Learn more about Schroders' funds visit: schroders.com.hk 1 Important Information The fund invests primarily in fixed and floating rate securities issued by governments and companies worldwide. •The fund invests in debt securities which may be subject to interest rate, credit and counterparty risks and risk relating to below investment grade and unrated debt securities, etc. •Investment in sovereign debt obligations which may expose the fund to political, social and economic risks. The fund may suffer significant losses upon defaults by government entities. •The fund invests in the emerging markets and may be subject to political and economic risks, legal and regulatory risks, liquidity and volatility risks, etc. . •The fund may use derivatives to meet its specific investment objective. Derivative exposures may involve credit risk and counterparty risk, liquidity risk, valuation risk, volatility risk, over-the-counter transaction risks and hedging risk. In adverse situations, the use of hedging instruments may become ineffective in hedging and the fund may suffer significant losses. •For share classes with a general dividend policy, expenses will be paid out of capital rather than out of gross income. The amount of distributable income therefore increases and the amount so increased may be considered to be dividend paid out of capital. Share classes with a fixed dividend policy may pay out both income and capital in distributions. Where distributions are paid out of capital, this amounts to a return or withdrawal of part of your original investment or capital gains attributable to that and may result in an immediate decrease in the net asset value of shares. You should not make any investment decision solely based on this document. Please read the relevant offering document carefully for further fund details including risk factors. Investment Objectives The Fund aims to provide income and capital growth by investing in fixed and floating rate securities issued by governments and companies worldwide. The Fund aims to mitigate losses in falling markets. The mitigation of losses cannot be guaranteed. Share class performance (Cumulative) Performance (%) 1 month 3 months 6 months YTD 1 year 3 years 5 years Since inception Fund 0.9 -0.1 0.1 0.9 0.9 19.7 26.9 28.3 Annual Performance (%) 2017 2018 2019 2020 2021 Fund 7.8 -1.6 11.3 6.6 0.9 Performance over 5 years (%) Schroder International Selection Fund Global Credit Income A Distribution USD M 2017 2018 2019 2020 2021 -10.0% 0.0% 10.0% 20.0% Source: Morningstar, NAV to NAV, net income reinvested, net of fees, based on Schroder International Selection Fund Global Credit Income A Distribution USD M Units, USD. Some performance differences between the fund and the benchmark may arise as the benchmark returns are not adjusted for non-dealing days of the fund. Schroder International Selection Fund is referred to as Schroder ISF. The Fund size quoted includes all classes of the Fund. Investment involves risks. Price of units may go down as well as up. Past performance is not indicative of future performance. Please refer to the relevant offering documents for fund details including risk factors. This material is issued by Schroder Investment Management (Hong Kong) Limited and has not been reviewed by the SFC. Performance is calculated from the share class's since launch date (30.11.2016). The names of the target and comparator(s) benchmarks may be displayed in abbreviation format, please refer to the Benchmark and corporate action information section for the full benchmark names. Fund literature Download the offering documents and investor notice here Ratings and accreditation Please refer to the Source and ratings information section for details on the icons shown above. Fund facts Fund manager Martin Coucke Julien Houdain Fund launch date 30.11.2016 Fund base currency USD Fund size (Million) USD 4,839.42 Number of holdings 1325 Unit NAV USD 100.8184 Distribution frequency Monthly Hi/Lo (past 12 mths) USD 104.8368 / USD 100.1147 Annualized Return (3Y) 6.17% Fees & expenses Initial charge up to 3.00% Annual management fee 1.1% Redemption fee 0.00% Schroder International Selection Fund Global Credit Income A Distribution USD | Data as at 31.12.2021
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Schroder International Selection Fund Global Credit Income
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Learn more about Schroders' funds visit: schroders.com.hk 1
Important Information
The fund invests primarily in fixed and floating rate securities issued by governments and companies worldwide. •The fund invests in debt securities which may be subject to interest rate, credit and counterparty risks and risk relating to below investmentgrade and unrated debt securities, etc. •Investment in sovereign debt obligations which may expose the fund to political, social and economic risks. The fund may suffer significantlosses upon defaults by government entities. •The fund invests in the emerging markets and may be subject to political and economic risks, legal and regulatory risks, liquidity and volatilityrisks, etc. . •The fund may use derivatives to meet its specific investment objective. Derivative exposures may involve credit risk and counterparty risk,liquidity risk, valuation risk, volatility risk, over-the-counter transaction risks and hedging risk. In adverse situations, the use of hedginginstruments may become ineffective in hedging and the fund may suffer significant losses. •For share classes with a general dividend policy, expenses will be paid out of capital rather than out of gross income. The amount ofdistributable income therefore increases and the amount so increased may be considered to be dividend paid out of capital. Share classes witha fixed dividend policy may pay out both income and capital in distributions. Where distributions are paid out of capital, this amounts to areturn or withdrawal of part of your original investment or capital gains attributable to that and may result in an immediate decrease in the netasset value of shares. You should not make any investment decision solely based on this document. Please read the relevant offering document carefully for furtherfund details including risk factors.
Investment Objectives
The Fund aims to provide income and capital growth by investing in fixed and floating rate securities issued by governments and companiesworldwide. The Fund aims to mitigate losses in falling markets. The mitigation of losses cannot be guaranteed.
Share class performance (Cumulative)
Performance (%) 1 month 3 months 6 months YTD 1 year 3 years 5 years Since inception
Fund 0.9 -0.1 0.1 0.9 0.9 19.7 26.9 28.3
Annual Performance(%)
2017 2018 2019 2020 2021
Fund 7.8 -1.6 11.3 6.6 0.9
Performance over 5 years (%)
Schroder International Selection Fund Global Credit Income A Distribution USD M
2017 2018 2019 2020 2021-10.0%
0.0%
10.0%
20.0%
Source: Morningstar, NAV to NAV, net income reinvested, net of fees, based on SchroderInternational Selection Fund Global Credit Income A Distribution USD M Units, USD. Someperformance differences between the fund and the benchmark may arise as the benchmarkreturns are not adjusted for non-dealing days of the fund. Schroder International SelectionFund is referred to as Schroder ISF. The Fund size quoted includes all classes of the Fund.Investment involves risks. Price of units may go down as well as up. Past performance is notindicative of future performance. Please refer to the relevant offering documents for funddetails including risk factors. This material is issued by Schroder Investment Management(Hong Kong) Limited and has not been reviewed by the SFC. Performance is calculated fromthe share class's since launch date (30.11.2016). The names of the target and comparator(s)benchmarks may be displayed in abbreviation format, please refer to the Benchmark andcorporate action information section for the full benchmark names.
Fund literature
Download the offeringdocuments and investor noticehere
Ratings and accreditation
Please refer to the Source and ratingsinformation section for details on the iconsshown above.
Fund facts
Fund manager Martin Coucke Julien Houdain
Fund launch date 30.11.2016Fund base currency USDFund size (Million) USD 4,839.42Number of holdings 1325Unit NAV USD 100.8184Distribution frequency MonthlyHi/Lo (past 12 mths) USD 104.8368 / USD
100.1147Annualized Return (3Y) 6.17%
Fees & expenses
Initial charge up to 3.00%Annual managementfee
1.1%
Redemption fee 0.00%
Schroder International Selection Fund Global Credit Income
Learn more about Schroders' funds visit: schroders.com.hk 2
Return of USD 10,000
Schroder International Selection Fund Global Credit Income A Distribution USD M
Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Jan-2210,000
10,500
11,000
11,500
12,000
12,500
13,000
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
Past Performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up andinvestors may not get back the amounts originally invested. Exchange rate changes maycause the value of any overseas investments to rise or fall. The chart is for illustrative purposes only and does not reflect an actual return on anyinvestment. Returns are calculated NAV to NAV (which means performance does not include the effect ofany initial charges), net income reinvested, net of fees.
CAIXA CENTRAL DE CREDITO AGRICOLA 2.5000 05/11/2026SERIES CORP REGS
0.7
MC BRAZIL DWNSTRM 7.2500 30/06/2031 REGS 0.7
MBANK SA 0.9660 21/09/2027 SERIES EMTN 0.7
CPI PROPERTY GROUP SA 4.8750 PERP SERIES 0.6
HEIMSTADEN BOSTAD AB 3.3750 31/12/2049 SERIES REGS 0.6
Source: Schroders.Percentages of allocation may not sum up to 100% due to rounding issue. Derivatives are displayed on the notional basis of the underlying exposurewhere possible. Due to the different treatment of derivative types, the allocation to Liquid Assets may vary between each chart.
Schroder ISF Global Credit IncomeBlending the right mix for changing investment climates30 November 2021
Important Information:1.Thefundinvestsprimarilyinfixedandfloatingratesecuritiesissuedbygovernmentsandcompaniesworldwide.2. The fund invests in debt securities which may be subject to interest rate, credit and counterparty risks and risk relating to below investment
grade and unrated debt securities, etc.3.Investmentinsovereigndebtobligationswhichmayexposethefundtopolitical,socialandeconomicrisks.Thefundmaysuffersignificant
losses upon defaults by government entities.4. The fund invests in the emerging markets and may be subject to political and economic risks, legal and regulatory risks, liquidity and volatility
liquidity risk, valuation risk, volatility risk, over-the-counter transaction risks and hedging risk. In adverse situations, the use of hedging instrumentsmaybecomeineffectiveinhedgingandthefundmaysuffersignificantlosses.
6. For share classes with a general dividend policy, expenses will be paid out of capital rather than out of gross income. The amount of distributable income therefore increases and the amount so increased may be considered to be dividend paid out of capital. Share classes withafixeddividendpolicymaypayoutbothincomeandcapitalindistributions.Wheredistributionsarepaidoutofcapital,thisamountstoa return or withdrawal of part of your original investment or capital gains attributable to that and may result in an immediate decrease in the net asset value of shares.
You should not make any investment decision solely based on this document. Please read the relevant offering document carefully for further fund details including risk factors.
Flexibility in investing across a wide range of bonds and creditsManaged with a benchmark-unconstrained approach, the fund is not tied down to an index and therefore not limited to what bonds it can invest in. Bonds of different types and regions offerdifferentlevelsofpotentialreturn.Wecaninvest across the global bond market wherever wefindattractiveincomeopportunities.Weaimto deliver a consistent and attractive level of income in all market environments by investing freely across the global bond spectrum, including investment grade, high yield, and emerging market sovereign and municipal bonds, asset-backed securities, and so on. Having a broad investment universe also helps us diversify risk effectively.
Rigorous risk management to mitigate volatilityWerecognisethatinvestorsseekingincomecan be more sensitive to capital loss. Dynamic asset allocation informed by scenario correlation analysis allows the fund to reduce risk during marketdownturnsbybuildingawell-diversifiedbond portfolio. Detailed drawdown risk analysis as well as risk management on currency and interest rates are incorporated with an aim to help the fund mitigate potential loss and volatility relative to the global credit market.
Schroder ISF Global Credit Income aims to deliver a stable stream of income in all market environments by investing dynamically across the global bond market. The fund also focuses on managing risk to mitigate volatility.
Why invest in the Schroder ISF Global Credit Income?
Fixed payout of 4.50% p.a (Applicable to A Dis USD and HKD classes. Dividend may be paid out of capital pay attention to important information 6)^
Bondsarepopularinvestmentsforpeopleseekingincome.Whileinterestratesarestillat low levels, by investing across the global bond market, the fund can combine various types of bonds to provide a relatively attractive level of income with a sensible balance of risks. The fund’s primary objective is to maintain sustainable and attractive distribution payments, and intends to makeafixedpayoutof4.50% per annum^.
1
Risk management on currency and
interest rates
Detailed drawdown risk analysis
Mitigate potential loss and volatility relative to the global credit market
4.50
Tapping into a world of bond opportunities
Types of Bonds & Credits
Emerging Markets
Municipal
Investment Grade
Asset-backed Securities
High Yield
Developed Markets
Mortgage-backed Securities
AAAAAABBBBBBCCCNot RatedOthers
0.21.9
11.733.529.810.6
0.70.2
11.3
Schroder International Selection Fund is referred to as Schroder ISF.# Percentages of allocation may not sum up to 100% due to rounding issue.^ The manager will make distributions in respect of distribution units. The manager has the sole and absolute discretion to vary the rate and/or frequency of distributions, subject
to one month’s prior notice to the relevant unitholders. Distribution yield is not indicative of the return of the fund. Distributions may be paid from capital of the fund. Investors should note that where the payment of distributions are paid out of capital, this represents and amounts to a return or withdrawal of part of the amount you originally invested or capital gains attributable to that and may result in an immediate decrease in the value of units. For details of the distribution policy and frequency of all share classes, please refer to the distribution policy & frequency table.
All fund information as at 30/11/2021. Source: Schroders unless stated otherwise. Fund performance based on Class A Dis; NAV-NAV in USD with net income re-invested, net of fees. The fund size quoted includes all classes of the fund. Performance is calculated from the share class’s since launch date (30/11/2016).Investment involves risks. Past performance is not indicative of future performance. Please refer to the relevant offering documents for fund details including risk factors. This material, including the website, is issued by Schroder Investment Management (Hong Kong) Limited and has not been reviewed by the SFC.Management Company: Schroder Investment Management (Europe) S.A., 5, rue Höhenhof, L-1736 Senningerberg, Grand Duchy of LuxembourgSupervisory Authority: Commission de Surveillance du Secteur Financier, 110, route d’Arlon, L-2991 Luxembourg
Fund features– ADistributionshareclassoffersafixedpayout^ (for details
refer to the table below)– Flexible allocation across a broad range of bonds and credits to
adapt to different market environments– Active risk management to mitigate volatility
Available share classes and distribution policy & frequency
Key information
Dividend distribution record^
Price on record date
Fund performance
Geographical breakdown#
Rating breakdown#
The fund aims to provide income and capital growth by investing in fixed and floating rate securities issued by governments and companies worldwide. The fund aims to mitigate losses in falling markets. The mitigation of losses cannot be guaranteed.
USD 100.2916
USD 104.8368/100.1147
Martin Coucke; Julien Houdain
30/11/2016
USD 4,923.92
3%
1.1% p.a.
Daily
31/12
The fund offers an investment choice for investors who– wishtoenjoyafixedpayout^
– look for active asset management that aims to maximise yield over an economic cycle
– are positive on the potential growth around the worldNote: Investors should consider your own investment objective and risk tolerance level and seek independent professional advice.
Weights (%)
Top holdings
Upcoming distribution record date of distribution share classes
Note: The distribution record date may subject to change.
United States United KingdomLuxembourgGermanyFranceItalyMexicoSwedenOthersLiquid Assets
24.19.97.46.66.13.43.32.8
30.65.7
Weights (%)
Weights (%)
Fund
Fund
-1.60.0 27.20.9
6.6 11.3 -1.6 7.8 1.1
18.7 27.2
15/12/2021 26/01/2022 23/02/2022
Cumulative performance (%)
Annual performance (%)
YTD 3-mth 1Yr
2020 2019 2018 2017 2016
3Yrs 5Yrs Since Inception
Schroder Inv Mgmt Europe SA ISF Securitised Credit I 6.0 USD Dis QV (ISECL)Mexico (United Mexican States) (Go 2.2500 12/08/2036) Series Govt 1.0Heimstaden Bostad AB 3.0000 31/12/2049 Regs 0.9Veolia Environnement SA 2.5000 Perp-Regs 0.9Autostrade Per Litalia 2.000 04/12/2028 Regs 0.7Caixa Central De Credito Agricola 2.5000 05/11/2026 0.7MC Brazil Dwnstrm 7.2500 30/06/2031 Regs 0.6Mbank Sa 0.9660 21/09/2027 Series Emtn 0.6CPI Proporty Group SA 4.875 Perp Series 0.6Heimstaden Bostad AB 3.375 31/12/2049 Series Regs 0.6
2
IMPORTANT: This letter is important and requires your immediate attention. If you have any questions about the content of this letter, you should seek independent professional advice. Schroder Investment Management (Europe) S.A., as the Management Company to Schroder International Selection Fund, accepts full responsibility for the accuracy of the information contained in this letter and confirms, having made all reasonable enquiries, that to the best of its knowledge and belief there are no other facts the omission of which would make any statement misleading.
21 December 2021
Dear Shareholder, Schroder International Selection Fund (the “Company”) – Change of depositary and administrator We are writing to inform you of a change of depositary and administrator of the Company and its sub-funds including those which are authorised by the Securities and Futures Commission (“SFC”)1 as set out in the Appendix A to this letter (“Funds”). Internal Restructuring of the Depositary and Administrator of the Company and the Funds Currently, J.P. Morgan Bank Luxembourg S.A. (“JPMBL”) is the Depositary and Administrator of the Company and the Funds. JPMBL and its affiliates are collectively referred to as "JPMorgan" in this letter. As part of an internal restructuring with the aim to streamline JPMorgan's banking entity structure across Europe, three banking entities in the JPMorgan group domiciled respectively in Germany, Luxembourg and Ireland and their branches across the region will be merged into a single European bank (“Merger”). The Merger requires the approval by the sole shareholder of the merging entities (i.e. J.P. Morgan International Finance Limited), which has been obtained in the end of November 2021. The date when the Merger takes legal effect will be the date on which the local court of Frankfurt registers the Merger in the commercial register (the “Effective Date”), which is expected to be on or around 22 January 2022. JPMBL will be one of the impacted legal entities of the Merger. In particular, the Merger will involve JPMBL merging into J.P. Morgan AG, which in turn will simultaneously change its legal form from a German Stock Corporation (Aktiengesellschaft) to a European company (Societas Europaea) known as J.P. Morgan Societas Europaea (“JPMSE”) organised under the laws of Germany with registered office at Taunustor 1 (TaunusTurm), 60310 Frankfurt am Main, Germany and registered with the commercial register of the local court of Frankfurt under number HRB 16861. It will be a credit institution subject to direct prudential supervision by the European Central Bank (ECB), the German Federal Financial Supervisory Authority
1 SFC authorization is not a recommendation or endorsement of a scheme nor does it guarantee the commercial merits of a scheme or its performance. It does not mean the scheme is suitable for all investors nor is it an endorsement of its suitability for any particular investor or class of investors.
(Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin) and Deutsche Bundesbank, the German Central Bank. All of JPMBL’s assets and liabilities will be transferred to the Luxembourg Branch of JPMSE, which will operate as J.P. Morgan SE – Luxembourg Branch (“JPMSE Luxembourg”). We will notify you separately if there is any change in the Effective Date or any other material changes to the Merger. The Commission de Surveillance du Secteur Financier (“CSSF”) is the financial regulator in Luxembourg where the Company is domiciled and has been notified of the Merger. JPMSE Luxembourg is authorised by the CSSF to act as a depositary and fund administrator for Luxembourg undertakings for collective investment. The CSSF has confirmed no objection to JPMSE Luxembourg assuming the role of Depositary and Administrator of the Company and the Funds. JPMSE Luxembourg will be registered in the Luxembourg Trade and Companies’ Register (RCS) under number B255938 and will be subject to the supervision of the home State supervisory authorities mentioned above, as well as local supervision by the CSSF. On the Effective Date and in accordance with Luxembourg laws, JPMBL will cease to exist and the depositary and administration functions of JPMBL will transfer from JPMBL to JPMSE Luxembourg, and JPMSE Luxembourg will succeed JPMBL as the Depositary and Administrator of the Company and the Funds. JPMSE Luxembourg will assume all rights and obligations that JPMBL currently has under its existing agreements with the Company and accordingly the rights and obligations of the Company and the Funds with respect to the Depositary and Administrator will not be impacted. The business operations of JPMBL will be carried on without interruption by a locally fully passported, Luxembourg based branch of JPMSE (i.e. JPMSE Luxembourg) and the duties and obligations of JPMBL as stated in the Hong Kong offering documents and/or the constitutive documents of the Company and the Funds will be taken up by JPMSE Luxembourg as of the Effective Date. There will be no changes to the scope of services provided to the Company and the Funds, and no change in the level of fees payable by the Company and the Funds to the Depositary and Administrator. The address and contact details of the Depositary and Administrator will remain the same, and the personnel, functions and internal control measures of JPMSE Luxembourg will be substantially the same as those of JPMBL currently. Save as disclosed above, there will be no other change in the operation or manner in which the Company and the Funds are being managed. There will be no impact on the features and risks applicable to the Company and the Funds. There will be no change to the fee level / cost in managing the Company and the Funds. The changes will not materially prejudice the shareholders’ rights or interests. All costs (including the legal and other administrative costs) associated with the changes to the Company and the Funds above will be borne by Schroder Investment Management (Europe) S.A., the Company’s management company. The Hong Kong offering documents of the Company and the Funds will be revised to reflect the above change and will be available free of charge at www.schroders.com.hk2 or upon request from the Hong Kong Representative of the Company and the Funds, Schroder Investment Management (Hong Kong) Limited. Options available to investors We hope that you will choose to remain invested in the Funds following these changes, but if you do wish to redeem your holding in the Funds before the changes become effective, you may do so at any time up
2 This website has not been reviewed by the SFC.
to and including the dealing cut-off at 5:00 p.m. Hong Kong time on 21 January 2022. Please ensure that your redemption instruction reaches the Hong Kong Representative before this deadline. We will execute your redemption instructions in accordance with the provisions of the Hong Kong offering documents of the Company and the Funds. Local agents might also have a local dealing cut-off which is earlier than that described above, so please check with them to ensure that your instructions reach the Hong Kong Representative before the dealing cut-off at 5:00 p.m. Hong Kong time on 21 January 2022. Enquiries If you have any questions or would like more information, please contact your usual professional advisor or the Hong Kong Representative at Level 33, Two Pacific Place, 88 Queensway, Hong Kong or calling the Schroders Investor Hotline on (+852) 2869 6968. The Board of Directors
Appendix A
1. All China Equity 2. Asian Bond Total Return 3. Asian Dividend Maximiser 4. Asian Equity Yield 5. Asian Local Currency Bond 6. Asian Opportunities 7. Asian Smaller Companies 8. Asian Total Return 9. BRIC (Brazil, Russia, India, China) 10. China Opportunities 11. Emerging Asia 12. Emerging Europe 13. Emerging Markets 14. Emerging Markets Debt Absolute Return 15. Emerging Markets Multi-Asset (formerly known as Emerging Multi-Asset Income) 16. EURO Bond 17. EURO Corporate Bond 18. EURO Equity 19. EURO Government Bond 20. EURO Liquidity 21. EURO Short Term Bond 22. European Dividend Maximiser 23. European Large Cap 24. European Smaller Companies 25. European Value 26. Frontier Markets Equity 27. Global Bond 28. Global Cities 29. Global Climate Change Equity 30. Global Corporate Bond 31. Global Credit Income 32. Global Dividend Maximiser 33. Global Emerging Market Opportunities 34. Global Energy 35. Global Equity Alpha 36. Global Equity 37. Global Equity Yield 38. Global Gold 39. Global High Yield 40. Global Inflation Linked Bond 41. Global Multi-Asset Income 42. Global Smaller Companies 43. Global Sustainable Growth 44. Global Target Return 45. Greater China 46. Hong Kong Dollar Bond 47. Hong Kong Equity 48. Indian Equity 49. Japanese Equity
50. Japanese Opportunities 51. Japanese Smaller Companies 52. Latin American 53. Middle East 54. Multi-Asset Growth and Income 55. QEP Global Active Value 56. QEP Global Quality 57. Strategic Bond 58. Taiwanese Equity 59. UK Equity 60. US Dollar Bond 61. US Dollar Liquidity 62. US Large Cap 63. US Small & Mid-Cap Equity 64. US Smaller Companies
Schroder International Selection Fund Société d’Investissement à Capital Variable
5, rue Höhenhof, L-1736 Senningerberg Grand Duchy of Luxembourg
Tel: +352 341 342 202 Fax: +352 341 342 342
www.schroders.com R.C.S. Luxembourg – B. 8202 For your security telephone conversations may be recorded
IMPORTANT: This letter is important and requires your immediate attention. If you have any questions about the content of this letter, you should seek independent professional advice. Schroder Investment Management (Europe) S.A., as the Management Company to Schroder International Selection Fund, accepts full responsibility for the accuracy of the information contained in this letter and confirms, having made all reasonable enquiries, that to the best of its knowledge and belief there are no other facts the omission of which would make any statement misleading.
15 October 2021
Dear Shareholder,
Schroder International Selection Fund (the “Company”) – Global Credit Income (the “Fund”)
Changes to the distribution policy of certain share classes (the "Share Classes")
We are writing to inform you that following a recent review, we have decided to change the distribution policy for some of the Share Classes of the Fund. The affected Share Classes are listed in the appendix of this letter. The amounts paid out will reduce but the distribution frequency of the Share Classes will not change. This change will come into effect for the distribution due to be paid on 30 November 2021 (the “Effective Date”) in accordance with the number of shares held by shareholders on the record date for November 2021 distributions (i.e. 17 November 2021), and will apply to all distributions going forward.
Background and rationale
We periodically review the distribution Share Classes and reserve the right to make changes. For example, if the investment income after expenses is higher than the target distribution, we may declare a higher amount to be distributed. Equally, we may deem it is appropriate to declare a dividend lower than the target distribution. The Share Class fees will remain unchanged and the costs of making these changes including regulatory and shareholder communication costs will be borne by Schroder Investment Management (Europe) S.A. which is the Company's management company.
The information on the dividend compositions of the Share Classes will continue to be available from Schroder Investment Management (Hong Kong) Limited, i.e. the Hong Kong Representative of the Company, on request and on the Schroders’ Internet site (www.schroders.com.hk1).
The Hong Kong offering documents of the Company will be revised to reflect the relevant changes and will be available free of charge at www.schroders.com.hk2 or upon request from the Hong Kong Representative.
1 This website has not been reviewed by the SFC. 2 This website has not been reviewed by the SFC.
Page 2 of 3
Redeeming or switching your shares to another Schroders fund or Share Classes of the Fund
We hope that you will choose to remain invested in the Fund following these changes, but if you do wish to redeem your holding in the Fund or to switch into another of the Company's sub-funds authorized by the Securities and Futures Commission (“SFC”)3 or Share Classes of the Fund before the changes become effective, you may do so at any time up to and including the dealing cut-off at 5:00 p.m. Hong Kong time on 17 November 2021. Please ensure that your redemption or switch instruction reaches the Hong Kong Representative before this deadline. We will execute your redemption or switch instructions in accordance with the provisions of the Company's Hong Kong offering documents, free of charge, although in some countries local paying agents, correspondent banks or similar agents might charge transaction fees. Local agents might also have a local dealing cut-off which is earlier than that described above, so please check with them to ensure that your instructions reach the Hong Kong Representative before the dealing cut-off at 5:00 p.m. Hong Kong time on 17 November 2021.
If you have any questions or would like more information, please contact your usual professional advisor or the Hong Kong Representative at Level 33, Two Pacific Place, 88 Queensway, Hong Kong or calling the Schroders Investor Hotline on (+852) 2869 6968.
The Board of Directors
3 SFC authorization is not a recommendation or endorsement of a scheme nor does it guarantee the commercial merits of a scheme or its performance. It does not mean the scheme is suitable for all investors nor is it an endorsement of its suitability for any particular investor or class of investors.
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Schroder International Selection Fund Société d’Investissement à Capital Variable
5, rue Höhenhof, L-1736 Senningerberg Grand Duchy of Luxembourg
Tel: +352 341 342 202 Fax:+352 341 342 342
www.schroders.com R.C.S. Luxembourg – B. 8202 For your security telephone conversations may be recorded
IMPORTANT: This letter is important and requires your immediate attention. If you have any questions about the content of this letter, you should seek independent professional advice. Schroder Investment Management (Europe) S.A., as the Management Company to Schroder International Selection Fund, accepts full responsibility for the accuracy of the information contained in this letter and confirms, having made all reasonable enquiries, that to the best of its knowledge and belief there are no other facts the omission of which would make any statement misleading.
3 September 2021
Schroder International Selection Fund – Sustainable Finance Disclosure Regulation (“SFDR”)
Dear Shareholder,
We are writing to advise you that the investment objectives and policies of the following funds of Schroder International Selection Fund (the “Company”) (each a “Fund” and collectively the “Funds”) have been updated in order to comply with new requirements imposed by the SFDR:
• Euro Corporate Bond • Euro Equity • European Dividend Maximiser • European Large Cap • Global Climate Change Equity • Global Credit Income • Global Sustainable Growth • Japanese Equity • QEP Global Quality
The SFDR rules require that sustainable funds are classified under one of two new categories:
Article 8 – funds which have binding environmental and/or social characteristics Article 9 – funds which have the objective of sustainable investment The Appendix to this letter shows the updated investment objective and policy wording in respect of the Funds which are Article 8 funds under the SFDR rules. The changes are intended to clarify the way in which the Funds are currently managed. All other key features of the Funds will remain the same. There is no change in the Funds’ investment style, investment philosophy, investment strategy, and the operation and/or manner in which the Funds are being managed following these clarifications.
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For the avoidance of doubt, only Global Climate Change Equity and Global Sustainable Growth are currently classified as environmental, social and governance (“ESG”) funds in Hong Kong. Funds other than Global Climate Change Equity and Global Sustainable Growth are not currently classified and will not be classified as ESG funds in Hong Kong following the updates to investment objectives and policies of these Funds.
The prospectus of the Company will be revised to further indicate that where a Fund’s investment policy states that the Fund will achieve a certain sustainability score (whether overall, or in relation to a particular measure such as carbon intensity) compared to a named benchmark, this does not mean that the Fund is constrained by, or seeks to achieve a financial return relative to that benchmark unless otherwise stated. Any benchmark named in this context should not be treated as a reference benchmark for the Fund.
For any Fund that has environmental or social characteristics, details of how the Fund attains those characteristics will be disclosed in the relevant Fund Details section of the prospectus, in the Fund’s investment policy and under a new section “Sustainability Criteria” in the Fund Characteristics section, as further disclosed in the Appendix.
For funds other than the Article 8 and Article 9 funds under the SFDR rules, references to the consideration of material environmental, social and governance factors have been removed from the investment policies of the relevant funds of the Company for consistency with the requirements of the SFDR as they fall under the scope of Article 6 of the SFDR. Instead, a more detailed explanation will be added to the prospectus to explain how we take sustainability risks into account in the management of all funds. Please note that we in any case take environmental, social or governance criteria (alongside other factors) into consideration in the overall risk management process. The funds of the Company that fall under the scope of Article 6 of SFDR and for which references to material environmental, social and governance factors have been removed from their investment policies are set out below:
• BRIC (Brazil, Russia, India, China) • Emerging Europe • Emerging Markets • European Value • Frontier Markets Equity • Global Dividend Maximiser • Global Emerging Market Opportunities • Global Equity • Global Equity Alpha • Global Equity Yield • Latin American • Middle East • QEP Global Active Value • US Large Cap
The Hong Kong offering documents of the Company will be revised to reflect the changes above.
Costs of making these changes including regulatory and shareholder communication costs will be borne by Schroder Investment Management (Europe) S.A..
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If you have any questions or would like more information, please contact your usual professional advisor or the Schroder Investment Management (Hong Kong) Limited at Level 33, Two Pacific Place, 88 Queensway, Hong Kong or calling the Schroders Investor Hotline on (+852) 2869 6968.
Yours faithfully,
The Board of Directors
Schroder International Selection Fund Société d’Investissement à Capital Variable
5, rue Höhenhof, L-1736 Senningerberg Grand Duchy of Luxembourg
Tel: +352 341 342 202 Fax:+352 341 342 342
www.schroders.com R.C.S. Luxembourg – B. 8202 For your security telephone conversations may be recorded
Appendix
Article 8 Funds
Sub-Fund Investment Objective and Policy as stated in the Prospectus dated November 2020
Enhanced Investment Objective and Policy and Sustainability Criteria
Euro Corporate Bond
Investment Objective
The Fund aims to provide capital growth and income in excess of the ICE BofA Merrill Lynch Euro Corporate index after fees have been deducted over a three to five year period by investing in fixed and floating rate securities denominated in Euro issued by companies worldwide.
Investment Policy
The Fund is actively managed and invests at least two-thirds of its assets in fixed and floating rate securities denominated in Euro by governments, government agencies, supra-nationals and companies worldwide.
The Fund may invest:
- up to 30% of its assets in securities that have a below investment grade credit rating (as measured by Standard & Poor's or any equivalent grade of other credit rating agencies for rated bonds and implied Schroders ratings for non-rated bonds);
- up to 20% of its assets in sovereign government bonds;
- up to 20% of its assets in asset-backed securities and mortgage-backed securities; and
- up to 20% of its assets in convertible bonds including up to
Investment Objective
The Fund aims to provide capital growth and income in excess of the ICE BofA Merrill Lynch Euro Corporate index after fees have been deducted over a three to five year period by investing in fixed and floating rate securities denominated in Euro issued by companies worldwide.
Investment Policy
The Fund is actively managed and invests at least two-thirds of its assets in fixed and floating rate securities denominated in or hedged to Euro issued by companies and other non-sovereign bond issuers, governments, government agencies, supra-nationals and companies worldwide.
The Fund may invest:
- up to 30% of its assets in securities that have a below investment grade credit rating (as measured by Standard & Poor's or any equivalent grade of other credit rating agencies for rated bonds and implied Schroders ratings for non-rated bonds);
- up to 20% of its assets in sovereign government bonds;
- up to 20% of its assets in asset-backed securities and mortgage-backed securities; and
- up to 20% of its assets in convertible bonds including up to
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10% of its assets in contingent convertible bonds.
The Fund may also invest up to one-third of its assets directly or indirectly in other securities (including other asset classes), countries, regions, industries or currencies, Investment Funds, warrants and Money Market Investments, and hold cash.
The Fund may also invest in derivatives to create long and short exposure to the underlying assets of these derivatives. The Fund may use derivatives with the aim of achieving investment gains, reducing risk or managing the Fund more efficiently.
10% of its assets in contingent convertible bonds.
The Fund may also invest up to one-third of its assets directly or indirectly in other securities (including other asset classes), countries, regions, industries or currencies, Investment Funds, warrants and Money Market Investments, and hold cash.
The Fund may also invest in derivatives to create long and short exposure to the underlying assets of these derivatives. The Fund may use derivatives with the aim of achieving investment gains, reducing risk or managing the Fund more efficiently.
The Fund maintains a higher overall sustainability score than ICE Bank of America Merrill Lynch Euro Corporate index based on the Investment Manager’s rating system. More details on the investment process used to achieve this can be found in the Fund Characteristics section.
The Fund does not directly invest in certain activities, industries or groups of issuers above the limits listed under “Sustainability Information” on the Fund’s webpage, accessed via www.schroders.com/en/lu/private-investor/gfc1.
Sustainability Criteria
The Investment Manager applies governance and sustainability criteria when selecting investments for the Fund.
The strategy aims to identify issuers demonstrating good or improving sustainability credentials, and those that impose a high cost on the environment and society. This involves:
− The exclusion of issuers that the Investment Manager deems to have businesses that are materially damaging to the climate and impose unjustifiable social costs.
1 For Hong Kong investors, please refer to the following website: https://www.schroders.com/en/hk/retail-investors/funds/fund-centre (this website has not been reviewed by the SFC).
− The inclusion of issuers that demonstrate stable and improving sustainability trajectories, and issuers demonstrating good governance based on the Investment Manager’s sustainability rating methodology.
The Investment Manager may also engage with companies to encourage transparency, the transition to a circular economy with lower carbon emissions intensity and responsible social behaviour that promotes sustainable growth and alpha generation.
The primary sources of information used to perform the analysis are the Investment Manager’s proprietary tools and research, third-party research, NGO reports and expert networks. The Investment Manager also performs its own analysis of publically available information provided by the companies, including information provided in company sustainability reports and other relevant company material.
More details on the Investment Manager’s approach to sustainability and its engagement with companies are available on the website www.schroders.com/en/lu/private-investor/strategic-capabilities/sustainability/disclosures2.
The Investment Manager ensures that at least:
− 90% of fixed or floating rate securities and money market instruments with an investment grade credit rating; sovereign debt issued by developed countries; and equities issued by large companies domiciled in developed countries; and
− 75% of fixed or floating rate securities and money market instruments with a high yield credit rating; sovereign debt issued by emerging countries equities issued by large companies
2 For Hong Kong investors, please refer to the following website: https://www.schroders.com/en/hk/retail-investors/sustainability/making-an-impact-through-sustainability (this website has not been reviewed by the SFC).
domiciled in emerging countries; equities issued by small and medium companies,
held in the Fund’s portfolio are rated against the sustainability criteria. For the purposes of this test, small companies are those with market capitalisation below €5 billion, medium companies are those between €5 billion and €10 billion and large companies are those above €10 billion.
Euro Equity Investment Objective
The Fund aims to provide capital growth in excess of the MSCI European Monetary Union (Net TR) index after fees have been deducted over a three to five year period by investing in equity and equity related securities of companies in countries participating in the European Monetary Union.
Investment Policy
The Fund is actively managed and invests at least 75% of its assets in equity and equity related securities of companies that are incorporated in the European Economic Area. The Fund invests at least two-thirds of its assets in equity and equity related securities of companies in countries whose currency is the Euro.
The Fund is managed with reference to material environmental, social and governance factors. This means issues such as climate change, environmental performance, labour standards or board composition that could impact a company’s value may be considered in the assessment of companies.
The Fund may also invest up one-third of its assets directly or indirectly in other securities (including other asset classes), countries, regions, industries or currencies, Investment Funds, warrants and Money Market Investments, and hold cash.
The Fund may use derivatives with the aim of reducing risk or managing the Fund more efficiently.
Investment Objective
The Fund aims to provide capital growth in excess of the MSCI European Monetary Union (Net TR) index after fees have been deducted over a three to five year period by investing in equity and equity related securities of companies in countries participating in the European Monetary Union.
Investment Policy
The Fund is actively managed and invests at least 75% of its assets in equity and equity related securities of companies that are incorporated in the European Economic Area. The Fund invests at least two-thirds of its assets in equity and equity related securities of companies in countries whose currency is the Euro.
The Fund may also invest up one-third of its assets directly or indirectly in other securities (including other asset classes), countries, regions, industries or currencies, Investment Funds, warrants and Money Market Investments, and hold cash.
The Fund may use derivatives with the aim of reducing risk or managing the Fund more efficiently.
The Fund maintains a higher overall sustainability score than MSCI European Monetary Union (Net TR) index, based on the Investment Manager’s rating system. More details on the investment process used to achieve this can be found in the Fund Characteristics section.
Sustainability Criteria
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The Investment Manager applies governance and sustainability criteria when selecting investments for the Fund.
The sources of information used to perform the analysis include Schroders’ proprietary sustainability tools and third-party data.
Companies in the investment universe are assessed on their governance, environmental and social profile, across a range of factors. This analysis is supported by quantitative analysis gained from Schroders in-house ESG data tools. The Investment Manager assesses a company’s environment and social impact, as well as governance practices, using proprietary sustainability tools. In addition, the Investment Manager also performs its own research and analysis before deciding whether a company is eligible for inclusion in the Fund, based on its overall sustainability profile. Proprietary tools will be key inputs to measure how companies in the portfolio are meeting the sustainability credentials outlined above.
The sources of information used to perform the analysis include information provided by the companies, such as company sustainability reports and other relevant company material, as well as Schroders’ proprietary sustainability tools and third-party data.
More details on the Investment Manager’s approach to sustainability and its engagement with companies are available on the website https://www.schroders.com/en/lu/private-investor/strategic-capabilities/sustainability/3.
The Investment Manager ensures that at least:
− 90% of equities issued by large companies domiciled in developed countries; fixed or floating rate
3 For Hong Kong investors, please refer to the following website: https://www.schroders.com/en/hk/retail-investors/sustainability/making-an-impact-through-sustainability(this website has not been reviewed by the SFC).
securities and money market instruments with an investment grade credit rating; and sovereign debt issued by developed countries; and
− 75% of equities issued by large companies domiciled in emerging countries; equities issued by small and medium companies; fixed or floating rate securities and money market instruments with a high yield credit rating; and sovereign debt issued by emerging countries,
held in the Fund’s portfolio are rated against the sustainability criteria. For the purposes of this test, small companies are those with market capitalisation below €5 billion, medium companies are those between €5 billion and €10 billion and large companies are those above €10 billion.
European Dividend Maximiser
Investment Objective
The Fund aims to deliver an income of 7% per year by investing in equities or equity related securities of European companies. This is not guaranteed and could change depending on market conditions.
Investment Policy
The Fund is actively managed and invests at least two thirds of its assets in equities or equity related securities of European companies, which are selected for their income and capital growth potential. To enhance the yield of the Fund, the Investment Manager selectively sells short dated call options over individual securities held by the Fund, generating extra income by agreeing strike prices above which potential capital growth is sold.
The Fund is managed with reference to material environmental, social and governance factors. This means issues such as climate change, environmental performance, labour standards or board composition that could impact a
Investment Objective
The Fund aims to deliver an income of 7% per year by investing in equities or equity related securities of European companies. This is not guaranteed and could change depending on market conditions.
Investment Policy
The Fund is actively managed and invests at least two thirds of its assets in equities or equity related securities of European companies, which are selected for their income and capital growth potential. To enhance the yield of the Fund, the Investment Manager selectively sells short dated call options over individual securities held by the Fund, generating extra income by agreeing strike prices above which potential capital growth is sold.
The Fund may also invest up to one-third of its assets directly or indirectly in other securities (including other asset classes), countries, regions, industries or currencies, Investment Funds, warrants and Money Market Investments, and hold cash.
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company’s value may be considered in the assessment of companies.
The Fund may also invest up to one-third of its assets directly or indirectly in other securities (including other asset classes), countries, regions, industries or currencies, Investment Funds, warrants and Money Market Investments, and hold cash.
The Fund may use derivatives with the aim of achieving investment gains, reducing risk or managing the Fund more efficiently.
The Fund may use derivatives with the aim of achieving investment gains, reducing risk or managing the Fund more efficiently.
The Fund maintains a carbon exposure below that of the MSCI Europe (Net TR), based on the Investment Manager’s rating system. More details on the investment process used to achieve this can be found in the Fund Characteristics section.
Sustainability Criteria
The Investment Manager applies governance and sustainability criteria when selecting investments for the Fund.
Companies in the investment universe are subject to analysis related to their individual total scope 1 & 2 carbon emissions. The sources of information used to perform the analysis include Schroders’ proprietary sustainability tools and third-party data.
Companies in the investment universe are assessed on their governance, environmental and social profile, across a range of factors. This analysis is supported by quantitative analysis gained from Schroders in-house ESG data tools. The Investment Manager assesses a company’s environment and social impact, as well as governance practices, using proprietary sustainability tools. In addition, the Investment Manager also performs its own research and analysis before deciding whether a company is eligible for inclusion in the Fund, based on its overall sustainability profile. Proprietary tools will be key inputs to measure how companies in the portfolio are meeting the sustainability credentials outlined above.
The sources of information used to perform the analysis include information provided by the companies, such as company sustainability reports and other relevant company material, as well as Schroders’ proprietary sustainability tools and third-party data
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More details on the Investment Manager’s approach to sustainability and its engagement with companies are available on the website www.schroders.com/en/lu/private-investor/strategic-capabilities/sustainability/disclosures4.
The Investment Manager ensures that at least:
− 90% of equities issued by large companies domiciled in developed countries; fixed or floating rate securities and money market instruments with an investment grade credit rating; and sovereign debt issued by developed countries; and
− 75% of equities issued by large companies domiciled in emerging countries; equities issued by small and medium companies; fixed or floating rate securities and money market instruments with a high yield credit rating; and sovereign debt issued by emerging countries,
held in the Fund’s portfolio are rated against the sustainability criteria. For the purposes of this test, small companies are those with market capitalisation below €5 billion, medium companies are those between €5 billion and €10 billion and large companies are those above €10 billion.
European Large Cap
Investment Objective
The Fund aims to provide capital growth in excess of the MSCI Europe (Net TR) index after fees have been deducted over a three to five year period by investing in equity and equity related securities of European large-sized companies.
Investment Policy
The Fund is actively managed and invests at least two-thirds of its assets in equity and equity related securities of large-
Investment Objective
The Fund aims to provide capital growth in excess of the MSCI Europe (Net TR) index after fees have been deducted over a three to five year period by investing in equity and equity related securities of European large-sized companies.
Investment Policy
The Fund is actively managed and invests at least two-thirds of its assets in equity and equity related securities of large-
4 For Hong Kong investors, please refer to the following website: https://www.schroders.com/en/hk/retail-investors/sustainability/making-an-impact-through-sustainability (this website has not been reviewed by the SFC).
sized European companies. These are companies which, at the time of purchase, are considered to be in the top 80% by market capitalisation of the European equities market.
The Fund is managed with reference to material environmental, social and governance factors. This means issues such as climate change, environmental performance, labour standards or board composition that could impact a company’s value may be considered in the assessment of companies.
The Fund may also invest up to one-third of its assets directly or indirectly in other securities (including other asset classes), countries, regions, industries or currencies, Investment Funds, warrants and Money Market Investments, and hold cash.
The Fund may use derivatives with the aim of reducing risk or managing the Fund more efficiently.
sized European companies. These are companies which, at the time of purchase, are considered to be in the top 80% by market capitalisation of the European equities market.
The Fund may also invest up to one-third of its assets directly or indirectly in other securities (including other asset classes), countries, regions, industries or currencies, Investment Funds, warrants and Money Market Investments, and hold cash.
The Fund may use derivatives with the aim of reducing risk or managing the Fund more efficiently.
The Fund maintains a carbon exposure below that of the MSCI Europe (Net TR), based on the Investment Manager’s rating system. More details on the investment process used to achieve this can be found in the Fund Characteristics section.
Sustainability Criteria
The Investment Manager applies governance and sustainability criteria when selecting investments for the Fund.
Companies in the investment universe are subject to analysis related to their individual total scope 1 & 2 carbon emissions. The sources of information used to perform the analysis include Schroders’ proprietary sustainability tools and third-party data.
Companies in the investment universe are assessed on their governance, environmental and social profile, across a range of factors. This analysis is supported by quantitative analysis gained from Schroders in-house ESG data tools. The Investment Manager assesses a company’s environment and social impact, as well as governance practices, using proprietary sustainability tools. In addition, the Investment Manager also performs its own research and analysis before deciding whether a company is eligible for inclusion in the Fund, based on its overall sustainability profile.
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Proprietary tools will be key inputs to measure how companies in the portfolio are meeting the sustainability credentials outlined above.
The sources of information used to perform the analysis include information provided by the companies, such as company sustainability reports and other relevant company material, as well as Schroders’ proprietary sustainability tools and third-party data.
More details on the Investment Manager’s approach to sustainability and its engagement with companies are available on the website www.schroders.com/en/lu/private-investor/strategic-capabilities/sustainability/disclosures5.
The Investment Manager ensures that at least:
− 90% of equities issued by large companies domiciled in developed countries; fixed or floating rate securities and money market instruments with an investment grade credit rating; and sovereign debt issued by developed countries; and
− 75% of equities issued by large companies domiciled in emerging countries; equities issued by small and medium companies; fixed or floating rate securities and money market instruments with a high yield credit rating; and sovereign debt issued by emerging countries,
held in the Fund’s portfolio are rated against the sustainability criteria. For the purposes of this test, small companies are those with market capitalisation below €5 billion, medium companies are those between €5 billion and €10 billion and large companies are those above €10 billion.
5 For Hong Kong investors, please refer to the following website: https://www.schroders.com/en/hk/retail-investors/sustainability/making-an-impact-through-sustainability (this website has not been reviewed by the SFC).
The Fund aims to provide capital growth by investing in equity and equity related securities of companies worldwide which the Investment Manager believes will benefit from efforts to accommodate or limit the impact of global climate change.
Investment Policy
The Fund is actively managed and invests at least two-thirds of its assets in equity and equity related securities of companies worldwide.
The Investment Manager believes that companies that recognise the threats and embrace the challenges early, or that form part of the solution to the problems linked to climate change, will ultimately benefit from long term structural growth which is underappreciated by the market. We expect these companies to outperform once the market recognises these stronger earnings growth dynamics.
The Fund is managed with reference to material environmental, social and governance factors. This means issues such as climate change, environmental performance, labour standards or board composition that could impact a company’s value may be considered in the assessment of companies.
The Fund may also invest up to one-third of its assets directly or indirectly in other securities (including other asset classes), countries, regions, industries or currencies, Investment Funds, warrants and Money Market Investments, and hold cash.
The Fund may use derivatives with the aim of reducing risk or managing the Fund more efficiently.
Investment Objective
The Fund aims to provide capital growth by investing in equity and equity related securities of companies worldwide which the Investment Manager believes will benefit from efforts to accommodate or limit the impact of global climate change and which meet the Investment Manager’s sustainability criteria.
Investment Policy
The Fund is actively managed and invests at least two-thirds of its assets in equity and equity related securities of companies worldwide.
The Fund maintains a higher overall level of avoided emissions than MSCI World (Net TR) index, based on the Investment Manager’s rating system. More details on the investment process used to achieve this can be found in the Fund Characteristics section.
The Fund does not directly invest in certain activities, industries or groups of issuers above the limits listed under “Sustainability Information” on the Fund’s webpage, accessed via www.schroders.com/en/lu/private-investor/gfc6.
The Fund invests in companies that have good governance practices, as determined by the Investment Manager’s rating criteria (please see the Fund Characteristics section for more details).
The Investment Manager may also engage with companies held by the Fund to challenge identified areas of weakness on sustainability issues. More details on the Investment Manager’s approach to sustainability and its engagement with companies are available on the website www.schroders.com/en/lu/private-
6 For Hong Kong investors, please refer to the following website: https://www.schroders.com/en/hk/retail-investors/funds/fund-centre (this website has not been reviewed by the SFC).
The Fund may also invest up to one-third of its assets directly or indirectly in other securities (including other asset classes), countries, regions, industries or currencies, Investment Funds, warrants and Money Market Investments, and hold cash.
The Fund may use derivatives with the aim of reducing risk or managing the Fund more efficiently.
Sustainability Criteria
The Investment Manager applies sustainability criteria when selecting investments for the Fund.
When assessing the significance of climate change on the long-term business outlook for a company, a company is assessed on a number of factors which include but are not limited to:
If the company has significant direct industry exposure to climate change trends (mitigation – reducing greenhouse gas emissions through energy efficiency, renewable power, and cleaner vehicles; or adaptation - those that are preparing for the impacts of climate change, for example water stress, coastal flooding, community health issues, or supply chain disruptions, among other issues).
The proportion of business segments that are potentially exposed to climate change trends.
If the company has significant investment and research and development spending related to the transition to a lower carbon economy.
A product portfolio that takes into account the physical and transition risks posed by climate change.
7 For Hong Kong investors, please refer to the following website: https://www.schroders.com/en/hk/retail-investors/sustainability/making-an-impact-through-sustainability (this website has not been reviewed by the SFC).
The impact on the company of rising carbon costs in the context of its industry and competitive environment.
The Investment Manager will then decide on a case by case basis whether a company is eligible for inclusion in the Fund’s investment universe, based on this assessment. In addition, the Investment Manager’s ESG analysis seeks to evaluate the materiality and impact of a range of ESG factors on the sustainability of future earnings growth and as potential risk factors that may affect a company’s valuation. The Investment Manager’s decision will focus on ratings in the areas that are most relevant to the particular business of that company.
The Investment Manager performs its own analysis of information provided by the companies, including information provided in company sustainability reports and other relevant company material. The research draws information from a wide variety of publicly available corporate information and company meetings, broker reports and outputs from industry bodies, research organisations, think tanks, legislators, consultants, NGOs and academics. Third party research is used as a secondary consideration, and generally provides a source of challenge or endorsement for the Investment Manager’s proprietary view.
The Investment Manager ensures that at least 90% of companies in the Fund’s portfolio are rated against the sustainability criteria. As a result of the application of sustainability criteria, at least 20% of the Fund’s potential investment universe is excluded from the selection of investments.
For the purposes of this test, the potential investment universe is the core universe of issuers that the Investment Manager may select for the Fund prior to the application of sustainability criteria, in accordance with the other limitations of the Investment Objective and Policy. This universe is comprised of equity and
Page 14 of 24
equity related securities of companies worldwide.
Global Credit Income
Investment Objective
The Fund aims to provide income and capital growth by investing in fixed and floating rate securities issued by governments and companies worldwide. The Fund aims to mitigate losses in falling markets. The mitigation of losses cannot be guaranteed.
Investment Policy
The Fund is actively managed and invests at least two-thirds of its assets in fixed and floating rate investment grade and high yield securities issued by governments, government agencies, supra-nationals and companies worldwide, including emerging market countries.
The Fund may invest:
- in excess of 50% of its assets in securities that have a below investment grade credit rating (as measured by Standard & Poor's or any equivalent grade of other credit rating agencies for rated bonds and implied Schroders ratings for non-rated bonds);
- up to 20% of its assets in asset-backed securities and mortgage-backed securities;
- up to 10% of its assets in convertible bonds (including contingent convertible bonds); and
- up to 10% of its assets in open-ended Investment Funds.
The Investment Manager aims to mitigate losses by diversifying the Fund’s asset allocation away from areas of the market identified as having a high risk of material negative return.
The Fund may also invest up to one-third of its assets directly or indirectly in other securities (including other asset classes), countries, regions, industries or
Investment Objective
The Fund aims to provide income and capital growth by investing in fixed and floating rate securities issued by governments and companies worldwide. The Fund aims to mitigate losses in falling markets. The mitigation of losses cannot be guaranteed.
Investment Policy
The Fund is actively managed and invests at least two-thirds of its assets in fixed and floating rate investment grade and high yield securities issued by governments, government agencies, supra-nationals and companies worldwide, including emerging market countries.
The Fund may invest:
- in excess of 50% of its assets in securities that have a below investment grade credit rating (as measured by Standard & Poor's or any equivalent grade of other credit rating agencies for rated bonds and implied Schroders ratings for non-rated bonds);
- up to 20% of its assets in asset-backed securities and mortgage-backed securities;
- up to 10% of its assets in convertible bonds (including contingent convertible bonds); and
- up to 10% of its assets in open-ended Investment Funds.
The Investment Manager aims to mitigate losses by diversifying the Fund’s asset allocation away from areas of the market identified as having a high risk of material negative return.
The Fund may also invest up to one-third of its assets directly or indirectly in other securities (including other asset classes), countries, regions, industries or
Page 15 of 24
currencies, warrants and Money Market Investments, and hold cash.
The Fund may use derivatives, long and short, with the aim of achieving investment gains, reducing risk or managing the Fund more efficiently.
currencies, warrants and Money Market Investments, and hold cash.
The Fund may use derivatives, long and short, with the aim of achieving investment gains, reducing risk or managing the Fund more efficiently.
The Fund maintains a higher overall sustainability score than Bloomberg Barclays Multiverse ex Treasury A+ to B- USD Hedged index, based on the Investment Manager’s rating system. More details on the investment process used to achieve this can be found in the Fund Characteristics section.
Sustainability Criteria
The Investment Manager applies governance and sustainability criteria when selecting investments for the Fund.
The strategy aims to identify issuers demonstrating good or improving sustainability credentials, and those that impose a high cost on the environment and society. This involves:
- The exclusion of issuers that the Investment Manager deems to have businesses that are materially damaging to the climate and impose unjustifiable social costs.
- The inclusion of issuers that demonstrate stable and improving sustainability trajectories, and issuers demonstrating good governance based on the Investment Manager’s sustainability rating methodology.
The Investment Manager may also engage with companies to encourage transparency, the transition to a circular economy with lower carbon emissions intensity and responsible social behaviour that promotes sustainable growth and alpha generation.
The primary sources of information used to perform the analysis are the Investment Manager’s proprietary tools and research, third-party research, NGO reports and expert networks. The Investment Manager also performs its
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own analysis of publically available information provided by the companies, including information provided in company sustainability reports and other relevant company material.
More details on the Investment Manager’s approach to sustainability and its engagement with companies are available on the website www.schroders.com/en/lu/private-investor/strategic-capabilities/sustainability/disclosures8.
The Investment Manager ensures that at least:
- 90% of fixed or floating rate securities and money market instruments with an investment grade credit rating; sovereign debt issued by developed countries; and equities issued by large companies domiciled in developed countries; and
- 75% of fixed or floating rate securities and money market instruments with a high yield credit rating; sovereign debt issued by emerging countries equities issued by large companies domiciled in emerging countries; equities issued by small and medium companies,
held in the Fund’s portfolio are rated against the sustainability criteria. For the purposes of this test, small companies are those with market capitalisation below €5 billion, medium companies are those between €5 billion and €10 billion and large companies are those above €10 billion.
Global Sustainable Growth
Investment Objective
The Fund aims to provide capital growth by investing in equity and equity related securities of companies worldwide which meet the Investment Manager’s sustainability criteria.
Investment Objective
The Fund aims to provide capital growth by investing in equity and equity related securities of companies worldwide which meet the Investment Manager’s sustainability criteria.
8 For Hong Kong investors, please refer to the following website: https://www.schroders.com/en/hk/retail-investors/sustainability/making-an-impact-through-sustainability (this website has not been reviewed by the SFC).
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Investment Policy
The Fund is actively managed and invests at least two-thirds of its assets in equity and equity related securities of companies worldwide.
The Investment Manager believes that companies demonstrating positive sustainability characteristics, such as managing the business for the long-term, recognising its responsibilities to its customers, employees and suppliers, and respecting the environment, are better-placed to maintain their growth and returns over the long term. In addition, the Investment Manager believes that when aligned with other drivers of growth, this can result in stronger earnings growth which is often under appreciated by the market.
The Fund is managed with reference to material environmental, social and governance factors. This means issues such as climate change, environmental performance, labour standards or board composition that could impact a company’s value may be considered in the assessment of companies.
The Fund may also invest up to one-third of its assets directly or indirectly in other securities (including other asset classes), countries, regions, industries or currencies, Investment Funds, warrants and Money Market Investments, and hold cash.
The Fund may use derivatives with the aim of reducing risk or managing the Fund more efficiently.
Investment Policy
The Fund is actively managed and invests at least two-thirds of its assets in equity and equity related securities of companies worldwide.
The Fund maintains a higher overall sustainability score than MSCI AC World (Net TR) index, based on the Investment Manager’s rating system. More details on the investment process used to achieve this can be found in the Fund Characteristics section. The Fund does not directly invest in certain activities, industries or groups of issuers above the limits listed under “Sustainability Information” on the Fund’s webpage, accessed via www.schroders.com/en/lu/private-investor/gfc9.
The Fund invests in companies that have good governance practices, as determined by the Investment Manager’s rating criteria (please see the Fund Characteristics section for more details).
The Investment Manager may also engage with companies held by the Fund to challenge identified areas of weakness on sustainability issues. More details on the Investment Manager’s approach to sustainability and its engagement with companies are available on the website www.schroders.com/en/lu/private-investor/strategic-capabilities/sustainability/disclosures10.
The Fund may also invest up to one-third of its assets directly or indirectly in other securities (including other asset classes), countries, regions, industries or currencies, Investment Funds, warrants and Money Market Investments, and hold cash.
9 For Hong Kong investors, please refer to the following website: https://www.schroders.com/en/hk/retail-investors/funds/fund-centre (this website has not been reviewed by the SFC). 10 For Hong Kong investors, please refer to the following website: https://www.schroders.com/en/hk/retail-investors/sustainability/making-an-impact-through-sustainability (this website has not been reviewed by the SFC).
The Fund may use derivatives with the aim of reducing risk or managing the Fund more efficiently.
Sustainability Criteria
The Investment Manager applies sustainability criteria when selecting investments for the Fund.
Companies are assessed and rated against a set of questions covering issues such as respect for the environment; fair and equitable treatment of employees, suppliers and customers; corporate citizenship; capital allocation and governance.
The Investment Manager will decide on a case by case basis whether a company is eligible for inclusion in the investible universe, taking into account these ratings. While all companies are assessed against all questions, the Investment Manager’s decision will focus on those areas that are most relevant to the particular business of that company. In these areas, the company should generally be appraised as at least “strong“ in order to be accepted into the investible universe. The eligibility of each company in the Fund’s portfolio is then reviewed at least annually.
The primary sources of information used to perform the analysis are Schroders’ proprietary sustainability tools, third-party research, unconventional data sourced by our Data Insights Unit, NGO reports and expert networks. The Investment Manager also scrutinises company sustainability reports and other disclosures, which may be complemented by direct engagement with the company during the assessment process.
The Investment Manager ensures that at least 90% of companies in the Fund’s portfolio are rated against the sustainability criteria. As a result of the application of sustainability criteria, at least 20% of the Fund’s potential investment universe is excluded from the selection of investments.
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For the purposes of this test, the potential investment universe is the core universe of issuers that the Investment Manager may select for the Fund prior to the application of sustainability criteria, in accordance with the other limitations of the Investment Objective and Policy. This universe is comprised of equity and equity related securities of companies worldwide.
Japanese Equity Investment Objective
The Fund aims to provide capital growth in excess of the Tokyo Stock Exchange 1st Section index (TOPIX) (TR) after fees have been deducted over a three to five year period by investing in equity and equity related securities of Japanese companies.
Investment Policy
The Fund is actively managed and invests at least two-thirds of its assets in equity and equity related securities of Japanese companies.
The Fund may also invest up to one-third of its assets directly or indirectly in other securities (including other asset classes), countries, regions, industries or currencies, Investment Funds, warrants and Money Market Investments, and hold cash.
The Fund may use derivatives with the aim of achieving investment gains, reducing risk or managing the Fund more efficiently.
Investment Objective
The Fund aims to provide capital growth in excess of the Tokyo Stock Exchange 1st Section index (TOPIX) (TR) after fees have been deducted over a three to five year period by investing in equity and equity related securities of Japanese companies.
Investment Policy
The Fund is actively managed and invests at least two-thirds of its assets in equity and equity related securities of Japanese companies.
The Fund may also invest up to one-third of its assets directly or indirectly in other securities (including other asset classes), countries, regions, industries or currencies, Investment Funds, warrants and Money Market Investments, and hold cash.
The Fund may use derivatives with the aim of achieving investment gains, reducing risk or managing the Fund more efficiently.
The Fund maintains a higher overall sustainability score than the Tokyo Stock Exchange 1st Section index (TOPIX) (Net TR), based on the Investment Manager’s rating system. More details on the investment process used to achieve this can be found in the Fund Characteristics section.
The Fund does not directly invest in certain activities, industries or groups of issuers above the limits listed under “Sustainability Information” on the Fund’s webpage, accessed via
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www.schroders.com/en/lu/private-investor/gfc11.
Sustainability Criteria
The Investment Manager applies governance and sustainability criteria when selecting investments for the Fund. The investable universe is assessed using a number of proprietary tools, as well as external rating services.
The Investment Manager performs due diligence on all potential holdings, including meetings with management, and assesses the company’s governance, environmental and social profile across a range of factors. This process is supported by quantitative analysis provided by Schroders’ proprietary sustainability tools, which are key inputs to assess how existing and potential investments for the portfolio are meeting the Fund’s sustainability criteria. In some cases, companies which fall below our sustainability criteria may still be eligible for investment if, as a result of proprietary analysis and ongoing engagement with management, the Investment Manager believes the company will meet our sustainability criteria within a realistic time horizon.
For a company to be eligible to be held in the Fund, it is expected to show a commitment to its stakeholders, including customers, employees, suppliers, shareholders and regulators. The Fund selects companies whose businesses demonstrate good governance and aim to treat stakeholders equitably.
More details on the Investment Manager’s approach to sustainability and its engagement with companies are available on the website www.schroders.com/en/lu/private-
11 For Hong Kong investors, please refer to the following website: https://www.schroders.com/en/hk/retail-investors/funds/fund-centre (this website has not been reviewed by the SFC).
− 90% of equities issued by large companies domiciled in developed countries; fixed or floating rate securities and money market instruments with an investment grade credit rating; and sovereign debt issued by developed countries; and
− 75% of equities issued by large companies domiciled in emerging countries; equities issued by small and medium companies; fixed or floating rate securities and money market instruments with a high yield credit rating; and sovereign debt issued by emerging countries,
held in the Fund’s portfolio are rated against the sustainability criteria. For the purposes of this test, small companies are those with market capitalisation below €5 billion, medium companies are those between €5 billion and €10 billion and large companies are those above €10 billion.
QEP Global Quality
Investment Objective
The Fund aims to provide capital growth and income in excess of the MSCI AC World (Net TR) index after fees have been deducted over a three to five year period by investing in equity and equity-related securities of companies worldwide.
Investment Policy The Fund is actively managed and invests at least two-thirds of its assets in a diversified portfolio of equity and equity-related securities of companies worldwide.
The Fund focuses on companies that have certain "Quality" characteristics.
Investment Objective
The Fund aims to provide capital growth and income in excess of the MSCI AC World (Net TR) index after fees have been deducted over a three to five year period by investing in equity and equity-related securities of companies worldwide.
Investment Policy
The Fund is actively managed and invests at least two-thirds of its assets in a diversified portfolio of equity and equity-related securities of companies worldwide.
The Fund focuses on companies that have certain "Quality" characteristics.
12 For Hong Kong investors, please refer to the following website: https://www.schroders.com/en/hk/retail-investors/sustainability/making-an-impact-through-sustainability (this website has not been reviewed by the SFC).
Quality is assessed by looking at indicators such as a company's profitability, stability, financial strength and governance.
The Fund is managed with reference to material environmental, social and governance factors. This means issues such as climate change, environmental performance, labour standards or board composition that could impact a company’s value may be considered in the assessment of companies.
The Fund may also invest up to one-third of its assets directly or indirectly in other securities (including other asset classes), countries, regions, industries or currencies, Investment Funds, warrants and Money Market Investments, and hold cash.
The Fund may use derivatives with the aim of reducing risk or managing the Fund more efficiently.
Quality is assessed by looking at indicators such as a company's profitability, stability, financial strength and governance.
The Fund may also invest up to one-third of its assets directly or indirectly in other securities (including other asset classes), countries, regions, industries or currencies, Investment Funds, warrants and Money Market Investments, and hold cash.
The Fund may use derivatives with the aim of reducing risk or managing the Fund more efficiently.
The Fund maintains a higher overall sustainability score than MSCI AC World (Net TR) index, based on the Investment Manager’s rating system. More details on the investment process used to achieve this can be found in the Fund Characteristics section.
Sustainability Criteria
The Investment Manager applies governance and sustainability criteria when selecting investments for the Fund. Companies in the investment universe are assessed on their governance, environmental and social profile, across a wide range of underlying measures. The Investment Manager will take into account an assessment of the sustainability profile of companies when determining position sizing within the portfolio.
Within governance, criteria assessed include risk to shareholders, business oversight, accounting risk and dividend policy. Environmental considerations include climate change related risks alongside broader environmental impact and opportunities. Social criteria reflects areas such as business involvement, safety, employee welfare, supply chain management and data privacy.
The primary sources of information include fundamental accounting data, Schroders’ proprietary sustainability tools and third-party ESG data.
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More details on the Investment Manager’s approach to sustainability and its engagement with companies are available on the website www.schroders.com/en/lu/private-investor/strategic-capabilities/sustainability/disclosures13.
The Investment Manager ensures that at least:
− 90% of equities issued by large companies domiciled in developed countries; fixed or floating rate securities and money market instruments with an investment grade credit rating; and sovereign debt issued by developed countries; and
− 75% of equities issued by large companies domiciled in emerging countries; equities issued by small and medium companies; fixed or floating rate securities and money market instruments with a high yield credit rating; and sovereign debt issued by emerging countries,
held in the Fund’s portfolio are rated against the sustainability criteria. For the purposes of this test, small companies are those with market capitalisation below €5 billion, medium companies are those between €5 billion and €10 billion and large companies are those above €10 billion.
Article 6 Funds
The Funds that fall under the scope of Article 6 of SFDR and for which references to material environmental, social and governance factors have been removed from their investment policies are the following:
• Schroder International Selection Fund BRIC (Brazil, Russia, India, China) • Schroder International Selection Fund Emerging Europe • Schroder International Selection Fund Emerging Markets • Schroder International Selection Fund European Value • Schroder International Selection Fund Frontier Markets Equity
13 For Hong Kong investors, please refer to the following website: https://www.schroders.com/en/hk/retail-investors/sustainability/making-an-impact-through-sustainability (this website has not been reviewed by the SFC).
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• Schroder International Selection Fund Global Dividend Maximiser • Schroder International Selection Fund Global Emerging Market Opportunities • Schroder International Selection Fund Global Equity • Schroder International Selection Fund Global Equity Alpha • Schroder International Selection Fund Global Equity Yield • Schroder International Selection Fund Latin American • Schroder International Selection Fund Middle East • Schroder International Selection Fund QEP Global Active Value • Schroder International Selection Fund US Large Cap
1
PRODUCT KEY FACTS Schroder International Selection Fund –
Global Credit Income
Issuer: Schroder Investment Management (Europe) S.A. April 2021
This statement provides you with key information about this product. This statement is a part of the offering document.
You should not invest in this product based on this statement alone.
Investment manager: Schroder Investment Management Limited, located in United Kingdom, internal delegation
Sub-investment manager(s): Schroder Investment Management North America Inc., located in the
United States of America, internal delegation
Schroder Investment Management (Hong Kong) Limited, located in Hong Kong, internal delegation
Depositary: J.P. Morgan Bank Luxembourg S.A.
Ongoing charges over a year*: Class A AUD Hedged Dis MFC 1.42% Class A1 USD Dis MF 1.89%
Class A AUD Hedged Acc 1.42% Class A EUR Hedged Acc 1.42%
Class A EUR Hedged Dis QF 1.42% Class A1 EUR Hedged Acc 1.93%
Class A USD Dis MF 1.39% Class A HKD Dis MF 1.39%
Class A USD Dis MV 1.39% Class A GBP Hedged Dis MF 1.42%
Class A USD Acc 1.39% Class A GBP Hedged Acc 1.42%
Class A1 USD Acc 1.89% Class A RMB Hedged Dis MFC 1.42%
Class A1 EUR Hedged Dis MF 1.93% & Class A HKD Acc 1.39% &
Class A1 USD Dis MV 1.89% & Class A EUR Hedged Dis MV 1.42% ❖
Class A GBP Hedged Dis MV 1.42% ❖ Class A HKD Hedged Acc 1.42% ❖
Class A HKD Hedged Dis MV 1.42% ❖
Dealing frequency: Daily
Base currency: USD
Dividend policy: A, A1 and D Accumulation share classes – Dividend will not be distributed but will be reinvested into the fund.
A, A1 and D Distribution share classes – The board of directors generally has discretion as to whether or not to make any distribution save for the Distribution share classes with fixed dividend policy which are subject to the disclosures below. This distribution frequency and attributes are indicated in the share class designation as follows:
M = monthly, Q = quarterly, S = semi-annual, A = annual,
Currency carry#: C
Distributions may be paid out of capital and reduce the fund’s net asset value.
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In respect of Distribution share classes with fixed dividend policy, the distribution amount per share is calculated as follows: dividend rate ÷ distribution frequency over a year × net asset value per share on the record date∆. Details of the Distribution share classes with fixed dividend policy are set out below:
Fixed Distribution Share Class
Currency Distribution Frequency over a year
Dividend Rate
Class A USD Dis MF USD Monthly (12) 4.75% per annum
Class A1 USD Dis MF USD Monthly (12) 4.75% per annum
Class A HKD Dis MF HKD Monthly (12) 4.75% per annum
Class A GBP Hedged Dis MF
GBP Monthly (12) 4.0% per annum
Class A EUR Hedged Dis QF
EUR Quarterly (4) 3.0% per annum
Class A1 EUR Hedged Dis MF
EUR Monthly (12) EUR 0.3333 per share
Investors should note that a positive distribution yield does not imply a positive return. The board of directors will periodically review fixed distribution share classes and reserves the right to make changes.
Financial year end of this fund: 31 December
Minimum investment: A, A1 and D share classes: Initial – EUR1,000 or USD1,000 (or equivalent);
Subsequent investment – EUR1,000 or USD1,000 (or equivalent)
* The ongoing charges figure is based on the expenses for the year ended 31 December 2020. This figure may vary from year to year.
# This refers to the premium or discount that may apply to the distribution. Distributions may include a premium when the interest rate of a currency hedged share class is higher than the fund’s base currency interest rate. Consequently when the interest rate of a currency hedged share class is lower than the fund’s base currency interest rate, the dividend may be discounted. The level of premium or discount is determined by differences in interest rates and is not part of the fund’s investment objective or investment policy.
& As the relevant share class is newly set up, the ongoing charges figure is an estimate only. The ongoing charges figures are estimated based on the ongoing charges figure of Class A1 EUR Hedged Acc, Class A1 USD Acc and Class A HKD Dis MF for the year ended 31 December 2020 respectively because the fee structures of Class A1 EUR Hedged Acc are the same as those of Class A1 EUR Hedged Dis MF, the fee structures of Class A1 USD Acc are the same as Class A1 USD Dis MV and the fee structures of Class A HKD Dis MF are the same as Class A HKD Acc. The actual ongoing charges figure of the relevant share class may be different from the estimate and may vary from year to year. ❖As the relevant share class will launch in April 2021, the ongoing charges figure is an estimate only. The ongoing charges figures are estimated based on the ongoing charges figure of Class A GBP Hedged Dis MF for the year ended 31 December 2020 because the fee structures of Class A GBP Hedged Dis MF are the same as those of Class A EUR Hedged Dis MV, Class A GBP Hedged Dis MV, Class A HKD Hedged Acc and Class A HKD Hedged Dis MV. The actual ongoing charges figure of the relevant share class may be different from the estimate and may vary from year to year. ∆ Not applicable to Class A1 EUR Hedged Dis MF, which will distribute the dividends based on a fixed amount per share. Note: As of the date of this document, Class A1 and Class D shares of the fund are not being offered to the public in Hong Kong.
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What is this product? This is a sub-fund of Schroder International Selection Fund, a mutual fund domiciled in Luxembourg and its home regulator is Commission de Surveillance du Secteur Financier.
Objectives and investment strategy Investment Objective The fund aims to provide income and capital growth by investing in fixed and floating rate securities issued by governments and companies worldwide. The fund aims to mitigate losses in falling markets. The mitigation of losses cannot be guaranteed.
Investment Policy
The fund is actively managed and invests at least two-thirds of its assets in fixed and floating rate investment grade and high yield securities issued by governments, government agencies, supra-nationals and companies worldwide, including emerging market countries.
The fund may invest:
− in excess of 50% of its assets in securities that have a below investment grade credit rating (as measured by Standard & Poor’s or any equivalent grade of other credit rating agencies for rated bonds and implied Schroders ratings for non-rated bonds);
− up to 20% of its assets in asset-backed securities and mortgage-backed securities;
− up to 10% of its assets in convertible bonds (including contingent convertible bonds); and
− up to 10% of its assets in open-ended investment funds.
The fund may invest up to 40% of its net asset value in emerging market debt (fixed and floating rate) securities.
The fund may also invest up to one-third of its assets directly or indirectly in other securities (including other asset classes), countries, regions, industries or currencies, warrants and money market investments, and hold cash.
The investment manager aims to mitigate losses by diversifying the fund’s asset allocation away from areas of the market identified as having a high risk of material negative return.
It is the current intention of the investment manager that the fund will not invest more than 10% of its net asset value in securities issued by or guaranteed by any single country with a credit rating below investment grade.
The fund may invest less than 30% of its net asset value in debt instruments with loss-absorption features (e.g. contingent convertible bonds, Additional Tier 1 and Tier 2 capital notes, senior and senior non-preferred notes, bail-in bonds, capital security bonds, subordinated Tier 2 capital notes, subordinated Additional Tier 1 capital notes and subordinated Lower Tier 2 capital notes). These instruments may be subject to contingent write-down or contingent conversion to ordinary shares on the occurrence of trigger events.
Under exceptional circumstances (e.g. market crash or major crisis), the fund may be invested temporarily up to 100% of its net asset value in liquid assets such as bank deposits, certificates of deposit, commercial paper and treasury bills for cash flow management.
The fund may use derivatives, long and short, with the aim of achieving investment gains, reducing risk or managing the fund more efficiently.
Derivatives may be employed for instance to generate additional income from exposure to credit risk in purchasing or selling protection through credit default swaps, adjusting the fund’s duration through the tactical use of interest related derivatives, generating additional income through inflation or volatility linked derivatives or increasing its currency exposure through the use of currency related derivatives. Derivatives could also be employed to create synthetic instruments. Such derivatives include over-the-counter and/or exchange traded options, futures, warrants, swaps, forward contracts and/or a combination of the above.
The fund will have no or limited Renminbi (RMB) denominated underlying investments.
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Benchmark
The fund does not have a target benchmark. The fund's performance should be compared against the Bloomberg Barclays Multiverse ex Treasury A+ to B- USD Hedged index, the Bloomberg Barclays Global Aggregate Corporate USD index, the Bloomberg Barclays Global High Yield USD index, and the JP Morgan EMBI Global Total Return index. The comparator benchmarks are only included for performance comparison purposes and do not have any bearing on how the investment manager invests the fund’s assets. The fund’s investment universe is expected to overlap materially with the components of the comparator benchmarks.
Use of derivatives / investment in derivatives The fund’s net derivative exposure may be up to 50% of the fund’s net asset value.
What are the key risks? Investment involves risk. Please refer to the offering document for details including the risk factors.
1. Risk relating to investment in debt securities
– Credit and counterparty risk – Investment in debt securities is subject to the credit/default risk of the issuer which may also adversely affect the settlement of the securities.
– Interest rate risks – Investment in the fund is subject to interest rate risk. In general, the prices of debt securities rise when interest rates fall, whilst their prices fall when interest rates rise.
– Below investment grade and unrated debt securities – Investments in fixed income securities below investment grade or unrated are generally subject to higher degree of counterparty risk, credit risk, volatility risk, liquidity risk and risk of loss of principal and interest than higher rated securities.
– Credit ratings risk – Credit ratings assigned by rating agencies are subject to limitations and do not guarantee the creditworthiness of the security and/or issuer at all times.
– Credit downgrading risk – The credit rating of debt securities or their issuers may subsequently downgraded. In the event of such downgrading, the value of the fund may be adversely affected. The investment manager may not be able to dispose of such securities immediately and the fund may therefore be subject to additional risk of loss.
– Liquidity and volatility risk – Securities not listed or rated or actively traded may have low liquidity and higher volatility. The prices of such securities may be subject to fluctuations. The bid and offer spread of their price may be high and the fund may therefore incur significant trading costs and may even suffer losses when selling such instruments.
– Valuation risk – Valuation of the fund’s investment may involve uncertainties and judgmental determinations. If such valuation turns out to be incorrect, this may affect the net asset value calculation of the fund.
2. Sovereign debt risk
Investment in sovereign debt obligations issued or guaranteed by governments or their agencies of certain developing countries and certain developed countries may expose the fund to political, social and economic risks. A government entity’s willingness or ability to repay principal and interest due in a timely manner may be affected by various factors. In the event that a government entity defaults on its sovereign debt, holders of sovereign debt, including the fund, may be requested to participate in the rescheduling of such debt and to extend further loans to the relevant government entity. The fund may suffer significant losses in such events.
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3. Emerging and less developed markets
The fund may invest in emerging and less developed markets. Investing in emerging and less developed markets is subject to greater risks than investing in securities of developed countries such as ownership and custody risks, political and economic risks, market and settlement risks, liquidity and volatility risk, legal and regulatory risks, taxation risk, execution and counterparty risk, and currency risk, which may adversely affect the net asset value per share of the fund and investors may as a result suffer losses.
4. Derivatives
The fund may use derivatives to meet its specific investment objective. There is no guarantee that the performance of derivatives will result in a positive effect for the fund. Derivative exposure may lead to a high risk of significant capital loss. Risks associated with derivatives include credit risk and counterparty risk, liquidity risk, valuation risk, volatility risk, over-the-counter transaction risks and hedging risk. The leverage element/component of derivatives can result in a loss significantly greater than the amount invested in the derivatives by the fund. There is no guarantee that the desired hedging instruments will be available or hedging techniques will achieve their desired result. In adverse situations, the use of hedging instruments may become ineffective in hedging and the fund may suffer significant losses.
5. Risks relating to distributions
– For distribution share classes with a general dividend policy, expenses will be paid out of capital rather than out of gross income. The amount of distributable income therefore increases and the amount so increased may be considered to be dividend paid out of capital; capital growth will be reduced and in periods of low growth capital erosion may occur.
– Distribution share classes with a fixed dividend policy will distribute the dividends based on a fixed amount or fixed percentage of the net asset value per share. This may result in share classes with fixed distributions either paying out both income and capital in distribution payments, or not substantially distributing all the investment income which a share class has earned.
– Investments in distribution share classes with fixed dividend policy are not an alternative to a savings account or fixed-interest paying investment. The percentage of distributions paid by distribution share classes with fixed dividend policy is unrelated to expected or past income or returns of these share classes or the fund. The distribution can thus be higher or lower than the income and return that were effectively realised.
– Distribution share classes with fixed dividend policy will continue to distribute in periods that the fund has negative returns or is making losses, which further reduces the net asset value of the distribution Share Classes with fixed dividend policy. In extreme circumstances, investors may not be able to get back the original investment amount.
– Investors should note that a positive distribution yield does not imply a positive return. Distribution share classes with a fixed dividend policy do not distribute a fixed amount and the constant percentage of distribution results in higher absolute distributions when the net asset value of the relevant Distribution share classes with fixed dividend policy is high, and lower absolute distributions when the net asset value of the relevant distribution share classes with fixed dividend policy is low.
– You should note that in the circumstances where the payment of distributions are paid out of capital, this represents and amounts to a return or withdrawal of part of the amount you originally invested or capital gains attributable to that and may result in an immediate decrease in the net asset value of shares.
– The distribution amount and net asset value of the currency hedged share class may be adversely affected by differences in the interest rates of the reference currency of the currency hedged share classes and the fund’s base currency, resulting in an increase in the amount of distribution that is paid out of capital and hence a greater erosion of capital than other non-currency hedged share classes.
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6. Risks relating to hedging and the hedged classes
– In respect of the share classes which the management company of the fund has the ability to fully hedge the shares of such share classes in relation to the fund currency, currency exposures or currency hedging transactions within the fund’s portfolio will not be considered. The aim of a currency hedged share class is to provide you with the performance returns of the fund’s investments by reducing the effects of exchange rate fluctuations between the fund currency and the reference currency. However there is no assurance that the hedging strategies employed will be effective in fully eliminating the currency exposure to the reference currency thereby delivering performance differentials that are reflective only of interest rate differences adjusted for fees.
– Where undertaken, the effects of this hedging will be reflected in the net asset value and, therefore, in the performance of such share class. Similarly, any expenses arising from such hedging transactions will be borne by the share class in relation to which the expenses have been incurred.
– It should be noted that, where relevant, these hedging transactions may be entered into whether the reference currency is declining or increasing in value relative to the relevant fund currency and so, where such hedging is undertaken it may substantially protect investors in the relevant share class against a decrease in the value of the fund currency relative to the reference currency, but it may also preclude investors from benefiting from an increase in the value of the fund currency.
7. Currency risks
Assets and share classes may be denominated in currencies other than USD and some may not be freely convertible. The fund may be adversely affected by changes in foreign exchange rates and exchange rate controls of the currencies in which securities are held, the reference currencies of the share classes and the US Dollar. This exposes all share classes of the fund to exchange rate fluctuations and currency risk. It may not be practicable or possible to hedge against such foreign exchange/currency risk exposure.
8. RMB Currency Risk and RMB share classes related risk
– RMB is currently not freely convertible and is subject to foreign exchange control policies and restrictions.
– There can be no assurance that RMB will not be subject to depreciation. Any depreciation of RMB could adversely affect the value of investor’s investment in share classes denominated in RMB.
– Share classes denominated in RMB will be valued with reference to offshore RMB (“CNH”) rather than onshore RMB (“CNY”). While CNH and CNY represent the same currency, they are traded at different rates. Any divergence between CNH and CNY may adversely impact investors.
– Non-RMB based investors in share classes denominated in RMB may have to convert HK dollar or other currency(ies) into RMB when investing in share classes denominated in RMB and subsequently convert the RMB redemption proceeds and/or dividend payment (if any) back to HK dollar or such other currency(ies). Investors will incur currency conversion costs and you may suffer losses depending on the exchange rate movements of RMB relative to HK dollar or such other currencies.
– Under exceptional circumstances, payment of redemptions and/or dividend payment in RMB may be delayed due to the exchange controls and restrictions applicable to RMB.
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How has the fund performed?
– Past performance information is not indicative of future performance. Investors may not get back the full amount
invested.
– The computation basis of the performance is based on the calendar year end, NAV-To-NAV, with dividend reinvested.
– These figures show by how much the fund’s Class A USD Accumulation increased or decreased in value during the calendar year being shown. Performance data has been calculated in USD including ongoing charges and excluding subscription fee and redemption fee you might have to pay.
– Where no past performance is shown there was insufficient data available in that year to provide performance.
– Comparator benchmarks: Bloomberg Barclays Multiverse ex Treasury A+ to B- USD Hedged index, Bloomberg Barclays Global Aggregate Corporate USD index, Bloomberg Barclays Global High Yield USD index, and JP Morgan EMBI Global Total Return index
– Fund launch date: 2016
– Class A USD Accumulation launch date: 2017
– The management company views the Class A USD Accumulation, being the retail share class denominated in the base currency of the fund, as the most appropriate representative share class of the fund.
Note: The performance of these years was achieved under circumstances that no longer apply. During these years, there was material change(s) to the fund, namely, changes of investment objective and policy, change of investment delegates and reduction of fee(s).
Is there any guarantee? This fund does not have any guarantees. You may not get back the full amount of money you invest.
▀ Class A USD Accumulation ▀ Bloomberg Barclays Multiverse ex Treasury A+ to B- USD Hedged index
▀ Bloomberg Barclays Global Aggregate Corporate USD index ▀ Bloomberg Barclays Global High Yield USD index
▀ JP Morgan EMBI Global Total Return index
-1.6
%
11.3
%
6.6%
-1.4
%
13.2
%
7.9%
-3.6
%
11.5
%
10.4
%
-4.1
%
12.6
%
7.0%
-4.6
%
14.4
%
7.0%
-15%
-10%
-5%
0%
5%
10%
15%
20%
2016 2017 2018 2019 2020
Note
Schroder International Selection Fund – Global Credit Income
8
What are the fees and charges? Charges which may be payable by you
You may have to pay the following fees when dealing in the shares of the fund.
Fee What you pay
Share class A A1 D
Subscription fee (Initial charge) Up to 3.00% of the total subscription amount
Up to 2.00% of the total subscription amount
Nil
Switching fee (Switching charge) Up to 1.00% of the value of the shares to be switched
Redemption fee (Redemption charge) Nil
Ongoing fees payable by the fund
The following expenses will be paid out of the fund. They affect you because they reduce the return you get on your investments.
Annual rate (as a % of the fund’s value)
Share class* A A1 D
Management fee 1.10% 1.10% 1.10%
Depositary fee Up to 0.005%
Performance fee Nil
Administration fee Up to 0.25%
Distribution charge Nil 0.50% 1.00%
Custody safekeeping fee Up to 0.3%
Transaction fees (charged by the Depositary)
Up to USD75 per transaction
Fund accounting and valuation fees Up to 0.0083%
* Where currency hedged share class is offered, a hedging charge of up to 0.03% per annum of the net asset value per share will be borne by the currency hedged share class in relation to which the charge is incurred. The hedging charge will be payable to the management company, which provides the currency hedging service. Note: As of the date of this document, Class A1 and Class D shares of the fund are not being offered to the public in Hong Kong.
Other fees
You may have to pay other fees when dealing in the shares of the fund. Please refer to the offering document for fees payable by the fund.
Schroder International Selection Fund – Global Credit Income
9
Additional information – You generally buy and redeem shares at the fund’s relevant net asset value (“NAV”) after Schroder
Investment Management (Hong Kong) Limited receives your request, directly or via a distributor, in good order at or before 5pm HK time, being the fund’s dealing cut-off time on each dealing day of the fund. Before placing your subscription or redemption orders, please check with your distributor for the distributor’s internal dealing cut-off time (which may be earlier than the fund’s dealing cut-off time).
– A dividend calendar including details on the distribution frequency and the dividend calculation basis for all available distribution share classes and a composition of the dividend payments (i.e. the percentages of distribution being paid out of capital and net distributable income) for the last twelve months for each of these distribution share classes (i) with a variable distribution policy or (ii) with a fixed dividend policy and paying dividends out of capital are also available from the Schroder Investment Management (Hong Kong) Limited on request and from the Schroders’ Internet site (www.schroders.com.hk).
– Past performance information of other share classes offered to Hong Kong investors is available online at www.schroders.com.hk.
– The net asset value of this fund is calculated and the price of shares is published on each dealing day. They are available online at www.schroders.com.hk. This website has not been reviewed by the SFC.
Important If you are in doubt, you should seek professional advice. The SFC takes no responsibility for the contents of this statement and makes no representation as to its accuracy or completeness.
Schroder Inv Mgmt Europe SA ISF Securitised Credit I 6.0 USD Dis QV (ISECL)Mexico (United Mexican States) (Go 2.2500 12/08/2036) Series Govt 1.0Heimstaden Bostad AB 3.0000 31/12/2049 Regs 0.9Veolia Environnement SA 2.5000 Perp-Regs 0.9Autostrade Per Litalia 2.000 04/12/2028 Regs 0.7Caixa Central De Credito Agricola 2.5000 05/11/2026 0.7MC Brazil Dwnstrm 7.2500 30/06/2031 Regs 0.6Mbank Sa 0.9660 21/09/2027 Series Emtn 0.6CPI Proporty Group SA 4.875 Perp Series 0.6Heimstaden Bostad AB 3.375 31/12/2049 Series Regs 0.6
基金沒有目標基準。基金的表現應與Bloomberg Barclays Multiverse ex Treasury A+ to B- USD Hedged index、Bloomberg Barclays Global Aggregate Corporate USD index、Bloomberg Barclays Global High Yield USD index及JP Morgan EMBI Global Total Return index作比較。比較基準只作比較表現用途,並不影響投資經理如何投資基金資產。基金的投資領域預期與比較基準的成份有顯著範圍的重疊。
- 比較基準:Bloomberg Barclays Multiverse ex Treasury A+ to B- USD Hedged index,Bloomberg Barclays Global Aggregate Corporate USD index,Bloomberg Barclays Global High Yield USD index和JP Morgan EMBI Global Total Return index