Schroder Global Value Extension Fund. Overview. Performance to 31 December Relative to MSCI World Index. Relative to MSCI All Country World

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1 Q/4 Overview Portfolio objective To generate long-term returns before fees in excess of traditional capitalisation weighted global equity indices by investing in a diversified portfolio of equity and equity related securities of companies worldwide. The Fund has the flexibility to invest up to 150% long Value stocks and up to 50% short lower Quality stocks. Adding a distinct and diversifying short low Quality strategy creates greater potential to deliver performance across a range of market environments while retaining a strategic bias towards high return Value investing. Key features Maximised return potential with low stock specific risk Short low Quality acts as both an effective style hedge and return driver in its own right Globally unconstrained, all cap portfolio Performance to 31 Relative to MSCI World Index calendar year Total returns (AUD) YTD Fund (Gross) MSCI World Index Excess (Gross) Fund (Net) Excess (Net) rolling periods Total returns (AUD) 1 month 3 mths FYTD 1 Year Relative to MSCI All Country World calendar year 3 Years 5 Years SI * SI Cum* Fund (Gross) MSCI World Index Excess (Gross) Fund (Net) Excess (Net) Total returns (AUD) YTD Fund (Gross) MSCI AC World Excess (Gross) Fund (Net) Excess (Net) rolling periods Total returns (AUD) 1 month 3 mths FYTD 1 Year 3 Years 5 Years SI * SI Cum* Fund (Gross) MSCI AC World Excess (Gross) Fund (Net) Excess (Net) Past performance is not a reliable indicator of future performance. The difference between the fund and benchmark returns may not equal stated excess returns due to rounding. *Since Inception are from 09 September Calendar year return in the year of inception is from 09 September The MSCI World Index Index includes stocks of all the developed markets as defined by MSCI whilst the MSCI AC World Index incorporates both developed and emerging markets. Page 1

2 Quarterly commentary Market update Page 2 Global Equities experienced renewed weakness in December and the MSCI AC World finished the month down %. Although the index staged a recovery over Q4, rising 5.0%, for the year as a whole it posted a decline of 2.4% (but up +9.8% in AUD terms). During December, concerns about energy and mining stocks weighed heavily on investors as the rout in commodity prices continued. The Federal Reserve raised interest rates by 0.25% mid-month; the hike had been well-signposted and investors currently seem to believe there will be a cautious approach to raising rates going forward. Many of the themes that dominated in December also characterised the quarter, and indeed the year as a whole. Q4 was a tough one for Value investors, with Value indices being outpaced by equivalent ones tracking Growth, Momentum and Minimum Volatility. Like the rest of the year, market performance was driven by a narrow group of stocks concentrated in the US technology and consumer discretionary sectors. Looking at as a whole, energy and materials were savaged, declining by 22.2% and 16.2% in MSCI ACWI respectively. Due to over-supply and worries about slowing demand from China, the Bloomberg Commodity Index, based on the value of 22 different futures contracts, has fallen 25 per cent in, the worst of five straight years of declines. At the other end of the spectrum the top performing sectors for were consumer staples and healthcare which, in the developed market index, both rose by around 6.5%. This reflected investors' preference for lower risk stocks, which was echoed in the rise of the MSCI World Minimum Volatility Index by 5.2%. Close behind, the MSCI World Momentum Index returned 4.1% over the course of, and the MSCI World Growth Index also rose by 3.1%. The principal contributors to the success of the developed Growth index were the consumer discretionary and technology sectors, which both rose by some 5%. This strong performance was helped by some big returns from a small cohort of anointed stocks in the US, for example Amazon +118%, Netflix +134%, Alphabet (formerly Google) +45% and Facebook +34%. Away from these over-loved names the US market was generally weak: the S&P 500 climbed only 1.4% for the year, its worst showing since the Global Financial Crisis, and an equally-weighted version of the index (removing the effect of the large market caps of the cohort of winners) was in negative territory. Outside these themes it was hard to make money in with all other sectors (except telecoms) declining. Value stocks suffered in particular, with the MSCI World Value down 4.8% over the year, and the underperformance of Value versus Growth stocks was the dominant theme across the world. Indeed in the resource-heavy UK market Value stocks actually underperformed Growth by a whopping 17.7% in. The only exception to this theme was Japan where Value stocks actually beat Growth by 3.0%. Japan was also an outlier in that the market rose by 9.6%, materially outperforming both the MSCI World Index and also the otherwise all-conquering US equity market (+0.7%). The outperformance of the US has been a multi-year theme, exacerbated in by the strength of the US dollar by far the top performer amongst the major currencies, it rose 10.8% on a trade-weighted basis in. The prize for the best performing single developed market over went to Denmark which returned 23.4%. This was mainly due to the continued appreciation in Novo-Nordisk: the pharmaceuticals manufacturer which focuses on diabetes drugs rose 56% in local currency terms. Novo-Nordisk captured both of the year's key themes in a single stock: growth and low risk. It has a dominant position in a fast-growing area of the pharmaceuticals market, as the number of diabetes sufferers is expected to increase from 415 million today to 642 million by Of course, positioning like that does not come cheap. Investors are currently prepared to pay a multiple of 31 times current earnings and 26 times next year s earnings to invest in stocks from the dwindling pool of companies with such apparently enviable positioning. The other theme that persisted in was the weakness in Emerging Markets which declined by 14.9%. Hardest hit were Latin American equities, down 31.0%, while EMEA did not fare much better, losing 20.0%. In the latter region, South African equities lost 25.5% mainly due to the weakness in the currency a problem shared by many other developing countries over the year. Emerging Markets, the former growth darling, can now be invested in on a multiple of 12.8 times current earnings.

3 Fund commentary The QEP Global Value Extension strategy underperformed over the year, with our focus on valuations and business quality side-lined in a market that for much of the past five years has been dominated by Growth and Momentum. Stock selection in US cyclical sectors was the key detractor from returns as investors continued to focus attention on a small number of expensive Growth stocks which we avoided or shorted. In particular, the group of stocks popularly known as FANG (Facebook, Amazon, Netflix and Google, now Alphabet) were driven to even higher valuations. Our allocation to Emerging Markets held back performance as these markets saw a broad sell-off. Overall, relative performance in resources was broadly in line with the index. In these sectors all stocks suffered due to the weak commodity price environment, but our shorts in higher-cost producers (which were hit hardest) balanced out the poor performance of the stocks where we held leveraged long positions. Other influences partially off-setting the negative factors included positive stock selection in financials. Our positions in simple banks, favouring the US while avoiding or shorting commodity-exposed Canadian and Australian banks, paid off. Our long-standing holdings in insurance stocks also performed well, particularly in the US, and we have been taking profits over the last quarter. Our shorts in US utilities were rewarded as the 'reach for yield' trade started to unwind with the prospect of rising interest rates. Our leveraged long positions in the strong Japanese market were another positive contributor, as performance was driven by the attractively-valued, good quality stocks that we favour. Contributions here came especially from the telecoms and technology sectors, but also from both consumer discretionary and industrials. The strategy was behind the index over the fourth quarter, as the benefit of our short positions helped to counter the style headwinds. A small group of US Growth stocks popularly known as FANG (Facebook, Amazon, Netflix, Google, now Alphabet) performed very strongly we avoided them due to their already elevated valuations. Such a narrow market environment tends to be unfavourable to our diversified, index-unconstrained approach to investing. On the positive side, stock selection in resources contributed thanks to our short positions in miners and in the energy sector. Our shorts in selected utilities stocks and in Canadian banks were rewarded. Elsewhere, we benefited from leveraged long positions in good quality Value stocks in Japan, particularly in the telecoms and industrials. Performance was behind the index for the month of December. Our leveraged long positions in Japan were the key contributors, as it was high quality, attractively-valued stocks that drove the strong market performance. Within Japan, telecoms was the stand-out sector and small contributions also came from several cyclical sectors. Our lower allocation to expensive, rate-sensitive areas in the US market, utilities and REITs, detracted. The continued outperformance of a narrow group of expensive US Growth stocks popularly known as FANG also detracted over the month. Amongst defensives we retain our preference for pharmaceuticals. Utilities in the US and Japan remain unattractive: we have a zero long position in these areas and shorts in the US mean that the sector has the largest net short weight in the strategy. We continue to favour European and Emerging Market stocks in both utilities and telecoms. Within financials, banks offer a broad range of value opportunities from high quality but over-sold simple banks in the US to lower quality but recovering banks in Europe. Australian and Canadian banks remain unattractive in our view. Our net weight in real estate is short: although we remain invested in high quality Asian stocks, these positions are more than offset by our short positions in US REITs. Within insurance we maintain our preference for attractively-priced, high quality companies with a focus on long-term business strength and diversity. In mining, our preference remains for larger, lower cost, diversified companies. Within energy, large integrated oil & gas stocks tend to offer attractive dividend yields and strong balance sheets. We remain short a number of high cost producers with over-extended balance sheets. Page 3

4 Attribution against MSCI World Index Sector 3 months to Energy Consumer Staples Utilities Industrials Health Care Materials Financials Telecommunication Consumer Discretionary Information Technology Stock Selection (%) Asset Allocation (%) Region 3 months to Japan Emerging Latin America Emerging EMEA Emerging Asia United Kingdom Continental Europe Pacific Ex Japan North America Stock Selection (%) Asset Allocation (%) The attribution analysis shown above is intended to provide an indicative summary of the contributions to relative performance. The information is generated using Factset, a multi-currency performance analytical system. The estimated attribution Sector and Region performance is reconciled with and adjusted to the reported official performance figures. Portfolio characteristics Fund MSCI World Index Tracking error* 2.2% N/A Active share 117.4% N/A Number of stocks (long / short) 806 / 157 1,653 Source: Schroders, *Style Research Fund details Portfolio size $A159m APIR code SCH0043AU Redemption price $ Inception date 09 September 2010 Buy/Sell spread Nil Management costs 1.03% Distribution frequency Normally annually June Page 4

5 Portfolio weights versus MSCI World Index Sector As At 31 December Information Technology Materials Industrials Energy Health Care Telecommunication Services Insurance & Asset Mgt Banks Consumer Discretionary Real Estate Consumer Staples Utilities Cash Region Emerging Markets Japan Pacific ex Japan United Kingdom Continental Europe North America Cash Market capitalisation Mega Large Mid Small Micro The difference between the fund and benchmark weights may not equal stated active weights due to rounding. Schroder Investment Management Australia Limited Level 20 Angel Place, 123 Pitt Street, Sydney NSW 2000 Phone: Fax: (02) Investment in the may be made on an application form in the Information Memorandum, available from Schroder Investment Management Australia Limited (ABN AFSL ) ( Schroders ).This Report is intended solely for the information of the person to whom it is provided by Schroders. It should not be relied on by any person for the purposes of making investment decisions. Total returns are calculated using exit price to exit price, after fees and expenses, and assuming reinvestment of income. Gross returns are calculated using exit price to exit price and are gross of fees and expenses. The repayment of capital and performance of the Funds is not guaranteed by Schroders or any company in the Schroders Group. Past performance is not a reliable indicator of future performance. Unless otherwise stated the source for all graphs and tables contained in this report is Schroders. Opinions constitute our judgment at the time of issue and are subject to change. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation. For security reasons telephone calls may be recorded. Third party data is owned by the applicable third party identified above and is provided for your internal use only. Such data may not be reproduced or re-disseminated and may not be used to create any financial instruments or products or any indices. Such data is provided without any warranties of any kind. Neither the third party data owner nor any other party involved in the publication of this document can be held liable for any error. The terms of the third party s specific disclaimers are set forth in the Important Information section at Page 5