Schroder GAIA & Egerton Capital Ltd

Transcription

1 Schroder GAIA & Egerton Capital Ltd Schroder GAIA Egerton European Equity May 2011 Prospective investors should consult with their independent financial advisor with respect to their specific investment objectives, financial situation or particular needs to determine the suitability of investment. NOT FOR DISTRIBUTION IN FRANCE, SPAIN, GERMANY, PORTUGAL OR AUSTRIA

2 Schroder GAIA Egerton European Equity Key Tenets Long / short portfolio with minimum 51% exposure to European equities Targets attractive absolute returns over the medium term Active management backed by intense fundamental research High pedigree PM team of 11, led by John Armitage, CIO Shorts are considered profit centers and not used for funding Leverage is used sparingly Cash levels raised where we believe appropriate, derivatives used as disaster insurance 1 Source: Schroders, as at May There can be no assurance that the investment objectives or target returns of the fund will be achieved and investment results may vary substantially over time.

3 Schroder GAIA Market background Our view of why demand is increasing for UCITS III products Recent market events have increased demand for hedge fund strategies in a regulated format: Regulators and governments (notably the European Commission) are proposing tougher rules for alternative funds Some countries have introduced tax uncertainty Impact of gates and side pockets on hedge funds Greater demand for liquidity and transparency Investor protection (e.g. diversification rules, assets safeguarded by independent custodian bank) Hedge fund investors are considering UCITS as a way of accessing hedge funds in a regulated format Long only investors are considering UCITS hedge funds given access is provided under a familiar format 2 Past performance is not necessarily indicative of future results. This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.

4 Schroder GAIA What are the key benefits for investors? Access to hedge fund strategies which have historically been limited to affluent investors Greater choice of investment products designed to offer absolute returns over the medium to long term while seeking to avoid deep drawdowns Better investor protection, liquidity and transparency when compared to typical hedge funds More diversification as a result of UCITS rules, both at underlying security level as well as counterparties Risk exposures are managed and closely monitored on a daily basis The finished product is fully regulated 3 Schroder GAIA is a fully regulated, transparently operated platform of UCITS funds giving investors access to hedge fund expertise Risk management and diversification processes seek to mitigate, but cannot eliminate risk, nor do they imply low risk. Regulatory oversight, filing or registration does not imply recommendation or analysis of investment merits.

5 Schroder GAIA What s the role of Schroders NewFinance Capital and Schroders? Schroders NewFinance Capital Investment Manager selection Due diligence Investment risk oversight Schroder GAIA (UCITS Platform) Luxembourg Schroders Manager selection, due diligence, and product positioning Sales, marketing and client service Management company administration and oversight Investment compliance and risk management Hedge Fund Managers Specialist expertise in managing alternative investment strategies with proven track records Combining the strengths of a well established UCITS manager with market leading hedge fund expertise 4 Risk management and due diligence processes seek to mitigate, but cannot eliminate risk, nor do they imply low risk.

6 Introduction to Egerton Capital Key to success is research-intensive stock picking Egerton Capital Limited ( Egerton ) was founded in person investment team led by CIO John Armitage Straightforward, liquid strategy that invests predominantly in large cap equities Aims to deliver equity type returns with less volatility than the market Europe is the home market with opportunistic investments in publicly-traded equities globally Egerton as a firm has $4.9 billion in assets under management in total with Schroder GAIA Egerton European Equity $450m Employees represent 11% of total firm assets Source: Egerton, as at 31 March

7 A Proven Track Record and Team 16-year hedge fund track record Egerton s flagship hedge fund (European Equity Fund Limited) has produced an annualised return of approximately 16% net of fees since inception (16 September 1994) compared to 7% for the MSCI Europe (total return net local currencies) over the same period with significantly lower volatility One down year in 16 (a period with 4 down years for the equity markets) In 2010 Schroder GAIA Egerton European Equity A1 Acc EUR returned 13% vs 7% for the MSCI Europe (total return net local currencies) Long-standing, stable, and experienced investment team Source: Egerton, as at 31 March

8 Organisation 43 staff including 11 Investment Professionals The Business Investment Team Jeff Blumberg CEO Mark Standish COO Sobhna Dahya Nima Shah Matthew Best Finance Paul Murphy Mark Norman Execution Traders Clare Elliott Investor Relations James Newman Catherine Francey Vishal Rao Paul Scerri Simon Cook Dan Kemble Peter Holding Operations Barry Winter Reporting Analyst Pauline Casimir-M. Catherine Zambrano Compliance Bahi Balarajah Anthony Paul Matthew Skelton Technology Charles Evans Lombe Ralph Kanza Chairman Joined Egerton in Feb 2005 Vice Chairman of Schroder & Co, Ltd Co-founder Beaumont Capital Chairman of Cheuvreux de Virieu 42-yrs investment experience Apr 2001 Cazenove 14 years exp. John Armitage CIO / Founder Founded Egerton Capital in 1994 Morgan Grenfell ( ) 23 yrs of fund management experience 30 yrs of investment experience Marcello Sallusti Deputy CIO Joined Egerton in 2000 Equity Research M at SG Warburg and Schroders 21 yrs investment experience Jay Huck Leila Govi Nick Jones Michael Blank Paul Tucker Jan 2003 CFRA 18 years exp. Mar 2004 JP Morgan 13 years exp. Mar 2005 Goldman Sachs 13 years exp. Experienced team (avg. 17 and collective 184 years industry experience) The investment team is the largest since inception No recent changes only 4 departures in 16 years Deep knowledge of all key countries in Europe and international markets Combination of generalists and geographic and sector specialists Aug 2005 Goldman Sachs 9 years exp. Sep 2007 Merrill Lynch 15 years exp. Jonathan Rodgers Jun 2008 Goldman Sachs 9 years exp. Teddy Molson Analyst Sep 2009 Princeton John Armitage has been managing portfolios for 23 years and has 30 years of investment experience Marcello Sallusti, the deputy CIO, has 21 years of investment experience Paul Tucker was a #1 Institutional Investor-rated analyst at Merrill Lynch Jay Huck is a forensic accountant and specialist in short selling Source: Egerton, as at 31 March

9 An investment strategy that picks excellent stocks Investment Objectives Investment Philosophy The Result Target attractive absolute returns over the medium to long term, with a net-long bias to equities Add value through stock selection with detailed, intensive fundamental analysis of individual equities Reduce volatility and drawdowns through the use of options, single stock shorts and cash Avoid large drawdowns Bottom-up approach to stock selection that creates a portfolio that is dynamic, eclectic, and uncorrelated Benchmark independent Awareness of macro and micro factors informs all good investments Look for quality companies at attractive valuations with significant upside potential Use little or no leverage Liquidity is paramount Diversification is key by geography and sector Europe is the home market but we will invest globally if the opportunity is unique or better Opportunistically invest in corporate bonds Currency exposure in our hedge funds is typically hedged The flagship Egerton European Equity Fund Limited (flagship offshore fund) has produced: Since inception annualised returns of approximately 16% net of fees versus 7% for the market as measured by MSCI Europe Net TR (local currencies) Since inception annualised volatility of 10.4% versus 16.6% for the MSCI Europe Net TR (local currencies) One down year in 16 years Never gated, side pocketed, or suspended redemptions Source: Egerton Capital Limited, as at 31 March There can be no assurance that the investment objectives of the fund will be achieved. Risk management and diversification processes seek to mitigate, but cannot eliminate risk, nor do they imply low risk. 8

10 Research Process Idea Generation / Analysis Idea Generation Company calls / meetings Company visits / travel Macro-economic changes / data Independent research Consultants Brokers / sell-side research Analysis Intensive review of public filings Dialogue with management senior/operational In regulated industries, close appreciation and monitoring of the regulatory environments We build our own models Analysis of peers / within supply chain / customers Macro/industry view while we are stock pickers, you cannot divorce the macro from the micro Monitoring Continuous review of data / results Frequent contact with company / analysts We ask would we make this investment today? What We Look For Long Positions A good margin of safety from valuation We like companies that generate a lot of cash, have strong balance sheets, and demonstrate considerable potential for growth We seek positions that we believe will have 20-30% upside over the next 12 months Strong and accessible management Companies we would happily own if the stock market closed Companies and industries we understand, where we can have an edge Short Positions Companies with poor capital structure Companies with high multiples and stagnant earnings Negative cash-flow Flawed / aggressive accounting 9 Source: Egerton Capital Limited, as at 31 March There can be no assurance that the investment objectives of the fund will be achieved. Risk management and diversification processes seek to mitigate, but cannot eliminate risk, nor do they imply low risk.

11 Portfolio Construction Portfolio Construction Philosophy Portfolio Composition Exposures The portfolio s exposures are principally driven by bottom-up stock selection Wholesale exposure management is limited to times when there is a marked change in the financial environment and/or where relative performance has deteriorated significantly Position Sizing Longs the portfolio will typically have around 20 core longs and a tail of smaller positions Core longs are 2% of NAV positions or greater and will typically represent 50-75% of the portfolio NAV in aggregate The tail of smaller positions are positions that are either in the process of being sized-up or have liquidity constraints Shorts single stock short positions are considered profit centers and are typically not used for hedging Our short exposure is generally comprised of positions A large short position is 1-2% of NAV Holding Period Typically 3-18 months for longs and 3-9 months for shorts Current 5 Maximum Limit 6 Gross Exposure 1 122% 150% Net Exposure 2 72% 120% Single Stock Long % of NAV 3 5% 10% Single Stock Short % of NAV 3 1% 5% Top 20 Longs % of NAV 4 60% 75% Non-Europe 7 40% 49% Corporate Bonds 4% 10% Source: Egerton Capital Limited, as at 31 March 2011 (1,2) Delta-adjusted for options. (3) At market value. (4) Top 20 Longs % of NAV 75% maximum limit is a guideline and not a formal size limit. (5) As of March 31, (6) Unless specified otherwise maximum limits are internal and not found in the prospectus and may be subject to change without notice to investors. (7) Schroder GAIA Prospectus limit the fund must have min 51% in European equities exposure (defined as equities issued by European issuers, traded on a European Regulated Market and/or issued by a company with a substantial proportion of its turnover in European markets). 10

12 Schroder GAIA Egerton European Equity Key Facts Investment focus Long/short portfolio with minimum 51% exposure to European stocks Launch date 25 November 2009 Dealing frequency Weekly, on each Wednesday or the next Business Day if a Wednesday is not a Business Day and on the last Business Day in a month Deal cut off Luxembourg time one business day preceding a dealing day NAV publication daily on t+1 Fund registered in Austria, Denmark, Finland, France, Germany, Italy, Luxembourg, Norway, Portugal, Spain, Sweden, Switzerland, The Netherlands, and the United Kingdom (certain share classes with UK, German, and Austrian tax reporting) EUR, USD hedged share classes available Share Class A1 Minimum Initial Subscription/ Minimum Holding 5,000 Initial Charge Up to 2% Investment Management Fee 2.00% Distribution Fee 0.50% 20% of the outperformance over EONIA +1% subject to a High Water Mark (USD Performance Fee Hedged: LIBOR USD O/N) + 1% subject to a High Water Mark Source: Schroders, Schroder GAIA Prospectus May 2010 These terms are subject in their entirety to the Fund s offering documents. Please refer to the Fund s offering documents for a complete description. 11

13 Schroder GAIA Egerton European Equity Current Geographic Breakdown (1) Country Allocation Northern America Europe ex- UK/Middle East Emerging Markets United Kingdom Japan % Cash 7.65 % 6.72 % 9.13 % % % Country Long Short Gross Net Europe Belgium 3.38 % 0.00 % 3.38 % 3.38 % Denmark 0.69 % % 0.88 % 0.50 % Finland 0.00 % % 0.48 % % France 7.11 % % 7.73 % 6.48 % Germany % % % % Italy 0.53 % % 1.13 % % Luxembourg 1.24 % 0.00 % 1.24 % 1.24 % Netherlands 3.58 % 0.00 % 3.58 % 3.58 % Norway 2.85 % 0.00 % 2.85 % 2.85 % Spain 3.95 % % 4.91 % 2.98 % Sweden 1.98 % % 2.82 % 1.14 % Switzerland 6.69 % % 7.13 % 6.24 % United Kingdom 7.18 % % 7.64 % 6.72 % Indices 2.42 % % % % Outside Europe United States % % % % Emerging Markets % % % % Japan 0.00 % % 0.42 % % Total % % % % Source: Schroders as at 31 March 2011 (1) Analysis based on market exposure as a percentage of Total Fund Size excluding currency forward contracts and cash. Emerging markets securities may be less liquid and more volatile and are subject to a number of additional risks, including but not limited to currency fluctuations and political instability. Any reference to a specific company or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. It should not be assumed that the recommendations made in the future will be profitable or will equal the performance of the securities discussed in this document. 12

14 Schroder GAIA Egerton European Equity Current Sector Breakdown (1) Portfolio Structure (2) Information Technology Consumer Discretionary Industrials Financials % % % % Equity and Fixed Income Exposure Long Exposure % Short Exposure % Net position % Cash 9.13 % Number of Positions Long 63 Short 35 Consumer Staples 13 Energy Materials Health Care Telecommunication Services Others % % % 4.34 % 2.21 % 6.84 % Top 5 Long Holdings Holding Sector % NAV News Corporation Consumer Discretionary 4.90 % Oracle Information Technology 4.69 % Apple Information Technology 4.31 % SAP Information Technology 4.01 % Anheuser-Busch Consumer Staples 3.38 % Top 5 Short Holdings Sector Country % NAV Materials United States % Industrials United States % Consumer Discretionary Sweden % Materials United States % Health Care Finland % Source: Schroders as at 31 March (1) Analysis based on market exposure as a percentage of Total Fund Size excluding currency forward contracts and cash. Others refers to contracts for differences. (2) These figures are on a delta-adjusted basis.

15 Schroder GAIA On-going risk management and monitoring 1. Investment Manager risk controls 2. Independent daily monitoring of UCITS rules, compliance and investment risk 3. Independent Risk oversight and investment monitoring 4. Due diligence 5. Quarterly risk review Investment Manager Schroder Investment Management (Luxembourg) S.A. Schroders NewFinance Capital Schroders and Schroders NewFinance Capital Schroders, Schroders NewFinance Capital, and Schroder GAIA Board Avoidance of Illiquidity, and excessive leverage and concentration Portfolio is well diversified across sectors and geography Cash levels are raised where appropriate Regulatory risk managements duties/hard limits Portfolio allocation Investment limits Counterparty risk Performed by specialist Hedge Fund analysts in conjunction with risk monitoring quantitative analyst Style drift related risk management/soft limits On-going monitoring and evaluation of original due diligence findings Derivatives used to mitigate tail risk GAIA provides a robust manager monitoring process Although risk management policies and procedures can be effective in reducing or mitigating the effects of certain risks, no such policies and diversification can completely eliminate the possibility of sudden and severe losses, illiquidity and the occurrence of other material adverse effects. 14

16 Risk Management Risk Management Philosophy Risk Limits Knowing what you own (Company/Macro/Regulatory) Diversification (economic, sector, and geographic) Focus on highly liquid securities Limited use of leverage Plain-vanilla derivatives for protection against tail-risk Position size limits at market value Gross and net exposure limits Non-Europe exposure limit Non-equity exposure limit Liquidity Parameters The majority of the portfolio is invested in large cap equities (as of March 31, 2010 c.88% of the portfolio is invested in companies with market capitalizations greater than $5bn) No private equity, structured credit, or complex derivatives Daily monitoring of days to exit, days to liquidate entire portfolio, and daily trading volumes of all individual securities Although risk management policies and procedures can be effective in reducing or mitigating the effects of certain risks, no such policies and diversification can completely eliminate the possibility of sudden and severe losses, illiquidity and the occurrence of other material adverse effects. 15

17 Schroder GAIA Egerton European Equity What are the main risks? A prospective investor should appreciate that the value of any investment, and any income from any investment, may go down as well as up and that an investor s capital is at risk and the investor may not receive back the amount invested The fund may be suitable for investors who are more concerned with maximising long term returns than minimising possible short term losses The fund makes use of financial derivative instruments for investment purposes which may increase the share price volatility There can be no assurance that the investment objectives of the fund will be achieved and investment results may vary substantially over time, including loss of entire investment Investment in the fund is not intended to be a complete investment programme for any investor and should form part of a broader diversified portfolio Investment in the fund is intended for experienced investors who are able to understand and accept the risks involved Past performance is not necessarily indicative of future results An investment in the Company entails additional risks, which are fully described in the prospectus. 16

18 Positioning and Outlook Current Positioning Portfolio Exposure Net long exposure (72% delta-adjusted) reflects a broadly positive view on stocks, and high conviction in our long positions, specifically Short exposure has fallen slightly in 2011 reflecting a challenging period for stock-specific shorts Put options remain in place for tail-risk protection Continued large-cap focus: 88% of the portfolio is invested in companies with market capitalisations of $5bn or greater Long Positions Characteristics include quality and growth Top 10 Longs as of Mar 31, 2011: News Corp, Oracle, Apple, SAP, Anheuser-Busch Inbev, UPS, Kuehne & Nagel, Polo Ralph Lauren, ASML, and TGS Nopec Global companies (primarily with European-listings); we also have meaningful US exposure Unlevered balance sheets and large net cash balances Attractively valued based on our earnings estimates Several long positions are net beneficiaries of increased corporate spending (e.g. News Corp, Oracle, ASML, and SAP) Limited exposure to sectors reliant on favourable conditions in domestic Europe (e.g. Euro-zone banks and telecoms) Short Positions Opposite characteristics of our longs Domestic Europe oriented Diversified sector exposure but retailers, financials, and solar companies are prominent Outlook Corporates Balance sheets are healthy; cash at record levels we believe this will be a key driver of this investment cycle Earnings remain strong in the sectors we find attractive Global Growth Global GDP growth continues despite increased headwinds The US appears to be recovering Europe is showing pockets of strength Emerging market growth may moderate but continues to be strong Valuations Valuations remain attractive in the context of a low interest rate environment Price of long-term debt is low versus stock valuations Market sentiment While equities have become more fashionable since the market began to rally in September 2010, many investors remain under allocated Risks Inflation higher commodity prices have led to higher input costs and will result in increased margin pressure in certain companies Consumer and government debt overhang in the developed world; there remain few safe haven currencies The sovereign crisis in Europe appears manageable but is far from being resolved There remain few safe haven currencies Geopolitical instability in the Middle East and the consequent rise in oil prices Authorities have few policy options left if economies relapse, particularly after the latest round of QE Past performance is not necessarily indicative of future results. This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice. 17

19 Schroder GAIA Egerton European Equity Historical Exposure 31/12/09 30/03/10 30/06/10 30/09/10 31/12/10 31/03/11 Fund Long Fund Short Fund Gross Fund Net 160% 140% 120% 100% 80% 60% 40% 20% 0% 20% 40% Source: Schroders NewFinance Capital 31 March 2011 Past performance is not necessarily indicative of future results. This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice. 18

20 Schroder GAIA Egerton European Equity Performance Returns Fund Index Fund Index Fund Index January % % -2.13% 1.93 % February 0.68 % 0.67 % 2.09% 2.13% March 4.60 % 6.88 % -1.49% -1.89% April % % 1.19% 3.35% May % % June 0.52 % % July 2.15 % 5.86 % August % % September 3.92 % 5.31 % October 3.30 % 3.00 % November % % December 2.75 % 4.90 % 3.48 % 5.45 % Year to date 12.64% 6.83% % 5.56 % Source: Schroders. As at 30 April 2011 All fund performance data are on Schroder GAIA Egerton A1 Accumulation EUR NAV to NAV basis, net income reinvested. In case a share class is created after the fund s launch date, a simulated past performance is used, based upon the performance of an existing share class within the fund, taking into account the difference in the Total Expense Ratio. Past performance is not a reliable indicator of future results, prices of shares and the income from them may fall as well as rise and investors may not get back the amount originally invested. The index used for comparative purposes is MSCI Europe TR Net LC. On 31 August 2010, the index changed from FTSE World Series Europe TR to MSCI Europe TR Net LC. The full track record of the previous index has been removed and replaced with the new one. 19

21 Appendices

22 Important information Schroders and Egerton have expressed their own views and opinions in this presentation and these may change. Any views and opinions of Egerton may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. Risk warnings: The Fund is a high risk vehicle. In particular the use of financial derivative instruments for investment purposes may increase the share price volatility, which may result in higher losses for the Investor. Investments in equities are subject to market risk and, potentially, to currency exchange rate risk. Important Information: This presentation does not constitute an offer to anyone, or a solicitation by anyone, to subscribe for shares of Schroder GAIA (the Company ). Nothing in this presentation should be construed as advice and is therefore not a recommendation to buy or sell shares. Subscriptions for shares of the Company can only be made on the basis of its latest prospectus together with the latest audited annual report (and subsequent unaudited semi-annual report, if published), copied of which can be obtained, free of charge, from Schroder Investment Management (Luxembourg) S.A. An investment in the Company entails risks, which are fully described in the prospectus. Past performance is not a reliable indicator of future results, prices of shares and the income from them may fall as well as rise and investors may not get back the amount originally invested. This presentation is issued by Schroder Investment Management Limited, 31, Gresham Street, EC2V 7QA, who is authorised and regulated by the Financial Services Authority. Registration No , England. For your security, all telephone calls are recorded. 21

23 Important information Third party data is owned or licensed by the data provider and may not be reproduced or extracted and used for any other purpose without the data provider's consent. Third party data is provided without any warranties of any kind. The data provider and issuer of the document shall have no liability in connection with the third party data. The Prospectus and/or contains additional disclaimers which apply to the third party data. Schroders has expressed its own views and opinions in this presentation and these may change. Please keep the following general risks in mind when investing in alternative investments: Alternative investments are speculative and involve a high degree of risk. Alternative investment trade on a leveraged basis which increases the risk of loss. Performance can be volatile. An investor could lose all or a substantial amount of his or her investment. The use of a single fund of funds manager applying one set of allocation procedures could mean lack of diversification and, consequently, higher risk. There is no secondary market for the investor s interest in the Fund and none is expected to develop. There may be restrictions on transferring interests in the alternative investment. High fees and expenses may offset the underlying manager s trading profits. This material is provided for discussion purposes only and does not constitute a solicitation, research or investment advice. The views expressed are subject to change. This information is presented for information purposes only and is not intended to be either a specific offer to sell or provide, or a specific invitation for a consumer to apply for, any particular financial product or service that may be available. An offer to purchase interests in any hedge fund referred to herein may be made only pursuant to the fund's private placement memorandum, which contains important information concerning risk factors, performance and other material aspects of the fund. This must be carefully read before any decision to invest is made. No additional written material may be provided. Failure to adhere to these restrictions will result in the violators being subject to severe sanctions, which may include fines and /or dismissal from the firm. Hedge funds are sold in private placements and may be offered only to individuals who are both Qualified Purchasers and Accredited Investors and for whom the investment is otherwise suitable. This material is intended to provide information only and is not intended to be construed as a solicitation for the sale of any particular investment. It does not have regard to the specific investment objectives, financial situation, and particular needs of, and does not represent investment advice or a personal recommendation to, any person. Changes in exchange rates may have an adverse effect on the value of and income from investments. The value of investments and their income can go down as well as up, and could rise or fall dramatically. Investors may not get back the full amount invested. If you have any doubt about the suitability of investments for you, you should consult your Financial Advisor. 22

24 Important information Important Information: This strategy may include the use of derivatives. Derivatives often involve a high degree of financial risk, because a relatively small movement in price of the underlying security or benchmark may result in a disproportionately large movement in price of a derivative, and are not suitable for all investors. No representation regarding the suitability of these instruments and strategies for a particular investor is made. Alternative Investments are speculative and subject to a high degree of risk. Although risk management policies and procedures can be effective in reducing or mitigating the effects of certain risks, no risk management policy can completely eliminate the possibility of sudden and severe losses, illiquidity and the occurrence of other material adverse effects. Past performance is not indicative of future results, which may vary. The value of investments and the income derived from investments can go down as well as up. Future returns are not guaranteed, and a loss of principal may occur. There may be conflicts of interest relating to the Alternative Investment and its service providers, and its affiliates, who are engaged in businesses and have clear interests other than that of managing, distributing and otherwise providing services to the Alternative Investment. These activities and interests include potential multiple advisory, transactional and financial and other interests in securities and instruments that may be purchased or sold by the Alternative Investment, or in other investment vehicles that may purchase or sell such securities and instruments, These are considerations of which investors in the Alternative Investment should be aware, Additional information relating to these conflicts is set forth in the offering materials for the Alternative Investment. Hedge funds are speculative and involve a high degree of risk. An investor could lose all or a substantial amount of his or her investment. There is no [readily available] secondary market, nor is one expected to develop for investments in hedge funds. There may be restrictions on transferring fund investments. Hedge funds may be leveraged and performance may be volatile. Hedge funds are subject to substantial fees and expenses that reduce returns. 23

25 Important information Singapore: The offer or invitation of the shares (the Shares ) of Schroder GAIA Egerton European Equity (the Fund ), which is the subject of this Prospectus, does not relate to a collective investment scheme which is authorised under Section 286 of the Securities and Futures Act, Chapter 289 of Singapore (the SFA ) or recognised under Section 287 of the SFA. The Fund is not authorised or recognised by the Monetary Authority of Singapore (the MAS ) and the Shares are not allowed to be offered to the retail public. This Prospectus and any other document or material issued in connection with the offer or sale is not a prospectus as defined in the SFA. Accordingly, statutory liability under the SFA in relation to the content of prospectuses would not apply. You should consider carefully whether the investment is suitable for you. This Prospectus has not been registered as a prospectus with the MAS. Accordingly, this Prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of Shares may not be circulated or distributed, nor may Shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 304 of the SFA, (ii) to a relevant person pursuant to Section 305(1), or any person pursuant to Section 305(2), and in accordance with the conditions specified in Section 305, of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA. Where Shares are subscribed or purchased under Section 305 by a relevant person which is: a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the [Shares/Units/Interests] pursuant to an offer made under Section 305 except: to an institutional investor or to a relevant person defined in Section 305(5) of the SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 305A(3)(i)(B) of the SFA; where no consideration is or will be given for the transfer; where the transfer is by operation of law; or as specified in Section 305A(5) of the SFA. 24

26 Important information Hong Kong: THE CONTENTS OF THIS DOCUMENT HAVE NOT BEEN REVIEWED BY ANY REGULATORY AUTHORITY IN HONG KONG. YOU ARE ADVISED TO EXERCISE CAUTION IN RELATION TO THE OFFER. IF YOU ARE IN ANY DOUBT ABOUT ANY OF THE CONTENTS OF THIS DOCUMENT, YOU SHOULD OBTAIN INDEPENDENT PROFESSIONAL ADVICE. THE SHARES MAY NOT BE OFFERED OR SOLD IN HONG KONG BY MEANS OF THIS DOCUMENT OR ANY OTHER DOCUMENT OTHER THAN TO PROFESSIONAL INVESTORS AS DEFINED IN THE HONG KONG SECURITIES AND FUTURES ORDINANCE, OR IN OTHER CIRCUMSTANCES THAT DO NOT CONSTITUTE AN OFFER TO THE PUBLIC FOR THE PURPOSES OF THE HONG KONG COMPANIES ORDINANCE. THIS DOCUMENT IS INTENDED SOLELY FOR THE USE OF THE PERSON TO WHOM IT HAS BEEN DELIVERED FOR THE PURPOSE OF EVALUATING A POSSIBLE INVESTMENT BY THE RECIPIENT IN THE SHARES DESCRIBED HEREIN, AND IS NOT TO BE REPRODUCED OR DISTRIBUTED TO ANY OTHER PERSONS (OTHER THAN PROFESSIONAL ADVISORS OF THE PROSPECTIVE INVESTOR RECEIVING THIS DOCUMENT). Uruguay: The investment products OR SERVICES REFERENCED HEREIN (the Products ) have not been registered under the Uruguayan Securities Market Law or recorded in the Uruguayan Central Bank. No action may be taken in Uruguay that would render the offering of the Products a public offering in Uruguay ABSENT SUCH REGISTRATION OR RECORDING. No Uruguayan regulatory authority has approved the Products or passed on the solvency of their issuer. In addition, any resale of the Products must be made in a manner that will not constitute a public offering in Uruguay. Brazil: The information contained herein does not constitute a public offer or distribution of securities in Brazil and no registration or filing with respect to any securities or financial products REFERENCED HEREIN has been made with the Comissão de Valores Mobiliários (CVM). No public offer of securities or financial products REFERENCED HEREIN MAY BE made in Brazil without the applicable registration at the CVM. 25