Global Absolute Return Strategies Fund

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1 Q Global Absolute Return Fund 31 March 2016 The Standard Life Investments Global Absolute Return Fund aims to provide positive investment returns in all market conditions over the medium to long term. The fund is actively managed, with a wide investment remit to target a level of return over rolling three-year periods equivalent to cash plus five percent a year, gross of fees. It exploits market inefficiencies through active allocation to a diverse range of market positions. The fund uses a combination of traditional assets (such as equities and bonds) and investment strategies based on advanced derivative techniques, resulting in a highly diversified portfolio. The fund can take long and short positions in markets, securities and groups of securities through derivative contracts. Past performance is not a guide to future returns and future returns are not guaranteed. The price of assets and the income from them may go down as well as up and cannot be guaranteed; an investor may receive back less than their original investment. The fund will use derivatives extensively to reduce risk or cost, or to generate additional capital or income at low risk, or to meet its investment objective. Usage of derivatives is monitored to ensure that the fund is not exposed to excessive or unintended risks. The value of assets held within the fund may rise and fall as a result of exchange rate fluctuations. Unit Trust Absolute Return Fund Quarterly Fund Manager Multi Asset Investing Team Fund Manager Start 29 Jan 2008 Launch Date 29 Jan 2008 Current Fund Size 26,233.7m Base Currency GBP IA Sector Targeted Absolute Return Benchmark 6 Month GBP LIBOR This document is intended for use by individuals who are familiar with investment terminology. Please contact your financial adviser if you need an explanation of the terms used. Please note that the Portfolio Risk and Return Analysis table is only updated on a quarterly basis. For a full explanation of specific risks and the overall risk profile of this fund and the shareclasses within it, please refer to the Key Investor Information Documents and Prospectus which are available on our website Fund Information * Quarterly Portfolio Risk and Return Analysis Market Returns Directional Relative Value Strategy European equity Japanese equity US investment grade credit High yield credit UK equity UK corporate bonds EU corporate bonds Pacific Basin ex Japanese equity US equity Long INR v CHF Australian duration Long USD v EUR Short US duration US real v nominal steepener Long USD v KRW Long USD v SGD Mexican rates v EUR Australian forward-start interest rates Long European payer swaptions Long GBP v CHF Long INR v EUR Long MXN v AUD US equity large cap v small cap US and Europe v UK duration US butterfly US equity tech v small cap US equity banks v consumer staples HSCEI v FTSE variance Asian v S&P variance EuroStoxx50 v S&P variance European equity banks v insurers European v UK duration Stand-alone Risk Exposure % Weighting (risk based %) Contribution to Returns % Q1 1 Yr FX Hedging FX hedging - Cash Cash 0.2 Residual Stock selection Total Diversification 8.8 Expected Volatility Should you require more information regarding the Physical Allocation please use contact numbers shown. Individual strategy contributions are based on gross returns.

2 Fund Performance * Price Indexed The performance of the fund has been calculated over the stated period using bid to bid basis for a UK basic rate tax payer. The performance shown is based on an Annual Management Charge (AMC) of 0.75%. You may be investing in another shareclass with a higher AMC. The charges for different share classes are shown later. For details of your actual charges please contact your financial adviser or refer to the product documentation. (Fund) and Thomson Datastream (Benchmark) Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Global Absolute Return 6 Month GBP LIBOR Year on Year Performance (Fund) and Thomson Datastream (Benchmark) 31/03/ /03/ /03/ /03/ /03/2012 Retail Fund Performance Institutional Fund Performance Platform One n/a n/a 6 Month GBP LIBOR Cumulative Performance (Fund) and Thomson Datastream (Benchmark) 6 Months 1 Year 3 Years 5 Years Retail Fund Performance Institutional Fund Performance Platform One n/a 6 Month GBP LIBOR Note: Past Performance is not a guide to future performance. The price of shares and the income from them may go down as well as up and cannot be guaranteed; an investor may receive back less than their original investment. 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 prospectus. For a full description of those eligible to invest in each share class please refer to the relevant prospectus.

3 Fund Performance (continued)* Fund Return Contribution From Benchmark Return Absolute Return Relative Return Stock Selection Contribution - - Market Risk Contribution Total Fund Contribution to Total Return from Market Risk Top Contributors Contribution US butterfly US real v nominal steepener Australian duration 0.2 High yield credit Australian forward-start interest rates Bottom Contributors Contribution Short US duration -0.9 Long USD v SGD - US equity banks v consumer staples - European equity - Long MXN v AUD -

4 Investment Review and Outlook Environment Global equities rebounded in the latter part of the quarter, reassured by central bank action and a modest recovery in oil prices Banking stocks in some regions came under pressure as investors considered the impact of negative interest rates on profitability Credit markets participated in the risk rally, rebounding towards quarter-end Global equities declined sharply in January and early February, amid resurgent fears over global growth, China and commodity markets. Central bank action and a recovery in oil prices subsequently provided reassurance, allowing equities and other risk assets to recoup some lost ground thereafter. Specifically, the European Central Bank (ECB) unveiled additional stimulus measures, while the Bank of Japan adopted a negative interest rate policy. In the US, the Federal Reserve (Fed) kept interest rates unchanged and affirmed that rates would rise only gradually. Despite the late-stage rally, European stocks ended the quarter lower. Banks came under particular pressure on mounting concern over the impact of negative deposit rates on profitability. The rebound in UK equities was helped by resource stocks, which responded positively to the recovery in commodity markets. US equities made gains, while those in Japan registered steep losses after a volatile quarter. Reflecting the turnaround in confidence, credit markets rallied towards quarterend. Core government bonds found support during the early part of the review period when concerns about global growth prevailed. They subsequently weakened slightly as the market mood improved. Nevertheless, sovereign yields fell over the quarter. Activity We closed our European equity banks versus insurers strategy as the challenging earnings and capital outlook for banks is now likely to persist for longer than we had previously thought. Of our currency strategies, we closed the long British sterling leg of our long British sterling versus Swiss franc pair, while also closing the short euro leg of our long Indian rupee versus euro pair. The remaining positions created a long Indian rupee versus Swiss franc strategy. Sterling s upside potential may now be limited by the uncertainty around the EU referendum and the increased likelihood of a delay to monetary tightening. Meanwhile, Switzerland has struggled to stave off deflation since it abandoned its currency linkage with the euro in January India s macroeconomic fundamentals remain stable if not modestly improving and the rupee remains fairly valued and attractive from a carry perspective. We later opened a US real versus nominal yield curve steepener strategy, expressing our view that US inflation expectations are too low. Finally, we exited our long Mexican peso versus Australian dollar currency pair, which we believed would struggle to meet our return expectations within the targeted investment time horizon. While we still have confidence in Mexico s ability to withstand the current challenges facing emerging markets, the country s subdued economic growth prospects (largely due to smaller-thanexpected benefits from energy reforms) will likely constrain the upside potential of the peso. However, we retain our Mexican government bond exposure. Performance During the first quarter of 2016, the Global Absolute Return Fund returned -3.1% against the index return of 0.2%. Over the year to 31 March 2016, the Fund returned -4.1%, against the index return of 0.7%. The declines in Japanese and European equity markets hurt our exposures here. Our US equity banks versus consumer staples strategy was also loss-making banks came under pressure from wavering investor confidence, receding expectations of further US rate hikes and worsening credit market conditions. The rebound in credit markets benefited our European corporate bonds and high yield credit strategies. Additionally, demand for safe-haven assets supported both our Australian duration and Australian forward-start interest rates strategies. Also positive was our US butterfly strategy. However, our short US duration position, which profits when US interest rates increase, lost value as Treasury yields fell over the quarter. Other positive contributors included our newly introduced US real versus nominal yield curve steepener strategy, which was boosted by increasing US inflation expectations. One consequence of the Fed s dovish comments was US dollar weakness. In addition, the recovery in US equities prompted investors to adjust their currency hedges, further undermining the dollar. This drove losses from our long US dollar versus Singapore dollar and long US dollar versus euro strategies. Outlook Our central expectation is still for modest global growth, albeit with regional variations. A growing divergence in central bank monetary policy will remain an important driver of asset returns. The US has finally embarked on monetary tightening, albeit on a gradual incline, whereas economies in Europe and Asia maintain a looser monetary path. Geopolitical tensions remain high and on many metrics asset prices appear expensive. We seek to exploit the opportunities that these conditions present by implementing a diversified range of strategies using multiple asset classes.

5 Overview Charts below illustrate the performance of each strategy over the quarter Japanese Equity US Equity Technology vs US Equity Small Cap US Equity Large Cap vs US Equity Small Cap Australian Forward-start Interest Rates Japanese equity Japanese equities are well placed for growth due to monetary policy easing and the advancement of structural reform initiatives. We believe that an economic rebound is likely, with inflation turning positive supported by a weak yen. We expect improvements in corporate profitability to support earnings. US equity technology stocks versus small-caps US technology companies tend to be the early beneficiaries of capital expenditure as economic growth picks up. However, this is yet to be reflected in earnings forecasts and valuations. High international exposure and solid capitalisation are also appealing, giving this strategy diversity in times of market stress. In contrast, smallcaps are highly US-centric in their business activities and, in our view, their consensus earnings growth forecasts are overly optimistic. Therefore, current valuations offer little protection should US growth disappoint. US equity large-cap versus small-cap In the early stages of an economic upswing, small companies are expected to outperform. As the upswing matures, this profile can change. We believe large caps are now better placed to outperform. Small companies are highly valued and will be more negatively impacted by US interest rate increases. By contrast, the broader international investor base of large-caps makes them less vulnerable and we expect earnings momentum to move in their favour. Australian short-term interest rates In our view, market expectations of a strong rebound in the Australian economy are too optimistic. Unemployment remains elevated compared with the recent past and the economy is being forced to rebalance away from the high resource demand it has experienced over the last decade. Credit growth is weak and unlikely to spur fresh investment. We expect this strategy to perform when the market prices-in slower economic activity, and hence lower interest rates, for Australia in the future.

6 Overview (continued)* US Butterfly Short US Duration Long Mexican Peso vs Australian Dollar Chinese Equity vs UK Equity Volatility US relative interest rates This strategy is a non-penal expression of a bearish view of US rates that should also benefit from a disappointing economic recovery. With the first interest rate rise since 2006 in the US taking place in December, a sharp rise in 1-year rates relative to 5- year rates and 15-year rates, as experienced in 2004, has the potential to produce strong positive returns. Short US duration The continued recovery and growth in the US economy points to interest rates rising over our investment time horizon. US bond yields continue to suggest levels of trend growth that are substantially below consensus estimates and that rates are likely to increase. This strategy is well placed to do well as investors seek higher rates. Long Mexican peso versus Australian dollar The Australian dollar is at risk from slowing growth in China and falling commodity prices as the commodity supercycle ends. The Mexican peso insulates the Fund against negative interest rate differentials, with Mexican rates higher than Australian rates. Additionally, it is benefiting from the US recovery and from structural reforms in Mexico. China equity versus UK equity volatility We believe cyclical markets, such as China, should exhibit more volatility than more defensive markets such as the UK. With the global economy prone to cyclical swings, this would likely drive volatility higher in more cyclical markets. China is not immune to global cycles and continues to be heavily influenced by US consumer demand.

7 *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 by Standard 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. FTSE, "FT-SE ", "Footsie ", [ FTSE4Good and techmark] are trade marks jointly owned by the London Stock Exchange Plc and The Financial Times Limited and are used by FTSE International Limited ( FTSE ) under licence. [ All-World, All- Share and All-Small are trade marks of FTSE.] The Fund is not in any way sponsored, endorsed, sold or promoted by FTSE International Limited ( FTSE ), by the London Stock Exchange Plc (the Exchange ), Euronext N.V. ( Euronext ), The Financial Times Limited ( FT ), European Public Real Estate Association ( EPRA ) or the National Association of Real Estate Investment Trusts ( NAREIT ) (together the Licensor Parties ) and none of the Licensor Parties make any warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the FTSE EPRA NAREIT Developed Index (the Index ) and/or the figure at which the said Index stands at any particular time on any particular day or otherwise. The Index is compiled and calculated by FTSE. However, none of the Licensor Parties shall be liable (whether in negligence or otherwise) to any person for any error in the Index and none of the Licensor Parties shall be under any obligation to advise any person of any error therein. FTSE is a trade mark of the Exchange and the FT, NAREIT is a trade mark of the National Association of Real Estate Investment Trusts and EPRA is a trade mark of EPRA and all are used by FTSE under licence. Useful numbers - Investor Services Call charges will vary. Standard Life Investments Limited is registered in Scotland (SC123321) at 1 George Street, Edinburgh EH2 2LL. Standard Life Investments Limited is authorised and regulated by the Financial Conduct Authority. Calls may be monitored and/or recorded to protect both you and us and help with our training Standard Life INVRT U222

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