A Standard Life Investments

presentation

March 2009

This communication is intended for investment professionals only and must not be relied on by anyone else.

2

Multiple return sources is superior to single returns

Maximizing your return potential

• Taking risk should be a calculated, purposeful strategy

• To maximize return, all risk should be put to maximum use at all times

• Portfolio manager expertise is essential to achieving this

3

Multi-Asset philosophy

A structure which allows for opportunities in bull and bear mkts

• Holding multiple asset classes alone may not suffice

• Timing markets in the short term is fraught with dangers

• Outlook is clearer for those with a 3 year investment horizon

4

The theory of diversification

Time

Blending the right mix of strategies creates greater consistency

Different strategies will behave differently over time

Time

5

Diversity, what diversity?

Rolling 6m correlationUS Equities UK Equities

Source: Standard Life Investments, Datastream 2/3/09

0

100

200

300

400

500

600

700

800

900

Mar

/89

Mar

/90

Mar

/91

Mar

/92

Mar

/93

Mar

/94

Mar

/95

Mar

/96

Mar

/97

Mar

/98

Mar

/99

Mar

/00

Mar

/01

Mar

/02

Mar

/03

Mar

/04

Mar

/05

Mar

/06

Mar

/07

Mar

/08

Mar

/09

0

0.5

1.0

0

100

200

300

400

500

600

700

800

900

Mar

/89

Mar

/90

Mar

/91

Mar

/92

Mar

/93

Mar

/94

Mar

/95

Mar

/96

Mar

/97

Mar

/98

Mar

/99

Mar

/00

Mar

/01

Mar

/02

Mar

/03

Mar

/04

Mar

/05

Mar

/06

Mar

/07

Mar

/08

Mar

/09

0

0.5

1.0

6

…even long-held relationships have broken

0

20

40

60

80

100

120

140

160

180

0

-2/3

2/3

0

20

40

60

80

100

120

140

160

180

0

-2/3

2/3

Rolling 3m correlationCorporate Bonds FTSE All Share

Source: Standard Life Investments, Datastream 2/3/09

7

Fear and panic………

September 2008

6 mth LIBOR 0.1

Gilts 0.5

UK IPD -2.4

£ Corp Bonds -4.5

GARS -6.3

CS/Tremont Hedge Fund Index* -6.5

FTSE APCIMS Balanced -8.2

FTSE 100 -12.9

Source: Lipper, * www.hedgeindex.com

October 2008

0.3

0.5

-3.8

-3.1

1.0

-6.8

-7.9

-11.9

8

A broad range of approaches

Market Returns

Relative Value

Enduring diversity – through a wider opportunity set

Stock SelectionOpportunistic

9

Current thinking

Volatility across markets remains at extreme levels

• Central scenario is muted recovery rather than ‘V’ shaped one

• Outlook for Europe looks particularly vulnerable

• Interest Rates to remain lower for longer

• Extreme distortion creating opportunities for investors with longer term horizons

10

Korea or Japan – opportunity?

Daily Q.TOPX, Q.KS11 04/01/2008 - 10/03/2009 (TOK)

Value

None

.123

-50

-45

-40

-35

-30

-25

-20

-15

-10

-52.327

-42.429

16 01 18 03 17 01 16 01 16 02 16 01 16 01 18 01 16 01 16 04 17 01 16 05 16 02 16 02

Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009

Source: Standard Life Investments, Reuters, 01/01/08 - 2/3/09

TopixKOSPI

11

Korea vs Japan –relative value opportunity

Source: Standard Life Investments, Reuters, 01/01/08 - 2/3/09

Daily QKRW=, QJPY= 01/01/2008 - 10/03/2009 (GMT)

Value

/USD

.123

-10

0

10

20

30

40

50

6060.831

-10.248

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009

US Dollars/ Japanese YennUS Dollars / Korean Won

12

Risk profile of multi-market return strategy

Stand-alone risk breakout

• Volatility:

GARS9.2%

Global 21.3%Equities

(annualised, using weekly data, to 2/3/2009

Source: Standard Life Investments, 27/2/2009

16.23%

7.32%

0%

5%

10%

15%

20%

25%

Expected Volatility

Diversification Benefits

13

Global Absolute Return Strategies Fund

Source: Standard Life Investments, performance of the institutional pooled pension fund from 12/6/2006 to 2/3/2009

Target updated to Libor + 5% post 28/1/08 ** Source: Datastream (net of 0.18% tracker fund fee)

75

85

95

105

115

125

135

Jun

06

Jul 0

6

Aug 0

6

Sep 0

6

Oct 06

Nov 0

6

Dec 0

6

Jan

07

Feb 0

7

Mar

07

Apr 0

7

May

07

Jun

07

Jul 0

7

Aug 0

7

Sep 0

7

Oct 07

Nov 0

7

Dec 0

7

Jan

08

Feb 0

8

Mar

08

Apr 0

8

May

08

Jun

08

Jul 0

8

Aug 0

8

Sep 0

8

Oct 08

Nov 0

8

Dec 0

8

Jan

09

Feb 0

9

Cash (Libor) GARS (Gross) Global Equities** Target Return

14

Appendices

15

Global Absolute Return Strategies

• UK 6 month Libor

• UK 6 month Libor + 5 % (Gross of fees) over a 3 year rolling basis(updated target post January 2008)

• Expected range: 4% to 8%*

• Retail 1.50% AMC, 1.62% TER• Institutional 0.75% AMC, 0.87% TER

* NB These are not hard limits

Benchmark

Performance Target

Robust Risk Control

Charges

16

Diverse pool of return-seeking positions

Long European Duration

Medium European Duration

Global Equity

Long BRL vs JPY

US Equity

Long GBP vs EUR

Long Japanese Duration

European Equity

Long US Duration

EUR Fwd Short-Term Rates

Short UK Inflation

Long USD vs JPYLong USD vs EUR

KOSPI - TOPIX Rel Value

GBP Fwd Short-Term Rates

Stock SelectionStrategic short FTSE VolUK Equity

Financial Sector Credit

UK Relative Value SMI - DAX Relative Value

Short Cable Vol

FTSE Dividend SwapEU High Yield Bonds

FXEPRA Short PutFTSE v DAX vol spread

J REIT

UK Nominal Bonds

Global Index Linked BondsEU Nominal Bonds

Long TRY vs CAD

Share of Risk Exposure

Source: Standard Life Investments, 27/02/ 2009

Understanding the risks shows the potential rewards

17

Comprehensive risk controls

Risk Management

• Fund risk restrictions: Volatility target range 4% to 8% Strategy risk limit, 40% of aggregate stand alone risk Sub-strategy limit, 30%

• Multi-Asset Investing team includes 3 highly qualified risk managers Track individual strategy development using "V-mask" technology Industry standard systems – Northfield, APT and UBS Delta

• Active risk monitored by three accountable groups Multi-Asset Investing team, headed by Euan Munro Risk Management team, which is integrated within the front office Client Fund Management team

18

Critical combination of skills and experience

Implementation of multi-asset solutions

• Responsibility for Multi-asset management for £63bn of funds

• Combines key components for successful multi-asset investment

• On-desk full time risk analysis

Source: Standard Life Investments, 31 December 2008

Asset Class SpecialistsChristopher Nichols FFA Malcolm Jones FFA

Owen McCrossan FIATammas McVie

Euan Munro FFAHead of Multi-Asset

Investing

Strategic Research &

Idea GenerationAndrew Milligan

Dr Richard BattyFrances HudsonDouglas Roberts

Jason Hepner CFANeal Caldwell

Gwilym Satchell

Multi AssetManagement

Guy Stern CFA

Colette ConboyAudrey Simpson David Jubb FFA

Harry SmithMurray Forbes

David Millar FFAMalin Nairn

Derek QuinnDavid Kirkpatrick

RiskAnalysis

Dr Brian Fleming CFA

Dr Anne Friel PRMDr Brendan Walsh

John Whelan

Staff Area Years in industryYears at Standard Life

Investments

11 Fund Management 18 10

4 Risk 10 8

7 Strategy 16 9

19

Cumulative Performance Attribution

Contributions since Q3 2006

Quarter Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08Cumulative contribution

Number of strategies 13 13 14 15 16 17 21 23 29 33Stock selection -0.20% 1.30% 1.19% 0.74% -0.28% -0.60% 0.00% 0.80% -0.90% -0.50% 1.53%

Cash 0.25% 0.21% 0.30% 0.48% 0.32% 0.30% 0.40% 0.40% 0.40% 0.30% 3.41%Global Index Linked Bonds 0.37% -0.07% 0.08% -0.11% 0.39% 0.40% 0.40% 0.10% 0.00% -0.30% 1.26%

Financial Sector Credit 0.20% 0.40% -0.30% 0.30% 0.60%UK Equity 0.57% 0.70% 0.22% 0.56% -0.11% 0.10% -1.00% -0.30% -0.50% -0.20% 0.03%Corporate Bonds 0.32% 0.26% 0.06% -0.18% 0.27% 0.20% -0.10% -0.10% -0.40% -0.30% 0.03%

European property 0.00% -0.20% -0.10% -0.70% -1.00%Japanese Property -0.10% -0.70% 0.00% -0.30% -0.30% -1.39%

Global Equity 0.54% 0.65% 0.19% 0.71% 0.02% -0.40% -1.30% 0.00% -0.80% -1.10% -1.50%US Equity -0.70% -1.10% -1.79%European Equity 0.53% 0.34% 0.66% 0.97% -0.12% -0.20% -1.40% -0.40% -1.10% -1.40% -2.13%

Long Japanese Duration 0.99% 0.81% 0.26% -0.15% 0.97% 0.50% 0.50% 0.60% 0.90% -0.50% 4.98%Long European Duration 0.33% -0.34% -0.33% -0.60% 0.12% 0.00% 0.00% -0.70% 0.70% 5.10% 4.23%GBP Short Rates -0.51% 0.75% 0.30% 0.10% 0.30% 0.80% 1.75%

EUR Short Rates -1.00% 0.60% 1.80% 1.39%Long USD vs EUR 0.30% 0.80% 1.10%

Long USD vs GBP 0.12% -0.22% -0.01% -0.22% -0.08% 0.50% 0.00% 0.00% 0.50% 0.59%Long US duration 0.20% 0.20%Turkish Lira 0.04% 0.04%

Other FX 0.10% -0.04% 0.07% 0.00% 0.08% 0.00% 0.20% 0.00% 0.00% -0.50% -0.09%Long TRY vs CAD -0.20% 0.10% -0.10%Long USD vs JPY -0.20% 0.20% 0.00% -0.80% -0.80%

Long BRL vs JPY -0.40% 1.00% -0.90% -1.30% -1.61%Long GBP vs EUR 0.10% -3.10% -3.00%

FTSE v DAX volatility spread 0.00% -0.20% 2.00% 1.80%S&P v Nikkei volatility spread -0.20% 1.20% 1.00%US short term swap spread 0.90% 0.90%

UK Equity Volatility 0.30% 0.20% 0.10% 0.60%Financial Relative Credit -0.40% 1.00% 0.60%UK Curve steepener 0.40% 0.40%

UK Large v Mid UK equity -0.39% -0.91% -0.35% 0.63% 0.28% 0.30% -0.50% 0.50% 0.20% 0.50% 0.25%Credit Curve Steepener 0.00% 0.10% 0.00% 0.10%

S&P Call Calendar Spread 0.10% 0.10%European Equity Volatility 0.20% 0.00% 0.02% -0.12% -0.01% 0.09%SMI v DAX equity 0.01% -0.30% 0.20% -0.10% 0.20% 0.00% 0.01%

USD v GBP volatility spread 0.00% 0.00%Short UK Inflation 0.21% -0.18% 0.00% -0.30% -0.27%

Long US v Short UK Inflation -0.50% -1.50% 0.00% -1.99%Residual 0.20% 0.01% -0.20% 0.20% 0.39% 0.30% 0.00% 0.00% 0.00% -0.10% 0.90%

Traditional risk premia no longer rewarding

Interest rate strategies performed well In this environment…..… as have relative value strategies

Source: Standard Life Investments, performance of the institutional pooled pension fund from 12/6/2006 to 31/12/2009

20

Source: Standard Life Investments

Study rejects hypothesis of ‘random walk’ over 2-8 year view

Evidence for Opportunities at Longer Timescales

Non-Outlier MaxNon-Outlier Min

75%25%Median

Box Plot: 1-Year Equivalent Volatility of UK Equity MarketTotal Real Return Data: 1900 - 2002, Source BZW Equity Gilt Study

Comparison with 40 random shuffled BZW data surrogates

Non-overlapping return runs of length n

1 Y

ear

Equ

ival

ent V

olat

ility

y_1

0.06

0.10

0.14

0.18

0.22

0.26

0.30

0.34

bzw sury_2

bzw sury_4

bzw sury_8

bzw sury_16

bzw sur

• Markets shown to be efficient over 1 year period

• Mean reversion or market inefficiency exists over periods greater than a year

• Investment decisions to exploit these opportunities are based on in-depth qualitative analysis

Market Data

21

22

Remember - past performance is no guarantee of future performance.

Past performance is not a guide to future performance. The value of investments and any income from them may go down as well as up and cannot be guaranteed.

Standard Life Investments Limited, tel. +44 131 225 2345, a company registered in Scotland (SC 123321) Registered Office 1 George Street Edinburgh EH2 2LL.

The Standard Life Investments group includes Standard Life Investments (Mutual Funds) Limited, SLTM Limited, Standard Life Investments (Corporate Funds) Limited and SL Capital Partners LLP. Standard Life Investments Limited acts as Investment Manager for Standard Life Assurance Limited and Standard Life Pension Funds Limited.

Standard Life Investments may record and monitor telephone calls to help improve customer service. All companies are authorised and regulated by the Financial Services Authority. ©2009 Standard Life Investments. www.standardlifeinvestments.com