schroders funds

8/8/2019 Schroders Funds

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Schroder Investment Management Australia LimitedLevel 20, 123 Pitt Street SYDNEY NSW 2000AFSL 226473 ABN 22 000 443 274

Schroder Wholesale SeriesSupplementary Product Disclosure Statement

Dated 1 April 2010

This document is a Supplementary Product Disclosure Statement (SPDS). This SPDS supplements theSchroder Wholesale Series Product Disclosure Statement (PDS) relating to units in the Schroder GlobalActive Value Fund and Schroder Global Active Value Fund (Hedged) issued by Schroder InvestmentManagement Australia Limited on 1 December 2008 and should be read together with that PDS.

In the table on page 5 of the PDS, the words 0.30% on application and 0.30% on redemption in the eighthrow of the column titled 6 - Schroder Global Active Value Fund are deleted and replaced with 0.15% onapplication and 0.15% on redemption.

In the table on page 6 of the PDS, the words 0.30% on application and 0.30% on redemption in the eighthrow of the column titled 7 - Schroder Global Active Value Fund (Hedged) are deleted and replaced with0.15% on application and 0.15% on redemption.

In the table on page 27 of the PDS, the words 0.30% on application 0.30% on withdrawal in the row titled 6 Schroder Global Active Value Fund are deleted and replaced with 0.15% on application 0.15% onwithdrawal; and the words 0.30% on application 0.30% on withdrawal in the row titled 7 Schroder GlobalActive Value Fund (Hedged) are deleted and replaced with 0.15% on application 0.15% on withdrawal.

Unless the context otherwise requires, capitalised terms in this SPDS have the same meaning as those setout in the PDS.

Any investment in any of the Funds made on the basis of the PDS and this SPDS is an investment in the relevant Fund'sunits. Under the terms of the Constitutions of the Funds, investors in units of a Fund have an interest in all assets of therelevant Fund, which may be used to meet all liabilities arising in respect of that Fund. References to Schroders, our,us, or we throughout the PDS and this SPDS are references to Schroder Investment Management Australia LimitedABN 22 000 443 274 in its capacity as the Responsible Entity and product issuer for the Funds.

References to Schroders Group are to Schroders plc and its subsidiaries.

Neither Schroders, nor any company in the Schroders Group promises that you will earn any return on your investment orthat your investment will gain, or retain its value. No Schroders Group company, other than us, makes any statement orrepresentation in this document. The information contained in the PDS and this SPDS is general information only anddoes not take into account your objectives, financial situation or needs. Before acting on the information contained in thePDS and this SPDS, you should consider the appropriateness of the information in the PDS and this SPDS having regardto your objectives, financial situation and needs.


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Schroder Wholesale Series

Product Disclosure Statement

Dated 1 December 2008


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Schroder Investment Management Australia Limited ABN 22 000 443 274 Australian Financial Services Licence 226473Product Disclosure Statement (PDS)

1 Important notes

2 About Schroders

3 At a glance

4 Fund line up

8 Risks of investing in the Funds

10 Fund descriptions

10 Schroder Wholesale AustralianEquity Fund

11 Schroder Australian SmallerCompanies Fund

12 Schroder Global EmergingMarkets Fund

13 Schroder Asia Pacific Fund

14 Schroder Global SmallerCompanies Fund

15 Schroder Global Active Value Fund

16 Schroder Global Active Value Fund(Hedged)

17 Schroder Geared Global Active

Value Fund (Hedged)18 Schroder Balanced Fund

19 Schroder Fixed Income Fund

20 Schroder Hybrid Securities Fund

21 Schroder Australian EquityIncome Fund

22 Additional Fund information

22 Fees and other costs

29 How to invest in the Funds?

30 Cooling-off period

30 How to withdraw from the Funds?

31 Distributions

32 Taxation issues

32 Keeping you informed

34 Our legal relationship with investors

35 Dealing with complaints

35 Investing through an intermediateinvestment operator

36 Important additional information forNew Zealand investors

37 Privacy

37 Contacting Schroders

38 Terms and conditions of applicationand withdrawal

40 Glossary

41 Important information for new investors

42 Client verification form Financial planner use only

43 AML/CTF verification checklist Individuals, joint individuals,sole traders and companies

45 AML/CTF verification checklist Trusts

47 Application form

Contents


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1

This Product Disclosure Statement (PDS) provides information on the range of Schroder funds (Funds) availablethrough platforms or via direct investment on the application form provided in this PDS.

You should read this PDS in its entirety before making a decision to invest. This PDS describes the main features of the Funds listed in the table here:

Fund ARSN APIR

Beneficiarylodgement

code*

1 Schroder Wholesale Australian Equity Fund 100 857 823 SCH0101AU WAE

2 Schroder Australian Smaller Companies Fund 128 708 476 SCH0036AU ASC

3 Schroder Global Emerging Markets Fund 121 251 410 SCH0034AU GEM

4 Schroder Asia Pacific Fund 092 337 936 SCH0006AU APF

5 Schroder Global Smaller Companies Fund 092 338 102 SCH0008AU GSC

6 Schroder Global Active Value Fund 114 292 009 SCH0030AU GAV

7 Schroder Global Active Value Fund (Hedged) 115 597 272 SCH0032AU GVH

8 Schroder Geared Global Active Value Fund (Hedged) 130 756 571 SCH0037AU GGH

9 Schroder Balanced Fund 092 337 203 SCH0102AU SBF

10 Schroder Fixed Income Fund 089 952 849 SCH0028AU FIF

11 Schroder Hybrid Securities Fund 092 060 172 SCH0103AU HSF

12 Schroder Australian Equity Income Fund 109 927 433 SCH0029AU AEI

* The beneficiary lodgement code must be referenced on any cheque or electronic fund transfer accompanyingan application to invest.

An investment in any of the Funds made on the basis of this PDS is an investment in the relevant Funds units. Under theterms of the Constitutions of the Funds, investors in units of a Fund have an interest in all assets of the relevant Fund, whichmay be used to meet all liabilities arising in respect of that Fund. References to Schroders, our, us or we throughoutthis PDS are references to Schroder Investment Management Australia Limited ABN 22 000 443 274 in its capacity as theResponsible Entity and product issuer for the Funds.References to Schroders Group are to Schroders plc and its subsidiaries.Neither Schroders, nor any company in the Schroders Group promises that you will earn any return on your investment orthat your investment will gain, or retain its value. No Schroders Group company, other than us, makes any statement orrepresentation in this document. The information contained in this PDS is general information only and does not take intoaccount your objectives, financial situation or needs. Before acting on the information contained in this PDS you shouldconsider the appropriateness of the information in this PDS having regard to your objectives, financial situation and needs.Indirect investors, such as those investing through Investor Directed Portfolio Services (IDPS), also known as master fundsor wrap accounts, should read the information contained under the heading Investing through an intermediate investmentoperator on page 35.

The offer of units in the Funds is available to persons receiving a copy, electronic or otherwise, of this PDS within Australiaor New Zealand. New Zealand investors should read the section Important additional information for New Zealand investorson page 36.

All references to dollars are in Australian dollars. Capitalised terms in this PDS are defined terms and they are listed in the Glossarysection on page 40 or defined elsewhere in the PDS. Days are calendar days unless otherwise specified as Business Days.RBC Dexia Investor Services Trust is responsible for the unit registry services of the Funds. RBC Dexia Investor Services

Trust has no supervisory role in relation to the operation of the Funds and has no liability or responsibility to Unitholders forany act done or omission made in accordance with the agreement. RBC Dexia Investor Services Trust was not involvedin preparing, nor takes any responsibility for, this PDS and RBC Dexia Investor Services Trust makes no guarantee of thesuccess of the Funds nor the repayment of capital or any particular rate of capital or income return. RBC Dexia InvestorServices Trust has given its written consent to being named as the unit registry services provider in this PDS.JPMorgan Chase Bank, N.A. has given its written consent to being named as custodian and administrator of the Funds inthis PDS, and has not withdrawn such consent prior to the issue of this PDS. JPMorgan Chase Bank, N.A. otherwise takesno responsibility for the content of this PDS.

This PDS was issued on 1 December 2008.

Schroder InvestmentManagement Australia Limited

ABN 22 000 443 274 Australian Financial ServicesLicence 226473

Important notes


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Schroder InvestmentManagement Australia Limited

ABN 22 000 443 274 Australian Financial ServicesLicence 226473

Schroder Wholesale SeriesProduct Disclosure Statement

2 About Schroders

The Schroders Group is one of the largest andmost internationally diverseindependent investmentmanagers providinginvestment management,research and marketingservices from officeslocated in 28 countries.

About SchrodersSchroders offers a range of investment products and ispart of the Schroders Group which as at 30 September2008 managed investment assets of approximately

A$259 billion worldwide. The Schroders Group is one of the largest and most internationally diverse independentinvestment managers providing investment management,research and marketing services from offices locatedin 28 countries. While many financial institutions try toprovide all things to their clients, we specialise in just one pure investment management.

In Australia, Schroders is a wholly owned subsidiary of Schroders plc, a publicly listed UK company descendingfrom a group that can trace its origins in banking andfinance back almost 200 years. Financial serviceshas been a core business for Schroders in Australiasince 1961 and it now manages A$10 billion as at 30September 2008 across a broad range of asset classes.

Why Schroders?organisational stability from a strong balance sheet, lowlevels of debt and majority family and staff ownershipindependence and exclusive focus on assetmanagement aligns our interests with our clientssize and experience of investment teams both locally

and globallycommitment to in-house researchglobal perspectivedisciplined and robust investment process


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3 At a glance

Choice of Funds

Fund name Schroder Wholesale Australian Equity FundSchroder Australian Smaller Companies FundSchroder Global Emerging Markets FundSchroder Asia Pacific FundSchroder Global Smaller Companies FundSchroder Global Active Value FundSchroder Global Active Value Fund (Hedged)Schroder Geared Global Active Value Fund (Hedged)Schroder Balanced FundSchroder Fixed Income FundSchroder Hybrid Securities FundSchroder Australian Equity Income Fund

Further informationis outlined on pages10 to 21

Minimum 1 amounts per Fund

Initial investment $50,000 Further information isoutlined in the sectionHow to invest in theFunds? on page 29 andHow to withdraw fromthe Funds? on page 30

Additional investment $5,000

Withdrawal amount $5,000

Minimum balance $50,000

Fees and other costs

Fees when your moneymoves in or out of the Fund

Nil Further information isoutlined in the sectionFees and other costson page 22Management costs

2 0.50% p.a. to 1.96% p.a. (depending on theFund) plus a performance fee of 20.5% of theoutperformance of the Fund in the case of theSchroder Australian Smaller Companies Fund

Transaction costs(buy/sell spread)

0% to 0.6% per transaction (varies by Fund)

Reporting and contact details

Reporting Confirmation of application/redemption, periodictransaction statements, distribution summary,annual tax statement, fund and financial reports

Further information isoutlined in the sectionKeeping you informedon page 32

Application andredemptions

Mail: Schroders c/- RBC Dexia InvestorServicesGPO Box 3332Melbourne VIC 3001

Fax: +61 2 8262 5460

Contact details www.schroders.com.auLevel 20, 123 Pitt Street Sydney NSW 2000 Australia

Telephone: Client Services: 1300 136 471+61 2 9210 9421 from outside Australia(times 9am-5pm EST)

Fax: +61 2 9231 1137Email: [email protected]

Further information isoutlined in the sectionContacting Schroderson page 37

1

Minimum: Schroders has the discretion to waive these minimums.2 Management costs: This represents the management fee, administration fee and performance fee, if any, charged bySchroders and is inclusive of GST less any RITC entitlement, where applicable. See Fees and other costs section of thisPDS for further details.


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Fund line up

1 2 3

Schroder Wholesale AustralianEquity Fund

Schroder Australian SmallerCompanies Fund

Schroder Global EmergingMarkets Fund

ARSN 100 857 823 128 708 476 121 251 410

APIR SCH0101AU SCH0036AU SCH0034AU

Fund objective 1 To outperform the S&P/ASX 200 Accumulation Index over themedium to long term.

To outperform the S&P/ASX SmallOrdinaries Accumulation Indexover the medium to long term,by investing in a broad range of smaller companies from Australiaand New Zealand.

To outperform the MSCIEmerging Markets Indexover rolling 3-year periods.

Inception date 1 July 2002 14 December 2007 25 October 2006

Investment category Equities Equities Equities

Management style 2 Active Active Active

Management costs 3 0.92% p.a. 1.10% p.a. plus performance fee of 20.5% of net outperformance

1.40% p.a.

Buy/sell spread 4 0.30% on application and 0.30%on redemption

0.30% on application and 0.30%on redemption

Nil

Distributionfrequency

Normally twice yearly. Calculated onthe last business day of June andDecember


Normally yearly, calculated on thelast business day of June

Key risks(see pg 8 forexplanation ofthese risks)

Market riskEquities riskInternational investments riskCurrency riskCompany riskDerivatives risk

Market riskEquities riskInternational investments riskCurrency riskCompany riskDerivatives risk

Market riskEquities riskInternational investments riskCurrency riskCompany riskDerivatives riskEmerging markets risk

Further information on the investment objective, strategy and benefits of each Fund are outlined in the Fund descriptions section frompages 10 to 21.Active: This means that the investment adviser of the Fund regularly makes decisions about buying and selling investments of the Fund.Management Costs: This represents the management fee, administration fee and performance fee, if any, charged by Schroders andis inclusive of Goods and Services Tax (GST) less any Reduced Input Tax Credit (RITC) entitlement, where applicable. Schroders maycharge abnormal expense recoveries in addition to management costs, which covers abnormal expenses such as the cost of unitholdermeetings. See Fees and other costs section on page 22 of this PDS for further details. Schroders may rebate or reduce the managementfee at its discretion.This is the buy/sell spread incurred. See Fees and other costs section on page 22 of this PDS for further details.


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6 7 8 9

Schroder Global Active ValueFund (Hedged)

Schroder Geared Global Active Value Fund (Hedged)

Schroder Balanced Fund

ARSN 115 597 272 130 756 571 092 337 203

APIR SCH0032AU SCH0037AU SCH0102AU

Fund objective 1 To obtain exposure to globalequities through investment inan underlying active diversifiedportfolio of equity and equity relatedsecurities of companies worldwideex Australia.Currency hedges seek to minimisethe impact of currency movementson performance.

To magnify long term returns fromcapital growth by borrowing toinvest in the Schroder Global Active

Value Fund (Hedged).

To deliver returns after fees andexpenses of 5% p.a. above inflationover the medium to long term.

Inception date 1 September 2005 1 July 2008 23 August 2002

Investment category Equities Geared equities Balanced

Management style 2 Active Active Active

Management costs 3 0.98% p.a. 0.98% (g) 5 /1.96% (n) 6 0.90% p.a.

Buy/sell spread 4 0.30% on application and 0.30%on redemption



Distributionfrequency


Normally yearly. Calculated on thelast business day of June

Normally twice yearly. Calculatedon the last business day of Juneand December

Key risks(see pg 8 forexplanation ofthese risks)

Market riskEquities riskInternational investments riskCurrency riskCompany risk

Derivatives riskEmerging markets risk

Market riskEquities riskInternational investments riskCurrency riskCompany risk

Derivatives riskEmerging markets riskGearing risk

Market riskEquities riskFixed interest and debt securities riskInternational investments riskCurrency risk

Company riskDerivatives riskLiquidity riskEmerging markets risk

Further information on the investment objective, strategy and benefits of each Fund are outlined in the Fund descriptions section frompages 10 to 21.Active: This means that the investment adviser of the Fund regularly makes decisions about buying and selling investments of the Fund.Management Costs: This represents the management fee, and administration fee and performance fee, if any charged by Schroders andis inclusive of Goods and Services Tax (GST) less any Reduced Input Tax Credit (RITC) entitlement, where applicable. Schroders maycharge abnormal expense recoveries in addition to management costs, which covers abnormal expenses such as the cost of unitholdermeetings. See Fees and other costs section on page 22 of this PDS for further details. Schroders may rebate or reduce the managementfee at its discretion.This is the buy/sell spread incurred. See Fees and other costs section on page 22 of this PDS for further details.

(g) expressed as a percentage of gross assets (which includes borrowings)(n) expressed as a percentage of net assets (which excludes borrowings) assuming borrowings represent 50% of gross assets.


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710 11 12

Schroder Fixed Income Fund Schroder Hybrid Securities Fund Schroder Australian EquityIncome Fund

089 952 849 092 060 172 109 927 433

SCH0028AU SCH0103AU SCH0029AU

To obtain exposure to a diversifiedrange of domestic and internationalfixed income securities with theprincipal aim of outperforming theUBS Composite Bond Index over themedium term.

To outperform the RBA CashRate and deliver income throughinvestment in hybrid and debtsecurities with a focus on preservinginvestor capital.

To provide investors with high levelsof income by accessing the dividendstream from companies whilereducing exposure to the overallequity market, thereby reducingcapital volatility.

25 February 2004 23 August 2002 14 September 2004

Income Income Income

Active Active Active

0.50% p.a. 0.75% p.a. 0.86% p.a.

0.05% on application and 0.05% onredemption



Normally quarterly. Calculated on thelast business day of March, June,September and December



Market riskFixed interest and debt securities riskInternational investments riskCurrency riskCompany risk

Derivatives riskLiquidity riskEmerging markets risk

Market riskFixed interest and debt securities riskInternational investments riskCurrency riskCompany risk

Derivatives riskLiquidity riskEmerging markets risk

Market riskEquities riskCompany riskDerivatives risk


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It is important to understand the risks associated withinvesting in the Funds. The nature of investment marketsis such that the return on investment markets, as well asindividual investments, can vary significantly and futurereturns are unpredictable. In the event that any of therisks described on the following pages eventuate thenthey may impact upon the value of a Funds assets andhence unit price and the extent to which a Fund is ableto make distributions. Different types of investmentsperform differently at different times and have different

risk characteristics and volatility. The risks and therefore return on investments will beinfluenced by factors, including many outside the controlof Schroders, such as domestic and internationalmarkets, economic conditions, political climates, interestrates and inflation. The higher the concentration of each Fund to the below risk factors, e.g. a Fund witha significant exposure to emerging markets orsub-investment grade debt, the greater the impact onthe Fund value if a particular risk event were to occur.

What are the significant risks whichmay apply to a Fund?

The significant risks that may affect the performance orvalue of your investment vary by Fund and include:

Equities riskOver the long term, equities have generally outperformedother asset classes, however returns can be volatile.Equity performance will generally be based on, amongstother things, the underlying strength of the cash flows,balance sheet and management of a company. Alsoaffecting the performance of equity markets are changesin global economic conditions (e.g. growth and inflation),interest rates and bond yields.

Fixed interest and debt securities risk The performance of fixed interest and debt securities willbe sensitive to movements in domestic and internationalinterest rates (e.g. increase in interest rates results inthe capital value of fixed interest investments falling) andthe ability of the counterparty to meet its obligations topay interest and principal when due. Investments withlonger terms and fixed coupon payments are more likelyto be affected by interest rate changes than shorter terminvestments or floating rate securities while investmentsin securities with a lower credit rating have a higherrisk that the counterparty will be unable to meet theirobligations when due.

International investments riskInternational investments will give exposure to different(or potentially greater) risks that are not typicallyassociated with investments in Australia. Internationalinvestments may be more affected by political andeconomic uncertainties, lower regulatory supervision,movements in foreign currency and interest rates, andmore volatile, less liquid markets.

Specific risks associated with international investmentsinclude but are not limited to movements in exchangerates and the imposition or tightening of exchangecontrols or other limitations on repatriation of foreigncapital and changes in the relative values of thecurrencies in which the Funds assets are denominated.

Emerging markets riskRisks associated with investments in Emerging Marketsinclude, but are not limited to, significantly greater pricevolatility than in developed markets; substantially lessliquidity and significantly smaller market capitalisationof securities markets; more government intervention inthe economy; higher rates of inflation; less governmentsupervision and regulation of securities markets andparticipants in those markets and a higher degree of political uncertainty.

Currency riskUnits in each of the Funds are denominated in Australiandollars. However, investments in the underlying securitiesmay be denominated in other currencies. Movements inthe exchange rate between the Australian dollar and othercurrencies may cause the value of these investments tofluctuate when expressed in Australian dollars.

Company risk An investment such as a share or corporate bond in anycompany is exposed to changes within that company,

or to its business environment. These events includechanges to operations and/or management, changes toproduct distribution, legal action against the companyor profit and loss announcements. These changes mayaffect the value of the shares or fixed interest securities(and thus the value of a Funds investments).

In addition, there is a risk that if the company becomesinsolvent, then shareholders rights of recovery againstthe assets of the company may rank lower than thesecured creditors of the company.

Derivatives riskDerivatives are contracts between two parties that usuallyderive their value from the price of an underlying physicalasset or market index. They can be used to manage

Risks of investing in the Funds


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certain risks in funds, however they can expose a fundto additional risks. These risks include the possibility thatthe derivative position is difficult or costly to reverse; thatthe value of the derivative does not move in line with theunderlying physical position; or that the parties do notperform their obligations under the contract.

Liquidity riskFixed interest and debt securities generally have lessliquidity than exchange traded equity products. The level

of liquidity will fluctuate, and at times of lower liquidity thesecurities may trade at a discount to fair value, reducingthe net asset value of the Fund if securities need to besold to fund redemptions.

Gearing riskGearing magnifies both gains and losses from theFunds investments, and investors will face largerfluctuations in the value of their investments comparedwith a comparable ungeared fund. A geared fund willunderperform a comparable ungeared fund when thecost of borrowing exceeds the return on the ungearedinvestment. In extreme market conditions, such as a rapidfall of over 50% in the value of the Funds investments,you may lose a substantial part or all of your investment.

Other general risks which applyto all FundsOther general risks which apply to all Funds are as follows:

Market riskMarket risk is the possibility that the market has negativereturns over short or even extended periods. Differentasset classes are exposed to different levels of marketrisks for instance, cash investments have the lowestmarket risk whereas equities have higher market risks.

The returns of individual securities in any asset sectorwould normally be determined by a combination of themarket return and returns specific to each security.

Market risk also relates to the risk that the valueof investments can be directly or indirectly affectedby changes in legislation, economic policy, politicalevents and infrastructure change. These factors canaffect both Australian and international markets and,in particular, Emerging Markets.

Fund risk The following risks are inherent in any managed fund:

The investment team may change, which may affect aFunds future performance.

Investing in a Fund may result in a different outcometo investing directly because of the application of taxlaws to the Fund, income or capital gains accrued ina Fund, the calculation of any performance fees andthe impact of investments into and withdrawals out of a Fund by other investors.

The costs of your investment may increase throughan increase in fees and costs. If this occurs, we willprovide at least 30 days prior written notice of anychanges (see Changing the fees in the Fees andother costs section of the PDS).

A Fund may be terminated.Investing in a Fund with a smaller number of investments may lead to more volatile returns thaninvesting in a Fund with a more diversified portfolio.

As stated above, as a result of these risks, the valueof an investment in a Fund and the level of distributionsmay change.

How Schroders seeks tomanage risksSchroders will seek to minimise risk throughdiversification of markets in which a Funds assets areheld and may undertake currency strategies such ashedging exposure against various currencies to limit theimpact of adverse exchange rate movements. Derivativesmay also be used for purposes such as hedging andfor the more efficient and cost effective implementationof investment strategies. Where derivatives are used,Schroders will ensure that, at all times, there aresufficient liquid funds to discharge its liabilities in relationto these investments. Schroders does not intend toleverage any of the Funds through the use of derivatives.Further information about derivatives and how Schroders

uses derivatives can be found in the current SchrodersDerivative Risk Statement, which can be provided atyour request or obtained from the Schroders websitewww.schroders.com.au.

How investors can manageinvestment riskInvestors should consider their investment objectives,timeframe and risk tolerance before investing in aFund. We recommend that investors obtain appropriateprofessional advice with regard to their individualcircumstances prior to investing in a Fund.


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Fund descriptions

1Schroder Wholesale Australian Equity Fund

Investment objective

To outperform the S&P/ASX 200 Accumulation Indexover the medium to long term.

The Fund offers investors access to a professionallymanaged portfolio of predominantly Australian securities.

Key featuresFocus on quality stocks companies with asustainable competitive advantage are typicallyrewarded with superior returns in the long term.Team structure and experience Schroders

Australian equities team is well resourced and highlyexperienced with 13 investment professionals havingan average of over 11 years experience.*Schroders global network over 400 investmentprofessionals in 28 countries* providing globalresearch capabilities which are vital when it comesto effective analysis of Australian equity investmentsin a globalising world.

* As at 30 September 2008.

RisksPlease refer to the Fund line up table on page 4 for alisting of risks applicable to this Fund and further detailsin the section titled Risks of investing in the Funds onpage 8.

Investment philosophy and process The core of Schroders investment philosophy is thatcorporate value creation, or the ability to generatereturns on capital higher than the cost of capital, leads tosustainable share price outperformance in the long term.

The ability to generate superior returns is a function of industry dynamics and company competitive advantage.

The investment process is a combination of qualitativeindustry and company competitive position analysis andquantitative financial forecasts and valuations as follows:

Step 1: Stock filtering and coverageWe expect to maintain direct coverage of all stocks withinthe S&P/ASX 200 Index, as well as a significant numberof stocks not included in this index.

Step 2: Financial modellingCompanies are subject to detailed analysis usinga standardised proprietary company financial model.

The model consists of a detailed profit & loss statement,cash flow statement, balance sheet and forecastassumptions. Analysts also have the flexibility to addadditional information they believe pertinent to anycompany. External meetings form an important part of the company assessment.

Step 3: Industry and business quality assessment An assessment of current and future key industry drivers,the level of industry returns and company specificreasons for relative success within an industryis quantified into financial forecasts of sustainablemargins and returns.

Step 4: Detailed company valuationCompanies within the investment universe are subjectto a standardised sum of the parts and/or discountedcash flow (DCF) valuation methodology where financialstatements are forecast forward three years to reacha mid-cycle or sustainable level of earnings, margins

and returns. This determination of the mid-cycle orsustainable level is a function of the industry andbusiness quality assessment.

Step 5: Business and financial risk assessmentWe assess the sensitivity of a companys cash flow to keymacro factors such as interest rates together with theimpact of financial leverage and capture this information inour database. We believe that these factors are a key riskconsideration when constructing a portfolio as opposedto only looking at returns based volatility measures(i.e. tracking error).

Step 6: Portfolio constructionPortfolio construction aims to maximise expectedreturns, whilst maintaining diversification and skewingthe portfolio to high quality companies. Analysts takean active role in the consideration of portfolio inclusions,exclusions and relative weights with final positions theresponsibility of the Portfolio Construction Committee.

Details about the latest performance and asset allocationfor this Fund are available on www.schroders.com.au

Stock filteringand coverage

Financialmodelling

Business andfinancial riskassessment

Portfolioconstruction

Detailed companyvaluation

Industry andbusiness qualityassessment


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Fund descriptions

2Schroder Australian Smaller Companies Fund


To outperform the S&P/ASX Small Ordinaries Accumulation Index over the medium to long term,by investing in a broad range of smaller companiesfrom Australia and New Zealand.

Key featuresExperienced team Schroders Australian equitiesteam has invested in smaller companies for manyyears and is supported within a highly resourcedglobal asset management group with over 30 yearshistory of investing in smaller companies worldwide.Potential for higher growth smaller companies oftenhave higher prospects for growth relative to largecompanies, either due to the fact they are in the earlystages of development or because they provide newservices or technologies.

Active management smaller companies aregenerally under-researched, making it possible toobtain an information advantage through in-depth,fundamentally driven research.


Investment philosophy and process The core of Schroders investment philosophy is thatcorporate value creation, or the ability to generatereturns on capital higher than the cost of capital, leads to

sustainable share price outperformance in the long term. The ability to generate superior returns is a function of industry dynamics and company competitive advantage.

The investment process is a combination of qualitativeindustry and company competitive position analysis andquantitative financial forecasts and valuations as follows:

Step 1: Stock filtering and coverageWe expect to maintain direct coverage of all stockswithin the S&P/ASX Small Ordinaries Index, as well as asignificant number of stocks not included in this index.

Step 2: Financial modellingCompanies are subject to detailed analysis using astandardised proprietary company financial model.

The model consists of a detailed profit & loss statement,cash flow statement, balance sheet and forecastassumptions. Analysts also have the flexibility to addadditional information they believe pertinent to anycompany. External meetings form an important part of the company assessment.

Step 3: Industry and business quality assessment An assessment of current and future key industrydrivers, the level of industry returns and companyspecific reasons for relative success within an industry isquantified into financial forecasts of sustainable marginsand returns.

Step 4: Detailed company valuationCompanies within the investment universe are subjectto a standardised sum of the parts and/or discountedcash flow (DCF) valuation methodology where financialstatements are forecast forward three years to reacha mid-cycle or sustainable level of earnings, margins

and returns. This determination of the mid-cycle orsustainable level is a function of the industry andbusiness quality assessment.

Step 5: Business and financial risk assessmentWe assess the sensitivity of a companys cash flowto key macro factors such as interest rates togetherwith the impact of financial leverage and capture thisinformation in our database. We believe that thesefactors are a key risk consideration when constructinga portfolio as opposed to only looking at returns basedvolatility measures (i.e. tracking error).

Step 6: Portfolio constructionPortfolio construction aims to maximise expectedreturns, whilst maintaining diversification and skewingthe portfolio to high quality companies. Analysts takean active role in the consideration of portfolio inclusions,exclusions and relative weights with final positions theresponsibility of the Portfolio Construction Committee.


Stock filteringand coverage

Financialmodelling

Business andfinancial riskassessment

Portfolioconstruction

Detailed companyvaluation

Industry andbusiness qualityassessment


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Fund descriptions

3Schroder Global Emerging Markets Fund


To outperform the MSCI Emerging Markets Index overrolling 3 year periods.

Key features

Opportunities in developing countries around theworld , which are typically characterised by a strongergrowth potential than mature economies, offeringthe opportunity for premium returns but with higherrisk attached.

Diversification advantages within a broadinvestment portfolio.

Experienced team consisting of 32 investmentprofessionals with an average of 13 years of investment experience.*Disciplined process targeting added value equallyfrom country allocation and stock selection with activerisk management throughout the process.

Strong proprietary stock research databasewhich provides our investment professionals withinstant access by intranet to both internal andexternal research.

* As at September 2008


Investment philosophy and processWe believe that emerging stock markets are inefficient andprovide strong potential for adding value through activefund management. This value can be extracted throughboth country and stock selection. We believe that it isinappropriate to apply a systematic style bias across somany countries at such different stages of development.However, given our strong analytical resources wewould expect to generally have a bias towards mediumcapitalisation stocks which should provide extra returnpotential. We believe that as fund managers we shouldmanage both return and risk. Our aim is to achievereturns with the minimum level of risk through a pro-activeapproach to risk control. We believe that applying asystematic, disciplined approach, with a strong teamculture increases our ability to add value.

Schroders has a balanced approach to investing inEmerging Market equities. We use a mix of top downanalysis and bottom up stock selection and look toderive 50% of our added value from country allocationand 50% from stock selection.

Our investment process begins with the gathering andanalysis of information on both countries and stocks,which is then used to decide allocations for the portfolio.Country allocation is driven by our proprietary quantitativemodel, to which the team applies judgmental overlay ina controlled manner. Fundamental research from ourteam of 22 locally-based analysts * forms the basis of thestock selection process and portfolios are constructedby our three global Emerging Market fund managersfocusing on their highest conviction ideas. We believethat risk management is important in Emerging Marketsand have active risk control processes in place at theportfolio construction stage, a sophisticated proprietaryrisk system and a comprehensive set of portfolio reviews.


Country analysis Quantitative model

with judgemental overlay

Stock analysis Fundamental

Country allocation (50%)

Stock selection (50%)

Client portfolioimplementation

Portfolio executionand monitoringModel portfolio

Risk management and implementationPortfolio constructionInputs


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Fund descriptions

4Schroder Asia Pacific Fund


To outperform the MSCI AC Asia ex-Japan Index overthe medium to long term.

Key features

Strong regional investment presence recognisingthat diverse cultural and language barriers exist inthe region and require a strong local presence toenable successful investing.Highly experienced professional investment team with an average of 12 years industry experience.*

Investing in quality businesses with robust businessmodels, good corporate governance and strongmanagement teams to drive shareholder returns.

* As at September 2008


Investment philosophy and processSchroders believes that equity markets are not fullyefficient and that these inefficiencies are particularlyexploitable in the Asian region because of:

Insufficient research coverage of Asian companiesInconsistencies in accounting standardsand regulationInsufficient understanding of market fundamentalsCapital flow restrictions

Our investment teams exploit market inefficienciesthrough the application of extensive, rigorous andproprietary research aimed at identifying mispricedopportunities.

The investment process is summarised as follows:

Screen stock universeStock selection begins with the application of quantitativeand qualitative screens to the entire stock universeto filter out stocks that are clearly inadmissible to theportfolio by virtue of liquidity, size constraints, weakbusiness models or lack of corporate transparency.

Shareholder return classificationBottom up stock research involves the classification

of our universe of investable stocks into one of fourcategories, which attempt to define the growth prospectsof the company.

Valuation and stock grading After determining a fair value for each stock, analystsgrade their stocks from 1 to 4 in their sector of coveragewith a 1 grade reflecting a strong belief that the stockwill outperform and a 4 grade a strong conviction thatthe stock will underperform.

Stock selection A specialist portfolio management team selects the

best stock candidates to outperform the investmentbenchmark, primarily relying on internal research inputsand stock gradings from analysts.

Sector and country overlay A risk control overlay in the final stage of portfolioconstruction considers top down macroeconomic,industry and political risk factors that may not have beenexplicitly taken into account during bottom-up analysis.

Model portfolioRisk is monitored and actively managed with the use of Schroders proprietary risk analysis and reporting tool

Portfolio Risk and Investment Strategy Manager.Details about the latest performance and asset allocationfor this Fund are available on www.schroders.com.au

Screen stockuniverse

Valuation andstock grading

Sector andcountry overlayStock selection Model portfolio

Shareholderreturnclassification


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14

Fund descriptions

5Schroder Global Smaller Companies Fund


To outperform the S&P Developed SmallCap WorldIndex (ex Australia) over the medium to long term.

Key features

Large team of dedicated smaller companies analysts located regionally around the world combined withan experienced portfolio management team.Robust investment process and risk managementframework.

Access to the global smaller companies markets whichare difficult for individual investors to access directly.Financial strength of the Schroders Group , with over30 years history of investing in smaller companiesworldwide.

Risks

Please refer to the Fund line up table on page 4 for alisting of risks applicable to this Fund and further detailsin the section titled Risks of investing in the Funds onpage 8.

Investment philosophy and process At the heart of the investment philosophy for the Fundis a belief that the identification of mispriced companiesexhibiting superior characteristics of visible growth andsustainable returns is the key driver of excess returns. Italso stems from the Schroders Groups belief that smallercompanies remain generically under researched, and thatwe can gain an information advantage through rigorousresearch consistently applied within a philosophicalframework which is long term, fundamentally driven andresearch based. Stock selection is at the core of theglobal smaller companies process, and the bulk of theresource and effort is devoted to it. This approach flowslogically from this philosophical belief.

The investment process can be summarised in thefollowing general stages:

Company visit programDirect contact with investee companies is a vital elementin the in-house research conducted by the globalsmallcap team. Over 2000 such research meetings areheld each year, from which a closely researched universeof some 800 companies is derived. It is from this closelyresearched universe that the portfolio is constructed.

Earnings model

Companies are included in the closely researcheduniverse based on a thorough assessment of thefundamental prospects of their business model.

The process seeks to identify high quality companiesoffering above average and relatively visible earningsgrowth (i.e. a business model which is not overlyreliant on an economic or business cycle over whichmanagement have relatively little control).

Team discussions The regional smaller companies portfolio managers areresponsible for stock selection within each regional bloc(United States, Pan-Europe, Japan and Asia ex Japan)for which they have day-to-day discretion. The regionalmanagers are closely integrated with their respectiveresearch teams.

Valuation screensIn addition to a thorough understanding of a companysbusiness prospects and key drivers, an explicit outputof the research is a fair value target for closely followedstocks, reflecting the aim to identify undervaluedopportunities. Fair values are derived from metrics thatexplicitly incorporate the research assessment of thelonger term outlook for potential investments.

Portfolio holding The portfolio managers make their day-to-day stockdecisions within a regional framework agreed by theGlobal Smaller Companies Investment Committee.

The end result of this stock selection process is amoderately well diversified Fund typically holding morethan 250 stocks.


Company visit program Earnings model Team discussions Valuation screens Portfolio holding


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15

Fund descriptions

6Schroder Global Active Value Fund


To obtain exposure to global equities throughinvestment in an underlying active diversified portfolioof equity and equity related securities of companiesworldwide ex Australia.

Key featuresTruly global investing exploiting opportunities fromthe widest possible universe.Value oriented style focusing on companies whoseshares appear underpriced.

Unconstrained approach investing on the basisof fundamentals with minimal constraints acrosscompanies of all sizes.

Focus on risk management employingbroad diversification to reduce risk withoutcompromising return.


Investment philosophy and processWe believe that behavioural biases in investing, togetherwith market imposed constraints such as the use of capitalisation weighted benchmarks can be exploited tothe advantage of investors. Capturing Value opportunitieswithin the widest possible universe helps exploit thesebiases and generates superior returns over time.

Value opportunities are best captured by an index-unconstrained, highly diversified portfolio of global stockswhich is actively managed. The Global Active Valueinvestment process is robust and repeatable. It can besummarised in 4 steps:

Step 1: Look broadlySchroders review opportunities from the widest possibleinvestment universe available. Over 15,000 stocks acrossmore than 40 countries are evaluated daily.

Step 2: Filter for attractively priced stocksSchroders recognise that a Value oriented style is ahigh returning long term investment strategy. The stocksin the investment universe are ranked by considering

fundamental Value criteria using Schroders proprietaryGlobal Value Rank. We typically invest in stocks fromthe top third of our Global Value Rank.

Step 3: Stock selection To determine how much of a stock to buy a quantitativeassessment is made of the probability of the stockoutperforming its peer group and higher allocations aremade to those stocks with superior fundamentals. Eachstocks liquidity is also assessed and the portfolio holdsa maximum of 0.5% in any one stock at the time of investment in order to ensure a highly diversified por tfolio.

Step 4: Portfolio construction and risk control The portfolio is diversified across hundreds of stocks. Although the Fund is globally unconstrained we applyrisk management techniques to ensure that the portfoliodoes not become skewed to stocks that behave similarlyto each other. It is diversified across stocks, industries,countries and Value themes.

Currency exposure remains unhedged in the SchroderGlobal Active Value Fund.


Look broadlyInvestment universe

Over 40 CountriesOver 15,000 stocks

Portfolio constructionand risk control

Diversify broadly

Filter for attractivelypriced stocks

Focus on top thirdof global value rank

Stock selectionNon-cap weighted

Probability of outperformance


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16

Fund descriptions

7Schroder Global Active Value Fund (Hedged)


To obtain exposure to global equities throughinvestment in an underlying active diversified portfolioof equity and equity related securities of companiesworldwide ex Australia.

Currency volatility arising from the investments of theunderlying portfolio are minimised through currency

hedges which seek to reduce the impact of currencymovements on the performance of the Fund.

Key featuresTruly global investing exploiting opportunities fromthe widest possible universe.

Value oriented style focusing on companies whoseshares appear underpriced.Unconstrained approach investing on the basisof fundamentals with minimal constraints acrosscompanies of all sizes.

Focus on risk management employingbroad diversification to reduce risk withoutcompromising return.Currency hedging intended to minimise the impactof currency movements on returns.


Investment philosophy and processWe believe that behavioural biases in investing, togetherwith market imposed constraints such as the use of capitalisation weighted benchmarks can be exploited tothe advantage of investors. Capturing Value opportunitieswithin the widest possible universe helps exploit thesebiases and generates superior returns over time.

Value opportunities are best captured by an indexunconstrained, highly diversified portfolio of global stockswhich is actively managed. The Global Active Valueinvestment process is robust and repeatable. It can besummarised in 4 steps:


Step 2: Filter for attractively priced stocksSchroders recognise that a Value oriented style is ahigh returning long term investment strategy. The stocksin the investment universe are ranked by consideringfundamental Value criteria using Schroders proprietaryGlobal Value Rank. We typically invest in stocks fromthe top third of our Global Value Rank.


Step 4: Portfolio construction and risk control

The portfolio is diversified across hundreds of stocks. Although the Fund is globally unconstrained we applyrisk management techniques to ensure that the portfoliodoes not become skewed to stocks that behave similarlyto each other. It is diversified across stocks, industries,countries and Value themes.

Finally, foreign currency exposure is minimised byhedging a significant portion of this exposure back to

Australian dollars. This reduces the impact of movementsin the Australian dollar on the Funds returns.





Diversify broadly






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17

Fund descriptions

8Investment objective

To magnify long term returns from capital growth byborrowing to invest in the Schroder Global Active

Value Fund (Hedged) (Underlying Fund) which hasexposure to an actively managed broadly diversifiedportfolio of equity and equity related securities of companies worldwide ex Australia. Currency hedgesin the Underlying Fund seek to minimise the impact of

currency movements on performance.

Key featuresTruly global investing exploiting opportunities fromthe widest possible universe.

Value oriented style focusing on companies whoseshares appear underpriced.Unconstrained approach investing on the basisof fundamentals with minimal constraints acrosscompanies of all sizes.Focus on risk management employing

broad diversification to reduce risk withoutcompromising return.Currency hedging intended to minimise the impactof currency movements on returns.Internal gearing within the Fund borrowing atinstitutional rates with no margin calls for investors,and no need to apply for a loan or to offer security.

RisksGearing risk is a significant risk with the SchroderGeared Global Active Value Fund (Hedged). Please referto the Fund line up table on page 6 for a listing of risksapplicable to this Fund and further details in the sectiontitled Risks of investing in the Funds on page 8.Investors should also note that redemptions may besuspended for a period if the gearing levels exceed 70%of gross assets until such time that gearing levels arebrought back below those levels.

Investment philosophy and process The Fund gains exposure to global equities by investingin the Underlying Fund. This exposure is geared byborrowing from major Australian trading banks or foreign

equivalents or from Schroders Group on an arms lengthbasis in order to increase the Funds investment in theUnderlying Fund.

The investment philosophy of the Underlying Fund isbased on our belief that behavioural biases in investing,together with market imposed constraints such as theuse of capitalisation weighted benchmarks can beexploited to the advantage of investors. Capturing Valueopportunities within the widest possible universe helpsexploit these biases and generates superior returnsover time. These opportunities are best captured byan index unconstrained, highly diversified portfolio of global stocks which is actively managed. The investmentprocess of the Underlying Fund is robust and repeatable.It can be summarised in 4 steps:


Step 2: Filter for attractively priced stocksSchroders recognise that a Value oriented style is ahigh returning long term investment strategy. The stocksin the investment universe are ranked by considering

fundamental Value criteria using Schroders proprietaryGlobal Value Rank. We typically invest in stocks fromthe top third of our Global Value Rank.


Step 4: Portfolio construction and risk control The portfolio is diversified across hundreds of stocks. Although the Underlying Fund is globally unconstrainedwe apply risk management techniques to ensure that theportfolio does not become skewed to stocks that behavesimilarly to each other. It is diversified across stocks,industries, countries and Value themes.

Finally, foreign currency exposure is minimised byhedging a significant portion of this exposure back to

Australian dollars. This reduces the impact of movementsin the Australian dollar on the Underlying Funds returns.


Schroder Geared Global Active Value Fund (Hedged)




Diversify broadly






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18

Fund descriptions


To deliver returns after fees and expenses of 5% p.a.above inflation (as measured by headline CPI) over themedium to long term.

Key featuresRobust investment process and risk managementframework an emphasis on low volatility of returnoutcomes compared to our peers and an emphasison delivering high risk adjusted returns.Broad spectrum of investment opportunities investing across a broad array of asset classesincluding equity, alternatives and debt to ensure theportfolio is truly diversified in both an economic andasset class sense.Leading edge multi-asset risk management tools designed specifically for multi-asset portfolios to aidin the effective allocation of risk.

Schroders global network Schroders Australianmulti-asset team draws on the resources of Schroders50* strong global multi-asset team as well as otherkey investors within the Schroders Group.

* As at 30 September 2008


Investment philosophy and processOur philosophy is based on the idea that understanding,managing and allocating risk is as important to meetingour investment objectives as is our understanding andallocation of sources of return. While accepting risk isnecessary in order to lift returns over time, investors oftentake more risk than they need to achieve their goals.

A properly constructed balanced fund should be a fundthat will perform well across diverse economic andmarket environments (not just in rising equity markets).

The following diagram summarises the Fundsinvestment process:

Strategic asset allocation (SAA) The SAA of the Fund represents the long term investmentstrategy of the Fund and is driven by the investmentobjectives. We examine the medium term risk and returnobjectives of the Fund against those offered by thedifferent asset classes within the investable universe, witha view to determining the most appropriate strategic assetallocation for the Fund.

Tactical asset allocation (TAA)Having conducted the SAA for the Fund we thenundertake a TAA assessment. Central to the TAA task isa need to identify those assets where, at current pricing,there is a high probability that 6-12 month returns will bematerially different from our medium term expectationwhich might justify an asset allocation away from thestrategic asset allocation. This ensures that we are takingthe right amount of risk at the right times in the cycle.

Security selectionDiffering asset classes have their own unique set of fundamentals, which drive relative performance withinthe asset class. Each asset class is analysed by

specialist analysts and portfolio managers within theSchroders Group to determine appropriate positions tobe taken within the asset class. These views are basedon a rigorous investment process, which is customisedfor each local market, asset class and investment styleto best capture prevailing market conditions. Risk controlis optimised to fit within the aggregate portfolio risk ina way which provides the optimal return for minimal risk.

Portfolio constructionOnce the strategic and tactical asset allocations havebeen established we then manage the overall portfoliowith a view to minimising risks over time.


9Schroder Balanced Fund

Strategic asset allocation Tactical asset allocation Security selection Portfolio construction


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20

Fund descriptions

11Schroder Hybrid Securities Fund


To outperform the RBA Cash Rate and deliver incomethrough investment in hybrid and debt securities witha focus on preserving investor capital.

Key features Absolute return focus with an objective to outperformcash and minimise capital volatility.Well diversified portfolio of hybrid and otherincome securities.

Active investment process that aims to ensure we arein the right assets at the right time.Focus on risk adjusted returns where there needs tobe appropriate reward for risk taken and the flexibilityto be very defensive.Strong domestic and global team , giving investorsaccess to a broader opportunity set and theresources to analyse and monitor credit risk.Product transparency investing predominantly inlisted securities with publicly quoted prices.


Investment philosophy and process A well constructed portfolio should be forward looking,well diversified, and seek to maximise returns throughthe cycle by allocating risk efficiently.

While the primary exposure of the Fund is to Australianhybrids, we believe that the achievement of our broaderinvestment objectives is enhanced by investment acrossa broader opportunity set, with a focus on instrumentsthat have their primary driver of return as income.

The Funds objectives are achieved through accessingthe risk premia across a range of fixed income marketsand alternative strategies and actively managing theexposure between these. This includes the activemanagement of a core holding of hybrid securities and

debt securities issued in Australia. Alternative strategiesmay include Asian bonds, Emerging Market bonds andglobal high yield.

Fundamental to our philosophy is ensuring investorsare being properly rewarded for the risks they are taking.

The risk management process has the flexibility toreduce market exposure when risk premiums are not

justifiably sufficient to reward the investor. Given thebreadth of the opportunity set, it is important to have aninvestment process which allows the manager to activelyrotate across strategies to allow us to be in the rightassets at the right time.

The practical application of our philosophy involvesseparating the investment process into 4 distinctcomponents (or drivers of portfolio return and risk):

Strategic beta selectionUtilising the full spectrum of investment opportunities(within the allowable opportunity set) to find assets thatare relatively uncorrelated to each other and offer anattractive expected return thereby significantly improvingthe risk/return outcome.

Active beta rotation Actively managing the market (beta) exposures to ensurethat we are taking the right amount of risk at the righttimes in the cycle.

Security selectionMaximise return through active management. Once theappropriate market exposures have been determined,significant value can be created in each market throughsecurity selection.

Portfolio constructionImplement investment views and manage overall risk inthe most effective way possible.

We look to build a portfolio that invests across a broadopportunity set to capture diversified sources of riskand return. In particular we believe that stock selection,sector selection, and managing credit exposure presentsignificant opportunities to add value.

By focusing on these 4 key drivers of risk and returnwe can deliver unique investment solutions with the aimto achieve higher absolute returns at lower risk thantraditional income funds.


Strategic beta selection Active beta rotation Security selection Portfolio construction


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21

Fund descriptions

12Schroder Australian Equity Income Fund


To provide investors with high levels of income byaccessing the dividend stream from companieswhile reducing exposure to the overall equity market,thereby reducing capital volatility.

Key featuresHigh levels of income target income levels in excessof cash.Tax effective* franked income stream .

Low correlation to other asset classes includingbonds and equities thus providing excellentdiversification benefits.

* Tax effectiveness will depend upon individualcircumstances

Risks

Please refer to the Fund line up table on page 6 for alisting of risks applicable to this Fund and further detailsin the section titled Risks of investing in the Funds onpage 8.

Investment philosophy and process At the heart of the investment philosophy for the Fund isthat individual stock valuations can be mispriced aroundthe dates that stocks trade ex dividend (ex date).

The Funds investment strategy offers investors a potentialreturn comprising predominantly income by exploitingthe outperformance of stocks prior to their dividend ex

date versus the market. Stocks are purchased in theperiod leading up to their ex date rather than adoptinga buy-and-hold strategy throughout the year. This isachieved without exposing investors to credit risk orsignificant sensitivity to the equity market. The strategyscosts are minimised by utilising the skill and experienceof Schroders equity trading team.

The Fund invests predominantly in Australian andNew Zealand equities but aims to reduce volatility byminimising the overall equity exposure through theuse of derivatives. As the strategy only buys securitiesaround their dividend ex date, the seasonal nature of thedividend payout cycle can sometimes result in sectorexposures in the Fund that differ to that of the futuresindex which is used to hedge the equity exposure.

Schroders aims to control these risks by taking into

consideration the likelihood that the price of a derivativewill move in line with the underlying physical positionsand assesses whether the level of hedging risk isacceptable. In order to minimise the hedging risk, theFund may purchase strategic holdings in non-dividendpaying stocks.

An overview of the investment process is as follows:

Establish the dividend ex dates approximately 60 daysahead and determine entry dates for stock purchases.Determine the maximum weight of the stocks theFund can purchase by analysing their liquidity,attractiveness of their dividends and their weights

in the index.Construct the portfolio using a proprietary processwhich maximises the expected return to the Fundwhilst minimising equity market exposure. An optimalmix of hedging instruments (short futures contractsor other derivative contracts) and strategic holdings inindividual securities is derived at the same time.Positions are liquidated generally within 10 days afterthe relevant ex date.



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22 Additional Fund informationEnvironmental, social and ethical factors and labour standards considerationsSchroders uses an investment approach that considers each investment based on its individual merits. Schrodersdoes not have a predetermined view about labour standards or environmental, social and ethical considerations inrelation to investment decision making. Schroders may however take into account these considerations if Schrodersbecomes aware of them, but only to the extent that they financially affect the investments. The primary focus of Schroders in relation to investments is on economic and financial outcomes.

Fees and other costs The law requires Schroders to draw your attention to the following government consumer advisory warning which

explains the impact of fees and costs on your long term returns from the Funds.

DID YOU KNOW?Small differences in both investment performance and fees and costs can have a substantial impact

on your long term returns.

For example, total annual fees and costs of 2% of your fund balance rather than 1% could reduceyour final return by up to 20% over a 30 year period (for example, reduce it from $100,000 to $80,000).

You should consider whether features such as superior investment performance or the provisionof better member services justify higher fees and costs.

You may be able to negotiate to pay lower contribution fees and management costs where applicable.

Ask the fund or your financial adviser.

TO FIND OUT MOREIf you would like to find out more, or see the impact of the fees based on your own circumstances,the Australian Securities and Investments Commission (ASIC) website (www.fido.asic.gov.au)

has a managed investment fee calculator to help you check out different fee options.

This document shows fees and other costs that you may be charged for each Fund. These fees and costs maybe deducted from your money, from the returns on your investment or from Fund assets as a whole.

Tax details are set out in the Taxation issues section on page 32 of this PDS.

You should read all the information about fees and costs, because it is important to understand their impact

on your investment.


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23 The following fee table applies to all Funds in this PDS. Fees and costs for specific Funds are set out on pages 25 and 27.

Type of fee or cost Amount How and when paid

Fees when your moneymoves in or out of the Fund

Establishment fee The fee to open your investment

Nil Not applicable

Contribution fee The fee on each amount contributed toyour investment

Nil Not applicable

Withdrawal fee The fee on each amount you take out of your investment

Nil Not applicable

Termination fee The fee to close your investment

Nil Not applicable

Management costs

The fees and costs for managing yourinvestment

Management costsof 0.50% to 1.96% p.a.of the Net Asset Value (NAV)depending on the Fund plusperformance fee*, if any.

The amount you pay for specificFunds is shown on pages25 and 27.

The management costscomprise the managementfee, administration fee andperformance fee, if any.Normal expense recoveriesare paid for by Schroders outof its administration fee. Formore information on thesecomponents, see Managementcosts in the Additionalexplanation of fees and costssection of this PDS.

The management costsare accrued daily and aregenerally deducted within10 Business Days of monthend. Management costs arededucted from the NAV of theFund as a whole before unitprices are determined.See page 26 for more detailsrelating to performance fees.

The management costs may benegotiated. See Managementcosts in the Additionalexplanation of fees andcosts section of this PDS forfurther details.

Service feesInvestment switching fee

The fee for changing investment optionsNil Not applicable

* A performance fee applies to the Schroder Australian Smaller Companies Fund.


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24 Example of annual fees and costs This table gives an example of how the fees and costs for the Schroder Global Emerging Markets Fund can affectyour investment over a 1-year period. You should use this table to compare this product with other managedinvestment products.

Example

Balance of $50,000 with acontribution of $ 5,000 duringthe year

Contribution fees Nil For every additional $5,000 youput in, you will be charged $0.

PLUS Management costs 1.40% 1 And, for every $50,000 youhave in the fund you will becharged $700 each year plus

the performance fee (if any).EQUALS Cost of fund If you had an investment of

$50,000 at the beginning of theyear and you put in an additional$5,000 during that year, youwould be charged fees of:

$700 2

What it costs you will dependon the investment optionyou choose and the fees younegotiate with your fund orfinancial adviser.

1 The rate used is for the purposes of this example only, management costs for each Fund may differ. Also note that themanagement costs may be higher having regard to the performance fee, if any.

2 This amount excludes fees for an additional contribution of $5,000 during the year.

Additional explanation of fees and costs

Taxation Tax details are set out in the Taxation issues section on page 32 of this PDS.

GST All fees and costs outlined in this PDS are inclusive of GST less any RITC entitlement where applicable.


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25Management costs The management costs of each Fund as set out in the following table represent the management fee, administrationfee and performance fee, if any, charged by Schroders. Schroders will pay all normal expense recoveries out of theadministration fee, with the exception of any abnormal expense recoveries.

FundManagementfee (p.a.)

Administrationfee (p.a.)

Performancefee (p.a.)

1 Schroder Wholesale Australian Equity Fund 0.87% 0.05% Nil

2 Schroder Australian Smaller Companies Fund 1.03% 0.07% 20.5% of performancenet of managementcosts over the

S&P/ASX SmallOrdinaries AccumulationIndex

3 Schroder Global Emerging Markets Fund 1.18% 0.22% Nil

4 Schroder Asia Pacific Fund 1.18% 0.19% Nil

5 Schroder Global Smaller Companies Fund 1.18% 0.07% Nil

6 Schroder Global Active Value Fund 0.82% 0.16% Nil

7 Schroder Global Active Value Fund (Hedged) 0.82% 0.16% Nil

8 Schroder Geared Global Active Value Fund (Hedged) 0.82% (g) 1 / 1.64% (n) 2

0.16% (g)1 / 0.32% (n) 2

Nil

9 Schroder Balanced Fund 0.82% 0.08% Nil

10 Schroder Fixed Income Fund 0.41% 0.09% Nil

11 Schroder Hybrid Securities Fund 0.70% 0.05% Nil

12 Schroder Australian Equity Income Fund 0.77% 0.09% Nil

1 (g) expressed as a percentage of gross assets (which includes borrowings)2 (n) expressed as a percentage of net assets (which excludes borrowings) assuming borrowings represent 50% of

gross assets

Management costs

Management costs include the management fee, administration fee, abnormal expense recoveries and performancefee (if applicable) as detailed below:

Management fee

This is the fee for Schroders services as Responsible Entity in overseeing the operations of a Fund and/or forproviding access to a Funds underlying investments. Schroders is entitled to a management fee as set out in theabove table calculated on the NAV of the Fund (inclusive of GST and net of RITCs). Schroders may rebate all or partof the management fee to wholesale clients as defined in the Corporations Act on an individually negotiated basis.Schroders can be contacted at the address specified in the Contacting Schroders section of the PDS.


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26 Administration feeSchroders may incur certain expenses while acting as the Responsible Entity of a Fund, such as fund accounting,unit registry, audit costs, postage and preparation of tax returns etc, which it is entitled to recover. Provided that theexpenses are properly incurred, there is no limit on the amount of these expenses that may be recovered by Schrodersfrom the assets of the Fund. However, Schroders has decided to pay any normal expenses out of its administration feeand will only be reimbursed out of the assets of the Fund where such expenses are abnormal expenses.

Abnormal expense recoveries

Schroders may recover abnormal expenses (such as costs of unitholder meetings, changes to constitutions, anddefending or pursuing legal proceedings) from the Funds. Abnormal expenses are not generally incurred during theday-to-day operation of the Funds and are not necessarily incurred in any given year. The management costs set outin the tables headed Fund line up on pages 4 to 7 and the table on page 25 do not include any abnormal expenses.Schroders may, in its sole discretion, decide not to recover these abnormal expenses from the Funds.

Performance fee

Schroders is entitled to recover performance fees from the Schroder Australian Smaller Companies Fund. Theperformance fee is reflected in the daily unit price and paid annually (Payment Date) at a rate of 20.5% (inclusive of GST and net of RITCs) of the outperformance above the performance benchmark, the S&P/ASX Small Ordinaries

Accumulation Index (Index). Full details of how the fee is calculated is set out in the Funds constitution.

Sometimes the calculation of the performance fee will result in a negative dollar amount (negative performancefee). This negative performance fee is offset against any entitlement to future performance fees. We do not have toreimburse a Fund for negative performance fees. Furthermore any negative performance fee will be reduced pro-ratawith the percentage of any net outflow.

For periods of high outperformance, the performance fee may be substantial. We recommend you discuss this withyour financial adviser to understand the impact of the performance fee.

Example of performance fee Balance of $50,000

The Fund has not outperformed the Index since thelast Payment Date.

No performance fee is payable

The Fund outperformed the Index after fees sincethe last Payment Date, but is insufficient to offsetprior periods of negative performance fees.

No performance fee is payable

After allowing for any prior periods of negativeperformance fees, the Fund outperformed theIndex by 2% after management costs since the lastPayment Date.

20.5% x 2% x $50,000 = $205

The performance fee example is provided for illustrative purposes only and does not represent any actual or

prospective performance of the Fund. We do not provide any assurance that the Fund will achieve the performanceused in the example and you should not rely on this in determining whether to invest in the Fund.

Transactional costs

The application price of units may be higher than the withdrawal price of those units. The difference between theapplication and the withdrawal prices represents an allowance for transaction costs such as brokerage, governmenttaxes, duties and levies incurred when acquiring or disposing part or all of a Funds underlying investments. This iscommonly referred to as the buy/sell spread and is an additional cost to you. The buy/sell spread is expressed asa percentage of a Funds unit price. Transactional costs such as bank charges and custody transaction costs whichcan not be reasonably incorporated into the buy/sell spread will be paid out of the assets of the Fund.


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28 What is paid to your adviser?Schroders does not currently pay any commission or other similar payments to financial advisers but does reservethe right to do so at any time in the future.

Dealer groups, IDPS operators and other licensees may receive remuneration from us for offering a Fund on theirinvestment menus or for the provision of services. This remuneration may be up to 0.5% p.a. of funds invested.

These amounts may be rebated or retained by the dealer group, IDPS operator or licensee. If these amounts arepaid, they are paid by us and are not an extra amount paid from a Fund nor are they a further amount you pay.

As a member of the Investment & Financial Services Association, we are required to maintain a register in compliancewith the Industry Code of Practice on Alternative Forms of Remuneration summarising alternative forms of remuneration that are paid or provided to financial advisers. If you would like to review this register, please contactClient Services on 1300 136 471 or +61 2 9210 9421 from outside Australia.

Other fees and chargesOn investing in a Fund, any costs associated with an in specie transfer will be paid by the investor.

Where a withdrawal is satisfied by an in specie transfer, the investor will bear all costs, including any applicable stampduty, payable as a result of the transfer.

Changing the feesSchroders may change the amount of any fees in this PDS (including increase fees up to the maximums set out in theConstitution) without your consent on 30 days advance notice to you. In accordance with the Constitution, Schrodersmay vary the amount of abnormal expense recoveries and the buy/sell spread at any time without your consent or notice.

Schroders may introduce and increase fees at its discretion, including where increased charges are due to Governmentchanges to legislation, increased costs, significant changes to economic conditions and/or the imposition of increasedprocessing charges by third parties.

However, Schroders cannot charge more than the maximum fees permitted under the Constitution as set out below(otherwise we would need members approval to increase the fee maximums in the Constitution).

Management feesIn relation to the Schroder Wholesale Australian Equity Fund, Schroder Global Emerging Markets Fund, Schroder Global

Active Value Fund (Hedged), Schroder Global Active Value Fund, Schroder Australian Equity Income Fund and SchroderHybrid Securities Fund the maximum management fee is 3.08% per annum. In relation to the Schroder Asia Pacific Fund,Schroder Global Smaller Companies Fund, Schroder Balanced Fund and Schroder Fixed Income Fund the maximummanagement fee is 3.59% per annum. For the Schroder Geared Global Active Value Fund (Hedged) the maximummanagement fee is 3.08% per annum of the gross asset value of the Scheme assets. In relation to the Schroder AustralianSmaller Companies Fund the maximum management fee is 5.1% per annum. These amounts, although referred togenerally as management fees, reflect the maximum entitlement to both management and administration fees.

All management fees are calculated on the NAV of the Fund (inclusive of GST and net of RITCs) except whereindicated otherwise.

Performance fees

The Schroder Australian Smaller Companies Fund and the Schroder Geared Global Active Value Fund (Hedged) havemaximum performance fees of 33% of performance net of management costs over the target benchmark. As at thedate of this PDS, the Schroder Geared Global Active Value Fund (Hedged) does not charge a performance fee.

Establishment fee All Schroder Funds have a maximum establishment fee of 5.00% of the application money for units or the market valueof the property or any amount as agreed between the applicant and their adviser and notified to Schroders. This fee isnot subject to GST.

Withdrawal fee All Schroder Funds have a maximum withdrawal fee of 5.00% of the withdrawal price or such other amount as agreedbetween Schroders and the i

schroders funds

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