This communication is for investment professionals only and should not be distributed to, or relied upon by retail clients.

December 2012

Absolute return investingCitywire Event

“Uncertainty is the only certainty there is, and knowing how to live with insecurity is the only security”

John Allen PaulosProfessor of Mathematics at Temple UniversityPhiladelphia, USA

3

The Global Absolute Return Strategies Fund

Objective:• Cash* +5% per year (gross) performance target over rolling 3

years periods• Expected volatility range of between 4% - 8%

Key Investment Themes:• Time Frame: 3 year investment outlook

• Captures return more consistently from demonstrable market inefficiencies

• Breadth: Broad investment freedom• A diverse array of strategies build a robust portfolio

• Balance: Risk controlled implementation• Portfolio constructed for resilience & to maximise the range of

scenarios that will provide a positive return

* Cash here is defined as 6 month US Libor

A proven track record in delivering the Fund objectives

44

GARS – the theory

GARS portfolio

Time

traditionalapproach

Target return a proxy for long term risk asset returns

Volatility significantly less than equity risk

Path NOT solely dependent on risk markets

Building a less volatile approach to generating positive investment returns

5

Global Absolute Return Strategies SICAV performance

Source: Standard Life Investments, gross performance from 12/06/2006 to 31/10/2012* Source: Standard Life Investments converted $ performance of £, institutional pooled pension portfolio to the 07/06/2011. US$ GARS SICAV portfolio performance from the 08/06/2011. Volatility calculations based on monthly performance data** Source: Thomson Datastream, 6 month US$ LIBOR, MSCI World ($)Standard Life Investments claims compliance with the Global Investment Performance Standards (GIPS®). The fund specific data presented above is supplementary information to the US GARS GIPS® composite report, which is enclosed in the Appendix for your reference

556065707580859095

100105110115120125130135140145150155160165170

Jun/0

6

Dec/06

Jun/0

7

Dec/07

Jun/0

8

Dec/08

Jun/0

9

Dec/09

Jun/1

0

Dec/10

Jun/1

1

Dec/11

Jun/1

2

Volatility

US$ GARS SICAV 6.0%

Global Equities 18.9%

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

6

GARS – a carefully chosen blend of traditional and advanced strategies

Market Returns

• Dynamic Allocation • Long term risk premia e.g.

Equities, Credit, Listed Real Estate

• Used only when we expect to be rewarded

Relative Value

• Seek pairs of closely related markets or segments

• Our view is that performance will differ over 3 years

• Profit from the difference in performance irrespective of market direction

Directional

• Specific directional investment ideas

• In markets with little or no long term risk premium

• With significant return potential on a 3 year view

Trad

ition

al in

vest

men

tsA

dvan

ced

Security Selection

• Active security selection• Conventional benchmarks• Bottom-up, Focus on Change

process• No extra layer of cost to our

fees

Outcomes• A wider range of investment

strategies• Greater diversification

• Implemented through derivatives• Highly liquid• Efficient risk management

Outcomes• Allocation to a range of asset

classes• Benefit from diversification

• Potential problems• Too constrained• Too highly correlated

Aiming to deliver low risk positive performance in all investment environments

GARS combines traditional and advanced approaches

7

Portfolio Outlook / Themes

• Profit opportunities in areas of growthUS equityUS technology equity vs US small cap equityKorean equity

• Corporate balance sheet strength US large cap equity vs US small cap equity Investment grade and high yield credit

• Fiscal advantages of resource-based economies Mexican government bondsMexican Peso vs Australian Dollar Russian equityUS Dollar vs Canadian Dollar

• Challenging Eurozone resolutionUS Dollar vs Euro European Financials Capital StructureEuropean high dividend-yield equity

Source: Standard Life Investments UK GARS portfolio, 30 September 2012

8

Building a true absolute return portfolio

• Portfolio has to deliver positive and stable performance in a wide range of scenarios

• Range of investment strategies implemented therefore have to reflect Fragile economic recovery Continuing spikes of volatility in the market Surge in commodity prices Collapse in commodity prices Inflation becoming a major problem Deflation fears growing Emerging Markets growing ever faster Emerging Markets bubble popping ….and many more

• Building a portfolio to allow for this range of eventualities is no easy task!

Uncertainty is the only certainty there is

9

Investment Grade Corporate Bonds 1.8% US Long Bond Yields (Forward-Start) 2.4% Investment Grade Corporate Bonds 1.9%Long-term European Interest Rates 1.6% Long Equity Variance 1.5% High Yield Credit 1.3%Broad vs Financial Sector Equity 1.3% Broad vs Financial Sector Equity 1.3% Mexican Government Bonds vs Euro 1.1%UK Short-term Interest Rates 1.1% Global Inflation-Linked Bonds 1.1% Broad vs Financial Sector Equity 0.9%Global Equity 1.1% Long Norwegian Krone vs Swiss Franc 0.8% Security Selection 0.7%European Equity 0.9% Australian vs US Short-rates 0.7% US Equity Technology vs US Equity Small Cap 0.6%UK Equity 0.8% Australian vs Japanese Medium Term Interest Rates 0.5% European Equity 0.5%Long US Dollar vs Euro 0.8% Swedish Short-term Interest Rates 0.5% Global Equity 0.3%Australian vs US Short-rates 0.7% Investment Grade Corporate Bonds 0.5% Global Inflation-Linked Bonds 0.3%Medium-term Australian Interest Rates 0.7% US Large vs US Small Cap Equity 0.4% European Bond Yield Steepener 0.3%

GARS return 10.8% GARS return 3.4% GARS return 7.0%

2010 2011 2012

Long-term Japanese Interest Rates 1.8% Long-term Japanese Interest Rates 1.6% Long-term European Interest Rates 2.7% Investment Grade Corporate Bonds 5.4%UK Equity 1.3% Cash 1.4% Medium-term European Interest Rates 2.4% Long Sterling vs Euro 1.9%Security Selection 1.2% European Equity 1.3% German Equity vs UK Equity Relative Volatility 1.8% Global Equity 1.9%Global Equity 1.2% Security Selection 1.0% Cash 1.5% Long Brazilian Real vs Japanese Yen 1.7%European Equity 0.8% UK Large v Mid Cap UK equity 0.9% Long-term Japanese Interest Rates 1.5% Medium-term European Interest Rates 1.6%Investment Grade Corporate Bonds 0.6% UK Equity 0.8% European Short-term Interest Rates 1.4% UK Equity 1.5%Cash 0.5% Global Inflation-Linked Bonds 0.8% UK Short-term Interest Rates 1.2% European Equity 1.5%Global Inflation-Linked Bonds 0.3% UK Short-term Interest Rates 0.6% Financial Sector Credit 1.2% US Equity 1.2%Long Turkish Lira vs Sterling 0.2% Global Equity 0.5% Long US Dollar vs Euro 1.1% Short UK Inflation 1.1%European Equity Volatility 0.2% Investment Grade Corporate Bonds 0.3% Relative Variance Income 1.0% Long-term Japanese Interest Rates 0.9%

GARS return 7.5% GARS return 8.4% GARS return -6.1% GARS return 19.4%

2006 2007 2008 2009

GARS – finding positive strategies in all markets

Top 10 GARS contributors by calendar yearGlobal equities -40%

Global equities -5%

Balance: building the portfolio for positive return in a wide range of different futures

Source: Standard Life Investments, GARS returns in $ gross of fees

1010

2 ways to use Absolute Returns in your portfolio

1. Diversify your Asset Allocation risk

2. A more attractive ‘Alternative’ portfolio

11

Diversify your asset allocation risk

• Standard Life Investments in consultation with external asset modelling consultants

• Economic Scenario Generator stochastically models many economic and market variables, including: Interest rates Risk premium for asset classes Volatility (short and long-term) Exchange rate fluctuations Correlation Short-term market features that may impact long-term risk/reward

• Constraints are applied to avoid “corner solutions”

Case study: Risk-based multi-asset funds

Significant issues in modelling Absolute Return

Solution: Absolute Return to form 20% of the “Growth” portion across all styles

12

Risk-based multi-asset portfolio

UK Equities

Absolute Returns

US Equities

UK direct Property

Emerging Market Equities

European Equities

Asia-Pacific Equities

Japan Equities

Hedged High-yield Bonds

Sterling Corporate Bonds

UK Index-linked Gilts

UK Gilts

Money Markets

Risk-based FundsPortfolio Strategic Weights

Modelled using Barrie & Hibbert’s Baseline Calibration, September 2011Baseline Calibration is used as it does not assume period specific initial conditions and so gives a stable asset allocation model.Expected Volatility is given as one standard deviation of annualised returns.Strategic asset allocations at 31/12/2011; reviewed quarterly

Risk-based portfolio: 8.5%-12.0% volatility range

Return-seeking asset classes 65.50% 100.0%

26.3%

20.0%

16.5%

12.2%

7.9%

5.5%

4.3%

3.7%

3.7% Defensive asset classes 34.50% 100.0%

69.6%14.5%

13.0%2.9% Money Markets

High Yield bonds

Sterling Corporate Bonds UK Index-linked Gilts

UK Gilts

Emerging Market Equities

European Equities

Asia Pacific Equities

Japan Equities

UK Equities

Absolute Returns

US Equities

UK direct property

13

A more attractive ‘Alternative’ portfolioComparison of conventional multi-asset v hedge funds

Investment benefits of Hedge funds offset by considerable negatives

CharacteristicConventional

Multi-assetHedge Funds

Typical featuresInvestment Objective • Peer group / Strategic

benchmark related• Absolute Return

Breadth of strategies • Benchmark constituents • Large

Risk Analysis • Limited • Comprehensive risk metrics

Economic leverage • No • Yes

Regulatory oversight • High • Low

Accessible for investment • Excellent • Limitations

Liquidity for disinvestment • Good • Limitations

Portfolio Transparency • High • Low

Fees • Modest • High

14

CharacteristicConventional

Multi-assetHedge Funds

Typical featuresGARS

Investment Objective • Peer group / Strategic benchmark related

• Absolute Return • Absolute Return

Breadth of strategies • Benchmark constituents

• Large • Large

Risk Analysis • Limited • Comprehensive risk metrics

• Comprehensive risk metrics

Economic leverage • No • Yes • Yes

Regulatory oversight • High • Low • High

Accessible for investment

• Excellent • Limitations • Excellent

Liquidity for disinvestment

• Good • Limitations • Good

Portfolio Transparency • High • Low • High

Fees • Modest • High • Modest

GARS Best Of Conventional And Hedge Funds

15

GARS – an alternative to hedge funds

‐20

‐15

‐10

‐5

0

5

10

15

20

2007 2008 2009 2010 2011 2012*

Year

% return US$

Standard Life GARS Fund of Hedge Fund Universe Median

Source: Mercer MPA, $ performance net of fees* Performance to 30 September 2012

16

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Libor+5% GARS (gross) Global Equities

3 year annualised return range

Source: Standard Life Investments, 31/10/2012Return ranges based on 3 years of monthly observations of rolling 3 year data

Best outcome

Worst outcome

Last 3 years to 31/10/2012

17

Progressive thinking of absolute return investing

• Absolute return investing places full accountability on the fund manager for positive return

• GARS produces a lower risk more consistent performance experience for investors

• GARS is a fund with multiple applications in clients’ portfolios

Increase the likelihood of ‘good’ outcomes for your portfolio and your clients

“Uncertainty is the only certainty there is, and knowing how to live with insecurity is the only security”

John Allen PaulosProfessor of Mathematics at Temple UniversityPhiladelphia, USA

Appendices

20

Philosophy

• Active managers Inefficient markets – ability to add value

• Focus on change Changes in micro/macro expectations drive pricing changes

• A team approach to investing Analysis, communicate, respond more effectively and quickly than the competition

• Global process Structured global micro and macro input (based on Focus on Change)

• Discipline Consistent portfolio structure, clear controls

Objective: consistent outperformance

21

95

100

105

110

115

120

125

130

135

140

01-J

an

01-F

eb

04-M

ar

04-A

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05-M

ay

05-J

un

06-J

ul

06-A

ug

06-S

ep

07-O

ct

07-N

ov

08-D

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08-J

an

08-F

eb

11-M

ar

11-A

pr

12-M

ay

12-J

un

13-J

ul

13-A

ug

13-S

ep

14-O

ct

14-N

ov

15-D

ec

15-J

an

15-F

eb

17-M

ar

17-A

pr

18-M

ay

18-J

un

19-J

ul

19-A

ug

19-S

ep

20-O

ct

GARS – stable performance in challenging times

* Standard Life Investments converted € performance of £ Fund to the 26/01/2011, GARS SICAV Fund performance from the 27/01/2011** Source: Thomson Datastream, MSCI World €Source: Standard Life Investments, gross € performance GARS Fund vs. MSCI € from 01/01/2010 to 31/10/2012

Greek election

US debt loses AAA

Greek debt problems

US Jackson Hole speech US QE 2

Mubarak resigns Japan Tsunami

Portugal seeks bailoutEFSF

leverage

2010 2011

MSCI World** € GARS*

2012

Bankiabailout

22

1 year cumulative performance attribution

Source: Standard Life Investments GARS SICAV portfolio, 30 September 2012

-1.0% 0.0% 1.0% 2.0% 3.0%Quarter Q4 11 Q1 12 Q2 12 Q3 12

Number of strategies

Security Selection 0.5% 0.2% 0.2% 0.1% 1.1%Investment Grade Corporate Bonds 0.3% 0.9% 0.1% 0.8% 2.1%High Yield Credit 0.6% 0.6% 0.0% 0.5% 1.7%US Equity 0.6% 0.4% -0.2% 0.1% 0.8%Global Equity 0.3% 0.7% -0.4% 0.1% 0.7%Global Inflation-Linked Bonds 0.3% 0.2% -0.2% 0.3% 0.6%Russian Equity 0.2% 0.4% -0.3% 0.2% 0.6%European Equity 0.1% 0.4% -0.2% 0.1% 0.5%Cash 0.1% 0.1% 0.1% 0.1% 0.3%UK Equity 0.0% 0.1% 0.0% 0.0% 0.0%Korean Equity 0.0% -0.4% 0.2% -0.3%Mexican Government Bonds vs Euro 0.3% 0.5% 0.3% 0.3% 1.4%Long US Dollar vs Euro 0.3% -0.3% 0.4% -0.1% 0.3%European Bond Yield Steepener 0.1% 0.1% 0.0% 0.1% 0.3%Long Norwegian Krone vs Euro 0.1% 0.1% 0.2%Long US Dollar vs Japanese Yen 0.0% 0.4% -0.2% -0.1% 0.2%Australian Short-term Interest Rates 0.0% 0.1% 0.1%US Long Bond Yields (Forward-Start) 0.1% -0.2% -0.2% 0.4% 0.1%Australian yield curve flattener 0.0% 0.0%Long Mexican Peso vs Australian Dollar 0.0% 0.0%UK Inflation Real Yield -0.1% 0.0% 0.0%Other FX 0.0% 0.0% 0.0% 0.0% 0.0%Long Equity Variance -0.1% -0.1%Long Equity Volatility 0.1% -0.1% -0.1% -0.2%Long Brazilian Real vs Czech Koruna -0.3% 0.0% -0.4%Long Brazilian Real vs Australian Dollar -0.4% 0.0% -0.5%Long US Dollar vs Canadian Dollar -0.1% -0.1% 0.1% -0.4% -0.5%Broad vs Financial Sector Equity 0.3% 0.0% 0.8% 1.2%Relative Variance Income 0.3% 0.3% -0.4% 0.2% 0.4%Financial Sector vs Broad Credit 0.0% 0.9% -0.5% 0.3%Australian vs US Short-rates 0.2% 0.2%UK Inflation vs Long Gilts 0.2% 0.2%European Financials Capital Structure -0.3% 0.4% 0.1%UK vs European Forward-Start Duration 0.1% 0.0% 0.1%US Equity Technology vs US Equity Small Cap -0.4% 0.7% -0.2% 0.1% 0.1%German vs French duration 0.0% 0.0%Chinese Yuan volatility vs Japanese Yen volatility 0.0% 0.0%China Equity vs UK Equity Volatility 0.1% -0.1% 0.0% 0.0% 0.0%Hang Seng vs S&P volatility -0.2% 0.1% -0.1%Swedish vs German Short-rates -0.2% 0.0% -0.2%US Large vs US Small Cap Equity -0.3% 0.0% 0.0% 0.1% -0.3%Korean Equity vs European Equity -0.1% -0.5% -0.5%

Cumulative contribution over 1

year

2323

Multi-Asset Investment Team

Idea Implementation

Risk Investigation

Idea Generation

MAI Team Members Staff Area Average years in industry Average years at Standard Life Investments

5 Global & EM Strategy 22 14

5 Risk & Structuring 9 6

18 Portfolio Management 17 9

Tenure

Critical combination of skills and experience

Size

* Roger Sadewsky is included in the Portfolio Management TeamStrategic Investment Group members in bold Source Standard Life Investments, 06 November 2012

Strength

Euan Munro FIAHead of Multi - Asset Investing and Fixed Income

Global Investment Specialist Team

Global StrategyAndrew Milligan

Jason Hepner CFAFrances Hudson

Douglas Roberts

CFA PRM

Dr Anne Friel PRM

Multi Asset RiskDr Brian Fleming

Dr Robert de Roeck

Dr Jens Kroeske

Gwilym Satchell PRM

Guy Stern CFA

Neil RichardsonColette Conboy

David KirkpatrickScott Smith

Ian Pizer

Multi Asset Management

Audrey Simpson

Harry SmithThad Quinn

Julia MikhniakCraig Hoyda

Alex Berry

Multi Asset Implementation

Murray Forbes

Malin Nairn James EslandMulti Asset Business Management

Portfolio Management

Neil Matheson

Global Economics

Alex GrassinoSLI Canada

Stan Pearson

Andrew Sutherland

Roger Sadewsky*

Richard House

Strategic Investment GroupMembers from out-with the

MAIT

Adam Rudd

Jennifer Catlow

24

GARS process

Integrated with full skill set across Standard Life Investments

Fundamental economic

analysis

Asset class team views

and strategies

Quantitative modelling

Valuation modelling

Multi Asset Risk and StructuringPre-trade risk Diversification measurement Scenario

Analysis

Strategic Investment Group• Review • Debate • Ratify / Reject

ConvictionDiversityLiquidity

Idea Generation

Selection

ImplementationMulti Asset Management

Strategy implementation Final position sizing Execution

Investment Governance &

Oversight

• Independent Risk Analysis

• Counterparty Risk Management

• Investment governance

25

Strategy activity in prior quartersQ4 2011 Q3 2012

Added Australian Yield Curve Flattener, - 10 year rates historically steep

Added German vs French 10 year interest rates- worsening fundamentals in France v Germany leading to wider spreads

Added Chinese Renminbi vs Japanese Yen currency volatility- Chinese currency to become more volatile as it internationalises

Amended Long Brazilian Real vs Australian Dollar to be long Mexican Peso vs Australian Dollar

Source: Standard Life Investments UK GARS portfolio, 30 September 2012

Altered Forward Starting US Duration – sold receiver swaptionat 2.4%

Altered Korean vs European equity relative value position by implementing Korean and German equity index call options

Altered Australian vs US short term duration by closing US short leg

Added US Dollar v Canadian Dollar

Closed Swedish v German short term rates strategy

Q1 2012 Added US Large Cap volatility

via VIX index

Closed UK 5Y inflation

Closed Long Norwegian Krone vs Euro

Added Long Brazilian Real vs Czech Koruna

Altered Financial vs Broad credit to take additional protection on the Broad credit position

Closed Australian Short Term Rates position

Assumed market exposure to Korean equities by closing the European side of Korean vs European equity relative value strategy

Added interest rate protection to Global Inflation-Linked bonds position

Q2 2012 Amended financials strategy to

create new European financials capital structure strategy to take account of anticipated changes to creditor preference on a bank failure

Closed Financial v Broad credit

Closed Broad v Financial equity

Added long UK vs Europe forward start duration strategy– European curve pricing in Japan style recession

Added relative value volatility strategy – Hang Seng vs S&P equity volatility through put options

Amended long Brazilian Real position to be versus Australian Dollar from Czech Koruna

26

Risk management

• Three stages of risk management:

• (1) Independent risk modelling using APT system (ex-ante risk) Daily risk reporting Basis for pre-trade risk analysis

• (2) Scenario analysis Historical extreme events using RiskMetrics Future extreme events modelled internally

• (3) Realised volatility based on performance (ex-post risk)

27

GARS Strategy Implementation

VIX index optionsDirectionalLong Equity Volatility

Nominal bonds, FX forwardsDirectionalMexican Government Bonds vs Euro

Bond futures, interest rate swapsDirectionalAustralian interest rate flattener

Equity optionsRelative valueHang Seng v S&P volatility

Variance swapsRelative valueRelative Variance Equity; China Equity vs UK Equity Volatility

Interest rate swapsRelative valueUK v European forward start duration

Duration

Currency call and put optionsRelative valueChinese vs. Japanese currency volatility

Volatility

Index-linked bonds and swaptionsMarket returnsGlobal Inflation-Linked BondsInflation

FX forwards and swapsDirectionalMexican Peso vs Australian Dollar

FX forwards and swapsDirectionalLong US Dollar; vs Euro, vs Canadian Dollar, vs Japanese YenFX

Equity futuresRelative valueUS Equity Large vs Small CapUS Tech vs Small Cap

Equity options Relative valueKorean Equity

Equity (GDRs)Market returnsRussian Equity

Equity, equity futures, equity optionsMarket returnsUS Equity

Equity, equity futuresMarket returnsEuropean Equity; Global Equity; UK Equity

Equities

Bond futuresRelative valueGerman vs. French interest rates

Bond futures, interest rate swaps and swaptionsDirectionalUS Long Bond Yields (forward start)

Interest rte swaptionsDirectionalEuropean Bond yield curve steepener

Nominal bonds, Credit default index swapsMarket returnsHigh Yield Credit

Credit default index swaps, equity futuresRelative valueEuropean Financials Capital Structure

Nominal bonds Market returnsEuropean Investment Grade Credit; UK Investment Grade Credit

Credit

ImplementationJigsawStrategyGroup

Source: Standard Life Investments, GARS UT, GARS SICAV and GARS offshore funds, 30 September 2012

28

• The portfolio is exposed to multiple diversified market risks

• 16.5% is total stand-alone investment risk chasing returns

• Equivalent equity volatility is 15.1%

• Independent risk analysis shows the benefits of investment diversification

• Each investment strategy measured on a like for like basis

Risk profile of multi-market return strategyStand-alone investment risks

Tota

l sta

nd-a

lone

risk

Source: Standard Life Investments GARS SICAV portfolio, 30 September 2012

European Equity position has stand-alone risk of 0.9 %

12.8%

3.7%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Diversification benefits

Expected volatility

16.5%

Market returns

Directional

Relative value

Security selection

29

Balanced blend of investment risks

Market ReturnsEuropean EquityHigh Yield CreditKorean EquityRussian EquityGlobal EquityUK Investment Grade CreditGlobal Inflation-Linked BondsUK EquityUS Equity European Investment Grade Credit

DirectionalLong US Dollar vs Canadian DollarLong US Dollar vs EuroUS Long Bond Yields (Forward Start)Mexican Government Bonds vs EuroLong Mexican Peso vs Australian DollarLong US Dollar vs Japanese YenLong Equity VolatilityFX HedgingAustralian interest rate flattenerEuropean Bond Yield Steepener

Relative ValueUS Equity Technology Sector vs US Equity Small CapUS Equity Large vs US Equity Small CapEuropean Financials Capital StructureRelative Variance IncomeUK vs European Forward-Start DurationHang Seng vs S&P VolatilityGerman vs. French interest ratesChina Equity vs UK Equity VolatilityChinese vs. Japanese currency volatility

Security SelectionRegional Equity and bond portfolios’ tracking error

A portfolio built to deliver stable performance in a wide variety of outcomes

Share of market risk exposure

Source: Standard Life Investments GARS SICAV portfolio, 30 September 2012

30

Diverse pool of return-seeking positions

A more informative view

Share of physical allocation

Source: Standard Life Investments GARS SICAV portfolio, 30 September 2012

Share of market risk exposure

US Equity 1.4%.Russian Equity 2.4%

Global Equity 3.2%

Mexican Government Bonds 4.1%

UK Equity 6.0%

EU Investment Grade Credit

7.0%

UK Investment

Grade Credit 7.1%

European Equity 7.4%

High YieldCredit 7.7%

Global Inflation-Linked

Bonds 10.1%

Cash & Other43.6%

Chinese vs. Japanese currency volatility

Security Selection

China Equity vs UK Equity Volatility

Long Equity Volatility

Australian interest rate flattener

German vs. French interest ratesHang Seng vs S&P Volatility

UK vs European Forward-Start Duration

Relative Variance Income

European Financials Capital Structure

US Equity Large vs USEquity Small Cap

European Bond Yield Steepener

US Equity TechnologySector vs

US Equity Small Cap

FX Hedging

Long US Dollar vs Japanese Yen

Long Mexican Peso vs Australian Dollar

Mexican Government Bonds vs Euro

US Long Bond Yields (Forward Start)

Long US Dollar vs Euro

Long US Dollar vs Canadian Dollar

European Investment Grade Credit

US Equity

UK Equity

Global Inflation-Linked Bonds

UK Investment Grade Credit

Global Equity

Russian Equity

Korean Equity

High Yield Credit

European Equity

31

Market returns

Directional

Relative Value

Security Selection

Source: Standard Life Investments UK GARS portfolio, 31 December 2006 - 30 September 2012

Dynamic diversificationVo

latil

ity

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Mar-12 Jun-12 Sep-12

32

Historical scenario analysis

* MSCI World Returns prior to 2000 denoted in European Currency Units, except for 1987 which is denoted in German MarksSource: GARS SICAV, RiskMetrics, 30/09/2012

-28 -26 -24 -22 -20 -18 -16 -14 -12 -10 -8 -6 -4 -2 0 2 4 6 8 10 12 14 16 18

Bank Meltdown 2008 ( September 12 - October 15, 2008)

Subprime Debacle 2007 (July 15 - August 15, 2007)

Emerging Market Sell-Off 2006 (May 1 - June 8,2006)

Bond Sell-Off (June 14 - July 31, 2003)

Bond Rally (May 1 - June 13, 2003)

Gulf War 2 (March 1-23,2003)

Equity Rally (October 10 - November 27,2002)

Equity Sell-Off (August 23 - October 9, 2002)

Sept 11th

Tech Wreck (April 7-14, 2000)

Russian/LTCM

Asian Crisis 1997

Mexican Crisis 1995

Rate Rise 94

Gulf War 1990

Black Monday 1987

% MoveGARS SICAV Portfolio MSCI World (EUR) move over same period*

33

From Historical To Future Scenarios

-6 -4 -2 0 2 4 60

20

40

60

80

100

120

Return %

Sce

nario

cou

nt

China crisis

-6 -4 -2 0 2 4 60

20

40

60

80

100

120

Return %

Sce

nario

cou

nt

Margin squeeze

• Other potential future scenarios we consider “interesting”:• Quantitative Easing (QE) bubble• QE collapse• Germany leaves• Shale gas

Combining quantitative models and subjective judgementSource: Bloomberg, Standard Life Investments for illustrative purposes only

34

Corporate Global Absolute

Fees (%):All stocks (0)Class Order:1 Month US Libid Index / LIBOR Top Level (factset)Benchmark / Sector:10 Year ReportReport:12/31/2011Report End Date:U.S. $Currency:Standard Life Investments Firm:07/01/2006Creation Date:US GARSComposite Name:

2

5.28

206,244,441,942

10,897,493,192

1.33

0.15

10.75

Dec 2010

3

8.58

191,669,710,118

16,448,902,409

0.14

0.11

2.89

Dec 2011

2

1.73

205,104,537,238

3,555,802,495

0.00

0.21

19.25

Dec 20093-Yr St Dev

(%) to end Dec 2011

3-Yr St Dev (%) to end Dec

2010Dec 2008Dec 2007Dec 2006Dec 2005Dec 2004Dec 2003Dec 2002

169,620,477,022

273,159,341,591

250,034,739,413

113,842,300,00093,581,500,00082,468,000,00073,201,000,000Total Firm Assets

1

0.02

61,396,573

2.63

7.92

1

0.18

480,921,603

0.00

5.28

8.36

0.02

5.77

0 1

0.70

1,193,805,120

0.00

2.58

-6.35

0.35

7.41

000Number of Funds

Percentage of Firms Assets

Composite Final Market Value

Composite Dispersion

Benchmark Weighted Average

Composite Weighted Average

Firm Disclosure

A complete list and description of all of the firm's composites are available from Standard Life Investments. The change from Process Date to Trade Date was made during 1999. No valuations are based on Settlement Date. There are no minimum asset levels set below which portfolios are not included in a composite. All performance calculations and returns have been calculated gross of management fees. All returns are presented on an all-inclusive basis and as such all capital gains interest income and withholding taxes have been taken into account in market valuations and returns. All indices are on a gross of tax basis apart from FTSE UK indices which are net of Withholding Tax There are no Non-Fee-Paying portfolios included in any composite. The Daily True Time Weighted Rate of Return methodology has been used from 2001 apart from unitised Cash Property GARS and Myfolio products where NAV performance is used. Prior to this NAV performance was used for all products. Additional information regarding policies for calculating and reporting returns is available upon request Dispersion is calculated using high/low difference

Returns and market values in Irish punts prior to 1999 are converted from punts into Euros at the fixed conversion rat Standard Life Investments 'The Firm' consists of all fee-paying funds managed by Standard Life Investments and its Subsidiaries which include Standard Life Investments (Mutual Funds) Limited SLTM Limited Standard Life Investments (Corporate Funds) Limited Standard Life Investments (USA) Limited and Standard Life Investments (Asia) Limited Past performance results from Standard Life Investments Limited UK Firm and Standard Life Investments Limited Irish Firm have been linked to form the performance record of the new firm Standard Life Investments. The new firm was created on 01/01/2008 Standard Life Investments claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. Standard Life Investments has been independently verified by Pricewaterhouse Coopers for the periods 1996 to 2011. The verification report is available upon request. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation

Composite Disclosure

Derivatives may be used to vary exposure to markets and express views on the direction of currencies interest rates sectors and securities to enhance capital return limit downside volatility and preserve capital Includes part period return for 2006 from 01/07 The composite includes funds that invest in a highly diversified strategy including equities bonds and cash with a derivative overlay in options futures swaps and currency forwards to deliver a positive absolute return. The fund is benchmarked against 1 month US Libid The standard annual fee applicable to this composite is 1.00% but individual fees are negotiated on an account basis This composite includes GBP denominated funds that are converted into USD using 3 month USD Libor and 3 month GBP Libor rates

Composite Report

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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.

This type of absolute return strategy makes extensive use of financial derivative instruments for investment purposes.

This material is for informational purposes only. This should not be relied upon as a forecast, research or investment advice. It does not constitute an offer, or solicitation of An offer, to sell or buy any securities or an endorsement with respect to any investment vehicle. The opinions expressed are those of Standard Life Investments and are subject to change at any time due to changes in market or economic conditions.

Any data contained herein which is attributed to a third party ("Third Party Data") is the property of (a) third party supplier(s) (the “Owner”) and is licensed for use byStandard Life**. Third Party Data may not be copied or distributed. Third Party Data is provided “as is” and is not warranted to be accurate, complete or timely. To the extent permitted by applicable law, none of the Owner, Standard Life** or any other third party (including any third party involved in providing and/or compiling Third Party Data) shall have any liability for Third Party Data or for any use made of Third Party Data. Past performance is no guarantee of future results. Neither the Owner nor any other third party sponsors, endorses or promotes the fund or product to which Third Party Data relates.

**Standard Life means the relevant member of the Standard Life group, being Standard Life plc together with its subsidiaries, subsidiary undertakings and associated companies (whether direct or indirect) from time to time."

Standard Life Investments Limited is registered in Scotland (SC123321) at 1 George Street, Edinburgh EH2 2LL.Standard Life Investments are authorised and regulated by the Financial Services Authority.

Calls may be monitored and/or recorded to protect both you and us and help with our training.

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