here and throughout this document should not be construed as advice and are not recommendations to buy or sell shares.

Biggest issuers

Smallest issuers

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

46 issuers account for 50% of the indexWe own only 14 of those large cap issuers

Small is beautiful – Perrigo

9

Past performance is no guarantee of future results. The value of an investment may go down as well as up and is not guaranteed. Source: Schroders. For illustrative purposes only and should not be viewed as a recommendation to buy or sell.

PerrigoCompany description

Catalyst for underperformance

Why buy?

Global pharmaceutical and consumer healthcare manufacturer and distributer. Market leader in over the counter (OTC) drugs with a focus on white label products (e.g. Boots' private label)

Ireland demanded $1.9 billion in back taxes relating to a divesture Perrigo completed several years ago

– The big picture: the company operates in a healthy non-cyclical market. White labelled OTC drugs are a win-win for Perrigo, retailers and consumers (cheaper yet more profitable than branded drugs)

– The financials stack up: Ireland has a history of settling tax disputes at lower sums than initially demanded. Exceptional earnings to cash conversion (c. 1bn EBITDA converts to 0.5bn EFCF) will allow the company to withstand a negative tax outcome.

88

90

92

94

96

98

100

102

104

106

Mar

201

7

May

201

7

Jul 2

017

Sep

2017

Nov

201

7

Jan

2018

Mar

201

8

May

201

8

Jul 2

018

Sep

2018

Nov

201

8

Jan

2019

Mar

201

9

May

201

9

Jul 2

019

Bought

Company description

Catalyst for underperformance

Why buy?

Second largest broadband provider in the UK. Number 1 market share in Fibre to the home

UK recession/Brexit fears and general market weakness

– The big picture: Virgin Media is a recession proof business, which is well positioned in ultra-fast broadband. Proprietary big data analysis indicated a subdued competitive environment

– Margin of safety 1: the senior secured bonds benefit from a first lien on the best fibre network in the county

– Margin of safety 2: Virgin’s corporate parent (Liberty Global) is awash with cash following the divesture of Unity Media

Sometimes big is beautiful too – Virgin Media

10

Past performance is no guarantee of future results. The value of an investment may go down as well as up and is not guaranteed. Source: Schroders. For illustrative purposes only and should not be viewed as a recommendation to buy or sell.

Virgin Media

Bought

92

94

96

98

100

102

104

106

Jul 2

017

Sep

2017

Nov

201

7

Jan

2018

Mar

201

8

May

201

8

Jul 2

018

Sep

2018

Nov

201

8

Jan

2019

Mar

201

9

May

201

9

Jul 2

019

Mr. Market presents interesting opportunities

11

Naturally diversified portfolio due to bottom-up driven investment process

Past performance is no guarantee of future results. The value of an investment may go down as well as up and is not guaranteed. Source: Bloomberg and Schroders as of August 2019. For illustrative purposes only and should not be viewed as a recommendation to buy or sell.

Leeds Building Society

98

99

100

101

102

103

104

Mar

201

8

Apr 2

018

May

201

8

Jun

2018

Jul 2

018

Aug

2018

Sep

2018

Oct

201

8

Nov

201

8D

ec 2

018

Jan

2019

Feb

2019

Casino

85

90

95

100

105

110

115

120

Dec

201

7

Feb

2018

Apr 2

018

Jun

2018

Aug

2018

Oct

201

8

Dec

201

8

Feb

2019

Apr 2

019

Jun

2019

Atlantia

90

92

94

96

98

100

102

104

106

108

Dec

201

7

Feb

2018

Apr 2

018

Jun

2018

Aug

2018

Oct

201

8

Dec

201

8

Feb

2019

BoughtBought Bought

Consistent outperformance driven by credit selection

12

Past performance is no guarantee of future results. The value of an investment may go down as well as up and is not guaranteed. Source: Schroders as at 28 June 2019. Attribution is based on gross returns.

Date Fund return Index return Alpha (bps)

FX, Rates and Sovereign (bps)

Credit(bps)

Residual (bps)

March 17 0.6% 0.3% 30 1 29 -1

Q2 17 1.7% 0.6% 106 0 108 -3

Q3 17 1.4% 0.2% 121 -2 110 13

Q4 17 2.8% 2.0% 79 1 90 -12

Q1 18 -0.7% -1.4% 64 5 59 0

Q2 18 -0.1% -0.2% 9 -11 21 -2

Q3 18 0.6% -0.3% 91 6 69 16

Q4 18 -0.6% -0.1% -45 -5 -53 13

Q1 19 5.8% 4.7% 111 -11 136 -14

Q2 19 2.8% 2.3% 54 11 52 -9

Total 15.0% 8.2% 679 -4 680 3

What is your view on credit markets?

13

Significant rally in risk assets YTD means the easy gains are gone

Source: Schroders as of August 2019.

£ 5–10yr BBB Spread to gilts

– Valuations inside the 20-year median in a fragile macro environment leave us more cautious than earlier in the year

– We still find ample idiosyncratic opportunities

Market backdrop

0

100

200

300

400

500

600

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19

£ 5-10yr BBB Corp Median Q1 Q3

G+OAS (bp)

What is your view on credit markets?

14

Source: Schroders as of August 2019. For illustrative purposes only and should not be viewed as a recommendation to buy or sell.

– Significant rally in risk assets YTD means the easy gains are gone

– Valuations around 20-year median appear fair in a supportive yet fragile macro environment

– Sterling Investment Grade is attractive on a relative basis

– Improving yet unloved credit stories

– UK risk where Brexit premium is excessive – alternative financials, senior bonds in smaller banks

– Defensive cash flow generative sectors (housing associations)

Picks

– Industrial cyclicals (autos, capital goods)

– Long-dated corporate bonds

– Cautious on high beta sectors (subordinated financials)

Pans

Schroder Sterling Corporate Bond

15

Sector allocation% market value

Positioning as at 30 August 2019

Portfolio refers to Schroder Sterling Corporate Bond; Benchmark is BAML Sterling Corporate & Collateralised Index UC00. Source: Schroders Fixed Income Analytics. Based on un-audited data as at 30 August 2019.Note: The chart may not sum to 100 as unclassified securities, futures, IRS, forwards, cash synthetic and CDS float (non-active leg of CDS) are excluded.1Number of issuers is based on cash bond and CDS holdings only.

48

20

8 8 7 63

38

17 16

10

1

13

04

0

10

20

30

40

50

60

Indu

stria

ls

Snr.

Fin

anci

als

Util

ity

Sub.

Fin

anci

als

Sov/

Qua

si S

ov

Secu

ritiz

ed

Cash

/M.M

kts

Cove

red

Portfolio Benchmark

Statistics Portfolio Benchmark

AUM £388m £509bn

Average effective yield, % 3.49 2.06

Average effective duration, years 7.63 8.53

OAS, basis points 297 150

Number of issuers1 108 454

Average credit rating BBB+ A-

High yield, % MV 8.69 –

Currency denomination, % market value

GBP 75.57

EUR 15.10

USD 9.17

Schroder Sterling Corporate Bond

16

A low risk oasis in the global yield desert

Source: Schroders, BofAML, Barclays, as of 29 August 2019. 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.

Alpha not Beta

What we aim for

17

Source: Schroders.

Bottom up Small is beautiful

Supporting slides

Global forecast

19

Contributions to World GDP growth (y/y), %

World economy to cool

A future of continued slow growth and low inflation

Source: Thomson Datastream, Schroders Economics Group. 28 May 2019.

5.0

2.83.2

4.0

5.0 4.85.3 5.3

2.5

-0.6

4.9

3.7

2.8 3.0 3.2 3.22.7

3.3 3.32.8 2.6

-3

-2

-1

0

1

2

3

4

5

6

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

US Europe Japan Rest of advanced BRICS Rest of emerging World

Forecast

Small is beautiful

20

7 out 8 managers with AUM >2 billion are in the 3rd

and 4th quartile over the past 5 years

Larger asset size precludes delivering returns from security selection

Source: Morningstar based on £ Corporate Bond sector.

Yet exposures are skewed to large managers

13%

63%

25%

0%

10%

20%

30%

40%

50%

60%

70%

% in 1st quartile % in 2nd quartile % in 3rd quartile % in 4th quartile

54%

20%

11%

11%4%

>2bn 1–2bn 500m–1bn 250–500m <250m

Distribution of sector AUM by manager size (%)

Choosing the right fund

21

Schroder Sterling Corporate Bond vs. UC00

Fund selection is at least as important as market timing

Past performance is no guarantee of future results. The value of an investment may go down as well as up and is not guaranteed. Source: Schroders, as at 31 July 2019. Performance shown gross of fees since Jonathan began working on the fund. UC00 is the Merrill Lynch Sterling Corporate and Collateralised Index.

-2%0%2%4%6%8%

10%12%14%16%18%20%

Mar

201

7

Apr 2

017

May

201

7

Jun

2017

Jul 2

017

Aug

2017

Sep

2017

Oct

201

7

Nov

201

7

Dec

201

7

Jan

2018

Feb

2018

Mar

201

8

Apr 2

018

May

201

8

Jun

2018

Jul 2

018

Aug

2018

Sep

2018

Oct

201

8

Nov

201

8

Dec

201

8

Jan

2019

Feb

2019

Mar

201

9

Apr 2

019

May

201

9

Jun

2019

Jul 2

019

Market Duration Returns Market Credit Returns Schroders Alpha

Schroder Sterling Corporate Bond

22

Credit risk as measured by spread duration Years

Reducing market risk into strength and concentrating on our best ideas

Source: Schroders Fixed Income Analytics. Based on un-audited data as at 31 July 2019. Portfolio is Schroder Sterling Corporate Bond; Benchmark is BAML Sterling Corporate & Collateralised Index UC00.

6.5

7.0

7.5

8.0

8.5

9.0

9.5

Mar

201

7

Jun

2017

Sep

2017

Dec

201

7

Mar

201

8

Jun

2018

Sep

2018

Dec

201

8

Mar

201

9

Jun

2019

Portfolio Benchmark

Schroder Sterling Corporate Bond

23

Sector allocation within financials% market value

Positioning as at 30 August 2019

Portfolio refers to Schroder Sterling Corporate Bond; Benchmark is BAML Sterling Corporate & Collateralised Index UC00.Source: Schroders Fixed Income Analytics. Based on un-audited data as at 30 August 2019. Breakdown of Industrials and financials is based on Bank of America Merrill Lynch classification level 3.

13

-1

1 0 1 1

6

14

2 1

13

40 1 1 0 0

41 2

0 0

-5

0

5

10

15

BankingSNR

Banking LT2

BankingT1

InsuranceSENR

InsuranceSECR

InsuranceLT2

InsuranceUT2

InsuranceSUB

InsuranceJSUB

FinancialServices

SENR

FinancialServices

SECR

FinancialServices

SUBPortfolio Benchmark

Sector allocation within industrials % market value

18

5 5 5 5 4 41 1 1 1

-2

95 4 2 2 2

63 1 1 2 0 1

-5

0

5

10

15

20

Real Estate Services Cons. Non-Cyclical

Energy Healthcare Cons. Cyclical Telecoms Automotive Tech &Electronics

Media Capital Goods Industrials -CONV

Basic Industry

Portfolio Benchmark

Schroder Sterling Corporate Bond

24

Rating % market value

Portfolio characteristics as at 30 August 2019

Portfolio refers to Schroder Sterling Corporate Bond; Benchmark is BAML Sterling Corporate & Collateralised Index UC00. Source: Schroders Fixed Income Analytics. Based on un-audited data as at 30 August 2019. Rating: chart will not add up to 100 as it does not include futures, IRS, forwards, cash synthetic or the CDS float(non-active leg of the CDS). Country of risk: exposures <1% have been excluded.

0

715

59

4 4 56 10

3648

0

-100

10203040506070

AAA AA A BBB BB B NR

Portfolio Benchmark

Asset swap spread% market value

Country of risk % market value

Duration % market value

66

8 5 3 3 3 2 2 2 1 1 1 1

57

15 8 6 2 1 1 1 1 10

10203040506070

UK

USA

Fran

ce

Ger

man

y

Net

herla

nds

Ital

y

Mex

ico

Switz

erla

nd

Isra

el

Icel

and

Swed

en

Spai

n

Luxe

mbo

urg

Portfolio Benchmark

-2

20

35

15 127

13

34

48

124 1 0

-100

102030405060

<0 0–99 100–199 200–299 300–399 400–500 >500

Portfolio Benchmark

1

0

19 1923

14

911

5

-1

1

1613

18 1821

9

2 1 0

-5

0

5

10

15

20

25

<0y 0–1y 1–3y 3–5y 5–7y 7–10y 10–15y 15–20y 20–25y 25–30y 30+y

Portfolio Benchmark

Schroder Sterling Corporate Bond

25

Top 10 long positions (MV%)

Source: Schroders FIA at 31 July 2019, Based on un-audited data. Long positions by market value (%) (including single name CDS but excluding gilts and CDS indices). Stocks shown are for illustrative purposes only and should not be viewed as a recommendation to buy or sell.

Ticker Name (%)

LONQUA London & Quadrant 2.92

HTHROW Heathrow Airport 2.63

NGGLN NGG Finance Plc 2.34

PRUFIN Prudential 2.32

VIRGMN Virgin Money 2.26

BATSLN British American Tobacco 2.18

YBS Yorkshire Building Society 2.10

TEVA Teva Pharmaceuticals 1.95

GRILN Grainger Plc 1.95

PEMEX Petroleos Mexicanos 1.91

Important information

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. 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.

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.

Sustainability AccreditationOur Schroders Sustainability Accreditation helps investors distinguish how ESG factors are considered across our products. The fund has been awarded an Integrated accreditation. ESG factors are embedded into the investment process and can be clearly evidenced. There is a strong commitment to stewardship and company engagement. For further information about our Schroders Sustainability Accreditation please visit www.schroders.lu/sustainabilityaccreditation

26

Important information

Risk factors: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.

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.

For your security, communications may be taped or monitored.

Issued in October 2019 by Schroder Investment Management Limited, 1 London Wall Place, London EC2Y 5AU, who is authorised and regulated by the Financial Conduct Authority.

27

ContactSchroder Investment Management Limited,

1 London Wall Place, London EC2Y 5AU.

schroders.com