Fund (Net)

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1 Overview Fund objective Key features 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 excluding Australia using a Value based investment strategy. Value style attractively priced companies with strong fundamentals outperform in the long run. Embracing breadth exploiting opportunities from more than 15,000 stocks globally. Bottom up, index unconstrained investing minimal sector, region or size constraints maximises the potential return and minimises dead money allocated to expensive stocks simply to satisfy inefficient index constraints. Focus on risk management and portfolio construction a highly diversified portfolio minimises stock specific risk whilst retaining a high degree of conviction. Performance to Relative to MSCI All Country World ex Australia Index Calendar year Total returns (AUD %) MSCI AC World ex Australia Excess (Net) 2018 YTD Rolling periods Total returns (AUD %) 1 month 3 mths FYTD 1 Year 3 Years 5 Years 10 Years SI * SI cum* MSCI AC World ex Australia Excess (Net) Relative to MSCI World ex Australia Index Calendar year Total returns (AUD %) MSCI World ex Australia Excess (Net) 2018 YTD Rolling periods Total returns (AUD %) 1 month 3 mths FYTD MSCI World ex Australia 1 Year 3 Years Excess (Net) Years 10 Years SI * SI cum* 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 from 26 July Page 1

2 Market and fund commentary Market review Global equities slightly gained overall in May in US dollar terms, although regional performance was mixed. Economic data remained broadly supportive, but a number of geopolitical developments weighed on riskier assets. US equities advanced, with economic data resilient enough to allow investors to shrug off trade sanction uncertainties. Although US unemployment fell to 3.8%, its lowest level since December 2000, wage inflation remained muted, leaving the expected pace of Federal Reserve rate normalisation unchanged. The strongest sector in May was technology, while the energy and industrial sectors also gained. Traditionally rate-sensitive sectors were somewhat weaker. Utilities, consumer staples and telecoms declined. Continental European equities saw negative returns in May as political uncertainty in Italy dominated market moves. The populist Five Star Movement and the League appeared close to forming a government but President Sergio Mattarella blocked the appointment of their proposed finance minister. This triggered a sell-off of Italian assets, with investors fearing a snap election that could put Italy s membership of the euro centre-stage. Financials, especially banks, and telecommunications services led the declines. UK equities rose over the month in local currency terms but down in USD terms. The absence of a rate hike helped support the market as it contributed to a further decline in the value of sterling, against ongoing strength in the US dollar. Merger and acquisition activity also remained an important theme. Emerging markets equities lost value, with US dollar strength a headwind amid concerns of potential de-synchronisation in global growth. Emerging European countries were among the weakest index markets, given strong Eurozone trade linkages. Countries with high exposure to global liquidity tightening also fell sharply, notably Turkey. Asian equities finished in negative territory in May. Korean equities fell as US President Trump cancelled a planned meeting with North Korean leader, Kim Jong-un. Singapore, Thailand and India also underperformed. China and Hong Kong posted positive returns as macroeconomic data remained firm. Fund commentary The Global Value strategy underperformed the indices in May. Value as a style significantly underperformed the broader market, which was led by growth and momentum stocks with the technology sector once again asserting its dominance. Underperformance was driven primarily by our US exposure, specifically within technology. The strategy also suffered from positioning in the consumer sectors and financials. Offsetting this slightly, the fund benefitted from positive stock selection within materials and healthcare. More specifically, within technology, the fund suffered from our underweight positions in the US. Not holding Apple, Facebook, Microsoft and Alphabet, all names that we do not favour based on our valuation criteria, weighed on returns. Within financials, the portfolio suffered from overweight positions across a number of regions as the financial sector declined through the month. Notably, overweight positions in US life & health insurers detracted. Overweight positions in Japanese simple banks also weighed on returns. Page 2

3 Market and fund commentary (continued) Within consumer discretionary, the strategy suffered from overweight positions in Continental Europe and the US. In Continental Europe our exposure to the apparel and media industries detracted. In the US, not holding Netflix was also a drag. Elsewhere, the strategy suffered from our overweight exposure to consumer staples, a sector that has been out of favour lately but one that offers opportunities of high quality companies on attractive valuations. On the positive side, the strategy benefitted from positioning in materials. In particular, our overweight positions in miners proved beneficial as commodity prices rose over the period. Within healthcare, our longstanding overweight towards Continental European and US pharmaceuticals proved beneficial. We maintain a diversified value exposure across sectors. We see opportunities across the full spectrum from deep value in financials and resources to high quality yield in consumer staples and health care. Utilities and real estate are the only two areas of the market where we maintain a low exposure and primarily in Asia. We view valuation for most stocks in these sectors as unattractive, particularly in the US. Our most significant exposure remains financials where we aim to take advantage of opportunities right across the quality spectrum. Deep value remains within some European and Asian banks. At the other end of the spectrum, we have a broad industry exposure to high quality companies trading at what we view as very attractive valuations, in particular within complex banks and life & health insurers within the US and UK. We have continued to gradually add to our exposure in US simple banks where some usually high quality and relatively expensive names are now good value. Attractive valuations remain across a range of high quality companies in three out of the four defensive sectors. In health care our biggest exposure remains primarily amongst US pharmaceutical companies and healthcare providers. In consumer staples we have built up our positions across a broad range of industries but the most opportunities are in the US. There has been little change in our exposure in telecoms and we retain a particular focus on mainly Asian integrated companies. Utilities remain overall unattractive. Elsewhere, within resources we maintain a preference for higher quality value within chemicals, miners and larger integrated oil companies. We have continued to add to new opportunities within the industrial sector (mainly in US and Europe) although our overall exposure to the sector remains the lowest amongst the cyclical sectors. Here, aside from not owning Amazon and Netflix, consumer discretionary remains our favoured area, in particular within the high quality yield areas of auto-parts, media and retail. Page 3

4 Attribution against MSCI All Country World ex Australia Index Sector May 2018 Telecommunication Services Materials Health Care Real Estate Energy Utilities Consumer Staples Industrials Information Technology Financials Consumer Discretionary Stock Selection (%) Asset Allocation (%) Region May 2018 Emerging Markets Asia Pacific ex Japan Fund details as at Fund size A$646m APIR code Emerging Markets Latam United Kingdom Emerging Markets Emea SCH0030AU Redemption price Inception date 26 July 2005 Buy/Sell spread 0.20%/0.15% Distribution frequency Japan Continental Europe North America Normally twice yearly June and Dec Management costs 0.98% Fund characteristics as at 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 total estimated sector and region performance attribution is reconciled with and adjusted to the reported official relative return. ActiveShare NumHoldings Fund Active share 75.8% Number of stocks 514 Source: Schroders MSCI All Country World ex Australia Index N/A 2,422 Page 4

5 Fund weights versus MSCI All Country World ex Australia Index Sector As at Health Care Telecommunication Services Consumer Staples Banks Materials Energy Insurance & Asset Manager Real Estate Utilities Industrials Consumer Discretionary Information Technology Cash Region As at United Kingdom Japan Emerging Markets Pacific ex Japan Continental Europe North America Cash Size As at Mega Large Mid Small Micro 0.1 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 Schroder Global Value Fund may be made on an application form accompanying the current Product Disclosure Statement, 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 redisseminated 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