This Product Highlights Sheet is an important document. It highlights the key terms and risks of this investment product and complements the Prospectus¹. It is important to read the Prospectus before deciding whether to purchase units in the product. If you do not have a copy, please contact us to ask for one. You should not invest in the product if you do not understand it or are not comfortable with the accompanying risks. If you wish to purchase the product, you will need to make an application in the manner set out in the Prospectus. Schroder International Choice Portfolio - Schroder Global High Yield Fund (the Fund ) Prepared on: 14 July 2016 Product Type Unit Trust Launch Date 14 January 2005 Manager Schroder Investment Management (Singapore) Ltd Custodian The Hongkong and Shanghai Banking Corporation Limited Investment Manager of the Underlying Fund Schroder Investment Management North America Inc. Trustee HSBC Institutional Trust Services (Singapore) Limited Capital Guaranteed No Dealing Frequency Every Dealing Day Name of Guarantor Not Applicable Expense Ratio for the year ended 31 December 2015 1.72% WHO IS THE PRODUCT SUITABLE FOR? The Fund is only suitable for investors who: seek capital growth and income; and PRODUCT SUITABILITY understand the risks of investing in bonds issued by governments, government agencies and companies worldwide in various currencies. WHAT ARE YOU INVESTING IN? KEY PRODUCT FEATURES You are investing in a unit trust constituted in Singapore that aims to provide capital growth by investing substantially into the Schroder ISF Global High Yield (the Underlying Fund ), whose investment objective is to provide a return of capital growth and income primarily through investment in a portfolio of bonds and other fixed and floating rate securities denominated in various currencies and issued by governments, government agencies, supra-nationals and corporate issuers worldwide. The Underlying Fund is one of the sub-funds in the Schroder International Selection Fund, SICAV ( Schroder ISF ) an open-ended investment company incorporated in Luxembourg. The Manager intends to make quarterly distributions of at least 1.25% of the NAV per Unit on or around 31st March, 30th June, 30th September and 31st December. Further Information objective and policy in Section 1 of Appendix 4 to the Prospectus for further information on product suitability objective and policy and Distribution Policy in Sections 1 and 4 of Appendix 4 to the Prospectus for further information on features of the product. Investment Strategy The Underlying Fund will be invested in bonds issued by governments, government agencies and companies worldwide in various currencies. A minimum of 70% of the Underlying Fund (excluding cash) will be invested in bonds that have been awarded lower ratings from credit agencies, these bonds are known as sub-investment grade bonds. Although high yield bonds are typically perceived to have higher levels of risk, the additional income they offer over an investment grade bond is intended to compensate for this. The Underlying Fund is dedicated to getting the best out of the high yield universe. The Investment Manager works with their global team of credit experts to evaluate economic, market, sector and other risks in order to determine the bonds that offer the best risk/reward profiles. The Underlying Fund may also invest in other financial instruments and hold cash on deposit. Financial derivative instruments may be used to achieve the investment objective and to reduce risk or manage the Underlying Fund more efficiently. The Underlying Fund may use leverage and take short positions. objective and policy in Section 1 of Appendix 4 to the Prospectus for further information on the investment strategy of the Fund. ¹ The Prospectus is available for collection from Schroder Investment Management (Singapore) Ltd or any of its appointed distributors during usual office hours. 1
Parties Involved WHO ARE YOU INVESTING WITH? The Underlying Fund is a sub-fund of the Schroder ISF. The Manager is Schroder Investment Management (Singapore) Ltd. The Investment Manager is Schroder Investment Management North America Inc. The Trustee is HSBC Institutional Trust Services (Singapore) Limited. The custodian is The Hongkong and Shanghai Banking Corporation Limited. The registrar is the Trustee. Refer to The Managers and Delegated Functions, The Trustee and Custodian and Other Parties at Sections II, III and IV of the Prospectus for further information on the role and responsibilities of these entities. KEY RISKS WHAT ARE THE KEY RISKS OF THIS INVESTMENT? The value of the Fund and its distributions (if any) may rise or fall. These risk factors may cause you to lose some or all of your investment: Refer to Risks, Financial Derivative Instruments, Risk Management Process and Supplementary Information at Section IX of the Prospectus for further information on risks of the product. You are exposed to market risk. Market and Credit Risks The value of investments by the Fund may go up and down due to changing economic, political or market conditions, or due to an issuer s individual situation. You are exposed to credit risk. A decline in the financial health of an issuer could cause the value of its bonds to fall or become worthless. Liquidity Risks There is no secondary market for the Fund. All redemption requests must be made to the Manager or its appointed agents. You are exposed to liquidity risk. In difficult market conditions, the Underlying Fund may not be able to sell a security for full value or at all. This could affect performance and could cause the Underlying Fund to defer or suspend redemptions of its shares. You are exposed to counterparty risk. Product-Specific Risks The counterparty to a derivative or other contractual agreement or synthetic financial product could become unable to honour its commitments to the Underlying Fund, potentially creating a partial or total loss for the Underlying Fund. You are exposed to negative yields risk. When interest rates are very low or negative, the Underlying Fund s yield may be zero or negative, and you may not get back all of your investment. Refer to Distribution Policy in Section 4 of Appendix 4 to the Prospectus for further information. You are exposed to money market & deposit risk. A failure of a deposit institution or an issuer of a money market instrument could create losses. You are exposed to currency risk. The Underlying Fund can be exposed to different currencies. Changes in foreign exchange rates could create losses. You are exposed to high yield debt securities risk. High yield debt securities (normally lower rated or unrated) generally carry greater market, credit and liquidity risk. You are exposed to interest rate risk. A rise in interest rates generally causes bond prices to fall. 2
You are exposed to leverage risk. The Underlying Fund uses derivatives for leverage, which makes it more sensitive to certain market or interest rate movements and may cause above-average volatility and risk of loss. You are exposed to derivatives risk. The Fund and the Underlying Fund may use financial derivatives and the use of futures, options, warrants, forwards, swaps or swap options involves increased risk. The Fund s or Underlying Fund s ability to use such instruments successfully depends on the Manager s or investment manager s ability to accurately predict movements in stock prices, interest rates, currency exchange rates or other economic factors and the availability of liquid markets. If the Manager s or investment manager s predictions are wrong, or if the derivatives do not work as anticipated, the Fund or Underlying Fund could suffer greater losses than if the Fund or Underlying Fund had not used the derivatives. You are exposed to operational risk. In respect of the Underlying Fund, failures at service providers could lead to disruptions of the Underlying Fund s operations or losses. You are exposed to risks relating to distributions. The Manager intends to make quarterly distributions of 1.25% of the NAV per Unit on or around 31st March, 30th June, 30th September and 31st December. The Manager has the absolute discretion to determine whether a distribution is to be declared. The Manager also reserves the right to review and make changes to the distribution policy from time to time. Where the income generated by the Fund is insufficient to pay distributions as declared, the Manager may at its discretion make such distributions out of the capital of the Fund. Distributions out of capital may only be made with the Trustee s consent. You should note that in the circumstances where distributions are paid out of capital of the Fund, the NAV of the Fund will be reduced. Payable by the Fund from invested proceeds Management Fee (per annum) Currently 0% (maximum 1.75%) Trustee Fee (per annum) FEES AND CHARGES WHAT ARE THE FEES AND CHARGES OF THIS INVESTMENT? Payable directly by you You will need to pay the following fees and charges as a percentage of your gross investment sum: Initial Sales Charge Cash Units and SRS Units: Currently up to 5% (maximum 5%) Realisation Charge Currently nil (maximum 4%) Switching Fee Currently 1% (maximum of 1% and minimum of S$5) The Fund will pay the following fees and charges to the Manager and Trustee: Currently not more than 0.05% per annum (currently not subject to any minimum amount) Maximum 0.25% per annum (subject to a minimum of S$10,000 per annum) Refer to Fees and Charges at Section VIII of the Prospectus for further information on the fees and charges of the product. Fees payable at Underlying Fund level Management fee of the Underlying Fund (per annum) Custody fee of the Underlying Fund (per annum) Administration fee of the Underlying Fund (per annum) 1.00% Up to 0.30% Up to 0.20% 3
HOW OFTEN ARE VALUATIONS AVAILABLE? The indicative NAV per unit of the Fund is published on the Manager s website at www.schroders.com. sg one (1) Business Day after the relevant Dealing Day and is also available directly from the Manager. The indicative net asset value per unit of the Fund is also published in The Straits Times and The Business Times on a periodic basis. HOW CAN YOU EXIT FROM THIS INVESTMENT AND WHAT ARE THE RISKS AND COSTS IN DOING SO? You may at any time during the life of the Fund make a request in writing (a Realisation Request ) for the realisation of all or any Units held by you. The Realisation Request must specify the Units in the Fund or (where applicable) Units in the Class of the Fund or amount to be realised. The realisation proceeds are paid to investors within seven (7) Business Days (or such other period as may be prescribed by the Monetary Authority of Singapore) following the receipt of the Realisation Request. Your realisation price is determined as follows: VALUATIONS AND EXITING FROM THIS INVESTMENT - If you submit the Realisation Request on or before 5 pm on a Dealing Day, you will be paid a price based on the NAV of the Fund at the close of that Dealing Day. - If you submit the Realisation Request after 5 pm on a Dealing Day, you will be paid a price based on the NAV of the Fund at the close of the next Dealing Day. Refer to Realisation of Units at Section XII of the Prospectus for further information on valuation and exiting from the product. The realisation proceeds that you will receive will be the realisation price per Unit of the relevant Class multiplied by the number of Units realised, less any applicable Duties and Charges. An example is as follows: 1000 Units Number of units realised The above example is on the assumption that there are no Duties and Charges payable. If applicable to you as provided in the trust deed of the Fund, you can exit the Fund by delivering a notice in writing to the Manager or its appointed distributors to cancel your subscription for Units in the Fund within the cancellation period of 7 calendar days from the date of your subscription. However, you will have to take the risk for any price changes in the NAV of the Fund since the time of your subscription. HOW CAN YOU CONTACT US? For enquries, please contact: x S$1.100 = Notional realisation price (NAV per Unit of the relevant Class) CONTACT INFORMATION S$1,100.00 Realisation proceeds Schroder Investment Management (Singapore) Ltd 138 Market Street, #23-01, CapitaGreen Singapore 048946 Tel: +65 6534 4288 Website: www.schroders.com.sg Distributor The Singapore Representative 4
APPENDIX: GLOSSARY OF TERMS Business Day means any day (other than a Saturday, a Sunday or a gazetted public holiday) on which commercial banks in Singapore are open for business or any other day as determined by the Managers with the approval of the Trustee. Dealing Day means such day or days as the Manager may from time to time with the approval of the Trustee determine, but so that:- (i) unless and until the Manager (with the approval of the Trustee) otherwise determine, each Business Day shall be a Dealing Day; and (ii) without prejudice to the generality of the foregoing, if on any day which would otherwise be a Dealing Day (a) the Recognised Stock Exchange or Exchanges on which the Authorised Investment or other property comprised in, and having in aggregate Values amounting to at least 50% of the Value (as of the immediately preceding Valuation Point (as defined in the Deed)) of the Fund s Units are quoted, listed or dealt in is or are not open for normal trading, or (b) on any day where the Underlying Fund is not normally traded, the Manager may determine that such day shall not be a Dealing Day in relation to Units of the Fund. Duties and Charges means all stamp and other duties, taxes, governmental charges, brokerage, bank charges, transfer fees, registration fees and other duties and charges whether in connection with the constitution of the deposited property or the increase or decrease of the deposited property or the creation, issue, sale, exchange or purchase of Units or the sale or purchase of authorised investments or otherwise, which may have become or may be payable in respect of or prior to or upon the occasion of the transaction or dealing in respect of which such duties and charges are payable but does not include commission payable to agents on sales and repurchases of Units. NAV means net asset value. Non-investment grade securities refer to securities rated below BBB- by Standard & Poor s or Fitch. SICAV means société d investissement à capital variable or an open-ended investment company. Sub-investment grade bonds refer to bonds rated below BBB- as measured by Standard & Poor s or Fitch or equivalent by other credit rating agencies. Unit means one (1) undivided share in the Fund. 5