External Conference Call

External Conference Call

8 September 2010

2

Investments

Karen Robertson

Investment Director

3 Investments

Agenda

•

Team

•

UK Investment process

4

Investments

Key messages for your clients

•

Premier investment house responsible for over £143.7bn of assets

•

UK Institutional pensions fund assets of over £28.3bn

•

Approximately £25.8bn of UK Equities

•

Clearly differentiated successful UK investment process

Focused on delivering superior performance

5

Investments

9 17

8 Corporate Governance & SRI

10 16

2 Quantitative analysts

13 21

4 UK Small Company Specialists

10 13

13 UK Large Company Specialists

Average years at Standard Life Investments Average years experience

UK equity resource

Active communication structure

structured global input

Rewarded on delivering client and business

performance objectives

Clear incentivisation and

accountability

Coverage, co-ordination, communication, rapid

investment response

Optimum team size

Key Attributes

6

Investments

Support Services (Business Support Services), Telecoms (Fixed Line & Mobile)

Andrew Millington

Food Producers, Nonlife Insurance

Ian Runacres

Travel & Leisure (exc. Bus & Rail)

Helen Driver

Media, Software & Computer Services, Technology Hardware & Equipment

Elena Fernandez

Chemicals, Real Estate, Household Goods, Construction & Materials

Mike Bessell

General Financials

Thomas Moore

Gas, Water & Multiutilities, Electricity, Beverages, Tobacco

Karen Robertson

Pharmaceuticals & Biotechnology, Oil & Gas Producers, Oil Equipment, Services & Distribution

John Wilson

Banks, Life Insurance, Equity Investment Instruments, Healthcare, Personal Goods (ex BRBY)

Euan Stirling

General Retailers, Food Producers, Food & Drug Retailers

Kiki MacDonald

Industrial Transport, Industrial Engineering, Electronics & Electricals, Aerospace & Defence

Edward Legget

Support Services (exc. Business Support Services), Travel & Leisure (Bus & Rail)

Lesley Duncan

Oil & Gas Producers (Integrated), Mining & Metals

David Cumming

UK Equity Team

Source: Standard Life Investments, 30 June 2010

7

Investments

17

UK Equity Team

6

Corporate Governance Team and SRI

39

Bond and corporate debt teams

10

Economic and market strategy team

44

Global and overseas equity investment managers and analysts

Research

Common investment language across research platform

8

Investments

Proprietary stock ranking tool, assimilation of

quantitative information. 12 factors linked to share

price performance. Proven added value

UK Matrix

Analysis of board performance and incentivisation.

Engagement in management change

Rigorous corporate

governance and SRI

No compromise on coverage. Winners List

Full FTSE350 and

small cap coverage

Scale, direct company contact, systematic

approach to information gathering, key driver focus

Superior information

flow

Change in company expectations drives

outperformance. Key issue analysis. Identify

change early

Focus on Change

A clearly differentiated investment process

9

Investments

The UK matrix

•

A proprietary stock ranking tool

•

Effective assimilation of key quantitative information

•

Useful for ideas, screening, identification of issues

•

10 factors linked to share price performance

10

Investments

Source: Standard Life Investments, 12 August 2010

7 Short-Term Momentum 3.3 3m Earnings 3 S C O R E 5 S C O R E 21 TOTAL 0 13.6 1 4.1 S C O R E EPS Growth S C O R E Dividend Yield

Matrix buy example

Expected EPS Relative

to FTSE350 (Indexed)

Source: Thomson Datastream, 12 August 2010

Britvic

Relative Price Share

Consensus Earnings Forecast Year 1 (R.H Scale) Consensus Earnings Forecast Year 2 (R.H Scale)

A S O N D J F M A M J J A 85 90 95 100 105 110 115 120 125 130 135 28 30 32 34 36 38 40

11

Investments

Success of winners list and matrix

Source: Standard Life Investments, 13 August 2010

Performance of winners and matrix top quintiles vs. FTSE 350 since August 2000

Winners Perf. Matrix Top Quintile Perf.

+139.1 +96.9 -20 0 20 40 60 80 100 120 140 160 Sep -00 Nov-0 0 Jan-01 Mar-0 1 Ma y -0 1 Jul-01 Sep -01 Nov-0 1 Jan-02 Mar-0 2 Ma y -0 2 Jul-02 Sep -02 Nov-0 2 Jan-03 Mar-0 3 Ma y -0 3 Jul-03 Sep -03 Nov-0 3 Jan-04 Mar-0 4 Ma y -0 4 Jul-04 Sep -04 Nov-0 4 Jan-05 Mar-0 5 Ma y -0 5 Jul-05 Sep -05 Nov-0 5 Jan-06 Mar-0 6 Ma y -0 6 Jul-06 Sep -06 Nov-0 6 Jan-07 Mar-0 7 Ma y -0 7 Jul-07 Sep -07 Nov-0 7 Jan-08 Mar-0 8 Ma y -0 8 Jul-08 Sep -08 Nov-0 8 Jan-09 Mar-0 9 Ma y -0 9 Jul-09 Sep -09 Nov-0 9 Jan-10 Mar-1 0 Ma y -1 0 Jul-10

12

Investments

Factor performance over the last 12 months

-8.63 Price / Sales Ratio

12 0.97 1m Chg in 9m MAV 11 1.38 3.52 3.82 7.99 9.96 10.53 12.47 14.05 15.46 15.76 Perf.

Dividend Cover Forecasts 10

Dividend Yield FY1 9

1m Chg in 6m MAV 8

Rolling 12m EPS Growth 7

Revisions Ratio (EPS FY1) 6 3m Sales Revisions 5 3m EPS Revisions 4 Z-score 3 Total Score 2

Broker Confidence Score 1

Factor Ranking

Source: Standard Life Investments, 9 August 2010

12 month factor performance relative to FTSE350

1 year performance

-20.00 -15.00 -10.00 -5.00 0.00 5.00 10.00 15.00 20.00 25.00 17/08 /200 9 31/08 /200 9 14/ 09/2 009 28/ 09/2 009 12/1 0/20 09 26/1 0/20 09 09/11 /200 9 23/11 /200 9 07/ 12/2 009 21/ 12/2 009 04/0 1/20 10 18/0 1/20 10 01/02 /201 0 15/02 /201 0 01/ 03/2 010 15/ 03/2 010 29/0 3/20 10 12/0 4/20 10 26/04 /201 0 10/05 /201 0 24/ 05/2 010 07/ 06/2 010 21/0 6/20 10 05/0 7/20 10 19/07 /201 0 02/08 /201 0

1m Chg in 6m MAV 1m Chg in 9m MAV Price / Sales Ratio Dividend Yield FY1 Fwd 12m PE Rolling 12m EPS Growth Revisions Ratio (EPS FY1) 3m EPS Revisions 3m Sales Revisions Broker Confidence Score Dividend Cover Forecasts Z-score Total Score

13 Investments

High conviction stock picking fund

UK Equity High Income Fund

•

Aims to provide a high level of income and capital appreciation from

investments in mainly UK Equities

•

To fulfil IMA UK Equity Income Sector requirements, the fund must

have a yield of at least 110% of the FT All Share

•

Number of stocks range 60 – 70

•

No sector constraints

14 Investments 1.18 1.19 1.19 1.25 1.26 1.36 1.46 1.84 1.93 2.18 Position % 1.48 Smiths Group 1.24 BBA Aviation 5.11 GlaxoSmithKline 1.29 WH Smith 6.23 BP 1.50 GKN 1.50 DS Smith 3.25 Xstrata 2.14 Vedanta Resources 2.26 Britvic Fund % Overweight

UK Equity High Income Fund

-1.41 -1.43 -1.77 -2.01 -2.04 -2.05 -2.17 -2.38 -2.41 -2.73 Position % 0.00 SABMiller 0.00 Reckitt Benckiser Group

0.00 Diageo

0.00 Anglo American

5.01 Royal Dutch Shell

0.00 Tesco 0.00 BG Group 0.65 AstraZeneca 4.93 HSBC Holdings 0.00 BHP Billiton Fund % Underweight

Active money positions

15

Investments

UK Equity High Income Fund

Oil & Gas Producers Food & Drug Retailers

Banks

Support Services Food Producers

Electricity

Industrial Engineering

Gas, Water & Multiutilities Financial Services

General Industrials

-5.00% -4.00% -3.00% -2.00% -1.00% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00%

Overweight/underweight positions

16

Investments

UK Equity High Income Fund

Sold



Mondi



IMI



National Grid



Britvic



N Brown

Bought



Fenner



Barratt



Domino Printing



Vedanta



Ladbrokes

Source: Standard Life Investments, 30 June 2010

17

Investments

UK Equity High Income Fund

•

Top decile performance

over 3 months and 7

years and top quartile

performance over 6

months and 5 and 10

years

•

AA rating from

OBSR

•

AAA rating from

S&P

Fund Research

•

Citywire Income Fund

Manager of the Year

Award in 2006

UK Equity High Income

Percentile ranking relative to peer group

18 Investments 96 77 91 87 44 33 24 29 20 50 80 3 m o n ths 6 m o n ths 1 Y e ar 2 Y e ar s 3 Y e ar s 5 Y e ar s 7 y e ar s 10 y e a rs P e rc en tile r a n k in g w ith in th e IM A U K E q u it y In co m e S ecto r

UK Equity High Income

Percentile ranking relative to peer group

Source: Morningstar, 1 August 2010

19

Investments

UK Equity High Income long term performance

Source: Morningstar, bid-bid, 31 January 2010

The value of your units may go down as well as up. Past performance is not necessarily a guide to the future.

13 10 7 20 37 53 35 0 25 50 75 100 2003 2004 2005 2006 2007 2008 2009 P e rc e n til e r a n k in g with in th e IM A U K E q u ity In c o m e S e c to r

UK Equity High Income

Percentile ranking for the Standard Life Investments UK Equity Income fund

against the Morningstar IMA UK Equity Income sector for each discrete year

20

Investments

UK Equity High Income Fund

Q2 2010 performance attribution

Source: Standard Life Investments, 30 June 2010

Positives



Overweight

Britvic, N Brown, IMI, Severn Trent, Wincanton, Domino

Printing, Hiscox, IG Group



Underweight

BHP Billiton, Anglo American

Negatives



Overweight

BP, Xstrata, Vedanta, DSGI

21

Investments

UK Equity High Income distributions since 2000

-5.99% +5.38% +8.67% +13.98% +13.63% +4.89% +11.81% +7.55% +11.91% 0.00 200.00 400.00 600.00 800.00 1000.00 1200.00 1400.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 £587.42 £657.38 £706.98 £790.44 £829.13 £942.10 £1,073.76 £1,166.89 £1,229.62

Average Income Growth 7.98% p.a. – optimism regarding 2010

* based on £25,000 invested on 31 December 1999 Source: Lipper Hindsight

Total distribution for calendar year (£) *

22

Investments

Reasons to be positive

Market focus will return to improving fundamentals

To 12 August 2010

Sources: Thomson Datastream and Standard Life Investments, 12 August 2010

•

Global recession is over

•

Corporate news flow improving

•

Earnings forecasts increasing

•

Monetary policy supportive

•

Excessive “double dip” fears

•

Valuations very attractive versus

bonds and cash

FTSE ALL SHARE - TOT RETURN IND MSCI WORLD EX UK - TOT RETURN IND

FTSE BRIT.GOVT.FIXED ALL STOCKS - TOT RETURN IND

O N D J F M A M J J A S O N D J F M A M J J 60 70 80 90 100 110 120 130 Q4,08 Q1,09 Q2,09 Q3,09 Q4,09 Q1,10 Q2,10 Q3,10

23

Investments

UK equities – still attractive?

6.0%

Vodafone

7.1%

Royal & Sun Alliance

6.2%

Shell

5.5%

GlaxoSmithKline

December 2010 forward yield

Sources: Thomson Datastream, Bloomberg, 1 August 2010

12.0

1.1%

3%

3.9%

2010

8.5

4.4%

2011

PE ratio (All Share)

Cash (6m LIBOR)

10 Yr gilts

UK Equity dividend 12m fwd

Developing corporate environment provides opportunities

for active investors who respond to change

•

Attractive yield vs. bonds and cash

•

Valuation very attractive given

earnings recovery prospects

•

Technical pressures (fund raisings)

have eased

•

M&A activity increased

Sources: Thomson Datastream, 1 August 2010 Source: Standard Life Investments, August 2010

UK Bond Yield / UK Dividend Yield Ratio

0.5 0.8 1.0 1.3 1.5 1.8 2.0 2.3 2.5 2.8 3.0 3.3 3.5 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Equities expensive Equities cheap

24

Investments

Where are we now?

UK earnings forecast improving rapidly –

total profits 2010E £bn

Valuation

opportunities

above average

Momentum

•

Corporate refinancing (£82.5bn

rights issues 2009)

•

Cost cutting and earnings

recovery underestimated

•

Trend in earnings forecasts

strongly upwards

•

Balance sheet leverage now low

across market vs. history

115 120 125 130 135 140 145 150 155 D J F M A M J J A S O N D J F M A M J 2008 2009 2010

25

Investments

Where are we now?

Revisions to 2010 profit estimates (% change on previous quarter)

•

Domestic sectors performing strongly

•

Defensives lagging even with currency tailwind – which is now abating

3 2 2 2 -4 -2

Excluding Resources & Financials

6 5 5 5 -3 -17 Excluding Resources 7 4 4 5 -7 -11 Excluding Financials 8 6 6 7 -6 -19 Total 18 44 44 47 2 -78 Banks 1 3 3 0 -9 8 Mobile Telecoms 5 1 1 2 -6 -10

Travel & Leisure

4 4 4 -4 -4 0 Media 3 12 12 14 14 -5 General Retailers 0 0 0 2 4 -3 Food Retailers 3 1 1 5 -7 4 Pharmaceuticals 0 2 2 2 0 2 Tobacco 7 3 3 121 23 -61 Housebuilders 4 3 3 1 1 -3 Food Producers 2 4 4 3 -5 -2 Beverages 22 16 16 33 -16 -38 Mining 5 3 3 1 -12 -16

Oil & Gas Producers

Q2 Q1 Q4 Q3 Q2 Q1 % Change 2010 2009

Source: Factset, June 2010

26

Investments

UK quoted corporate sector in sound shape

Dividend cover much higher than in early 1990s – supportive

_•

_{Dividend cover}

high relative to this

point in previous

cycle

•

Balance sheet

leverage now low

across market vs.

history

•

Buybacks and

special dividends

making a return

•

Corporate

refinancing

(£82.5bn rights

issues 2009)

Balance sheet repair complete

Source: Morgan Stanley, Thomson Datastream, 1 May 2010

Source: Thomson Datastream, UBS, 1 May 2010

Di v ide nd Co v e r 1.0 1.5 2.0 2.5 3.0 3.5 4.0

Jan-70 Jan-75 Jan-80 Jan-85 Jan-90 Jan-95 Jan-00 Jan-05 Jan-10

Net Corporate Flows as % of Mkt Value (3m MA) FTSE100 Level (rhs) -0.8 -0.6 -0.4 -0.2 0.0 0.2 0.4 0.6 0.8 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 % 3,500 4,000 4,500 5,000 5,500 6,000 6,500 7,000 net net

FTSE 350 dividend growth now forecast to be -2% in 2010 and

+17% in 2011 (pre-BP cut, forecasts were +8% and +9%)

27

Investments

Source: Thomson Datastream, 7 September 2010

High Yield stocks have underperformed

2005 2006 2007 2008 2009 2010 60 70 80 90 100 110 120 130 140 150

FTSE 350 - PRICE INDEX

28 Standard Life

Investments

Low yielders include:



DSGI



easyJet



ITV



Tullow Oil



Rios



Vedanta

Less than

3.5%

Greater than

3.5%

Barbell approach –

29 Standard Life

Investments

Standard Life Investments’

Performance awards in 2010

Our dedication to meeting your financial needs is what drives us to deliver excellent performance.

We've been delighted to receive a raft of industry awards in recognition of this commitment.

•

The Standard Life UK Smaller Companies Trust Plc has, for the fourth consecutive year, won the

‘UK Smaller Companies’

category

(Moneywise Investment Trust Awards, 2010)

•

Standard Life Investments won the

'Best Fund – Equity Global High UK'

category for the

performance of its Managed Fund over a three and five year period

(Lipper Awards, March 2010)

•

Thomas Moore of the UK Larger Companies team was ranked 1

_{in the}

_{Thomson Reuters Extel}

Pan-European survey

2008 and again in 2010 for the Speciality & Other Financial sector

And other notable awards in 2009

• Standard Life Investments received the award for the ‘Fastest Growing Money Manager over $10 billion’, recognising Canada's most innovative plan sponsors and money managers (Benefits Canada Awards, November 2009)

• For the second consecutive year, Standard Life Investments won the ‘Best UK Small Cap’category (Money Observer Investment Trust Awards, 2009)

• Standard Life Investments won a 5 Star Awardin the Investment category (FTAdviser Online Service Awards, June 2009)

• Standard Life UK Smaller Companies Trust Plc won the Smallcap Fund of the Yearaward (Growth Company Awards, 2009)

• Standard Life Investments won the ‘Global Fixed Income, unhedged’category (Asian Investor Awards, 2009)

• Standard Life Investments won the ‘Best Sterling Corporate Bond Fund’category (Morningstar 2009 Fund Awards)

• Standard Life UK Smaller Companies Trust Plc won the ‘UK Smaller Companies’category for the third consecutive year (Moneywise Investment Trust Awards, 2009)

• For the second consecutive year, Harry Nimmo and the UK Smaller Companies team took the number one spot in Citywire’s Top One Hundred Fund Manager of the Year 2009

• Standard Life Investments won the 'Bond Pound Sterling – High Yield'category and the Hong Kong based Award of the 'Best Bond Group'category (Lipper Awards, 2009)

30 Investments

Focus on change

Superior information flow

Full FTSE350 and small cap coverage

Matrix

Active corporate governance

Consistent outperformance

Our competitive advantage

31

Investments

The information shown relates to the past. Past performance is not a guide to the future. The value of investment can go down as well as up. For full details of the fund's objective, policy, investment and borrowing powers and details of the risks investors need to be aware of please refer to the full prospectus which can be found on www.standardlifeinvestments.com

Standard Life Investments Limited, tel. +44 131 225 2345, a company registered in Scotland (SC123321) 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 in the UK to help improve customer service. All companies are authorised and regulated by the Financial Services Authority.