QUARTERLY UPDATE Q4 2015

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QUARTERLY

UPDATE Q4 2015

THE SANTANDER ATLAS GROWTH PORTFOLIOS

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01

Santander Atlas Portfolios Overview Pages 3-4

02

Market Update for Q4 2015 Pages 5-6

03

Santander Atlas Portfolio 3 Quarterly Update Pages 7-9

04

05

06

07

08

Glossary Page 22

This Quarterly Update document is designed to provide you with information on the Santander Atlas Growth Portfolios 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.

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The Santander Atlas Growth Portfolios range has been benchmarked against funds across the UK by independent financial research and software company, Defaqto, and has received a 5 Diamond Rating for providing a well-balanced proposition across features and charges.

Rayner Spencer Mills (RSM), another independent Research company, has researched the Santander Atlas Portfolio range and has awarded them with the Recommended ‘Fund Range’ Rating. Awarded May 2014. The Santander Atlas Portfolios range has also received the ‘Recommended’ rating from Square Mile Investment Consulting and Research (SMICR) following a detailed, independent qualitative research. Awarded July 2014.

Distribution Technology (DT) have independently reviewed the Atlas Growth Portfolios and awarded them

a 3 diamond Asset Consistency and Efficiency (ACE) rating, as at January 2016.

01 SANTANDER

ATLAS PORTFOLIOS

OVERVIEW

The Santander Atlas Growth Portfolios give you a

choice of five multi-asset portfolios 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 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.

• An 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 funds – giving you access to best-in-class investment managers.

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ATLAS 3 ATLAS 4 ATLAS 5 ATLAS 6 ATLAS 7

Neutral Asset Allocation

Equities Fixed Income Alternatives Liquidity *Source: Santander Asset Management UK as at 31 December 2015.

5% 5% 90% 75% 15% 5% 5% 30% 5% 5%

Experience you can trust

The Santander Atlas Portfolios’ lead fund managers, Tom Caddick and Toby Vaughan, run more than €22bn* of assets under management through multi manager and multi asset approaches. They are part of the Global Multi-Asset Solutions team, which consists of 23 specialists based across a number of countries and can draw on their global expertise and resources.

Each team member has a specific role to bring to the overall investment process covering: portfolio construction, monitoring and controls, as well as dedicated fund research analysts organised by asset class and markets.

Tom and Toby have worked together for over nine years. Between them they have over 27 years’ experience in fund management, both holding several senior fund manager positions during their careers.

You can find more information about our

Global Multi-Asset Solutions team on our website: www.santanderassetmanagement.co.uk

Portfolio construction

A key aspect of the Santander Atlas Portfolios is the fund managers’ sophisticated and dynamic approach to asset allocation, designed to give the maximum level of return for the given level of risk. Our investment team uses its own in-house modelling of potential investment returns and relationships between different asset classes to set the asset allocations.

We take a dynamic approach to position portfolios towards preferred markets in the short term, as well as ensuring that the longer-term asset allocation is appropriate to deliver attractive risk-adjusted returns. So although we are disciplined, we’re not wedded to any specific asset class, investment vehicle or fund manager. We stay as objective and as flexible as possible, blending different approaches where appropriate. For example, we may use passive instruments if we believe they deliver a better risk/reward outcome than the active equivalent. All aspects of portfolio positioning are continually monitored to improve investor outcomes

The Neutral Asset Allocation for each portfolio is shown below. The Tactical Asset Allocation (to address current and expected market conditions) for each individual portfolio is shown in the relevant Quarterly Update detailed later in this document.

45% 40% 5% 10% 65% 20% 5% 10% 60%

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02 MARKET UPDATE

FOR Q4 2015

From lead fund managers Tom Caddick and Toby Vaughan

The fourth quarter was a generally positive one for risk assets, however there was a return of market volatility as the year drew to a close. Following a sell-off in risk assets in August and September, October saw a sharp improvement in risk appetite. This partly reflected renewed confidence and clarity by the Federal Reserve in raising rates before the end of 2015. The primary driver, however, was dovish commentary by European Central Bank President Mario Draghi, outlining the likelihood of further monetary policy easing at the December meeting. Combined with resilient data through the early part of Q4, this supported risk assets and pushed bond yields slowly higher. After raising expectations, however, the ECB disappointed with its expansion, and combined with the Fed raising rates for the first time in nearly a decade, investor sentiment weakened. Ongoing underlying market factors, especially for fixed income markets, included weaker global manufacturing activity and falling commodity prices, especially oil prices. Declining commodity prices re-enforced the downward pressure on inflation, which weighed on bond yields, especially core sovereign bonds. The impact of lower oil prices was also a headwind to higher risk corporate bonds - a market which has more exposure to oil prices given large recent issuance of debt by oil companies. In the UK, although economic data continued to point to decent growth, the Bank of England maintained a cautious approach to interest rate policy given low inflation.

Market performance for Q4 2015

ASSET CLASS SUB-ASSET CLASS INDEX RETURN

Equities UK equities FTSE All-Share TR 3.95%

Europe ex-UK equities MSCI Europe ex UK TR GBP 6.18%

US equities S&P 500 TR GBP 10.01%

Japan equities Topix TR 12.38%

Asia Pacific ex-Japan equities MSCI AC Asia Pacific ex Japan TR GBP 8.13%

Emerging Markets equities MSCI EM (Emerging Markets) TR GBP 3.52%

Alternatives Absolute Return Lipper Global Absolute Return GBP Medium MEDIAN 1.06% Fixed Income UK corporate bonds Markit iBoxx Sterling Non Gilts Overall TR 0.37%

UK government bonds FTSE A British Govt All Stocks TR -1.20%

Global Emerging Markets bonds JP Morgan EMBI Global 1.55%

International bonds JP Morgan Global GBI Hedged USD TR -0.02%

High Yield bonds BofA Merrill Lynch Global High Yield TR USD Hedged -0.66%

Liquidity Liquidity LIBOR GBP Overnight Rate 0.12%

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The investment landscape continues to be determined by three major factors: 1) weak global manufacturing and emerging markets, but more resilient developed economies 2) the continuous fall in oil prices, and 3) divergent monetary policy as the Fed has started its tightening cycle while the ECB stays dovish. As a result of these factors, especially the first two, markets have adopted a very benign inflation outlook.

While we acknowledge that the risks from emerging markets are still high, and that it is difficult to assess when oil prices are likely to bottom out, we do believe the long term deflationary outlook increasingly being priced is inconsistent with the still growing global economy. As such, we continued to hold a constructive outlook for selected risk assets (certain developed market equities) and higher yielding corporate bonds. We are cautious on sovereign bonds in the developed world, which we believe are pricing in a too benign policy and inflation outlook.

One theme that we have continuously commented on is the likelihood of rising market volatility in both 2015 and 2016. This trend was very evident in 2015 (in aggregate most assets struggled to gain more than a few percent through the year), and we believe it will remain a focus in 2016. With volatility likely to see episodic moves higher, an ongoing focus on diversification is necessary to maintain suitable volatility levels for our funds. Here, low correlation absolute return managers remain a key focus within portfolios.

OUTLOOKS BY ASSET BY CLASS

EQUITIES

In many ways, the trends that shaped the equity markets in 2015 (regional differentiation, higher volatility and lower total returns) are likely to repeat themselves through the coming year, in our view. Predominantly, we expect better equity gains for those regions where earnings growth is likely to be stronger, where policy is accommodative and where economic momentum is strongest: Eurozone and Japan stand out here. We see more limited upside in US equities, given profit margins are unlikely to move higher and valuations appear to have gone some way in discounting decent US economic data. As for emerging markets, we believe there are still too many economic risks to justify high returns in the coming quarters and accordingly hold a more cautious outlook. Key to equity performance is the emphasis on volatility which should again be rising - adopting a tactical and flexible approach to equities will be necessary to manage market risks.

FIXED INCOME

The short term persistence of weaker global manufacturing activity combined with lower commodity prices and low pricing power is likely to limit the upside in bond yields in developed markets. This is despite more resilient domestic data in Europe and the US. Our core view remains that bond yields will be higher in the coming 12 months. However, we must acknowledge that yields will stay lower than where fundamentals would suggest, reflecting the lack of safe haven assets across the investment marketplace. In regards to corporate bonds, we see better returns from higher yielding credits which have discounted a very negative economic scenario, especially in the US, but point to higher volatility in these bonds compared to traditional fixed income.

ALTERNATIVES

Returns from alternative strategies, such as absolute returns, were respectable in 2015, benefitting from a stronger fourth quarter compared to the rest of the year. We expect more of the same in the coming quarters and year ahead. Our focus remains on targeting absolute return managers which can deliver modest returns with low volatility and low correlation to traditional assets. We place a premium especially on those managers that have shown historical success in preserving capital during periods of market stress. In that regard, we were encouraged by absolute return funds through much of 2015.

Regarding property, none of the Santander Atlas Portfolios have any exposure to property funds as we have a concern about the illiquidity of this asset class, given that our portfolios offer daily liquidity.

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03 SANTANDER

ATLAS PORTFOLIO 3

QUARTERLY UPDATE

Source: Santander Asset Management UK as at 31 December 2015. 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 3 delivered positive returns during the fourth quarter, reflecting the generally positive period for risk assets. These returns were driven by the dovish commentary by the European Central Bank and resilient data through the early part of Q4, which supported risk assets and pushed bond yields slowly higher.

Total fund size:

£59.64M

UK European e x UK Nor th Americ a Japan Asia P acific ex Japan Global E mer ging C orpora

te Bonds UK Gilts _Overseas

H igh Y ield GEM E mer ging Mar ket Debt Alt erna tiv es Cash 62% 15% 23%

TACTICAL ASSET ALLOCATION GEOGRAPHICAL/ASSET CLASS BREAKDOWN (%)

Equities Fixed Income Alternatives 0 5 10 15 20 25 30

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PORTFOLIO ACTIVITY

Over the fourth quarter we increased the overall equity position through an increase to the European and Japanese overweight. Within fixed income, we reduced the underweight through an increase of short duration High Yield. We increased the underweight in cash and reduced the overweight in Alternatives, in order to fund these positions. The funds we introduced to increase our UK, alternatives and short term duration high yield exposure were: Invesco UK Growth, Schroder Prime UK, Muzinich Short Duration High Yield for and Blackrock European Absolute Return Fund.

Source: Santander Asset Management UK as at 31 December 2015 HOLDINGS

Fund Name Santander Atlas Portfolio 3

1. INSIGHT UK GOVERNMENT ALL MATURITIES BD 6.67% 2. BLACKROCK COLLECTIVE CORP. B. TRACKER 6.07% 3. FIDELITY MONEYBUILDER INCOME GRS 5.84% 4. INSIGHT INVESTMENT DISCRETIONARY F 5.47% 5. VANGUARD U.K. GOVERNMENT BD IDX GBP ACC 5.39% 6. JPM AGGREGATE BOND C GBP HEDGED INC 4.97% 7. ISHARES CORE CORPORATE BOND (GBP) 4.02% 8. FUT. EURO STOXX 50 03/16 3.12% 9. FUT. TOPIX INDX 03/16 3.07% 10. LEGAL AND GENERAL ALL STOCKS GILT INDEX 3.06% 11. OLD MUTUAL GLOBAL EQUITY ABSOLUTE RETURN 3.01% 12. MFS MERIDIAN FUNDS EMERGING MKTS DEBT A1 2.98% 13 M&G OPTIMAL INCOME -A- NET 2.72% 14. JUPITER STRATEGIC BOND -I 2.68% 15. AXA ROSENBERG EQ ENHANCED- A (USD) 2.57% 16. BGF G HYB H D2RF 2.57% 17. BLACKROCK UK EQUITY - I 2.42% 18. ISHARES S&P 500 UCITS ETF ( EUR) B XETRA 2.40% 19. GLG STRATEGIC BOND FUND C 2.36% 20. BLUEBAY INVST GR ABS RET BD D 2.34% 21. SCHODER PRIME UK EQ IA 2.32% 22. HENDERSON UK ABSOLUTE RETURN-AA (GBP) 2.13% 23. MUZINICH SHORT DURAT HIGH YIELD G ACC R 1.99% 24. AXA WORLD FUNDS GLOBAL HY BONDS GBP 1.76% 25. SCHRODER INTL GL H Y 1.68% 26. BNY MELLON ABSOLUTE RETURN EQUITY GBP S 1.59% 27. ISHARES FTSE UK ALL STOCKS GILT (GBP) 1.56% 28. BLACKROCK STRATEGIC ABSOLUTE RETURN 1.52% 29. JPM INCOME OPPORTUNITY A (DIST) - GBP (H 1.47% 30. FIDELITY INVESTMENT FUNDS INDEX UK-PA 1.47% 31. KAMES UK ABS BAC 1.45% 32. ISHARES CO FTSE 100 UCITS ETF DIST (GBP) 1.38% 33. BLACKROCK EURO DYNAMIC FA AC 1.37% 34. JB MULTISTOCK ABS RET EUROPE EQ BH (GBP) 1.29% 35. JUPITER UK GR IA 1.26% 36. INVESCO PERPETUAL UK GRW NOTR ACC 1.23% 37. INVESTEC GSF ASIA PACIFIC EQUITY I (GBP) 0.49% 38. ISHARES MSCI EMU SMALL CAP 0.37% 39. BLACKROCK COLLECTIV EMERGING MK EQ TRACK 0.01%

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PERFORMANCE

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 2013. Performance shown corresponds to the RA 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.

Disclaimer

The following risks may impact the fund’s price volatility. Please consider when investing that:

(i) Investments in equities are subject to market risk, the economic and political conditions of the countries which investments are made and, potentially, to currency exchange rate risk.

(ii) Investments in debt securities are primarily subject to interest rate, credit and default risk and, potentially, to currency exchange risk.

(iii) Investments in absolute return and alternative strategies are primarily subject to interest rate, market liquidity, credit and default risk, and, potentially, to currency exchange risk. The use of financial instruments, including those listed above, as part of the investment process may also generate risk related to liquidity constraints and leverage.

(iv) Investments in emerging markets and/or small companies may involve a higher degree of risk as they can be more volatile than their developed markets or large companies counterparts.

Cumulative Performance % 3 Months 6 Months YTD 1 Year 3 Years 4 Years 5 Years

Santander Atlas Portfolio 3 1.30 -0.40 0.54 0.54 10.87 21.23 25.13 Discrete Performance % _{to Dec 2015}Dec 2014 _{to Dec 2014}Dec 2013 _{to Dec2013}Dec 2012 _{to Dec 2012}Dec 2011 _{to Dec 2011}Dec 2010

Santander Atlas Portfolio 3 0.54 5.83 4.75 9.34 3.21

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04 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.

£219.57M

TACTICAL ASSET ALLOCATION

Source: Santander Asset Management UK as at 31 December 2015.

GEOGRAPHICAL/ASSET CLASS BREAKDOWN (%)

43% 14% 43% 0 5 10 15 20 25 Equities Fixed Income Alternatives _UK European e x UK Nor th Americ a Japan Asia P acific ex Japan Global E mer ging C orpora

H igh Y ield GEM E mer ging Mar ket Debt Alt erna tiv es Cash

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Source: Santander Asset Management UK as at 31 December 2015. PORTFOLIO ACTIVITY

Over the fourth quarter we have increased the overall equity position through an increase to the European and Japanese overweight. Within fixed income, we reduced the underweight through an increase of short duration High Yield. We increased the underweight in cash and reduced the overweight in Alternatives, in order to fund these positions. The funds we introduced to increase our UK, alternatives and short term duration high yield exposure were: Invesco UK Growth, Schroder Prime UK, Muzinich Short Duration High Yield, Blackrock European Absolute Return Fund. We sold Threadneedle UKL Equity Income.

HOLDINGS

1. INSIGHT INVESTMENT DISCRETIONARY F 8.89% 2. BLACKROCK COLLECTIVE CORP. B. TRACKER 4.51% 3. BGF G HYB H D2RF 3.99% 4. FIDELITY INVESTMENT FUNDS INDEX UK-PA 3.87% 5. FUT. EURO STOXX 50 03/16 3.83% 6. M&G OPTIMAL INCOME -A- NET 3.68% 7. JUPITER STRATEGIC BOND -I 3.52% 8. SCHODER PRIME UK EQ IA 3.46% 9. ISHARES CORE CORPORATE BOND (GBP) 3.43% 10. ISHARES S&P 500 UCITS ETF ( EUR) B XETRA 3.26% 11. VANGUARD U.K. GOVERNMENT BD IDX GBP ACC 3.10% 12. INSIGHT UK GOVERNMENT ALL MATURITIES BD 2.95% 13 SCHRODER INTL GL H Y 2.89% 14. AXA ROSENBERG EQ ENHANCED- A (USD) 2.87% 15. KAMES UK EQUITY B ACC 2.82% 16. OLD MUTUAL GLOBAL EQUITY ABSOLUTE RETURN 2.70% 17. VANGUARD JAPAN STOCK INDEX GBP ACC 2.64% 18. BLACKROCK UK EQUITY - I 2.52% 19. NOMURA FUNDS IRELAND JAPAN STRATEGIC VAL 2.27% 20. BLUEBAY INVST GR ABS RET BD D 2.25% 21. FUT. TOPIX INDX 03/16 2.22% 22. AXA WF US GBL HIGH YIELD BONDS I C USD 2.01% 23. JUPITER UK GR IA 1.99% 24. HENDERSON UK ABSOLUTE RETURN-AA (GBP) 1.96% 25. MUZINICH SHORT DURAT HIGH YIELD G ACC R 1.94% 26. ACMBERNSTEIN SICAV SELECT US EQUITY I 1.86% 27. ISHARES FTSE UK ALL STOCKS GILT (GBP) 1.82% 28. INVESCO PERPETUAL UK GRW NOTR ACC 1.69% 29. ISHARES CO FTSE 100 UCITS ETF DIST (GBP) 1.53% 30. BLACKROCK STRATEGIC ABSOLUTE RETURN 1.50% 31. BNY MELLON ABSOLUTE RETURN EQUITY GBP S 1.42% 32. BLACKROCK EUROPEAN DYNAMIC - A 1.39% 33. JB MULTISTOCK ABS RET EUROPE EQ BH (GBP) 1.39% 34. ISHARES MSCI EUROPE EX-UK INC (IE) GBP 1.38% 35. JPM INCOME OPPORTUNITY A (DIST) - GBP (H 1.36% 36. FIDELITY INVESTMENT FUNDS UK SELECT FUND 1.33% 37. KAMES UK ABS BAC 1.24% 38. ISHARES MSCI EMU SMALL CAP 1.08% 39. ISHARES S&P 500 MINIMUN VOLATILITY 0.95% 40. BLACKROCK EURO DYNAMIC FA AC 0.50%

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Santander Atlas Portfolio 4 3.88 0.16 2.24 2.24 19.87 32.51 29.22 Discrete Performance % _{to Dec 2015}Dec 2014 _{to Dec 2014}Dec 2013 _{to Dec 2013}Dec 2012 _{to Dec 2012}Dec 2011 _{to Dec 2011}Dec 2010

Santander Atlas Portfolio 4 2.24 5.26 11.94 10.55 -2.48

Disclaimer

Source: Lipper as at 31 December 2015 PERFORMANCE

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05 SANTANDER

ATLAS PORTFOLIO 5

QUARTERLY UPDATE

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.

£76.60M

28%

9%

63%

0 5 10 15 20 25 30 Equities Fixed Income Alternatives UK European e x UK Nor th Americ a Japan Asia P acific ex Japan Global E mer ging C orpora

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PORTFOLIO ACTIVITY

Over the fourth quarter we have increased the overall equity position through an increase to the European and Japanese overweight. Within fixed income, we reduced the underweight through an increase of short duration High Yield. We increased the underweight in cash and reduced the overweight in Alternatives, in order to fund these positions. The funds we introduced to increase our UK, alternatives and short term duration high yield exposure were: Invesco UK Growth, Schroder Prime UK, Muzinich Short Duration High Yield. We sold Threadneedle UK Equity and Schroder Emerging Market.

HOLDINGS

1. FIDELITY INVESTMENT FUNDS INDEX UK-PA 8.33% 2. INSIGHT INVESTMENT DISCRETIONARY F 4.94% 3. ISHARES FTSE UK ALL STOCKS GILT (GBP) 4.01% 4. ROYAL LONDON UK ALL SHARE TRACKER Z 3.92% 5. ISHARES S&P 500 UCITS ETF ( EUR) B XETRA 3.55% 6. SCHODER PRIME UK EQ IA 3.53% 7. FUT. EURO STOXX 50 03/16 3.22% 8. FUT. TOPIX INDX 03/16 2.96% 9. BGF G HYB H D2RF 2.94% 10. LYXOR ETF MSCI EMERGING MK-B (USD) SUIZA 2.92% 11. BLACKROCK UK EQUITY - I 2.88% 12. SCHRODER INTL GL H Y 2.86% 13 KAMES UK EQUITY B ACC 2.72% 14. AXA ROSENBERG EQ ENHANCED- A (USD) 2.71% 15. JUPITER UK GR IA 2.70% 16. BLACKROCK COLLECTIVE CORP. B. TRACKER 2.60% 17. INVESCO PERPETUAL UK GRW NOTR ACC 2.56% 18. OLD MUTUAL GLOBAL EQUITY ABSOLUTE RETURN 2.52% 19. VANGUARD JAPAN STOCK INDEX GBP ACC 2.34% 20. JUPITER STRATEGIC BOND -I 2.29% 21. BLUEBAY INVST GR ABS RET BD D 2.28% 22. BLACKROCK EUROPEAN DYNAMIC - A 2.24% 23. ISHARES CORE CORPORATE BOND (GBP) 2.18% 24. FIDELITY INVESTMENT FUNDS UK SELECT FUND 2.17% 25. M&G OPTIMAL INCOME -A- NET 2.01% 26. AXA WF US GBL HIGH YIELD BONDS I C USD 1.99% 27. NOMURA FUNDS IRELAND JAPAN STRATEGIC VAL 1.98% 28. ACMBERNSTEIN SICAV SELECT US EQUITY I 1.97% 29. MUZINICH SHORT DURAT HIGH YIELD G ACC R 1.94% 30. BLACKROCK COLLECTIVE CONT. EURO 1.70% 31. HENDERSON UK ABSOLUTE RETURN-AA (GBP) 1.44% 32. ISHARES CO FTSE 100 UCITS ETF DIST (GBP) 1.27% 33. INVESTEC GSF ASIA PACIFIC EQUITY I (GBP) 1.15% 34. ABERDEEN GLOBAL ASIA PACIFIC EQUITY D2 1.14% 35. ISHARES S&P 500 MINIMUN VOLATILITY 1.06% 36. FISHER EMERG MRKTS EQ GBP UH 1.02% 37. BLACKROCK GF ASIA PACIFIC EQ. INC - A2RF 0.98% 38. BLACKROCK COLLECTIVE PACIFIC EX JAPAN D 0.95% 39. KAMES UK ABS BAC 0.92% 40. ISHARES MSCI EMU SMALL CAP 0.90% 41. BNY MELLON ABSOLUTE RETURN EQUITY GBP S 0.80% 42. JB MULTISTOCK ABS RET EUROPE EQ BH (GBP) 0.80% 43. JPM ASIA PAC STRAT EQ-BI (USD) 0.74%

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Santander Atlas Portfolio 5 4.46 -1.59 1.48 1.48 21.37 34.93 26.73 Discrete Performance % _{to Dec 2015}Dec 2014 _{to Dec 2014}Dec 2013 _{to Dec 2013}Dec 2012 _{to Dec 2012}Dec 2011 _{to Dec 2011}Dec 2010

Disclaimer

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06 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.

£214.38M

Source: Santander Asset Management UK as at 31 December 2015.

78%

9%

13%

0 5 10 15 20 25 30 35 Equities Fixed Income Alternatives UK European e x UK Nor th Americ a Japan Asia P acific ex Japan Global E mer ging C orpora

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HOLDINGS

1. FIDELITY INVESTMENT FUNDS INDEX UK-PA 7.76% 2. LYXOR ETF MSCI EMERGING MK-B (USD) SUIZA 6.36% 3. ISHARES S&P 500 UCITS ETF ( EUR) B XETRA 4.50% 4. ISHARES CO FTSE 100 UCITS ETF DIST (GBP) 3.91% 5. ROYAL LONDON UK ALL SHARE TRACKER Z 3.91% 6. BLACKROCK UK EQUITY - I 3.79% 7. SCHODER PRIME UK EQ IA 3.62% 8. KAMES UK EQUITY B ACC 3.39% 9. JUPITER UK GR IA 3.26% 10. AXA ROSENBERG EQ ENHANCED- A (USD) 3.20% 11. INSIGHT INVESTMENT DISCRETIONARY F 3.07% 12. INVESCO PERPETUAL UK GRW NOTR ACC 2.95% 13 BLACKROCK EUROPEAN DYNAMIC - A 2.93% 14. FUT. EURO STOXX 50 03/16 2.71% 15. VANGUARD JAPAN STOCK INDEX GBP ACC 2.69% 16. M&G OPTIMAL INCOME -A- NET 2.60% 17. OLD MUT GB EQY ABS RE A (USD) 2.57% 18. FIDELITY INVESTMENT FUNDS UK SELECT FUND 2.55% 19. ACMBERNSTEIN SICAV SELECT US EQUITY I 2.37% 20. NOMURA FUNDS IRELAND JAPAN STRATEGIC VAL 2.26% 21. FUT. TOPIX INDX 03/16 2.24% 22. BLUEBAY INVST GR ABS RET BD D 2.07% 23. MUZINICH SHORT DURAT HIGH YIELD G ACC R 1.98% 24. BLACKROCK GF ASIA PACIFIC EQ. INC - A2RF 1.97% 25. BLACKROCK COLLECTIVE CORP. B. TRACKER 1.93% 26. JPM ASIA PAC STRAT EQ-BI (USD) 1.62% 27. BLACKROCK COLLECTIVE PACIFIC EX JAPAN D 1.61% 28. ABERDEEN GLOBAL ASIA PACIFIC EQUITY D2 1.59% 29. FISHER EMERG MRKTS EQ GBP UH 1.51% 30. BLACKROCK COLLECTIVE CONT. EURO 1.41% 31. INVESTEC GSF ASIA PACIFIC EQUITY I (GBP) 1.38% 32. HENDERSON UK ABSOLUTE RETURN-AA (GBP) 1.35% 33. ISHARES CORE CORPORATE BOND (GBP) 1.34% 34. ISHARES MSCI EMU SMALL CAP 1.10% 35. BGF G HYB H D2RF 1.10% 36. JB MULTISTOCK ABS RET EUROPE EQ BH (GBP) 1.04% 37. ISHARES FTSE UK ALL STOCKS GILT (GBP) 1.00% 38. ISHARES S&P 500 MINIMUN VOLATILITY 0.99% 39. ROBECO EMERGING CONSERVATIVE EQUITIES I 0.96% 40. KAMES UK ABS BAC 0.84% 41. BNY MELLON ABSOLUTE RETURN EQUITY GBP S 0.84%

PORTFOLIO ACTIVITY

Over the fourth quarter we increased the overall equity position through an increase to the European and Japanese overweight. Within fixed income, we reduced the underweight through an increase of short duration High Yield. We increased the underweight in cash and reduced the overweight in Alternatives, in order to fund these positions. The funds we introduced to increase our UK, alternatives and short term duration high yield exposure were: Invesco UK growth, Schroder Prime UK, Muzinich Short Duration High Yield. We sold Threadneedle UK Equity Income and Lyxor ETF MSCI AC Asia-Pacific ex Japan.

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Disclaimer

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07 SANTANDER

ATLAS PORTFOLIO 7

QUARTERLY UPDATE

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.

£152.31M

1.0%

6%

93%

0 5 10 15 20 25 30 35 40 Equities Alternatives Cash UK European e x UK Nor th Americ a Japan Asia P acific ex Japan Global E mer ging C orpora

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PORTFOLIO ACTIVITY

Over the fourth quarter we increased the overall equity position through an increase to the European and Japanese overweight. We introduced Invesco UK Growth and Schroder Prime UK for diversification of the UK model, and sold Threadneedle UK Equity Income.

HOLDINGS

1. FIDELITY INVESTMENT FUNDS INDEX UK-PA 8.84% 2. ROYAL LONDON UK ALL SHARE TRACKER Z 5.84% 3. ISHARES S&P 500 UCITS ETF ( EUR) B XETRA 4.84% 4. FUT. FTSE 100 03/16 (LIFFE) 4.10% 5. VANGUARD JAPAN STOCK INDEX GBP ACC 4.08% 6. AXA ROSENBERG EQ ENHANCED- A (USD) 3.90% 7. JUPITER UK GR IA 3.71% 8. FUT. EURO STOXX 50 03/16 3.53% 9. LYXOR ETF MSCI EMERGING MK-B (USD) SUIZA 3.52% 10. INVESCO PERPETUAL UK GRW NOTR ACC 3.46% 11. BLACKROCK UK EQUITY - I 3.22% 12. SCHODER PRIME UK EQ IA 3.19% 13 GS GROWTH EMERGING MKT (GBP) 3.14% 14. FIDELITY INVESTMENT FUNDS UK SELECT FUND 3.11% 15. KAMES UK EQUITY B ACC 2.74% 16. BLACKROCK GF ASIA PACIFIC EQ. INC - A2RF 2.68% 17. FISHER EMERG MRKTS EQ GBP UH 2.57% 18. FUT. TOPIX INDX 03/16 2.52% 19. BLACKROCK EUROPEAN DYNAMIC - A 2.34% 20. BLACKROCK COLLECTIVE PACIFIC EX JAPAN D 2.31% 21. OLD MUT GB EQY ABS RE A (USD) 2.28% 22. ACMBERNSTEIN SICAV SELECT US EQUITY I 2.28% 23. BNY MELLON ABSOLUTE RETURN EQUITY GBP S 2.26% 24. BLACKROCK COLLECTIVE CONT. EURO 2.06% 25. SCHRODER GLOBAL EMERGING MARKET CA GBP 2.01% 26. ISHARES CO FTSE 100 UCITS ETF DIST (GBP) 1.96% 27. ABERDEEN GLOBAL ASIA PACIFIC EQUITY D2 1.69% 28. JPM ASIA PAC STRAT EQ-BI (USD) 1.68% 29. INVESTEC GSF ASIA PACIFIC EQUITY I (GBP) 1.66% 30. NOMURA FUNDS IRELAND JAPAN STRATEGIC VAL 1.59% 31. ROBECO EMERGING CONSERVATIVE EQUITIES I 1.55% 32. HENDERSON UK ABSOLUTE RETURN-AA (GBP) 1.50% 33. ISHARES S&P 500 MINIMUN VOLATILITY 1.40% 34. ISHARES MSCI EMU SMALL CAP 1.23% 35. BLACKROCK COLLECTIV EMERGING MK EQ TRACK 1.02%

36. CASH 0.21%

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Disclaimer

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08 GLOSSARY

OF TERMS

This glossary has been designed to help you understand some of the common investment and financial terms that may appear in this Quarterly Update.

It is not intended to be a definitive reference document and you should contact your financial adviser for further assistance where necessary.

Absolute Return Fund: A fund that has a flexible investment approach with the objective of delivering positive returns in all market environments.

Alternatives: Any investment other than equities and fixed income, such as property and absolute return funds.

Annual Management Charge (AMC): The annual fee paid by the unit holder that covers the costs of running a fund, usually deducted in arrears once a month from the fund. The AMC is taken into account before the share prices are calculated.

Asset allocation: An investment strategy that attempts to balance risk versus reward by adjusting the percentage of asset classes, (i.e. equities/shares, bonds, liquidity, property etc), geographic regions or industry sectors in an investment portfolio according to the investor’s risk tolerance, goals and investment time frame. In this document we show the Neutral Asset Allocation (in order to meet longer term investments goals) and Tactical Asset Allocation (to address current and expected market conditions).

Bonds: A bond is a loan issued by a government or a company. When you buy a bond, the issuer promises to pay a certain amount of income until the bond redeems and is repaid by the issuer. The strength of that promise varies by the issuer of the bond. This is known as creditworthiness (see credit rating).

Corporate bonds: Bonds issued by a company as a way of raising money to invest in their business. They have nominal value, which is the amount that will be returned to the investor on a stated future date (the redemption date). These bonds are bought and sold on the market and their price can go up or down.

Credit rating: Credit ratings measure a borrower’s creditworthiness and provide an international framework for comparing the credit quality of issuers and rated debt securities. The top credit rating agencies are Standard & Poor’s and Moody’s. Ratings are divided into two broad groups – i.e. investment grade and speculative (junk) grade.

Fund of Funds: A fund that invests in other funds in order to reduce the risk of investing in just one fund.

Government bonds: Bonds issued by governments.

High yield bonds: Also known as non-investment grade bonds, these are bonds that are rated below investment grade, below BBB by credit rating agencies (such as Moody’s and Standard & Poor’s). Typically, they offer higher interest rates than investment grade bonds as they are considered to be at a higher risk of default.

Investment grade bonds: A term used to describe borrowers or bonds that meet a certain satisfactory credit quality deemed by credit rating agencies (such as Moody’s and Standard & Poor’s). They carry credit ratings of BBB/Baa or above from the credit ratings agencies, who do not consider the issuers likely to default.

Net income reinvested: The returns shown in the performance tables are after income has been reinvested back into the fund, after tax has been deducted.

Ongoing Charge: Represents the total costs associated with managing and operating a fund including management fees, trading fees, legal fees, auditor fees, custodian transaction fees, Stamp Duty Reserve tax, Authorised Corporate Director expenses and Financial Conduct Authority fees, etc.

Quantitative Easing (QE): An unconventional monetary policy used by central banks (such as buying government bonds) to pump money into the economy directly, normally when interest rates can go no lower.

Shares: Often referred to as equities or stocks; in investing, this is a share of ownership in a company. Investing in a fund gives exposure to underlying share prices without investors actually owning the shares themselves.

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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 122491. www.santanderassetmanagement.co.uk

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WWW.SANTANDERASSETMANAGEMENT.CO.UK SA

M

10056

QUARTERLY UPDATE Q4 2015

QUARTERLY

UPDATE Q4 2015

01

02

03

04

05

06

07

08

CONTENTS

01

SANTANDER

ATLAS PORTFOLIOS

OVERVIEW

The Santander Atlas Growth Portfolios give you a

choice of five multi-asset portfolios to suit the level of

risk you feel comfortable with.

02

MARKET UPDATE

FOR Q4 2015

OUTLOOKS BY ASSET BY CLASS

03

SANTANDER

ATLAS PORTFOLIO 3

QUARTERLY UPDATE

£59.64M

04

SANTANDER

ATLAS PORTFOLIO 4

QUARTERLY UPDATE

£219.57M

05

SANTANDER

ATLAS PORTFOLIO 5

QUARTERLY UPDATE

£76.60M

06

SANTANDER

ATLAS PORTFOLIO 6

QUARTERLY UPDATE

£214.38M

07

SANTANDER

ATLAS PORTFOLIO 7

QUARTERLY UPDATE

£152.31M

08

GLOSSARY

OF TERMS