QUARTERLY INCOME PORTFOLIOS SANTANDER ASSET MANAGEMENT UK THE SANTANDER ATLAS THE SANTANDER ATLAS PORTFOLIOS FOR GROWTH AND INCOME

Transcription

1 SANTANDER ASSET MANAGEMENT UK ATLAS QUARTERLY GROWTH & UPDATE INCOME Q PORTFOLIOS Q1 THE SANTANDER ATLAS 2018 GROWTH UPDATE PORTFOLIOS THE SANTANDER ATLAS PORTFOLIOS FOR GROWTH AND INCOME All information in this document is valid as at the end of March 2018, unless stated otherwise. For the most up-to-date information, including daily prices, please visit our website

2 CONTENTS This Quarterly Update document is designed to provide you with information on the Santander Atlas Portfolios for Growth and Income and includes performance data, the asset allocation and a full breakdown of the holdings for each of the portfolios, as well as fund and market commentary from the lead fund managers, Tom Caddick and Toby Vaughan. 01 Atlas Growth Portfolios Overview Pages Atlas Income Portfolio Overview Pages Market Update Pages Santander Atlas Portfolio 3 Quarterly Update Pages Santander Atlas Portfolio 4 Quarterly Update Pages Santander Atlas Portfolio 5 Quarterly Update Pages Santander Atlas Portfolio 6 Quarterly Update Pages Santander Atlas Portfolio 7 Quarterly Update Pages Atlas Income Portfolio Page Projected Income Page 27 All information in this document is as at 31 March 2018.

3 SANTANDER ASSET MANAGEMENT UK Q ATLAS GROWTH PORTFOLIOS OVERVIEW The Santander Atlas Portfolios give you a choice of five multi-asset growth portfolios and one income portfolio to suit the level of risk you feel comfortable with. Built on a robust and rigorous investment process, the portfolios offer: A choice of five UK regulated growth portfolios, constructed as fund of funds, each managed within a specific volatility range over the long term. An actively-managed solution to improve returns through active and passive building blocks. Portfolios diversified and dynamically managed across core global asset classes including Equities, Bonds, Property and Alternatives. Competitive annual management charge of only 0.40% * per year. An ongoing charge capped at 0.99% *. High levels of transparency in fees (including transaction Costs) and holdings. No entry or exit charges. The portfolios are unfettered, which means the fund managers are not required to invest in Santander Asset Management. The Santander Atlas Growth Portfolios range has been benchmarked against funds across the UK by independent financial information business Defaqto, and has received a 5 Diamond Rating for providing a wellbalanced proposition across features and charges. Rayner Spencer Mills (RSM), an independent research company, has researched the Santander Atlas Portfolio range and has awarded them with the Recommended Fund Range Rating since May Distribution Technology (DT) have independently reviewed the Atlas Growth Portfolios and awarded them Select Fund status. *Institutional accumulation (IA) share class, only available via platforms. ATLAS 3 ATLAS 4 ATLAS 5 ATLAS 6 ATLAS 7 3

4 QUARTERLY UPDATE Q THE SANTANDER ATLAS PORTFOLIOS FOR GROWTH AND INCOME ATLAS GROWTH PORTFOLIOS AT A GLANCE ATLAS 3 ATLAS 4 ATLAS 5 ATLAS 6 ATLAS 7 Objective Achieve long-term growth in value through capital appreciation and income and will target a lower level of volatility over the longer term. Achieve long-term growth in value through capital appreciation and income and will target a low to moderate level of volatility over the longer term. Achieve long-term growth in value through capital appreciation and income and will target a moderate level of volatility over the long term. Achieve long-term growth in value through capital appreciation and income and will target a moderate to high level of volatility over the long term. Achieve long-term growth in value through capital appreciation and income and will target a higher level of volatility over the long term. Ongoing Charge Capped at 0.99% Reward NEUTRAL POSITIONS 5% 5% 5% 5% 15% 6 5% 5% 7 90% 30% 75% 5% 5 60% 10% 5% 10% 20% 45% 4 40% 3 65% Risk Equities Fixed Income Alternatives Liquidity Source: Santander Asset Management UK. 4 SANTANDER ASSET MANAGEMENT

5 SANTANDER ASSET MANAGEMENT UK Q ATLAS INCOME PORTFOLIO OVERVIEW THE ATLAS INCOME PORTFOLIO AIMS TO: Provide a sustainable minimum level of income, without guarantees, of 4% yield. Provide some capital growth. Pay a sustainable income that is smoothed throughout the year. (We estimate how much income we expect to pay you over the year, and then pay you 11 months at that income level. In the twelfth month, we adjust the amount of income you receive either upwards or downwards to reflect the actual amount of income that has been achieved over the year.) HOW WE MANAGE THE PORTFOLIO The portfolio is diversified across different asset classes and geographies so that you can benefit from opportunities that arise in different places and in different market conditions. There is clarity over the amount of return you can expect for a specific target risk range. The Atlas Income Portfolio is designed to sit within a risk profile of 4 under normal market conditions (on a scale of 1 to 10, where 1 is low risk and 10 is high risk). This is based on Santander's own risk scale, which is based on a risk scale defined by Distribution Technology. Distribution Technology are an independent provider of risk profiling tools to fund and investment advisers. The nature of achieving a target income means you should expect the risk profile to move between 3 and 5 in more extreme market conditions. We access only high-quality funds. You have peace of mind that your investment is being closely monitored and managed every day to a clear set of objectives. We offer competitive charges and fees (ongoing charge capped at 0.99%). *The Atlas Income Portfolio minimum yield target is calculated on a Projected Yield basis, where the target level of yield (at least 4%) is applied to the Net Asset Value of the fund at the start of its accounting year. This creates the pence per unit that will need to be delivered over the coming 12 months in order to achieve the Projected Yield. 5

6 QUARTERLY UPDATE Q THE SANTANDER ATLAS PORTFOLIOS FOR GROWTH AND INCOME ATLAS INCOME PORTFOLIO AT A GLANCE Objective The investment objective of the Fund is to provide minimum 4%*income, without guarantees, together with the potential for capital growth over the long term. Target income yield * Pays income Target Pence Per Unit (PPU) per month** Share classes available 4% (minimum) Monthly (smoothed) 0.84 (II) 1.18 (IA) Institutional Income (II) Institutional Accumulation (IA) Tactical investment limits Although we broadly aim to invest according to the asset allocation shown, we will flex our approach within the investment limits below in order to maximise returns in the prevailing market conditions. Equities Fixed Interest & Cash Alternatives Additional information: Call options Property 15% 65% 25% 85% 0% 20% 0% 30% 0% 10% II CLASS PPU MONTHLY PAYMENTS NEUTRAL POSITIONS Reward 1.51 Risk Level 3 5% Risk Level % 40% 55% JAN 17 FEB 17 MAR 17 APR 17 MAY 17 JUN 17 JUL 17 AUG 17 SEP 17 OCT 17 NOV 17DEC 17 JAN 18 FEB 18 MAR 18 Risk *The Atlas Income Portfolio minimum yield target is calculated on a Projected Yield basis, where the target level of yield (at least 4%) is applied to the Net Asset Value of the fund at the start of its accounting year. This creates the pence per unit that will need to be delivered over the coming 12 months in order to achieve the Projected Yield. **As at 31 March with the aim to deliver the same PPU for the remaining months of the accounting year. Equities Fixed Income Alternatives Source: Santander Asset Management UK. 6 SANTANDER ASSET MANAGEMENT

7 SANTANDER ASSET MANAGEMENT UK Q MARKET UPDATE FROM OUR LEAD FUND MANAGERS Tom Caddick Chief Investment Officer Toby Vaughan Head of Multi Strategy Solutions WHAT WERE THE KEY FACTORS INFLUENCING MARKETS IN THE FIRST QUARTER OF 2018? After a positive start to the year, investor worries crept in about rising inflation and the potential for interest rates to go up faster than expected. By February this helped set a more nervous tone. The S&P 500 Index, the top US 500 publicly listed companies, recorded its first negative month of return since October From March, global trade wars started adding to the tension. Concerns here were centred on trade tariffs as well as other actions taken by the US President Donald Trump to shield the US against Chinese imports. So we saw the quarter end on an increasingly volatile note, meaning more in the way of short term price movements in the price of Shares. HOW DID THIS IMPACT INVESTMENT PERFORMANCE AROUND THE WORLD? As you d expect, investment performance was generally lower due to these nervous conditions, with returns falling across most asset classes and in most markets around the world. As an example of the changing sentiment, market price movements became unpredictable. Most stock markets ended the quarter lower, whereas in 2017, the US market rose every month. This expectation of higher levels of risk is something we have previously flagged. As risk appetite deteriorates, Bond prices typically rise. But this didn t materialise as expected, and Cash was actually one of the best performing asset classes in the short term. Bond market returns were low due to the nagging concerns around inflation and interest rates. Market performance for 2018 ASSET CLASS SUB-ASSET CLASS INDEX RETURN Equities UK Equities FTSE All-Share TR -6.87% Europe ex-uk Equities MSCI Europe ex UK TR GBP -4.61% US Equities S&P 500 TR GBP -4.30% Japan Equities Topix TR -2.62% Asia Pacific ex-japan Equities MSCI AC Asia Pacific ex Japan TR GBP -4.10% Emerging Markets Equities MSCI EM (Emerging Markets) TR GBP -2.15% Global Equities MSCI AC World ex UK TR -4.20% Alternatives Absolute Return Lipper Global Absolute Return GBP Medium -0.53% Fixed Income UK corporate Bonds Markit iboxx Sterling Non Gilts Overall TR -1.15% UK government Bonds FTSE Actuaries UK Coven Gilts All Stocks TR GBP 0.26% Global Emerging Markets Bonds JP Morgan EMBI Global (USD) -1.78% International Bonds JP Morgan Global GBI Hedged USD TR 0.39% High Yield Bonds BofA Merrill Lynch Global High Yield TR USD Hedged -0.59% Liquidity Liquidity LIBOR GBP Overnight Rate 0.12% Source: Lipper. Total return performance figures for the period 31 December 2017 to 31 March Past performance is not a guide to future performance. 7

8 QUARTERLY UPDATE Q THE SANTANDER ATLAS PORTFOLIOS FOR GROWTH AND INCOME HOW DO YOU SEE THE OUTLOOK FOR MARKETS DEVELOPING NOW? We ve been enjoying a long period of growth. With some assets such as Shares and Bonds looking expensive, we ve been expecting lower returns and more uncertainty this year. At the fundamental level, though, we still think the engine of global growth is working. We re not seeing any clear signs of global recession yet. But the jitters around inflation, interest rates and rising world trade tensions remain barriers. So we can probably expect a bumpy ride through the rest of the year. WHAT DOES THIS MEAN FOR INVESTORS? Ultimately, we re more cautious on Shares for now and reduced our exposure over the quarter. But over the medium term we expect risk taking to be rewarded. And with Bonds not currently as reliable to diversify risk, we re also looking to more Alternative strategies and investments for this role. If global recession does come, things could get challenging for a while because we re still in a low interest rate environment. This means policymakers would have fewer tools to help than in 2008 when the financial crisis hit. This is something we're monitoring. We re still positive on the outlook for investors over the medium to longer-term. But it may take more time now to generate growth, and the levels of return may be at lower levels than we ve been used to. OUTLOOKS BY ASSET CLASS EQUITIES As we identify trade wars as the main short-terms risk for Equities despite, as mentioned, a still healthy macro backdrop it becomes increasingly important to differentiate between different regions / countries / sectors as we expect returns dispersions to be significant going forward. In that respect, US Equities seem better positioned at the moment given that the US is a more insulated economy and the S&P 500 combines a more defensive profile with meaningful exposure to Tech (25% of the index), which we think remains attractive given unchanged supportive fundamental drivers like IT spending growth, repatriation tailwinds, weakening USD and the scarcity (and sustainability) of growth anywhere else. FIXED INCOME While government Bonds finally showcased some safe haven qualities with positive performance in March, the fundamental backdrop remains very challenging in light of expensive valuations, asymmetric risks from monetary tightening and the potential for upside inflation surprises. In the credit space while we maintain an overall neutral stance the need to pick the right spots is even more relevant as interest rate differentials (and therefore hedging costs) approach all-time highs and therefore pose meaningful challenges in the context of low rates. ALTERNATIVES In line with our previous stance, we remain constructive on absolute return funds given the role they can play in portfolios in an environment of expensive valuations across the board for traditional asset classes. Even more so at the moment as we don t have positive view on more traditional asset classes like Equities and Bonds we see the need for increased focus on the alternatives space, where skilled managers should be able to profit from the increased volatility and dispersion of returns. 8 SANTANDER ASSET MANAGEMENT

9 SANTANDER ASSET MANAGEMENT UK Q SANTANDER ATLAS PORTFOLIO 3 QUARTERLY UPDATE INVESTMENT OBJECTIVE The Investment Objective of the Fund is to increase the value of your investment through a combination of income and capital growth. The manager will achieve this whilst targeting a lower level of volatility over the longer term. PORTFOLIO COMMENTARY The Santander Atlas Portfolio 3 delivered a negative return during the first quarter, on the back of negative performance from Equities and Bonds. Total fund size: 87M TACTICAL ASSET ALLOCATION GEOGRAPHICAL/ASSET CLASS BREAKDOWN (%) 12.7% % 53.4% % 5 Equities Fixed Income Alternatives Cash 0 UK European ex UK North America Japan Asia Pacific ex Japan Global Emerging Corporate Bonds UK Gilts Overseas High Yield GEM Emerging Market Debt Alternatives Cash Source: Santander Asset Management UK settled position as at 31 March

10 QUARTERLY UPDATE Q THE SANTANDER ATLAS PORTFOLIOS FOR GROWTH AND INCOME PORTFOLIO ACTIVITY The first quarter was characterised by a return of volatility. While the macro backdrop remained strong, geopolitical tensions and inflation fears weighted negatively on financial markets. During the quarter we have decreased our allocation to Equity and have increased the allocation to Cash. We reduced our allocation to Equity through UK, Europe, North America and Asia Pacific mainly through passive vehicles. In Alternatives we sold our position in Amundi European Volatility as the need for protection decreased with lower Equity levels. During the market sell off, we benefited from the Put spread we hold. In High Yield we rationalised by selling our position in Schroders and holding only one position in Pimco HY. HOLDINGS Fund Name Santander Atlas Portfolio 3 EQUITY 1. ISHARES S&P 500 UCITS ETF ( EUR) B XETRA 4.20% 2. SCHRODER PRIME UK EQ IA 2.25% 3. FIDELITY INVESTMENT FUNDS INDEX UK-PA* 2.23% 4. FUT. TOPIX INDX 06/ % 5. BLACKROCK EURO DYNAMIC FA AC 1.21% 6. INVESCO PERPETUAL UK GRW NOTR ACC 1.00% 7. VANGUARD PACIFIC EX-JAP STCK INDEX GBP A 0.95% 8. MAJEDIE ASSET UK EQTY X ACC 0.94% 9. ISHARES MSCI AC FAR EAST EX - JAPAN ETF* 0.91% 10. FUT. E-MINI S&P /18 (CME) 0.86% 11. LYXOR ETF JAPAN TOPIX (ETF)* 0.76% 12. VANGUARD FTSE DEV EUROPE XUK E I-A RET* 0.66% 13. ISHARES CO FTSE 100 UCITS ETF DIST (GBP)* 0.00% FIXED INCOME 14. JPM AGGREGATE BOND C GBP HEDGED INC 6.04% 15. VANGUARD U.K. GOVERNMENT BD IDX GBP ACC* 5.33% 16. INSIGHT UK GOVERNMENT ALL MATURITIES BD 4.90% 17. LEGAL AND GENERAL ALL STK I AC* 4.86% 18. INSIGHT INVESTMENT DISCRETIONARY F 4.06% 19. ISHARES FTSE UK ALL STOCKS GILT (GBP)* 3.34% 20. FIDELITY MNYBLDR INC-NET 3.03% 21. JUPITER STRATEGIC BOND -I 2.87% 22. ISHARES CORE CORPORATE BOND (GBP)* 2.84% 23. MFS MERIDIAN FUNDS EMERGING MKTS DEBT A1 2.74% 24. PIMCO GL H/Y P 2.52% 25. BLACKROCK COL. UK GILTS ALL STOCKS-LA* 2.32% 26. HSBC INV OEIC CORP BOND ACC 2.04% 27. FIDELITY STRATEGIC BD Y ACC 1.94% 28. M&G OPTIMAL INCOME -A- NET 1.76% 29. VANGUARD UK INVST GRADE BOND INDX GBP A* 1.56% 30. ISHARES CORPORATE BOND INDEX F 1.17% ALTERNATIVES 31. BNY MELLON ABSOLUTE RETURN EQUITY GBP S 4.00% 32. OLD MUTUAL GLOBAL EQUITY ABSOLUTE RETURN 3.69% 33. JANUS HENDERSON UK AB. RETURN A (GBP) 3.19% 34. JPM INCOME OPPORTUNITY A (DIST) - GBP (H 2.66% 35. BSF FIXED INCOME STRATEGIES D2RFG 2.47% Source: Santander Asset Management UK settled position as at 31 March New funds for the quarter are indicated in bold. * Passive vehicle Holdings calculated as a percentage of the total net assets (TNA). 10 SANTANDER ASSET MANAGEMENT

11 SANTANDER ASSET MANAGEMENT UK Q PERFORMANCE Cumulative Performance % 3 Months 6 Months YTD 1 Year 3 Years 4 Years 5 Years Santander Atlas Portfolio * Discrete Performance % Mar 2017 to Mar 2018 Mar 2016 to Mar 2017 Mar 2015 to Mar 2016 Mar 2014 to Mar 2015 Mar 2013 to Mar 2014 Santander Atlas Portfolio * Source: Lipper as at 31 March 2018 The performance shown in the tables above is based on circumstances which no longer apply due to changes to the Fund s name, investment objective and policy as of 30 September Performance shown corresponds to the IA share class. Past performance is not a guide to future performance. The value of your investment can fall as well as rise and you may not get back the original amount you invested. For funds that invest in Bonds, the value of investments can fall if a Bond issuer defaults, receives a lower credit rating, or if the risk rating of an individual issue changes. Investments in overseas securities may be affected by changes in the rates of exchange which may also cause the value of your investment and any income it may pay to go down or up. The performance figures shown are calculated* on percentage growth, on a bid to bid basis with net income reinvested. They are net of annual management charges and exclude portfolio fees. *The share class was launched on 30 September 2013, past performance before launch date includes data from another share class with similar characteristics. Past performance is not a guide to future performance. The value of your investment can fall as well as rise and you may get back less than the original amount you invested. Risks warnings Prior to making an investment decision, please consider the following risks; (i) Interest Rate Risk: For Funds investing in Fixed Income, changes in interest rates are likely to affect the Fund's value. In general, as interest rates rise, the price of a fixed Bond will fall and vice versa. (ii) Credit Risk: The value of the Fund may fall if the companies and governments who have issued the Bonds deterioriate in quality, or in the worst case scenario become insolvent. (iii) Liquidity Risk: It may be difficult to sell some investments (or sell them without making a loss) due to an insufficient number of buyers in the market. (iv) Derivatives Risk: The use of derivatives may result in relatively small market movements leading to disproportionately large (positive or negative) movements in the value of the investment. (v) Counterparty Risk: There is a risk that a counterparty may default or not comply with its contractual obligations resulting in financial loss. (vi) Currency Risk: The Fund can hold some investments that are not denominated in UK Sterling. These may be affected by changes in currency exchange rates. (vii) Emerging Market Risk: The Fund invests in markets where economic, political and regulatory factors can be significant. This may affect the liquidity, settlement and asset values. Any such event can have a negative effect on the value of your investment. Investments in emerging markets can demonstrate significant declines in value over extended periods of time. (viii) Property Risk: Property may be difficult to sell and can demonstrate significant declines in value due to changes in economic conditions and interest rates. (ix) More information about other risks can be found in the Fund Prospectus section Risk Factors. *Currency is GBP 11

12 QUARTERLY UPDATE Q THE SANTANDER ATLAS PORTFOLIOS FOR GROWTH AND INCOME 05 SANTANDER ATLAS PORTFOLIO 4 QUARTERLY UPDATE INVESTMENT OBJECTIVE The Investment Objective of the Fund is to increase the value of your investment through a combination of income and capital growth. The manager will achieve this whilst targeting a lower to moderate level of volatility over the longer term. PORTFOLIO COMMENTARY Santander Atlas Portfolio 4 delivered a negative return during the first quarter, on the back of negative performance from Equities and Bonds. Total fund size: 273M TACTICAL ASSET ALLOCATION GEOGRAPHICAL/ASSET CLASS BREAKDOWN (%) 13.4% 10.4% 40.1% % 10 5 Equities Fixed Income Alternatives Cash 0 UK European ex UK North America Japan Asia Pacific ex Japan Global Emerging Corporate Bonds UK Gilts Overseas High Yield GEM Emerging Market Debt Alternatives Cash Source: Santander Asset Management UK settled position as at 31 March SANTANDER ASSET MANAGEMENT

13 SANTANDER ASSET MANAGEMENT UK Q PORTFOLIO ACTIVITY The first quarter was characterised by a return of volatility. While the macro backdrop remained strong, geopolitical tensions and inflation fears weighted negatively on financial markets. During the quarter we have decreased our allocation to Equity and have increased the allocation to Cash. We reduced our allocation to Equity through UK, Europe, North America and Asia Pacific mainly through passive vehicles. In Alternatives we sold our position in Amundi European Volatility as the need for protection decreased with lower Equity levels. During the market sell off, we benefited from the Put spread we hold. In High Yield we rationalised by selling our position in Schroders and holding only one position in Pimco HY. HOLDINGS Fund Name Santander Atlas Portfolio 4 EQUITY 1. ISHARES S&P 500 UCITS ETF ( EUR) B XETRA* 4.00% 2. FIDELITY INVESTMENT FUNDS INDEX UK-PA* 3.96% 3. PIMCO GL H/Y P 3.47% 4. FIRST ST ASIAN EQ PLUS 3 USD 3.01% 5. FUT. TOPIX INDX 06/18* 2.84% 6. VANGUARD US 500 STK INDEX FUND (USD) 2.53% 7. JPM UK EQUITY CORE FUN E ACC 2.13% 8. LYXOR UCITS ETF S&P D-USD 2.04% 9. ISHARES CO FTSE 100 UCITS ETF DIST (GBP)* 1.89% 10. SCHRODER PRIME UK EQ IA 1.88% 11. FUT. E-MINI S&P /18 (CME) 1.71% 12. INVESCO PERPETUAL UK GRW NOTR ACC 1.48% 13. BLACKROCK EUROPEAN DYNAMIC - A 1.47% 14. GLG JAPAN COREALPHA I GBP 1.43% 15. MAJEDIE ASSET UK EQTY X ACC 1.42% 16. BAILLIE GIFFORD JPN B ACC 1.11% 17. VANGUARD FTSE DEV EUROPE XUK E I-A RET* 0.90% 18. ISHARES MSCI AC FAR EAST EX - JAPAN ETF* 0.76% 19. BLACKROCK EURO DYNAMIC FA AC 0.53% 20. ISHARES MSCI EUROPE EX-UK INC (IE) GBP 0.49% 21. FUT. EURO STOXX 50 06/ % 22. VANGUARD PACIFIC EX-JAP STCK INDEX GBP A 0.22% FIXED INCOME 23. VANGUARD U.K. GOVERNMENT BD IDX GBP ACC* 5.83% 24. INSIGHT INVESTMENT DISCRETIONARY F 4.84% 25. INSIGHT UK GOVERNMENT ALL MATURITIES BD 4.18% 26. FIDELITY MNYBLDR INC-NET 3.79% 27. HSBC INV OEIC CORP BOND ACC 3.67% 28. PIMCO GL H/Y P 3.47% 29. MFS MERIDIAN FUNDS EMERGING MKTS DEBT A1 2.70% 30. ISHARES CORE CORPORATE BOND (GBP)* 2.32% 31. JUPITER STRATEGIC BOND -I 1.88% 32. ISHARES CORPORATE BOND INDEX F 1.55% 33. VANGUARD UK INVST GRADE BOND INDX GBP A* 1.43% 34. FIDELITY STRATEGIC BD Y ACC 1.34% 35. M&G OPTIMAL INCOME -A- NET 1.10% ALTERNATIVES 36. BNY MELLON ABSOLUTE RETURN EQUITY GBP S 3.89% 37. OLD MUT GB EQY ABS RE A (USD) 3.69% 38. JANUS HENDERSON UK AB. RETURN A (GBP) 3.54% 39. BSF FIXED INCOME STRATEGIES D2RFG 1.74% 40. OLD MUTUAL GLOBAL EQUITY ABSOLUTE RETURN 0.55% Source: Santander Asset Management UK settled position as at March New funds for the quarter are indicated in bold. * Passive vehicle Holdings calculated as a percentage of the total net assets (TNA). 13

14 QUARTERLY UPDATE Q THE SANTANDER ATLAS PORTFOLIOS FOR GROWTH AND INCOME PERFORMANCE Cumulative Performance % 3 Months 6 Months YTD 1 Year 3 Years 4 Years 5 Years Santander Atlas Portfolio * Discrete Performance % Mar 2017 to Mar 2018 Mar 2016 to Mar 2017 Mar 2015 to Mar 2016 Mar 2014 to Mar 2015 Mar 2013 to Mar 2014 Santander Atlas Portfolio * Source: Lipper as at 31 March 2018 The performance shown in the tables above is based on circumstances which no longer apply due to changes to the Fund s name, investment objective and policy as of 30 September Performance shown corresponds to the IA share class. Past performance is not a guide to future performance. The value of your investment can fall as well as rise and you may not get back the original amount you invested. For funds that invest in Bonds, the value of investments can fall if a Bond issuer defaults, receives a lower credit rating, or if the risk rating of an individual issue changes. Investments in overseas securities may be affected by changes in the rates of exchange which may also cause the value of your investment and any income it may pay to go down or up. The performance figures shown are calculated* on percentage growth, on a bid to bid basis with net income reinvested. They are net of annual management charges and exclude portfolio fees. *The share class was launched on 30 September 2013, past performance before launch date includes data from another share class with similar characteristics. Past performance is not a guide to future performance. The value of your investment can fall as well as rise and you may get back less than the original amount you invested. Risks warnings Prior to making an investment decision, please consider the following risks; (i) Interest Rate Risk: For Funds investing in Fixed Income, changes in interest rates are likely to affect the Fund's value. In general, as interest rates rise, the price of a fixed Bond will fall and vice versa. (ii) Credit Risk: The value of the Fund may fall if the companies and governments who have issued the Bonds deterioriate in quality, or in the worst case scenario become insolvent. (iii) Liquidity Risk: It may be difficult to sell some investments (or sell them without making a loss) due to an insufficient number of buyers in the market. (iv) Derivatives Risk: The use of derivatives may result in relatively small market movements leading to disproportionately large (positive or negative) movements in the value of the investment. (v) Counterparty Risk: There is a risk that a counterparty may default or not comply with its contractual obligations resulting in financial loss. (vi) Currency Risk: The Fund can hold some investments that are not denominated in UK Sterling. These may be affected by changes in currency exchange rates. (vii) Emerging Market Risk: The Fund invests in markets where economic, political and regulatory factors can be significant. This may affect the liquidity, settlement and asset values. Any such event can have a negative effect on the value of your investment. Investments in emerging markets can demonstrate significant declines in value over extended periods of time. (viii) Property Risk: Property may be difficult to sell and can demonstrate significant declines in value due to changes in economic conditions and interest rates. (ix) More information about other risks can be found in the Fund Prospectus section Risk Factors. *Currency is GBP 14 SANTANDER ASSET MANAGEMENT

15 SANTANDER ASSET MANAGEMENT UK Q SANTANDER ATLAS PORTFOLIO 5 QUARTERLY UPDATE INVESTMENT OBJECTIVE The Investment Objective of the Fund is to increase the value of your investment through a combination of income and capital growth. The manager will achieve this whilst targeting a moderate level of volatility over the longer term. PORTFOLIO COMMENTARY Santander Atlas Portfolio 5 delivered a negative return during the first quarter, on the back of negative performance from Equities and Bonds. Total fund size: 112M TACTICAL ASSET ALLOCATION GEOGRAPHICAL/ASSET CLASS BREAKDOWN (%) 12.1% 5.5% % 53.3% Equities Fixed Income Alternatives Cash UK European ex UK North America Japan Asia Pacific ex Japan Global Emerging Corporate Bonds UK Gilts Overseas High Yield GEM Emerging Market Debt Alternatives Cash Source: Santander Asset Management UK settled position as at 31 March

16 QUARTERLY UPDATE Q THE SANTANDER ATLAS PORTFOLIOS FOR GROWTH AND INCOME PORTFOLIO ACTIVITY The first quarter was characterised by a return of volatility. While the macro backdrop remained strong, geopolitical tensions and inflation fears weighted negatively on financial markets. During the quarter we have decreased our allocation to Equity and have increased the allocation to Cash. We reduced our allocation to Equity through UK, Europe, North America and Asia Pacific mainly through passive vehicles. In Alternatives we sold our position in Amundi European Volatility as the need for protection decreased with lower Equity levels. During the market sell off, we benefited from the Put spread we hold. In Fixed Income we marginally increased our allocation to Corporate Bonds through Fidelity moneybuilder. HOLDINGS Fund Name Santander Atlas Portfolio 5 EQUITY 1. FIDELITY INVESTMENT FUNDS INDEX UK-PA* 5.62% 2. ISHARES S&P 500 UCITS ETF ( EUR) B XETRA* 4.64% 3. ROYAL LONDON UK ALL SHARE TRACKER Z* 4.17% 4. VANGUARD US 500 STK INDEX FUND (USD) 3.12% 5. LYXOR UCITS ETF S&P D-USD* 2.84% 6. SCHRODER PRIME UK EQ IA 2.74% 7. ACADIAN EMERGING MK EQ UCIT II CUSDIA 2.67% 8. FIRST ST ASIAN EQ PLUS 3 USD 2.65% 9. BAILLIE GIFFORD JPN B ACC 2.50% 10. JPM UK EQUITY CORE FUN E ACC 2.45% 11. GLG JAPAN COREALPHA I GBP 2.24% 12. MAJEDIE ASSET UK EQTY X ACC 2.19% 13. FUT. TOPIX INDX 06/ % 14. BLACKROCK EUROPEAN DYNAMIC - A 2.04% 15. INVESCO PERPETUAL UK GRW NOTR ACC 1.98% 16. ISHARES CORE MSCI EMERG. MKTS IMI ETF* 1.94% 17. FUT. E-MINI S&P /18 (CME) 1.86% 18. VANGUARD FTSE DEV EUROPE XUK E I-A RET* 1.64% 19. BLACKROCK GF ASIA PACIFIC EQ. INC - A2RF 1.58% 20. JO HAMBRO UK DYNAMIC YA GBP 1.23% 21. ISHARES CO FTSE 100 UCITS ETF DIST (GBP) 1.07% 22. VANGUARD PACIFIC EX-JAP STCK INDEX GBP A 0.00% FIXED INCOME 23. INSIGHT INVESTMENT DISCRETIONARY F 4.85% 24. FIDELITY MNYBLDR INC-NET 3.67% 25. HSBC INV OEIC CORP BOND ACC 2.68% 26. SCHRODER INTL GL H Y 2.68% 27. VANGUARD U.K. GOVERNMENT BD IDX GBP ACC* 2.59% 28. ISHARES CORE CORPORATE BOND (GBP) 2.54% 29. PIMCO GL H/Y P 2.43% 30. ISHARES CORPORATE BOND INDEX F 2.21% 31. ISHARES FTSE UK ALL STOCKS GILT (GBP)* 1.67% 32. JUPITER STRATEGIC BOND -I 1.57% 33. M&G OPTIMAL INCOME -A- NET 1.11% 34. FIDELITY STRATEGIC BD Y ACC 1.01% ALTERNATIVES 35. BNY MELLON ABSOLUTE RETURN EQUITY GBP S 3.16% 36. OLD MUT GB EQY ABS RE A (USD) 2.73% 37. JANUS HENDERSON UK AB. RETURN A (GBP) 2.68% 38. HENDERSON GART UK A R IUSDAH 1.83% 39. BSF FIXED INCOME STRATEGIES D2RFG 1.73% Source: Santander Asset Management UK settled position as at 31 March New funds for the quarter are indicated in bold. * Passive vehicle Holdings calculated as a percentage of the total net assets (TNA). 16 SANTANDER ASSET MANAGEMENT

17 SANTANDER ASSET MANAGEMENT UK Q PERFORMANCE Cumulative Performance % 3 Months 6 Months YTD 1 Year 3 Years 4 Years 5 Years Santander Atlas Portfolio * Discrete Performance % Mar 2017 to Mar 2018 Mar 2016 to Mar 2017 Mar 2015 to Mar 2016 Mar 2014 to Mar 2015 Mar 2013 to Mar 2014 Santander Atlas Portfolio * Source: Lipper as at 31 March 2018 The performance shown in the tables above is based on circumstances which no longer apply due to changes to the Fund s name, investment objective and policy as of 30 September Performance shown corresponds to the IA share class. Past performance is not a guide to future performance. The value of your investment can fall as well as rise and you may not get back the original amount you invested. For funds that invest in Bonds, the value of investments can fall if a Bond issuer defaults, receives a lower credit rating, or if the risk rating of an individual issue changes. Investments in overseas securities may be affected by changes in the rates of exchange which may also cause the value of your investment and any income it may pay to go down or up. The performance figures shown are calculated* on percentage growth, on a bid to bid basis with net income reinvested. They are net of annual management charges and exclude portfolio fees. *The share class was launched on 30 September 2013, past performance before launch date includes data from another share class with similar characteristics. Past performance is not a guide to future performance. The value of your investment can fall as well as rise and you may get back less than the original amount you invested. Risks warnings Prior to making an investment decision, please consider the following risks; (i) Interest Rate Risk: For Funds investing in Fixed Income, changes in interest rates are likely to affect the Fund's value. In general, as interest rates rise, the price of a fixed Bond will fall and vice versa. (ii) Credit Risk: The value of the Fund may fall if the companies and governments who have issued the Bonds deterioriate in quality, or in the worst case scenario become insolvent. (iii) Liquidity Risk: It may be difficult to sell some investments (or sell them without making a loss) due to an insufficient number of buyers in the market. (iv) Derivatives Risk: The use of derivatives may result in relatively small market movements leading to disproportionately large (positive or negative) movements in the value of the investment. (v) Counterparty Risk: There is a risk that a counterparty may default or not comply with its contractual obligations resulting in financial loss. (vi) Currency Risk: The Fund can hold some investments that are not denominated in UK Sterling. These may be affected by changes in currency exchange rates. (vii) Emerging Market Risk: The Fund invests in markets where economic, political and regulatory factors can be significant. This may affect the liquidity, settlement and asset values. Any such event can have a negative effect on the value of your investment. Investments in emerging markets can demonstrate significant decline in value over extended periods of time. (viii) Property Risk: Property may be difficult to sell and can demonstrate significant decline in value due to changes in economic conditions and interest rates. (ix) More information about other risks can be found in the Fund Prospectus section Risk Factors. *Currency is GBP 17

18 QUARTERLY UPDATE Q THE SANTANDER ATLAS PORTFOLIOS FOR GROWTH AND INCOME 07 SANTANDER ATLAS PORTFOLIO 6 QUARTERLY UPDATE INVESTMENT OBJECTIVE The Investment Objective of the Fund is to increase the value of your investment through a combination of income and capital growth. The manager will achieve this whilst targeting a moderate to higher level of volatility over the longer term. PORTFOLIO COMMENTARY Santander Atlas Portfolio 6 delivered a negative return during the first quarter, on the back of negative performance from Equities and Bonds. Total fund size: 239M TACTICAL ASSET ALLOCATION GEOGRAPHICAL/ASSET CLASS BREAKDOWN (%) 7.5% 6.1% % % Equities Fixed Income Alternatives Cash UK European ex UK North America Japan Asia Pacific ex Japan Global Emerging Corporate Bonds UK Gilts Overseas High Yield GEM Emerging Market Debt Alternatives Cash Source: Santander Asset Management UK settled position as at 31 March SANTANDER ASSET MANAGEMENT

19 SANTANDER ASSET MANAGEMENT UK Q PORTFOLIO ACTIVITY The first quarter was characterised by a return of volatility. While the macro backdrop remained strong, geopolitical tensions and inflation fears weighted negatively on financial markets. During the quarter we have decreased our allocation to Equity and have increased the allocation to Cash. We reduced our allocation to Equity through UK, Europe, North America and Asia Pacific mainly through passive vehicles. In Alternatives we sold our position in Amundi European Volatility as the need for protection decreased with lower Equity levels. During the market sell off, we benefited from the Put spread we hold. HOLDINGS Fund Name Santander Atlas Portfolio 6 EQUITY 1. LYXOR UCITS ETF S&P D-USD* 5.05% 2. FIDELITY INVESTMENT FUNDS INDEX UK-PA* 4.63% 3. VANGUARD FTSE UK ALL I AGBPI 4.04% 4. VANGUARD US 500 STK INDEX FUND (USD) 3.72% 5. JPM UK EQUITY CORE FUN E ACC 3.72% 6. FUT. TOPIX INDX 06/ % 7. FIRST ST ASIAN EQ PLUS 3 USD 3.46% 8. ROYAL LONDON UK ALL SHARE TRACKER Z* 3.43% 9. SCHRODER PRIME UK EQ IA 3.40% 10. ISHARES CORE MSCI EMERG. MKTS IMI ETF* 3.26% 11. GLG JAPAN COREALPHA I GBP 3.14% 12. BLACKROCK GF ASIA PACIFIC EQ. INC - A2RF 2.97% 13. ISHARES S&P 500 UCITS ETF ( EUR) B XETRA 2.88% 14. BLACKROCK EUROPEAN DYNAMIC - A 2.66% 15. MAJEDIE ASSET UK EQTY X ACC 2.28% 16. FISHER EMERG MRKTS EQ GBP UH 2.24% 17. INVESCO PERPETUAL UK GRW NOTR ACC 2.21% 18. ACADIAN EMERGING MK EQ UCIT II CUSDIA 2.00% 19. VANGUARD FTSE DEV EUROPE XUK E I-A RET 1.77% 20. JO HAMBRO UK DYNAMIC YA GBP 1.70% 21. VANGUARD PACIFIC EX-JAP STCK INDEX GBP A 1.68% 22. BAILLIE GIFFORD JPN B ACC 1.66% 23. FUT. EURO STOXX 50 06/ % 24. BLACKROCK COLLECTIV EMERGING MK EQ TRACK 0.82% 25. FUT. E-MINI S&P /18 (CME) 0.80% 26. ISHARES CO FTSE 100 UCITS ETF DIST (GBP)* 0.36% 27. ISHARES MSCI AC FAR EAST EX - JAPAN ETF* 0.26% FIXED INCOME 28. INSIGHT INVESTMENT DISCRETIONARY F 4.21% 29. ISHARES CORE CORPORATE BOND (GBP)* 3.16% 30. PIMCO GL H/Y P 3.04% 31. SCHRODER INTL GL H Y 2.03% 32. VANGUARD U.K. GOVERNMENT BD IDX GBP ACC* 1.41% 33. JUPITER STRATEGIC BOND -I 1.39% 34. FIDELITY STRATEGIC BD Y ACC 1.26% 35. ISHARES FTSE UK ALL STOCKS GILT (GBP) 1.17% ALTERNATIVES 36. HENDERSON GART UK A R IUSDAH 2.36% 37. OLD MUTUAL GLOBAL EQUITY ABSOLUTE RETURN 2.14% 38. BNY MELLON ABSOLUTE RETURN EQUITY GBP S 2.11% 39. BSF FIXED INCOME STRATEGIES D2RFG 0.98% Source: Santander Asset Management UK settled position as at 31 March New funds for the quarter are indicated in bold. * Passive vehicle Holdings calculated as a percentage of the total net assets (TNA). 19

20 QUARTERLY UPDATE Q THE SANTANDER ATLAS PORTFOLIOS FOR GROWTH AND INCOME PERFORMANCE Cumulative Performance % 3 Months 6 Months YTD 1 Year 3 Years 4 Years 5 Years Santander Atlas Portfolio * Discrete Performance % Mar 2017 to Mar 2018 Mar 2016 to Mar 2017 Mar 2015 to Mar 2016 Mar 2014 to Mar 2015 Mar 2013 to Mar 2014 Santander Atlas Portfolio * Source: Lipper as at 31 March 2018 The performance shown in the tables above is based on circumstances which no longer apply due to changes to the Fund s name, investment objective and policy as of 30 September Performance shown corresponds to the IA share class. Past performance is not a guide to future performance. The value of your investment can fall as well as rise and you may not get back the original amount you invested. For funds that invest in Bonds, the value of investments can fall if a Bond issuer defaults, receives a lower credit rating, or if the risk rating of an individual issue changes. Investments in overseas securities may be affected by changes in the rates of exchange which may also cause the value of your investment and any income it may pay to go down or up. The performance figures shown are calculated* on percentage growth, on a bid to bid basis with net income reinvested. They are net of annual management charges and exclude portfolio fees. *The share class was launched on 30 September 2013, past performance before launch date includes data from another share class with similar characteristics. Past performance is not a guide to future performance. The value of your investment can fall as well as rise and you may get back less than the original amount you invested. Risks warnings Prior to making an investment decision, please consider the following risks; (i) Interest Rate Risk: For Funds investing in Fixed Income, changes in interest rates are likely to affect the Fund's value. In general, as interest rates rise, the price of a fixed Bond will fall and vice versa. (ii) Credit Risk: The value of the Fund may fall if the companies and governments who have issued the Bonds deterioriate in quality, or in the worst case scenario become insolvent. (iii) Liquidity Risk: It may be difficult to sell some investments (or sell them without making a loss) due to an insufficient number of buyers in the market. (iv) Derivatives Risk: The use of derivatives may result in relatively small market movements leading to disproportionately large (positive or negative) movements in the value of the investment. (v) Counterparty Risk: There is a risk that a counterparty may default or not comply with its contractual obligations resulting in financial loss. (vi) Currency Risk: The Fund can hold some investments that are not denominated in UK Sterling. These may be affected by changes in currency exchange rates. (vii) Emerging Market Risk: The Fund invests in markets where economic, political and regulatory factors can be significant. This may affect the liquidity, settlement and asset values. Any such event can have a negative effect on the value of your investment. Investments in emerging markets can demonstrate significant declines in value over extended periods of time. (viii) Property Risk: Property may be difficult to sell and can demonstrate significant declines in value due to changes in economic conditions and interest rates. (ix) More information about other risks can be found in the Fund Prospectus section Risk Factors. *Currency is GBP 20 SANTANDER ASSET MANAGEMENT

21 SANTANDER ASSET MANAGEMENT UK Q SANTANDER ATLAS PORTFOLIO 7 QUARTERLY UPDATE INVESTMENT OBJECTIVE The Investment Objective of the Fund is to increase the value of your investment through a combination of income and capital growth. The manager will achieve this whilst targeting a higher level of volatility over the longer term. PORTFOLIO COMMENTARY Santander Atlas Portfolio 7 delivered a negative return during the first quarter, on the back of negative performance from Equities and Bonds. Total fund size: 177M TACTICAL ASSET ALLOCATION GEOGRAPHICAL/ASSET CLASS BREAKDOWN (%) 8.2% 7.2% % 5 0 Equities Alternatives Cash UK European ex UK North America Japan Asia Pacific ex Japan Global Emerging Corporate Bonds UK Gilts Overseas High Yield GEM Emerging Market Debt Alternatives Cash Source: Santander Asset Management UK settled position as at 31 March

22 QUARTERLY UPDATE Q THE SANTANDER ATLAS PORTFOLIOS FOR GROWTH AND INCOME PORTFOLIO ACTIVITY The first quarter was characterised by a return of volatility. While the macro backdrop remained strong, geopolitical tensions and inflation fears weighted negatively on financial markets. During the quarter we have decreased our allocation to Equity and have increased the allocation to Cash. We reduced our allocation to Equity through UK, Europe, North America and Asia Pacific mainly through passive vehicles. In Alternatives we sold our position in Amundi European Volatility as the need for protection decreased with lower Equity levels. During the market sell off, we benefited from the Put spread we hold. HOLDINGS Fund Name Santander Atlas Portfolio 7 EQUITY 1. FIRST ST ASIAN EQ PLUS 3 USD 5.52% 2. LYXOR UCITS ETF S&P D-USD 4.68% 3. SCHRODER PRIME UK EQ IA 4.52% 4. ROYAL LONDON UK ALL SHARE TRACKER Z* 4.24% 5. FIDELITY INVESTMENT FUNDS INDEX UK-PA* 4.16% 6. VANGUARD PACIFIC EX-JAP STCK INDEX GBP A* 4.02% 7. BLACKROCK GF ASIA PACIFIC EQ. INC - A2RF 3.98% 8. ISHARES CO FTSE 100 UCITS ETF DIST (GBP) 3.84% 9. VANGUARD FTSE UK ALL I AGBPI 3.26% 10. ACADIAN EMERGING MK EQ UCIT II CUSDIA 3.11% 11. GLG JAPAN COREALPHA I GBP 3.11% 12. VANGUARD FTSE DEV EUROPE XUK E I-A RET* 2.94% 13. FUT. TOPIX INDX 06/ % 14. ROBECO EMERGING CONSERVATIVE EQUITIES I 2.92% 15. JPM UK EQUITY CORE FUN E ACC 2.83% 16. INVESCO PERPETUAL UK GRW NOTR ACC 2.82% 17. ISHARES S&P 500 UCITS ETF ( EUR) B XETRA 2.82% 18. BLACKROCK COLLECTIV EMERGING MK EQ TRACK 2.66% 19. MAJEDIE ASSET UK EQTY X ACC 2.55% 20. BAILLIE GIFFORD JPN B ACC 2.45% 21. VANGUARD US 500 STK INDEX FUND (USD)* 2.44% 22. BLACKROCK EUROPEAN DYNAMIC - A 2.42% 23. FISHER EMERG MRKTS EQ GBP UH 2.30% 24. JO HAMBRO UK DYNAMIC YA GBP 1.96% 25. GS GROWTH EMERGING MKT (GBP) 1.81% 26. ISHARES CORE MSCI EMERG. MKTS IMI ETF* 1.25% 27. FUT. FTSE /18 (LIFFE)* 1.11% 28. FUT. E-MINI S&P /18 (CME) 0.98% 29. VANGUARD JAPAN STOCK INDEX GBP ACC* 0.62% 30. ISHARES MSCI AC FAR EAST EX - JAPAN ETF* 0.30% ALTERNATIVES 31. OLD MUTUAL GLOBAL EQUITY ABSOLUTE RETURN 3.02% 32. HENDERSON GART UK A R IUSDAH 2.76% 33. BNY MELLON ABSOLUTE RETURN EQUITY GBP S 2.48% Source: Santander Asset Management UK settled position as at 31 March New funds for the quarter are indicated in bold. * Passive vehicle Holdings calculated as a percentage of the total net assets (TNA). 22 SANTANDER ASSET MANAGEMENT

23 SANTANDER ASSET MANAGEMENT UK Q PERFORMANCE Cumulative Performance % 3 Months 6 Months YTD 1 Year 3 Years 4 Years 5 Years Santander Atlas Portfolio * Discrete Performance % Mar 2017 to Mar 2018 Mar 2016 to Mar 2017 Mar 2015 to Mar 2016 Mar 2014 to Mar 2015 Mar 2013 to Mar 2014 Santander Atlas Portfolio * Source: Lipper as at 31 March 2018 The performance shown in the tables above is based on circumstances which no longer apply due to changes to the Fund s name, investment objective and policy as of 30 September Performance shown corresponds to the IA share class. Past performance is not a guide to future performance. The value of your investment can fall as well as rise and you may not get back the original amount you invested. For funds that invest in Bonds, the value of investments can fall if a Bond issuer defaults, receives a lower credit rating, or if the risk rating of an individual issue changes. Investments in overseas securities may be affected by changes in the rates of exchange which may also cause the value of your investment and any income it may pay to go down or up. The performance figures shown are calculated* on percentage growth, on a bid to bid basis with net income reinvested. They are net of annual management charges and exclude portfolio fees. *The share class was launched on 30 September 2013, past performance before launch date includes data from another share class with similar characteristics. Past performance is not a guide to future performance. The value of your investment can fall as well as rise and you may get back less than the original amount you invested. Risks warnings Prior to making an investment decision, please consider the following risks; (i) Interest Rate Risk: For Funds investing in Fixed Income, changes in interest rates are likely to affect the Fund's value. In general, as interest rates rise, the price of a fixed Bond will fall and vice versa. (ii) Credit Risk: The value of the Fund may fall if the companies and governments who have issued the Bonds deterioriate in quality, or in the worst case scenario become insolvent. (iii) Liquidity Risk: It may be difficult to sell some investments (or sell them without making a loss) due to an insufficient number of buyers in the market. (iv) Derivatives Risk: The use of derivatives may result in relatively small market movements leading to disproportionately large (positive or negative) movements in the value of the investment. (v) Counterparty Risk: There is a risk that a counterparty may default or not comply with its contractual obligations resulting in financial loss. (vi) Currency Risk: The Fund can hold some investments that are not denominated in UK Sterling. These may be affected by changes in currency exchange rates. (vii) Emerging Market Risk: The Fund invests in markets where economic, political and regulatory factors can be significant. This may affect the liquidity, settlement and asset values. Any such event can have a negative effect on the value of your investment. Investments in emerging markets can demonstrate significant declines in value over extended periods of time. (viii) Property Risk: Property may be difficult to sell and can demonstrate significant declines in value due to changes in economic conditions and interest rates. (ix) More information about other risks can be found in the Fund Prospectus section Risk Factors. *Currency is GBP 23

24 QUARTERLY UPDATE Q THE SANTANDER ATLAS PORTFOLIOS FOR GROWTH AND INCOME 09 ATLAS INCOME PORTFOLIO QUARTERLY UPDATE INVESTMENT OBJECTIVE The investment objective of the Fund is to provide minimum 4%*income, without guarantees, together with the potential for capital growth over the long term. PORTFOLIO COMMENTARY The Santander Atlas Income Portfolio delivered a negative returns during the first quarter. As we enter into the late cycle less support exists from valuations and markets have became more volatile from being impacted by political tensions and threats to global trade. Equity was the main negative contributor to performance, where all markets posted negative returns. Credit markets were also affected by the market correction as spreads widened, having also a negative contribution to the portfolio. Total fund size: 66M 4% TACTICAL ASSET ALLOCATION GEOGRAPHICAL/ASSET CLASS BREAKDOWN (%) % % 57.7% Equities Fixed Income Cash UK European ex UK North America Tactical asset allocation calculated as a percentage of the net asset value (NAV). Source: Santander Asset Management UK settled position as at 31 March 2018 * THE ATLAS INCOME PORTFOLIO MINIMUM YIELD TARGET IS CALCULATED ON A PROJECTED YIELD BASIS, WHERE THE TARGET LEVEL OF YIELD (AT LEAST 4%) IS APPLIED TO THE NET ASSET VALUE OF THE FUND AT THE START OF ITS ACCOUNTING YEAR. THIS CREATES THE PENCE PER UNIT THAT WILL NEED TO BE DELIVERED OVER THE COMING 12 MONTHS IN ORDER TO ACHIEVE THE PROJECTED YIELD. Emerging Market Japan Asia Pacific ex Japan Other Equities Corporate Bonds UK Gilts Overseas Gilts High Yield Emerging Market Debt Overseaes Non-Gov Alternatives Cash 24 SANTANDER ASSET MANAGEMENT

25 SANTANDER ASSET MANAGEMENT UK Q PORTFOLIO ACTIVITY We have a positive view of higher yielding non-traditional Fixed Income strategies, which is reflected in the current positioning of the fund. We incorporated a new High Yield strategy during the quarter, UBAM Global High Yield Solutions, and sold AXA US High Yield. Equities were reduced, despite maintaining a positive view in the medium term, we are entering into a more volatile environment. The fund maintains a small allocation to UK Gilts and a more significant position in UK Credit that provides higher yield and lower duration risk. HOLDINGS Fund Name Santander Atlas Income Portfolio EQUITY 1. INSIGHT EQ INCOME BOOSTER ST I 6.08% 2. SCHRODER INC MAXIMISER A INC 5.86% 3. THEAM QUANT EQ EUR INCOME DEFENSIVE JEUR 5.60% 4. HENDERSON ASIAN DVD INC I 4.65% 5. VANGUARD FTSE 100 UCITS ETF* 4.65% 6. FIDELITY ENHANCED INC 4.33% 7. ISHARES EURO DIVIDEND UCITS ETF* 4.26% 8. RWC GL EN DV B D 1.45% FIXED INCOME 9. VANGUARD UK INVESTMENT GRADE BOND IDX I* 9.27% 10. ISHARES CORE CORPORATE BOND (GBP)* 6.93% 11. BLACKROCK COLLECTIVE CORP BOND TRACKER* 6.63% 12. PIMCO GLOBAL HIGH YIELD BOND FUND 6.25% 13. LEGAL AND GENERAL ALL STK I IN* 4.78% 14. FIDELITY STRATEGIC BD NET Y 4.63% 15. HSBC INV OEIC CORP BOND INC 4.42% 16. JUPITER STRATEGIC BOND -I 4.36% 17. MFS MER EMERG MARK DB A3USD 4.18% 18. PRINCIPAL PREF SEC GBP HAI 4.04% 19. UBAM GLOB HIGH YLD SOL IHDGB 2.29% Source: Santander Asset Management UK settled position as at 31 March New funds for the quarter are indicated in bold. * Passive vehicle Holdings calculated as a percentage of the total net assets (TNA). 25

26 QUARTERLY UPDATE Q THE SANTANDER ATLAS PORTFOLIOS FOR GROWTH AND INCOME PERFORMANCE Cumulative Performance %* 3 Months 6 Months YTD 1 Year 3 Years 4 Years 5 Years Santander Atlas Income Portfolio * 19.73* 33.32* Discrete Performance %* Santander Atlas Income Portfolio Mar 2017 to Mar 2018 Mar 2016 to Mar 2017 Mar 2015 to Mar 2016 Mar 2014 to Mar 2015 Mar 2013 to Mar * 8.75* 11.34* Source: Lipper as at 31 March 2018 *Performance and fund statistics were achieved under circumstances which no longer apply. The name of the fund and the investment objective changed on 9 September Performance shown prior to 9 September 2015 corresponds to the Equity Income Portfolio and therefore is not representative of the current fund strategy (the name of the fund and the investment objective changed on 9 September 2015). Past performance is not a guide to future performance. The value of your investment can fall as well as rise and you may not get back the original amount you invested. For funds that invest in Bonds, the value of investments can fall if a Bond issuer defaults, receives a lower credit rating or if the risk rating of an individual issue changes. Investments in overseas securities may be affected by changes in the rates of exchange, which may also cause the value of your investment and any income it may pay to go down or up. The performance shown is based on the performance of share class II and is calculated* on a bid to bid basis, net of fees. Past performance is not a guide to future performance. The value of your investment can fall as well as rise and you may get back less than the original amount you invested. Risks warnings Prior to making an investment decision, please consider the following risks; (i) Interest Rate Risk: For Funds investing in Fixed Income, changes in interest rates are likely to affect the Fund's value. In general, as interest rates rise, the price of a fixed Bond will fall and vice versa. (ii) Credit Risk: The value of the Fund may fall if the companies and governments who have issued the Bonds deterioriate in quality, or in the worst case scenario become insolvent. (iii) Liquidity Risk: It may be difficult to sell some investments (or sell them without making a loss) due to an insufficient number of buyers in the market. (iv) Derivatives Risk: The use of derivatives may result in relatively small market movements leading to disproportionately large (positive or negative) movements in the value of the investment. (v) Counterparty Risk: There is a risk that a counterparty may default or not comply with its contractual obligations resulting in financial loss. (vi) Currency Risk: The Fund can hold some investments that are not denominated in UK Sterling. These may be affected by changes in currency exchange rates. (vii) Emerging Market Risk: The Fund invests in markets where economic, political and regulatory factors can be significant. This may affect the liquidity, settlement and asset values. Any such event can have a negative effect on the value of your investment. Investments in emerging markets can demonstrate significant declines in value over extended periods of time. (viii) Property Risk: Property may be difficult to sell and can demonstrate significant declines in value due to changes in economic conditions and interest rates. (ix) More information about other risks can be found in the Fund Prospectus section Risk Factors. *Currency is GBP 26 SANTANDER ASSET MANAGEMENT

27 SANTANDER ASSET MANAGEMENT UK Q PROJECTED INCOME THE ATLAS INCOME PORTFOLIO PROJECTED INCOME FOR THE REMAINDER OF FUND ACCOUNTING YEAR ENDING 31 JULY 2018 We believe it is helpful to provide investors with an expectation of what their investment is aiming to deliver. At the beginning of each fund accounting year we publish a projected income for the coming year, which will be based on the Net Asset Value (NAV) at the start of this period, and expressed both in terms of an annualised equivalent rate, and a pence per unit (PPU) value. Unless there are material changes in the amount of income we receive against our expectations, then we will aim to pay the quoted PPU as a smoothed payment each month over the year. In the final month of the year (the 12th payment) we make a balancing payment of all remaining income accumulated in the fund. We will endeavour, and plan for, the 12th payment to be a little higher than the previous 11 installments, but we cannot guarantee this. Each month we will publish how we are progressing against our projections and notify advisers of any changes. This publication is ed out and published on our website, Investors within the fund accounting year can then easily understand the PPU income they can expect to receive when they invest. The Projected Income and PPU for the smoothed monthly distributions is as follows: Projected Income of 4.2% (this is an annualised equivalent rate reflecting the payments up to end of fund accounting year) PPU distributions: IA Share Class = 1.18 PPU Monthly II Share class = 0.84 PPU Monthly These projections are based on the NAV as at 1 August Please note that distributions are physically paid one month after the declaration date. For example the 31 October distribution is paid at the end of November. The actual historic yield figure at the end of the fund accounting year may be more or less than today s income projection of 4.2% as the NAV will either fall or rise over the year. PROJECTED INCOME 4.2% PENCE PER UNIT (PPU) IA Share Class = 1.18 PPU Monthly II Share Class = 0.84 PPU Monthly HISTORIC YIELD* Atlas Income IA = 4.30% Atlas Income II = 4.45% *Source: Santander Asset Management UK, end of March Fund statistics were achieved under circumstances that no longer apply. The name of the fund and the investment objective changed on 9 September A historic yield is the sum of distributions announced in the preceding twelve months, divided by the unadjusted MID market price as at date of yield. Investors may be subject to tax on their income. 27

28 The Santander Altlas Income Portfolio is a sub-fund of Santander Managed Investments OEIC ( Open Ended Investment Company), a non-ucits retail scheme that is authorised in the UK by the Financial Conduct Authority (FCA). The Santander Atlas Portfolio 3, 4, 5 and 7 are sub-funds of Santander Multi-Manager OEIC (Open Ended Investment Company), a non-ucits retail scheme that is authorised in the UK by the Financial Conduct Authority (FCA). The Santander Atlas Portfolio 6 is a sub-fund of Santander Managed OEIC (Open Ended Investment Company), a non-ucits retail scheme that is authorised in the UK by the Financial Conduct Authority (FCA). This document for the use of investment professionals only and is not for onward distribution to retail investors. Please contact a financial adviser if you require further advice. If you need more information on any of our funds, you can ask us for a free copy of KIID and the prospectus. The KIID is designed to help investors make an informed decision before investing. You can view or download all our funds' KIIDs from our website at Information relating to investments is based on research and analysis we have carried out or brought for our own purposes and may have been made available to other members of the Santander Group which, in turn, may have acted on it. While we try and take every care over the information in this document, we cannot accept any responsibility for mistakes and missing information that may be presented. Because of this, we recommend that you seek financial advice before making any investment decisions and do not enter into any investment decisions alone. Opinions expressed within this document, if any, are current opinions as of the date stated and do not constitute investment or any other advice; the views are subject to change and do not necessarily reflect the views of Santander Asset Management as a whole or any part thereof. Santander Asset Management UK Limited (Company Registration No. SC106669) is registered in Scotland at 287 St Vincent Street, Glasgow G2 5NB, United Kingdom. Authorised and regulated by the Financial Conduct Authority. FCA registered number Santander and the flame logo are registered trademarks. SAM10056 MARCH 2018