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Schroder GAIA Egerton Equity

Quarterly Fund Update
Second Quarter 2018

Portfolio characteristics Portfolio structure

Fund manager John Armitage (Egerton) Gross/net exposure (%)

Long Equities 111.8

Managed fund since 25 November 2009
Short Equities -53.9
Fund launch date 25 November 2009 Total gross exposure 165.7

Fund benchmark* MSCI World TR Net (local currencies) Total net exposure 57.9
Options (delta-adjusted) -5.9
Fund size $1,574 million
Total gross exposure (delta-adjusted) 171.5
Ongoing charge** 1.67% Total net exposure (delta-adjusted) 52.0
Number of positions*
Performance fee 20% excess return above EONIA +
1% subject to a High Water Mark Long 46

Source: Schroders, as at 30 June 2018. Short 106

*Please note the fund is benchmark unconstrained; index returns are
provided for reporting purposes only. Source: Schroders as at 30 June 2018. Figures are on a delta-adjusted
**The ongoing charges figure is as at 31 May 2018 and may vary from year basis.*Excluding index options and government bonds.
to year for the C Acc EUR share class.

Discrete monthly returns since inception (%)

C accumulation shares (EUR)
Year* Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2018 5.2 5.0 -0.3 -0.5 0.0 1.7 -0.7
2017 15.0 2.6 1.6 1.2 2.9 3.6 -1.0 3.0 1.5 -1.4 2.7 -0.9 -1.4
2016 -3.7 -4.3 -2.5 1.8 -2.1 3.6 -3.6 2.7 0.4 0.8 -1.7 0.8 0.7
2015 8.3 0.9 1.7 1.0 -1.2 2.8 -0.4 4.3 -2.4 -1.7 3.6 0.3 -0.8
2014 3.4 -2.6 3.0 -2.1 -1.5 2.1 0.0 -1.0 2.1 0.0 1.2 2.0 0.3
2013 23.3 2.5 2.9 2.8 0.5 3.3 0.1 2.6 -2.7 2.5 1.8 2.5 2.6
2012 12.0 2.6 3.6 2.2 -0.0 -2.6 1.3 1.0 0.2 1.4 -0.6 2.3 0.2
2011 -4.2 -2.0 2.0 -1.4 1.2 -0.2 -0.4 -0.2 -3.4 -1.8 3.5 -0.4 -1.1
2010 14.4 -2.9 0.8 5.2 -0.0 -2.9 0.2 2.6 -0.7 4.7 3.2 -0.0 3.6
2009 1.8 - - - - - - - - - - -1.1 2.9
Source: Schroders as at 30 June 2018. NAV to NAV, net of fees. Fund launch date: 25 November 2009. *Year-to-date performance is shown for years
where monthly returns are not displayed for the full year.

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 the amount originally invested.

Schroder GAIA Egerton Equity

Second Quarter 2018
Cumulative returns to 30 June 2018 (%)
C accumulation shares (EUR)
130 3 months 1 year 3 years
90 Schroder
1.0 8.8 20.3 100.9
70 GAIA Egerton Equity
30 MSCI World TR Net
3.6 10.9 28.2 131.6
10 (local currencies)
-10 Source: Schroders as at 30 June 2018. NAV to NAV, net of fees. Fund
3 months 1 year 3 years Since launch launch date: 25 November 2009.

Portfolio Index 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 the amount
originally invested.

What happened in the market and portfolio

Global markets moved higher in the second quarter, led by the US and Europe, with emerging markets (EM) significantly
underperforming. The backdrop was less positive than in the previous 18 months. There were protectionist moves initiated by the US
against the EU and China, sporadic EM currency blow-ups and/or stock market declines (in Brazil, Argentina, South Africa and China,
among others), and the combination of a flattening yield curve and a globally weak financial sector raised fears of an incipient economic
slowdown. Meanwhile further US rate rises are near to turning US dollar cash/near cash into an acceptable asset class.

The fund managed a modestly positive performance, with decent returns from its longs offset by poor results from short-selling.

Stock highlights
21st Century Fox
The fund has continued to add to 21st Century Fox Inc (“Fox”), which is now its largest position.

Subsequent to Disney's 14th December offer for the majority of Fox assets at the equivalent of roughly $28 per share, Comcast launched
a competing all-cash offer, for the same assets, at $35, on 13th June. Seven days later, Disney revised its all-stock offer to $38 (split
50/50 between cash and stock), and subsequently settled with the Department of Justice (DoJ) that its deal would be approved on the
sale of Fox's Regional Sports Networks; this significantly reduces the regulatory risk of the transaction (which we had believed was
quite low). Disney is still required to obtain international approvals, which are likely to take some time, so the deal is only expected to
settle within the next 6-12 months.

We still feel, on balance, that Comcast may counter-bid, because the company is also making some progress on the regulatory issues
and believes that Fox's assets have significant strategic value in the changing media landscape. We do not think that Comcast’s
ownership of these assets poses any additional material regulatory risk compared to Disney (the same Regional Sports Networks
remedy is available to Comcast, and the Trump-appointed FCC chairman has ruled out the vertical integration of programming and
distribution as a potential source of consumer harm), although the timing delay inherent in any offer would have to be reflected in its

We continue to see significant upside in the remaining Fox assets (New Fox).

New Fox is currently trading at an implied price of $11.80 based on the Disney offer (compared to $5.50 when we first invested in Fox);
this is around 10x and 8x the earnings and FCF we forecast for the FY ending June 2020.

New Fox's revenues, EBITDA and FCF/share can grow mid single-digits, high single-digits, and c.20% per annum over 2018-2020, and
share repurchases or additional acquisitions of local stations would further enhance this growth.

Schroder GAIA Egerton Equity

Second Quarter 2018
Fox News will generate around two-thirds of EBITDA growth, with the rest generated by some of the smaller cable networks (Fox Sports
1 and 2) which continue to perform well. The broadcast network could yield significant upside, should it be successful in negotiating
significantly higher retransmission rates (they are $1.70 per subscriber today and the company targets nearer $3.00 in time), and in
lowering costs by eliminating expensive entertainment programming.

These two sources of upside could add an additional 15-20% to our FCF per share estimates by June 2021, but we do not forecast them
because of the recent poor performance of the network.

The fund bought a position in Tenaris SA the leading producer of Oil Company Tubular Goods (known by the acronym OCTG, they are
used to drill and complete oil and gas wells), in part as a modest hedge against, and beneficiary of, higher oil prices.

Tenaris originated in Italy, is still 60% family-controlled and has a global production network with its main hubs in North/South America
and the EU. It sells worldwide and particularly in the US (32% of sales), Middle East (“ME”) (16%), Argentina (14%), Canada (11%) and
Europe (8%).

Tenaris remained EBITDA and OpCF positive between 2014-2017, despite 45% and 32% declines in its volumes and realised prices
respectively. It retained a net cash balance sheet, which allowed it to continue investing in the maintenance and expansion of its
industrial footprint and to roll-out a direct sales model in the US (which embeds it with its customers). In contrast, its key competitors

Many subsectors of the oil service industry have been permanently disrupted as a result of the downturn, either on the supply-side, by
over-capacity, commoditisation and technology, or by the rise of the shale industry, and by hydrocarbon producers' new focus on
efficiency and capital discipline.

However, the OCTG sector has emerged stronger.

Led by the shale industry, the US rig count has risen by 160% from its trough in early 2016 (and it is still 45% below its prior cycle peak).
Consumption of tubes-per-rig has now reached c.500 tonnes per month (up from c.300 tonnes in 2014), due to the significant
improvement (i.e. reduction) in drill times, the shift to horizontal drilling and an increase in lateral lengths drilled. Total OCTG demand
in the US is therefore already close to prior cycle peak levels. A similar improvement from here is unlikely, but OCTG consumption-per-
rig will likely rise further – since 40-60% (cf. 20% in 2014) and 100% of wells in the Permian and the Bakken respectively have lateral
lengths of 9000ft or more.

Drilling activity has only started recovering modestly outside the US, but since OPEC and Russia are signalling a production increase in
H2 2018, and the need to rebuild spare capacity, Middle East land markets should see a return to growth.

There have been some early signs of a recovery in shallow water markets as operators have improved project economics but deepwater
drilling is being held back by the oil majors' capital discipline.

The OCTG supply/demand balance has tightened significantly in the US, as a result of Section 232 quotas and tariffs on steel and steel
product imports, since 60% of the 5 million mt market (and as much as 80% of welded tubes) was supplied by imports, which quotas
imposed on Korea, Brazil and Argentina will reduce by 800,000 mt annually.

Domestic producers should therefore benefit from a significant volume opportunity. Tenaris is well placed to exploit this, because its
new 600kt seamless plant in Bay City, TX, is currently in ramp-up, while other domestic seamless producers are running at capacity and
cannot grow much.

Substantial spare capacity exists in the lower value welded tube segment of the OCTG market, but restarts will be lengthy and expensive
and will require further price increases to make them economic for higher cost producers. Tenaris is in the process of restarting some
facilities it has idled.

The company plans to increase its market share in the US with the help of RigDirect, its direct sales model which offers just in time
delivery and customer inventory management, circumventing traditional distributors.

Schroder GAIA Egerton Equity

Second Quarter 2018
US OCTG prices have risen by c.18% YTD and are up 58% from their trough. Price increases, especially for welded tubes, have so far
been mostly cost-driven, as a result of rising steel prices in the US due to S232 quotas and tariffs on steel imports. Korea and Brazil
have already used up their FY 2018 import quotas for OCTG, and their shipments will stop, while imports from countries not subject to
quotas face a 25% tariff. Very significant price increases are therefore likely in the coming months, and as steel prices stabilise at a
high level, we expect gross margins per ton will rise.

Tenaris itself is impacted by the S232 tariffs because it sources semi-finished billets for its Bay City facility from its steel plant in Mexico.
The company has filed for an exemption, arguing that it will be unable to source sufficient steel of the quality it requires, and in the
meantime has sufficient supply in the US to run Bay City for several months. The company also ships tubes from Mexico and Canada
to the US, the 25% tariffs on which are being passed on to customers.

Tenaris is cyclical, and is set to generate very strong revenues and EBITDA growth over the next few years, on the basis that oil prices
remain firm and with the US supply side as outlined above. But it is also an advantaged business – it performed very well through the
downturn, from which it emerged stronger and better positioned – with a strong balance sheet and it is set to be highly cash-generative
– capital spending will be well below depreciation because it has completed a programme of modernisation and expansion. While the
roll-out of RigDirect in the US has led to increased working capital as Tenaris focused on service quality, there is now an opportunity to
improve inventory levels on the ground by up to half from the current c.45 days.

Outlook and strategy

This is a mixed market environment.

Near-term/current earnings are strong. These are helped by a buoyant US economy, tax cuts, and moderately favourable trends
globally (excluding emerging markets). The dollar is reasonably stable, inflation seems, for the moment, anchored at levels which will
allow the Fed to continue its gradual and well-telegraphed path away from zero interest rate policy, and central banks outside the US
remain highly accommodative.

However, market participants lack confidence that this cyclical upturn will continue, as is reflected in the flattening yield curve, a peak
in the rate of earnings revisions, and weakness in financial stocks globally.

More concerning is the negative of protectionism/threats of a trade war (and an unstable and unpredictable political framework).
Investors are broadly assuming that protectionism will be confined and will leave the current economic expansion intact, i.e. that all
parties concerned will seek to avoid the 'mutually assured destruction' of wholesale economic warfare.

We have so far thought of EM weakness as something we must sidestep in earnings estimates and stock selection, rather than being
of broader significance for the financial markets/economy, but worry that this view is too sanguine. In particular, is the sell-off in
Chinese assets reflective of economic trends which could overwhelm the fund's investments in three key positions (Tencent, Alibaba
and AIA)? And are EM currency sell-offs a symptom of liquidity withdrawal which could impact developed markets rather than simply

Our previously stated concern that periods of very low interest rates encourage capital misallocation remains.

Overall, however, we feel the market is one which will struggle to make progress, rather than sell-off aggressively.

We would characterise the fund as being cautiously invested, rather than bullishly or bearishly positioned.

The fund’s long exposures are concentrated around a few major themes – it has large positions in aerospace, consumer internet,
enterprise software, and financials/rate sensitives among other sectors – and we think of it as biased to businesses with visible and
above-average revenue growth, with a heavy US exposure. Its shorts possess the opposite characteristics to its longs.

We feel that, as interest rates rise, earnings growth will be key to the appreciation of stocks, while our focus on revenue growth is
shaped by a conviction that a rapid industrial revolution, i.e. the application of technology to almost all businesses and business
processes, is impacting many sectors of the economy (for better or worse).

What are the threats to this strategy?

 a prolonged stock market rotation towards lower quality issues;

 significant economic weakness/a panic in China;

Schroder GAIA Egerton Equity

Second Quarter 2018
 a shift away from the US, whose companies dominate the era and whose economy and stock market have far outperformed
the rest of the world; and

 the over-ownership of the current era’s winners, by both active and passive investors (the latter are forced to buy winners as
their index weightings rise), which might cause excessive price declines during market shake-ups, particularly since their
multiples have been pushed up by the gains of the last 18 months.

Risk Considerations
The capital is not guaranteed. The value of the fund will move similarly to the equity markets. Emerging equity markets may be more
volatile than equity markets of well established economies. The title of securities may be jeopardised through fraud, negligence or
mere oversight in some countries. However the access to such markets may provide a higher return to your investment in line with its
risk profile. The fund may hold indirect short exposure in anticipation of a decline of prices of these exposures or increase of interest
rate where relevant. The fund may be leveraged, which may increase the volatility of the fund. The fund may not hedge all of its market
risk in a down cycle. Investments into foreign currencies entail exchange risks. Investments in money market instruments and deposits
with financial institutions may be subject to price fluctuations or default of the issuer. Some of the invested and deposited amounts
may not be returned to the fund. The investments denominated in a foreign currency of the share-class may not be hedged back to
the currency denomination of the share-class. The share-class will be positively or negatively impacted by the market movements
between those currencies.

Schroder GAIA Egerton Equity

Second Quarter 2018
Performance attribution as at 30 June 2018*
Summary performance attribution Month (%) Quarter (%) Year to date (%)
Long equity 0.6 4.6 8.9
Short equity -1.3 -3.3 0.5
Corporate bonds 0.0 0.0 0.0
Index options 0.0 -0.6 -0.6
FX hedging 0.2 0.4 -0.1
Total -0.5 1.1 8.7

Top 5 contributors Type Country Sector Quarter (%)

21st Century Fox Long United States Consumer Discretionary 1.9
Safran Long France Industrials 1.0
Facebook Long United States Information Technology 0.9
Adobe Systems Long United States Information Technology 0.7
Praxair Long United States Materials 0.6

Bottom 5 contributors Type Country Sector Quarter (%)

Charter Communications Long United States Consumer Discretionary -0.6
Sberbank Long Russia Financials -0.6
Porsche Long Germany Consumer Discretionary -0.5
Applied Materials Long United States Information Technology -0.3
Undisclosed Short United States Consumer Discretionary -0.3

Region Month (%) Quarter (%) Year to date (%)

Europe ex UK 0.2 1.5 3.1
United Kingdom -0.4 -0.2 0.8
North America -0.1 5.8 8.5
Pacific ex Japan -0.3 0.6 0.5
Japan -0.1 -0.1 -0.1
Emerging Markets 0.0 -0.7 -0.5
Other (including FX Hedging, Options) 0.2 -5.7 -3.5
Total -0.5 1.1 8.7

Sector Month (%) Quarter (%) Year to date (%)

Consumer Discretionary -0.2 -0.2 0.2
Consumer Staples -0.5 -0.2 0.0
Energy 0.0 -0.2 0.0
Financials -0.5 0.6 1.3
Healthcare -0.2 -0.1 -0.4
Industrials -0.1 1.9 3.2
Information Technology 0.4 4.0 6.8
Materials 0.4 1.1 0.8
Telecommunication Services 0.0 0.2 0.3
Utilities 0.0 -0.1 -0.1
Other (including FX Hedging, Options) 0.1 -5.8 -3.5
Total -0.5 1.1 8.7
Source: Schroders. *Analysis expressed on a gross of fees basis using a total return methodology. The impact of any currency movement at security
level is reflected within each of the relevant strategies. All data is rounded to one decimal place; as such, any small discrepancies can be attributed to

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 the amount originally invested.

Schroder GAIA Egerton Equity

Second Quarter 2018
Key positions as at 30 June 2018 (%)
Top 10 long positions
Holding Sector Weight (%)
1 21st Century Fox Consumer Discretionary 8.2
2 Airbus Industrials 7.4
3 Safran Industrials 4.5
4 Tencent Information Technology 4.3
5 Microsoft Information Technology 4.3
6 Praxair Materials 4.2
7 Alibaba Information Technology 3.8
8 AIA Financials 3.6
9 S&P Global Financials 3.6
10 UnitedHealth Health Care 3.4

Top 5 short positions Country allocation

Sector Country Weight (%) Sector Net Weight (%)

1 Consumer Discretionary US -3.1 United States 35.1

2 Consumer Staples US -1.7 France 13.4

-1.2 China 6.2

3 Information Technology US
Germany 5.9
4 Financials AU -1.1
Cash & Cash Equivalents 4.0
5 Financials US -1.0
Hong Kong 3.6
Source: Schroders.
Canada 3.0
Portfolio positioning as at 30 June 2018
Sector allocation Singapore 1.4
Sector Net Weight (%) Luxembourg 1.3
Information Technology 24.7 Switzerland -0.1

Financials 15.9 Denmark -0.2

Industrials 15.2 Finland -0.3

Consumer Discretionary 9.5 Belgium -0.3

Turkey -0.4
Materials 4.5
United Kingdom -0.6
Cash & Cash Equivalents 4.0
South Africa -0.9
Real Estate 0.3
Netherlands -1.2
Energy 0.1
Japan -1.3
Health Care -1.2 South Korea -1.5
Utilities -1.4 Sweden -1.6

Telecommunication Services -1.9 Spain -1.7

Others -13.7 Australia -1.8

56.0 Index Options -5.9

Source: Schroders. Analysis based on market exposure as a percentage Total 56.0
of total fund size excluding currency forward contracts.

Schroder GAIA Egerton Equity

Second Quarter 2018
Important Information:
This document does not constitute an offer to anyone, or a solicitation by anyone, to subscribe for shares of Schroder GAIA (the “Company”). Nothing in
this document 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 Key Investor Information Document and prospectus, together with
the latest audited annual report (and subsequent unaudited semi-annual report, if published), copied o which can be obtained, free of charge, from
Schroder Investment Management (Europe) 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 the amount originally invested.
Egerton has expressed its own views and opinions in this document and these may change.
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Schroder GAIA Egerton Equity

Second Quarter 2018