Reasons why

Why Schroders?

Trusted heritage and advanced thinking

Schroders is an independent, dedicated asset manager with a strong heritage and culture based on over 200 years' experience of investment markets. A FTSE 100 company, we benefit from a strong balance sheet and a stable ownership structure which allows us to focus entirely on delivering results for our clients. With £236.5 billion funds under management and an international network spanning 34 offices in 27 countries, Schroders has the perspective and expertise to identify major investment potential wherever it is located

Source: Schroders as at 31 March 2013

Why Bonds?

Investors seeking a regular and good level of income coupled with the prospect of long-term capital growth should consider bonds as an attractive investment opportunity. This asset class is particularly attractive to investors in times of uncertainty as it is generally less volatile than equities, and returns are more dependable. Bonds can also provide valuable diversification benefits when combined in a portfolio with other assets such as equities and cash. In addition there is a vast choice of bonds in the market to suit each investor's needs from government bonds, known as gilts, and bonds issued by companies, otherwise known as corporate bonds.

Where a fund holds investments denominated in currencies other than sterling investors should note that exchange rates may cause the value of these investments, and the income from them, to rise or fall.

Why the Schroder Gilt & Fixed Interest Fund?

The Schroder Gilt & Fixed Interest Fund aims to generate a dependable income with potential for long-term capital growth. The fund invests predominantly in bonds issued by the British government, known as gilts. As the government is responsible for paying back both the original loan on expiry and its interest re-payments in the interim, these types of investments tend to be very secure assets. As well as being suited to cautious investors either requiring a reliable income or steady capital growth, in tandem with other investments, gilts can moderate the overall risk of a diversified portfolio.

As a result of the annual management fee of the fund being charged to capital, the distributable income of the fund may be higher but there is the potential that performance or capital value may be eroded. More than 35% of the fund may be invested in government securities.

Why the Schroder Monthly High Income Fund?

The Schroder Monthly High Income Fund invests in a diversified portfolio of bonds and aims to provide a high income which is distributed monthly. The fund can invest in the full spectrum of bonds issued by UK and overseas companies, governments and other bodies. A portion of the fund is made up of higher yielding non-investment grade bonds which have the potential to offer a higher income. Although these types of bonds are riskier, the potential for default is minimised by the fund manager's expertise in this area and Schroders' in-depth research resources which aim to identify the best bonds in the market place.

As a result of the annual management fee of the fund being charged to capital, the distributable income of the fund may be higher but there is the potential that performance or capital value may be eroded. The fund invests in higher-yielding, or non-investment grade, bonds. The risk of the issuer defaulting on the capital repayment is higher than with investment grade bonds.

Why the Schroder Corporate Bond Fund?

The Schroder Corporate Bond Fund aims to generate an attractive income, whilst not compromising capital, by investing in a diversified basket of fixed income securities. These may include investment-grade bonds, which are issued by companies with high credit ratings, or those within the sub-investment grade sector, which, due to the issuer's lower credit rating, tend to carry a higher risk, but also the potential for an enhanced return. Through extensive research, the fund manager seeks bonds in companies with strong balance sheets and good growth potential. The fund manager is supported by Schroders' highly experienced fixed income resources, and is well positioned to identify those bonds with the best potential.

As a result of the annual management fee of the fund being charged to capital, the distributable income of the fund may be higher but there is the potential that performance or capital value may be eroded. The fund invests in higher-yielding, or non-investment grade, bonds. The risk of the issuer defaulting on the capital repayment is higher than with investment grade bonds.

Why the Schroder Absolute Return Bond Fund?

The Schroder Absolute Return Bond Fund opens up a world of opportunity for UK investors. It has the flexibility to invest in a broad range of fixed income securities without the constraints of a benchmark to create a true 'best ideas' bond fund. Launched in September 2003, the fund invests in a diverse range of bonds globally, and aims to generate positive returns over a 12 month rolling period. As the fund is unconstrained, it can exploit the widest possible range of fixed income opportunities anywhere in the world, and can hold more aggressive positions than a typical global bond fund as the manager is free to back his ideas of strongest conviction.

The fund invests in higher-yielding, or non-investment grade, bonds. The risk of the issuer defaulting on the capital repayment is higher than with investment grade bonds. As a result of the annual management fee of the fund being charged to capital, the distributable income of the fund may be higher but there is the potential that performance or capital value may be eroded. The fund can use derivatives for investment purposes. These instruments can be more volatile than investment in equities or bonds. The fund is not tied to replicating a benchmark and holdings can therefore vary from those in the index quoted. For this reason the comparison index should be used for reference only.

* As at the 13 June 2011 Schroder Strategic Bond Fund was changed to Schroder Absolute Return Bond Fund. At this time the internal duration guidelines were broadened to a range of -2 to +6 years and the funds internal performance was realigned to focus on generating a rolling 12 month positive return. Prior to this date Schroder Strategic Bond Fund aimed to deliver outperformance of GBP libor of 300bps and had a duration range of 0-9 years.

Why UK Equities?

An investment in UK equities provides the opportunity to benefit from long-term growth opportunities in the domestic UK market, and broader global economies through companies listed on the London Stock Exchange. The UK stock market is home to a broad range of companies, from large established multinationals to smaller, fast growing companies in emerging industries. Many companies listed in the UK have substantial operations or interests abroad, providing access to growth opportunities and sectors which do not form a significant part of the domestic economy. For UK investors, there is no direct currency risk when investing in the domestic market as shares are priced in sterling.

Why the Schroder Income Fund?

The Schroder Income Fund aims to provide a rising income coupled with strong capital growth. To achieve this it adopts a value approach, investing in companies whose share prices appear low relative to their long-term earnings potential and the amount of cash they could able to generate. This may simply be because the stocks are in an area of the market that is currently out of favour or because investors have lost sight of the longer-term case for these names. The fund aims to capture both the capital gains as companies' profits improve and the dividend growth as profit is returned to shareholders.

As a result of the annual management fee of the fund being charged to capital, the distributable income of the fund may be higher but there is the potential that performance or capital value may be eroded. Funds which invest in a smaller number of stocks can carry more risk than funds spread across a larger number of companies. The fund holds investments denominated in currencies other than sterling, changes in exchange rates will cause the value of these investments, and the income from them, to rise or fall.

Why Schroder Income Maximiser?

Schroder Income Maximiser is an equity-based fund that aims to deliver a market beating 7% p.a. target yield¹ for investors. The fund invests in a portfolio of stocks whose share prices appear low relative to their long-term earnings potential and the amount of cash they will be able to generate. They will also tend to be high yielding stocks and shares that offer a generous dividend payment as well as the ability to grow that dividend over time.

To reach the target yield of 7%, fund manager, Thomas See, Head of Schroders' Structured Investment Team, applies an innovative strategy to the portfolio of shares. In exchange for giving up some of the potential for capital gains from the shares, the fund earns upfront payments. These payments contribute additional income to the fund which is paid to investors. By taking this approach investors are able to gain access to equity markets and the potential for share price growth, but with the added security of a regular income and lower volatility.

¹The target yield of 7% is not guaranteed and could change according to prevailing market conditions. The Manager will notify registered unitholders if the target yield changes. The yield is the sum of the four quarterly distributions that comprise the fund year, each calculated by dividing the quarterly distribution amount by the unit price at the start of that quarter. It is quoted net of basic rate tax, however higher rate tax payers should note that they may be liable for further deductions.

The fund uses derivatives to achieve its investment objective. The way in which derivatives are used will increase the income paid to investors and reduce volatility, but there is the potential that performance or capital value may be eroded. As a result of all fees being charged to capital, the distributable income of the fund may be higher but there is the potential that performance or capital value may be eroded. Funds which invest in a smaller number of stocks can carry more risk than funds spread across a larger number of companies. The fund is not tied to replicating a benchmark and holdings can therefore vary from those in the index quoted. For this reason the comparison index should be used for reference only.

Why the Schroder Recovery Fund?

The fund aims to provide capital growth by selecting out-of-favour companies which have suffered a severe business or market setback but have good long-term prospects. Investors often take a short-term view on companies, swayed by recent news flow, resulting in fundamentally sound companies becoming cheap relative to their intrinsic value. The fund managers Kevin Murphy and Nick Kirrage take a longer-term view. They undertake a rigorous assessment of a company's earnings potential, and will look to invest if it exhibits both financial strength and a sound business model. They will look for recovery potential and companies that do not seem to be achieving their potential profitability at present, but with clear signs that management is focused on turning this around. By taking a more contrarian view in the short term, these types of companies should offer investors strong returns over the long term.

Funds that invest predominantly in the companies of one country or region can carry more risk than funds spread over a number of countries or regions. The fund can use derivatives for investment purposes. These instruments can be more volatile than investment in equities or bonds. The fund is not tied to replicating a benchmark and holdings can therefore vary from those in the index quoted. For this reason the comparison index should be used for reference only.

Why the Schroder UK Alpha Plus Fund?

The Schroder UK Alpha Plus Fund is a UK equity fund with a difference. Fund manager, Richard Buxton focuses on his highest conviction ideas with no consideration of a benchmark index. The fund invests in a relatively small number of large and mid cap stocks (30-40) seeking to identify those which could provide greater returns. Only those stocks in which the fund manager has the highest level of conviction will be included in the portfolio, making this a potentially "best ideas" investment. The flexible nature of the fund means that Richard is able to shift in and out of investment themes and sectors, aiming to capture the best investment opportunities in the UK market.

Funds which invest in a smaller number of stocks can carry more risk than funds spread across a larger number of companies. Funds that invest solely in the companies of one country or region can carry more risk than funds spread over a number of countries or regions. The fund is not tied to replicating a benchmark and holdings can therefore vary from those in the index quoted. For this reason the comparison index should be used for reference only.

Why the Schroder UK Core Fund?

The Schroder UK Core Fund is an actively-managed UK equity product designed to provide investors with a low cost, lower risk, more transparent alternative to passive index investing. The fund invests in a low turnover, well diversified portfolio of 50-65 stocks. It targets superior returns versus index funds and ETFs (exchange traded funds). The fund has an estimated total expense ratio capped at 40 basis points and aims to generate outperformance after fees of 1 per cent p.a. versus the benchmark (FTSE All Share). It is co-managed by Sue Noffke, Andy Simpson and Jessica Ground, who form Schroders' UK Prime Team, a specialist unit within the broader UK equity team headed by Richard Buxton.

Funds that invest solely in the companies of one country or region can carry more risk than funds spread over a number of countries or regions. Investments in smaller companies can be less liquid than investments in larger companies and price swings may therefore be greater than in larger company funds. The fund can use derivatives for specific investment purposes but currently does not. If we decide to use derivatives this way, this may result in a more volatile unit price and so result in a higher degree of market risk, therefore we will give unitholder appropriate notice if we decide to do so.

Why the Schroder UK Equity Fund?

The fund looks to invest in the best opportunities across a broad range of UK equities. Fundamental research is the hallmark of our approach. We have a disciplined, focused and ultimately successful investment process to identify stocks with hidden potential. Share prices tend to be driven by short-term sentiment, so by taking a longer-term view, it is possible to identify companies with strong prospects that are not yet fully appreciated by the market. The fund managers, Errol Francis and Ed Meier seek out companies with healthy balance sheets, strong management teams and compelling business models. They believe that these attributes, along with the undervaluation of companies' longer-term potential, can lead to superior long-term returns.

Funds that invest solely in the companies of one country or region can carry more risk than funds spread over a number of countries or regions. Investments in smaller companies can be less liquid than investments in larger companies and price swings may therefore be greater than in larger company funds.

Why the Schroder UK Mid 250 Fund?

Many investment funds focus on the UK's largest stocks and the giant blue-chips of the FTSE 100 index. While these stocks offer a stable core, ignoring the next tier of medium-sized companies can mean missing out on many exciting investment opportunities. Investing in medium-sized companies can broaden your spread of holdings and provide a more diversified investment portfolio. While the largest UK companies are concentrated in relatively few industries such as pharmaceuticals, mining, oil and telecommunications, companies in the FTSE 250 index cover a broader spread.

With companies continually moving in and out of the FTSE 250 index, fund manager Andy Brough and his team have been able to uncover plenty of opportunities for growth ahead of the market. They utilise Schroders' strength in the UK market when conducting their research, and regularly meet the companies they invest in. Investments in smaller companies can be less liquid than investments in larger companies and price swings may therefore be greater than in larger company funds. Funds that invest solely in the companies of one country or region can carry more risk than funds spread over a number of countries or regions.

Why the Schroder UK Smaller Companies Fund?

The fund invests in the overlooked but highly diverse UK smaller companies market. While more volatile and therefore more risky than their larger counterparts, these companies offer exciting opportunities for investors. Good management strategies combined with successful new products can have a rapid impact on profits. Due to the higher volatility inherent in this sector, a rigorous stock-picking and research approach is essential. The team has developed a robust investment process which is designed to capture the best investment opportunities in this area.

Investments in smaller companies can be less liquid than investments in larger companies and price swings may therefore be greater than in larger company funds. Funds that invest solely in the companies of one country or region can carry more risk than funds spread over a number of countries or regions.

Why European Equities?

European equities give investors the chance to benefit from the long-term growth opportunities offered by companies in the region. Continental Europe is home to a broad range of companies across major economic sectors, from large established multinationals to small fast growing companies in emerging industries. European equities might provide valuable diversification benefits for UK investors along with aiming to provide access to opportunities within economic sectors which are not well represented in the UK.

Why the Schroder European Alpha Plus Fund?

The Schroder European Alpha Plus Fund has the flexibility to invest without having to follow a particular stockmarket index. In other words, Schroders can invest in any stock in Europe (excluding the UK) where its future prospects are not reflected in its current share price.

Schroders is particularly attracted to companies with good track records over a long period of time; industry leaders; operators in markets with limited competition and high barriers to entry; or firms whose fortunes do not closely track the economic cycle. They do not explicitly follow themes or take bets on what will happen in the wider economy. Their focus is on finding and meeting companies with strong underlying businesses, solid market positions, good long-term growth drivers and excellent management teams. Schroders believes this investment strategy couldl reward investors with long-term performance.

The fund holds investments denominated in currencies other than sterling, changes in exchange rates will cause the value of these investments, and the income from them, to rise or fall. Funds which invest in a smaller number of stocks can carry more risk than funds spread across a larger number of companies. The fund is not tied to replicating a benchmark and holdings can therefore vary from those in the index quoted. For this reason the comparison index should be used for reference only.

Why the Schroder European Fund?

The Schroder European Fund is constructed from the bottom up with no inherent style bias – we focus on a number of characteristics including 'growth', 'value' and each individual company's quality of earnings and ability to create value for shareholders.

We believe that through detailed fundamental analysis we are able to identify the most important drivers of a business. By asking ourselves where we differ from the market either financially or operationally we are able to articulate our investment thesis and clearly identify what we believe will drive the share price. Identifying shares where our investment thesis is not priced in enables us to buy shares below their intrinsic value. This pragmatic style of investing means that our outperformance should not be restricted to any particular market environment.

The fund holds investments denominated in currencies other than sterling, changes in exchange rates will cause the value of these investments, and the income from them, to rise or fall.

Why the Schroder European Smaller Companies Fund?

Smaller companies offer investors exposure to some niche growth areas that, often, cannot be accessed through large companies. They also tend to grow more rapidly than larger firms and can go on to become household names. The Schroder European Smaller Companies Fund aims to find those investment opportunities through markets in Europe excluding the UK. The fund manager is focused on stock selection and each company's ability to create value for shareholders, rather than trying to predict what will happen in the wider economic environment. More than 1,000 contacts are made with companies each year and as research coverage of smaller companies is limited, meeting company management is vital to the stock picking process. The fund manager, backed by an experienced and large in-house team, seeks out undervalued smaller companies which are capable of organic growth, pricing power and earnings sustainability.

The fund holds investments denominated in currencies other than sterling, changes in exchange rates will cause the value of these investments, and the income from them, to rise or fall. Investments in smaller companies can be less liquid than investments in larger companies and price swings may therefore be greater than in larger company funds.

Why Multi-Manager?

Using a multi-manager solution may give you the opportunity to benefit in two important ways. First it diversifies your investment across a variety of leading funds and fund managers from different investment houses. And second, it means your investment can be managed actively so that the asset allocation can be varied to suit different market conditions. A good multi-manager will aim to deliver consistent performance over the long term by taking advantage of both of these opportunities.

No single investment house has a monopoly of skills and this approach recognises that fund managers' will have peaks and troughs in performance and cannot lead the field at all times. By careful selection of a number of managers, a multi-manager solution can provide diversification across funds and could lead to more consistent returns. By investing in multi-manager funds, investors are also able to access investment opportunities that would otherwise not be available to them.

Why Schroders for Multi-Manager?

A multi-manager portfolio considers not only the quality of individual fund managers, but considers their place within the portfolio as a whole. The Schroder multi-manager funds are managed by the Multi-Asset investment team, which regularly meets with fund managers to understand their approach and the drivers of fund performance. The team has significant resources and is able to draw upon the expertise and experience of over 70 investment professionals around the world. The strength and depth of the team is based on having specialists researching and analysing a wide range of funds, working in tandem with the broader Multi-Asset team to decide the best asset allocation mix so that portfolios are positioned to try to deliver attractive long-term returns.

Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them can go down as well as up and investors may not get back their original investment.

Why the Schroder Multi-Manager Cautious Managed Fund?

The Schroder Multi-Manager Cautious Managed Fund provides a one-stop solution for investors looking for a flexible product that accesses a broad range of assets and financial markets. The fund seeks to try to generate attractive returns over the long term by blending a diversified selection of around 15 high conviction funds from asset managers around the world. This 'fund of funds' approach allows Schroders to tap into a blend of strong investment ideas across the industry. As well as investing in traditional markets such as equities, bonds and cash, the fund also seeks to add value through opportunities in alternative assets such as commodities, hedge funds, private equity and property. This diversified approach can help lower investment risk, making the fund ideal for a relatively cautious investor looking for capital growth or income - or a combination of both - without taking on high levels of risk.

The fund has the potential to invest in unregulated Collective Investment Schemes which can involve a higher degree of risk as they are not regulated by the FCA and may not provide the same level of investor protection as regulated schemes. These schemes may not be readily realisable, and price swings may be more volatile if they are priced less frequently than authorised funds. The fund invests in derivatives and alternative asset classes (i.e. hedge funds, commodities, property funds and private equity) via Unregulated Collective Investment Schemes. Alternative investments involve an above-average degree of risk and can be more volatile than investment in equities or bonds. The fund holds investments denominated in currencies other than sterling, changes in exchange rates will cause the value of these investments, and the income from them, to rise or fall. As a result of the annual management fee of the fund being charged 50% to capital and 50% to income, the distributable income of the fund may be higher than if taken 100% from income but there is the potential that performance or capital value may be eroded.

Why the Schroder Multi-Manager High Alpha Fund?

This portfolio is the most adventurous of the three Multi-Manager Funds offered by Schroders. It is a diversified portfolio holding with exposure to potentially higher risk, higher return markets and investments. The fund aims to provide capital growth through investment in a focused portfolio of high conviction funds, as well as directly held securities, derivatives and cash. It is an equity orientated fund of funds, diversified across the world's major markets, but with a focus on the UK. It also has exposure to alternative investments such as property funds, hedge funds and private equity funds.

The fund has the potential to invest in unregulated Collective Investment Schemes which can involve a higher degree of risk as they are not regulated by the FCA and may not provide the same level of investor protection as regulated schemes. These schemes may not be readily realisable, and price swings may be more volatile if they are priced less frequently than authorised funds. The fund invests in derivatives and alternative asset classes (i.e. hedge funds, commodities, property funds and private equity) via Unregulated Collective Investment Schemes. Alternative investments involve an above-average degree of risk and can be more volatile than investment in equities or bonds. The fund holds investments denominated in currencies other than sterling, changes in exchange rates will cause the value of these investments, and the income from them, to rise or fall.

Why the Schroder Multi-Manager Strategic Balanced Fund?

The Schroder Multi-Manager Strategic Balanced Fund is managed to suit investors looking for a medium risk, core portfolio holding with the potential for income and long-term capital growth. The fund seeks to try to generate attractive returns over the long term by blending a diversified selection of around 15 high conviction funds from asset managers around the world. This 'fund of funds' approach allows Schroders to tap into a blend of strong investment ideas across the industry. As well as investing in traditional markets such as equities, bonds and cash, the fund also seeks to add value through opportunities in alternative assets such as commodities, hedge funds, private equity and property.

The fund has the potential to invest in unregulated Collective Investment Schemes which can involve a higher degree of risk as they are not regulated by the FCA and may not provide the same level of investor protection as regulated schemes. These schemes may not be readily realisable, and price swings may be more volatile if they are priced less frequently than authorised funds. The fund invests in derivatives and alternative asset classes (i.e. hedge funds, commodities, property funds and private equity) via Unregulated Collective Investment Schemes. Alternative investments involve an above-average degree of risk and can be more volatile than investment in equities or bonds. The fund holds investments denominated in currencies other than sterling, changes in exchange rates will cause the value of these investments, and the income from them, to rise or fall.

Why Japanese Equities?

Japan is one of the world's most important economic powers and is one of the key global stockmarkets for investors to get exposure to. Japanese manufacturers are world leaders in several major industries. For example, Japanese companies continue to enjoy a global competitive advantage in the electronic components and machinery industries. Moreover, Japanese equities can provide valuable diversification benefits for UK investors along with providing access to opportunities within economic sectors which are not well represented in the UK.

Where a fund holds investments denominated in currencies other than sterling investors should note that exchange rates may cause the value of these investments, and the income from them, to rise or fall.

Why the Schroder Tokyo Fund?

Japan is one of the world's most important economic powers and is one of the key global stockmarkets for investors to get exposure to. The Schroder Tokyo Fund aims to generate capital growth through investment in this growing economy. Investment is based primarily on Japan's economic strengths such as its manufacturing industry and on sectors benefiting from structural change in the economy. The fund invests in companies that can grow their profits with management teams focused on improving efficiency, as these teams have the best prospects over the longer term.

The fund holds investments denominated in currencies other than sterling, changes in exchange rates will cause the value of these investments, and the income from them, to rise or fall. Funds that invest solely in the companies of one country or region can carry more risk than funds spread over a number of countries or regions.

Why the Schroder Pacific Fund?

The Schroder Pacific Fund invests in companies traded on the stock markets of the Asia Pacific (ex Japan) region, an area that is regarded as having good long-term growth potential. The fund manager focuses on companies which are expected to deliver above-average performance and whose potential has not been fully recognised by the market. Macro-economic conditions and country factors are also considered given the economic structure and diversity of markets in the region. The fund manager is supported by an extensive team of analysts based in the region who can tap into Asia's strong growth trends and identify the most promising investment opportunities.

The fund holds investments denominated in currencies other than sterling, changes in exchange rates will cause the value of these investments, and the income from them, to rise or fall. Potential investors in emerging markets should be aware that this can involve a higher degree of risk. Less developed markets are generally less well regulated than the UK, investments may be less liquid and there may be less reliable arrangements for trading and settlement of the underlying holdings.

Why the Schroder Japan Alpha Plus Fund?

The Schroder Japan Alpha Plus Fund invests in fewer holdings than more mainstream Japanese funds, as it focuses on the fund manager's strongest investment ideas. With no benchmark constraints, it aims to deliver good returns by picking out those companies that present the very best investment opportunities, and as a result the fund has an emphasis on small and medium sized companies. In terms of investment research, this area of the market is not as widely covered as the largest companies in Japan. As a result there is considerable scope for finding good opportunities that have not been uncovered by other investors. The fund manager is supported by an experienced and large team of equity analysts based in the region.

The fund holds investments denominated in currencies other than sterling, changes in exchange rates will cause the value of these investments, and the income from them, to rise or fall. Funds that invest solely in the companies of one country or region can carry more risk than funds spread over a number of countries or regions. Funds which invest in a smaller number of stocks can carry more risk than funds spread across a larger number of companies. The fund is not tied to replicating a benchmark and holdings can therefore vary from those in the index quoted. For this reason the comparison index should be used for reference only.

Why the Schroder Asian Alpha Plus Fund?

The fund invests in companies in the Pacific ex Japan region, one of the world's most dynamic regions. These economies, which vary considerably in the range and type of opportunities, offer some of the most compelling investment opportunities in terms of long-term growth potential. The region is generally growing at a faster pace than its developed peers, and corporate culture in Asia is showing an increased focus on shareholder value and dividend payments. The fund manager is supported by a dedicated in-house team and takes advantage of Schroders' network of regional contacts. It focuses on companies with good business franchises, earnings visibility, quality of management and a focus on shareholder returns. The fund offers a relatively concentrated portfolio of high conviction stocks, and has generated excellent relative returns since inception.

The fund can use derivatives for investment purposes. These instruments can be more volatile than investment in equities or bonds. The fund holds investments denominated in currencies other than sterling, changes in exchange rates will cause the value of these investments, and the income from them, to rise or fall. Potential investors in emerging markets should be aware that this can involve a higher degree of risk. Less developed markets are generally less well regulated than the UK, investments may be less liquid and there may be less reliable arrangements for trading and settlement of the underlying holdings. Investments in smaller companies can be less liquid than investments in larger companies and price swings may therefore be greater than in larger company funds. The fund also has the potential to invest in unregulated Collective Investment Schemes which can involve a higher degree of risk as they are not regulated by the FCA and may not provide the same level of investor protection as regulated schemes. These schemes may not be readily realisable, and price swings may be more volatile if they are priced less frequently than authorised funds. The fund is not tied to replicating a benchmark and holdings can therefore vary from those in the index quoted. For this reason the comparison index should be used for reference only.

Why the Schroder Asian Income Fund?

The Asian region offers investors the potential for strong returns in the medium to long term, supported by strong economic and corporate fundamentals. From a broad economic point of view, the region has undergone a dramatic turnaround compared to the mid 90's when the Asian financial crisis took hold. Today, most countries have low government, company and consumer debt levels while economic growth is increasingly being driven from within Asia, underpinned by a growing population with strong income growth. Companies are becoming more focused on shareholder value and dividend payments and the reinvestment of dividends now make up a substantial proportion of total returns seen. The fund aims to find the best investment opportunities from an income perspective across the Asia Pacific ex Japan region (including Australia and New Zealand). The fund manager looks for companies in strong financial shape, appealing valuations, and attractive income prospects, and is supported by Schroders' in-depth resources in the region.

The fund holds investments denominated in currencies other than sterling, changes in exchange rates will cause the value of these investments, and the income from them, to rise or fall. Potential investors in emerging markets should be aware that this can involve a higher degree of risk. Less developed markets are generally less well regulated than the UK, investments may be less liquid and there may be less reliable arrangements for trading and settlement of the underlying holdings. As a result of the annual management fee and all other charges of the fund being deducted from capital, the distributable income of the fund may be higher but there is the potential that performance or capital value may be eroded.

Why the Schroder Asian Income Maximiser?

Schroder Asian Income Maximiser aims to deliver a market beating 7% p.a. target yield¹ while providing significant exposure to the exciting potential of leading companies in some of the world's most dynamic economies. The fund combines the skills of two talented and experienced fund managers, Asian equity income specialist Richard Sennitt and Schroders' Head of Structured Investments Thomas See. The portfolio of 60-80 Asian stocks is selected by Richard Sennitt on the basis of their potential to provide high, sustainable dividends and long-term capital growth. Asian markets are well positioned to deliver growth in income and capital due to underlying strong and sustainable economic growth across the region. Asian markets now offer some of the highest equity yields globally and provide valuable diversification away from UK income sources. The Structured Investment Team applies the 'Income Maximiser' strategy to stocks in the underlying portfolio. This exchanges some of the upside potential in the stocks for upfront payments, which provide a boost to income. The potential upside of the majority of the portfolio is expected to be capped at around 10% over three month periods. The income strategy is similar to that of Schroder Income Maximiser, which has proved effective in both strong and weak market conditions since the fund was launched in November 2005².

¹ The Fund aims to deliver a target yield of 7% per year. The target yield of 7% is not guaranteed and could change according to prevailing market conditions. The Manager will notify registered unitholders if the target yield changes. The yield is the sum of the four quarterly distributions that comprise the fund year, each calculated by dividing the quarterly distribution amount by the unit price at the start of that quarter.

² Source: Schroders. Schroder Income Maximiser was launched in November 2005. It produced an annualised yield of 7.4% in its first year, 7.3% in its second, 8.7% in its third and 7.4% in its fourth and 7.3% in its fifth. Please note the yield is variable.

Investors in emerging markets should be aware that this can involve a higher degree of risk. Less developed markets are generally less well regulated than the UK, investments may be less liquid and there may be less reliable arrangements for trading and settlement of the underlying holdings. The fund uses derivatives to achieve its investment objective. They way in which derivatives are used will increase the income paid to investors and reduce volatility, but there is the potential that performance or capital value may be eroded. The fund holds investments denominated in currencies other than sterling, investors should note that exchange rates may cause the value of these investments, and the income from them, to rise or fall. As a result of all fees being charged to capital, the distributable income of the fund may be higher but there is the potential that performance or capital value may be eroded.

Why US Equities?

US equities give investors the chance to benefit from the long-term growth opportunities offered by companies listed in the US. The US is the world's largest economy and is home to a very broad range of companies across major economic sectors, from large established multinationals to small fast growing companies in emerging and established industries. The US is also home to the world's largest equity market. US equities can provide valuable diversification benefits for UK investors along with providing access to opportunities within economic sectors which are not well represented in the UK.

Where a fund holds investments denominated in currencies other than sterling investors should note that exchange rates may cause the value of these investments, and the income from them, to rise or fall.

Why the Schroder US Mid Cap Fund?

The Schroder US Mid Cap Fund concentrates on companies which are between $750 million to $7 billion in market cap at the time of purchase. One of the highlights of investing in this space in the US is that fewer sell side analysts cover mid cap companies (in contrast to the large caps). This creates the opportunity of an information advantage. Additionally, although liquidity is not as deep as it is for large cap companies, it is better than the true small cap companies. Thus we have the combination of reasonable liquidity with lower levels of sell side coverage. The fund manager coupled with a large and experienced research team seeks to identify those companies with compelling business models, a strong management team and attractive valuation levels. Companies are classified in three categories; mis-priced growth opportunities, 'steady eddies' (high quality, reliable businesses) and turnarounds. By combining these three company types, Schroders believes it can enhance overall returns while, at the same time, mitigating risk.

Investments in smaller companies can be less liquid than investments in larger companies and price swings may therefore be greater than in larger company funds. The fund holds investments denominated in currencies other than sterling, changes in exchange rates will cause the value of these investments, and the income from them, to rise or fall. Funds that invest solely in the companies of one country or region can carry more risk than funds spread over a number of countries or regions.

Why the Schroder US Smaller Companies Fund?

Smaller companies offer investors exposure to some niche growth areas that often cannot be accessed through large companies. They also tend to grow more rapidly than larger firms and can go on to become household names. Additionally, fewer sell side analysts cover companies in this group which creates the opportunity to exploit an information advantage. The Schroder US Smaller Companies Fund focuses on companies which are between $200m to $2 billion in market cap at time of purchase. The fund manager coupled with a large and experienced research team seeks to identify those companies with compelling business models, a strong management team and attractive valuation levels. Companies are classified in three categories; mis-priced growth opportunities, 'steady eddies' (high quality, reliable businesses) and turnarounds. By combining these three company types, Schroders believes it can enhance overall returns while, at the same time, mitigating risk.

Investments in smaller companies can be less liquid than investments in larger companies and price swings may therefore be greater than in larger company funds. The fund holds investments denominated in currencies other than sterling, changes in exchange rates will cause the value of these investments, and the income from them, to rise or fall. Funds that invest solely in the companies of one country or region can carry more risk than funds spread over a number of countries or regions.

Why the Schroder Global Property Securities Fund?

The Schroder Global Property Securities Fund allows you to invest in some of the world's most attractive office, hotel, retail and residential properties worldwide, without carrying the difficulties associated with investing directly in property. The fund invests in property securities, such as real estate investment trusts (REITs) and listed property companies. This approach allows flexible access to commercial property markets in many countries, where it may be difficult and costly to benefit through buying property directly.

Schroders' global presence allows them to take advantage of the world's varying property cycles rather than just relying on the real estate trends in one region. As a result the fund does not follow a benchmark, allowing the fund manager to target opportunities as and when they arise.

The fund holds investments denominated in currencies other than sterling, changes in exchange rates will cause the value of these investments, and the income from them, to rise or fall. Funds which invest in a smaller number of stocks can carry more risk than funds spread across a larger number of companies. Investments in smaller companies can be less liquid than investments in larger companies and price swings may therefore be greater than in larger company funds. Funds that focus on specific sectors can carry more risk than funds spread over a number of different industry sectors. The fund is not tied to replicating a benchmark and holdings can therefore vary from those in the index quoted. For this reason the comparison index should be used for reference only.

Why the Schroder Global Property Income Maximiser?

Schroder Global Property Income Maximiser aims to deliver a target yield of 7% per year¹. The fund is a unique proposition based on Schroders' proven 'Income Maximiser' strategy and expertise in global property securities.

To reach the target yield, fund manager, Thomas See, head of Schroders' Structured Investment Team, supplements the underlying dividends received by the fund with additional proceeds from an overlay strategy managed by Schroders' Structured Investments team. This strategy produces an enhanced income, in exchange for giving up some potential growth in each stock above a certain level, on a rolling three monthly basis.

The underlying portfolio of Schroder Global Property Income Maximiser is invested in property securities on a global basis, capitalising on the long-term expansion of the global property market. The fund invests in the shares of Real Estate Investment Trusts (REITs) and listed property companies, instead of directly in bricks and mortar. The underlying global property securities are selected by European Investors Inc (EII), the investment managers of the Schroder Global Property Securities Fund. The team at EII have the focus, reach and flexibility to maximise opportunities in property markets on a global basis. EII looks for securities which are capable of yielding 7% p.a. through a combination of their dividend yield and the Maximiser strategy. Schroders' Structured Investment team provides EII with advice on the applicability of the Maximiser strategy to the securities that it considers for selection.

The fund follows a similar stock selection strategy to the successful Schroder Global Property Securities Fund but with a bias towards high quality income securities. The fund provides the opportunity to invest in a wide range of property opportunities (retail, residential, industrial, office, healthcare) with experienced property management teams in the best locations. It helps to overcome accessibility and liquidity issues associated with direct property.

The Fund uses derivatives to achieve its investment objective. The way in which derivatives are used will increase the income paid to investors and reduce volatility, but there is the potential that performance or capital value may be eroded. The fund holds investments denominated in currencies other than sterling, changes in exchange rates will cause the value of these investments, and the income from them, to rise or fall. Investments in smaller companies can be less liquid than investments in larger companies and price swings may therefore be greater than in larger company funds. Funds that focus on specific sectors can carry more risk than funds spread over a number of different industry sectors. As a result of all fees being charged to capital, the distributable income of the fund may be higher but there is the potential that performance or capital value may be eroded. The fund is not tied to replicating a benchmark and holdings can therefore vary from those in the index quoted. For this reason the comparison index should be used for reference only.

¹ The target yield of 7% is not guaranteed and could change according to prevailing market conditions. The Manager will notify registered unitholders if the target yield changes. The yield is the sum of the four quarterly distributions that comprise the fund year, each calculated by dividing the quarterly distribution amount by the unit price at the start of that quarter.

Why the Schroder Global Equity Income Fund?

The fund invests in a broad spread of companies around the world, and one of its primary objectives is to generate a high dividend yield. This means that it will have a natural bias to those companies that pay out a dividend that is higher than the regional average. Through extensive research and a disciplined investment approach, the fund manager seeks out companies that have the potential to deliver high dividends without compromising the growth of the business. The fund's global remit means there are opportunities in virtually every area of the stockmarket and region of the world.

The fund holds investments denominated in currencies other than sterling, changes in exchange rates will cause the value of these investments, and the income from them, to rise or fall. Funds which invest in a smaller number of stocks can carry more risk than funds spread across a larger number of companies. Potential investors in emerging markets should be aware that this can involve a higher degree of risk. Less developed markets are generally less well regulated than the UK, investments may be less liquid and there may be less reliable arrangements for trading and settlement of the underlying holdings. As a result of all fees being charged to capital, the distributable income of the fund may be higher but there is the potential that performance or capital value may be eroded.

Why the Schroder Managed Wealth Portfolio Fund?

The fund offers investors a diversified investment solution targeting returns in excess of cash but with less volatility than most equity funds. With no benchmark constraints and an absolute return focus, the fund is able to seek out the best investment opportunities across a wide range of asset classes. The majority of the fund is made up of funds of funds but it can also invest in bonds, cash, property, gold, and commodities. These asset classes tend to perform differently under different market conditions, helping to reduce volatility and boost performance in difficult times for equity markets. With such a wide remit, the manager seeks out the best opportunities in each asset class thanks to a dedicated research team. It also has the advantage of being able to leverage expertise and research across a number of Schroders' investment teams.

The fund may invest in derivatives and alternative investments (hedge funds, property funds and private equity). These types of investments involve an above-average degree of risk and can be more volatile. They should only be considered as a long-term investment. The fund holds investments denominated in currencies other than sterling, changes in exchange rates will cause the value of these investments, and the income from them, to rise or fall. Funds which invest in a smaller number of stocks can carry more risk than funds spread across a larger number of companies.

Why the Schroder Medical Discovery Fund?

The fund aims to deliver enhanced returns through investment in healthcare, medical services and related companies. It invests in a diverse global industry, which is attracting increased resources, both public and private, as the population of the developed world ages.

The fund management team looks for companies with novel products which will be protected from competition for some time, companies which enjoy a dominant position in their own market, or companies with a product for which demand has been underestimated by other investors. In the latter case, the share price will not yet reflect the future increase in profit margins. While it invests worldwide, given that half of the world's healthcare companies are headquartered in the US, this market is likely to make up the largest part of the portfolio. Companies are examined on a stock-by-stock basis, and Schroders' strong capabilities mean that it is able to pick up stocks which are off the radar of many other investors.

Funds that focus on specific sectors can carry more risk than funds spread over a number of different industry sectors. The fund holds investments denominated in currencies other than sterling, changes in exchange rates will cause the value of these investments, and the income from them, to rise or fall. Funds which invest in a smaller number of stocks can carry more risk than funds spread across a larger number of companies.

Why the Schroder Global Climate Change Fund?

The Schroder Global Climate Change Fund invests in companies that create products or offer services which help to mitigate or adapt to the effects of global climate change. Detrimental changes to the environment as a result of carbon emissions and other manmade actions pose possibly the greatest challenge to the world's citizens and companies. The difference that companies can make in addressing this problem offers a compelling long-term opportunity for today's investors. With no benchmark constraints, the fund manager seeks to identify companies that are benefiting from either mitigation of the impact of global climate change or adaptation to changes that are possibly now inevitable. As climate change impacts virtually every area of the investment universe, the fund invests in a wide range of companies. For example companies that provide renewable energy solutions, such as wind power, to companies that develop low energy light bulbs. In addition the fund manager can find compelling opportunities in the agriculture industry, with climate change making it important to improve crop production. These are all long-term investment themes that can benefit investors today.

The fund holds investments denominated in currencies other than sterling, changes in exchange rates will cause the value of these investments, and the income from them, to rise or fall. The fund can use derivatives for investment purposes. These instruments can be more volatile than investment in equities or bonds. Potential investors in emerging markets should be aware that this can involve a higher degree of risk. Less developed markets are generally less well regulated than the UK, investments may be less liquid and there may be less reliable arrangements for trading and settlement of the underlying holdings. Investments in smaller companies can be less liquid than investments in larger companies and price swings may therefore be greater than in larger company funds. The fund is not tied to replicating a benchmark and holdings can therefore vary from those in the index quoted. For this reason the comparison index should be used for reference only.

Why the Schroder Global Alpha Plus Fund?

Schroder Global Alpha Plus Fund aims to deliver strong performance through investment in a concentrated portfolio of around 30 stocks, selected from a global opportunity set. It provides international equity exposure at a time when the greatest growth drivers are outside the UK. The fund is managed by Virginie Maisonneuve and Jonathan Armitage. They have developed a proven process looking at stock opportunities on a truly global basis. This makes full use of Schroders' powerful fundamental research platform, with equity analysts and credit analysts based in markets all around the world. The fund is not managed with reference to a benchmark index which gives the fund managers an unconstrained hand to back their highest-conviction investment ideas, which can be in any country and any sector.

The fund holds investments denominated in currencies other than sterling, changes in exchange rates will cause the value of these investments, and the income from them, to rise or fall. Potential investors in emerging markets should be aware that this can involve a higher degree of risk. Less developed markets are generally less well regulated than the UK, investments may be less liquid and there may be less reliable arrangements for trading and settlement of the underlying holdings. Funds which invest in a smaller number of stocks can carry more risk than funds spread across a larger number of companies. Investments in smaller companies can be less liquid than investments in larger companies and price swings may therefore be greater than in larger company funds. The fund can use derivatives for investment purposes. These instruments can be more volatile than investment in equities or bonds. The fund is not tied to replicating a benchmark and holdings can therefore vary from those in the index quoted. For this reason the comparison index should be used for reference only.

Why Emerging Markets Equities?

The key reason for investing in global emerging markets is to get access to their strong long-term growth potential. Emerging market economies are generally growing at a faster rate than the developed world and this is set to continue in the future. Factors such as domestic consumer spending and trade between emerging market countries is becoming much more important. In addition investors should be encouraged by the improvements we have seen across many emerging markets in recent years, including increased financial strength. As a result of these improvements, emerging market countries are in better shape than the developed world in terms of factors such as government debt levels. Improved economic management has made them financially stronger and less vulnerable than they have been in the past to the ups and downs of the global economy, presenting investors with a compelling investment opportunity.

Where a fund holds investments denominated in currencies other than sterling investors should note that exchange rates may cause the value of these investments, and the income from them, to rise or fall. Potential investors in emerging markets should be aware that this can involve a higher degree of risk. Less developed markets are generally less well regulated than the UK, investments may be less liquid and there may be less reliable arrangements for trading and settlement of the underlying holdings.

Why the Schroder Global Emerging Markets Fund?

One of the key reasons for investing in global emerging markets is to get access to their strong long-term growth potential. The Schroder Global Emerging Markets Fund aims to achieve long- term capital growth by investment in this dynamic area of the market. Emerging market economies are generally growing at a faster rate than the developed world and this is set to continue in the future. Thanks to the depth of Schroders' investment resources, they are able to carry out high quality 'on the ground' research in these countries and take maximum advantage of this compelling investment opportunity.

The fund holds investments denominated in currencies other than sterling, changes in exchange rates will cause the value of these investments, and the income from them, to rise or fall. Potential investors in emerging markets should be aware that this can involve a higher degree of risk. Less developed markets are generally less well regulated than the UK, investments may be less liquid and there may be less reliable arrangements for trading and settlement of the underlying holdings. Investments in smaller companies may be less liquid than in larger companies and price swings may therefore be greater than in larger company funds.

Why the Schroder QEP Global Core Fund?

The Schroder QEP Global Core Fund is the second in a suite of actively-managed products, designed to provide investors with a low cost, lower risk, transparent alternative to passive investing. The fund invests in a diversified portfolio of over 500 global stocks. It aims to outperform the MSCI World index by 1% p.a. with low relative risk. The fund has an estimated total expense ratio capped at 40 basis points. The fund manager is based in London and is supported by a well resourced team located in London and Sydney.

The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested. Where a fund holds investments denominated in currencies other than sterling, investors should note that exchange rates may cause the value of these investments, and the income from them, to rise or fall. Potential investors in emerging markets should be aware that this can involve a higher degree of risk. Less developed markets are generally less well regulated than the UK, investments may be less liquid and there may be less reliable arrangements for trading and settlement of the underlying holdings. Investments in smaller companies can be less liquid than investments in larger companies and price swings may therefore be greater than in larger company funds.

Why the Schroder Managed Balanced Fund?

The fund gives investors access to a number of leading Schroders funds, carefully selected to provide a diversified multi-asset investment solution. It aims to outperform the IMA Mixed Investment 40-85% Shares sector average and generate capital growth over the long term through dynamic asset allocation strategies, and through the individual performances of underlying funds. All underlying management fees are rebated back, meaning it is a cost effective balanced solution designed to suit investors who are looking for a core portfolio holding.

The manager makes use of Schroders' extensive resources globally, and while the product has a bias to UK equity funds, it also invests a large proportion of assets across overseas stockmarkets, such as Europe, North America, Japan, Asia and emerging economies. It can also invest in bond and cash funds.

The fund is authorised as a Non-UCITS Retail Scheme. The investment and borrowing powers of these types of scheme are wider than those for UCITS funds whilst still aiming to provide a prudent spread of risk. The fund holds investments denominated in currencies other than sterling, changes in exchange rates will cause the value of these investments, and the income from them, to rise or fall.

Why the Schroder Dynamic Multi-Asset Fund?

The Schroder Dynamic Multi-Asset Fund is also managed by the Multi-Asset team who actively manage the asset allocation to aim to benefit from upward moves in the market whilst being able to take more defensive positions when the situation changes. The fund has no benchmark but aims for steady, long-term returns in excess of inflation by investing in a wide range of assets including equities, commodities, emerging market debt, absolute return funds and government bonds. Every position in the portfolio is an active decision. This unconstrained, but closely targeted approach means it is designed to be less sensitive to falls in the stock market.

The fund invests in assets which are exposed to currencies other than sterling. Exchange rates may cause the value of overseas investments and the revenue from them to rise or fall. The fund is not tied to replicating a benchmark and holdings can therefore vary from those in the index quoted. For this reason the comparison index should be used for reference only. The fund uses derivatives for investment purposes. This involves a higher degree of risk and may lead to a higher volatility in the unit prices of the fund. The Manager employs a risk management process to allow the Manager to measure derivative and forward positions and their contribution to the overall risk profile of the Schroder Dynamic Multi-Asset fund. As part of this risk management process, the manager conducts daily Value at Risk analysis of the fund and performs both stress and back testing of the fund. The fund also has the potential to invest in unregulated collective investment schemes, which involves a higher degree of risk as they are not regulated by the FCA. The funds may not be readily realisable and priced less frequently than listed shares or authorised unit trusts, and therefore price swings may be more volatile. Unregulated schemes may be closed for subscription and/or redemption, may be subject to certain restrictions or limitations and there is unlikely to be an active secondary market in the shares or units of such underlying schemes. Some schemes may only be available for subscription or redemption on a periodic basis. The fund invests in alternative investments (including commodities) which involves a higher degree of risk and can be more volatile. They should only be considered as a long term investment.

Why the Schroder US Alpha Plus Fund?

The Schroder US Alpha Plus Fund is a concentrated equity portfolio, designed for investors seeking a potentially higher return and who can accept the higher stock specific risk. While the fund manager utilises a team of eight industry specialists to generate investment ideas, this is not a team driven product. The Fund Manager selects only the 20 to 30 stocks she believes have the highest alpha generation potential. The portfolio is not constrained by a benchmark and has no bias to an industry or sector. We can make tactical investments, invest in stocks with a >$1bn market cap, hold up to 15% cash, and invest up to 15% in American Depository Receipts (ADRs). Keeping with our investment philosophy, the portfolio has the potential to grow by seeking to identify companies who also have unrecognised or under-appreciated earnings growth potential.

The capital is not guaranteed. Investments denominated in a currency other than that of the share-class may not be hedged. The market movements between those currencies will impact the share-class. The fund may hold large positions in a particular investment and if market declines or the issuer defaults, then the fund will be adversely affected. The fund will not hedge its market risk in a down cycle. The value of the fund will move similarly to the markets.

Why the Schroder Managed Monthly High Income?

These are challenging times if you're looking for income. At the moment, interest rates are exceptionally low and unlikely to rise for quite some time. Moreover, any interest you actually earn on your savings is instantly being eroded by the effects of high inflation. So it makes sense to look at other options.

While equities are one source of yield, not all investors are willing or able to accept the risk associated with pure equity funds. Schroder Managed Monthly High Income Fund has been developed with this in mind, combining both equity and fixed income to provide a diversified yield solution for more cautious investors.

The fund aims to pay a regular income of around 5.5% per year, via monthly distributions. Around half of the fund is invested in equities and half in bonds, reducing the volatility compared to an equity only investment. Moreover, the fund’s income sources are varied, from four sources overall – income from bonds, from property securities, from equities generally, and finally, from Schroders’ Maximiser yield enhancement strategy.

This is achieved by investing in several long-running Schroder funds and some of the more recently launched opportunities. Each underlying fund is managed by a specialist Schroder fund manager – bringing together at least 7 different active investment strategies, all in a single product. Investors can benefit from performance diversified across a number of fund managers, with established track records.

The bond funds provide coverage of all key areas of the fixed income universe, with the flexibility to allocate according to the prevailing market conditions. The equity component invests in a range of Schroders’ Maximiser funds, giving exposure to UK and international equities, Asian equities, European equities and global property securities, with the additional benefit of the enhanced income stream produced by the Maximiser strategy.

Despite these important benefits, this fund of funds does not carry any extra charges – each underlying fund rebates 100% of all fees to ensure investors pay only one layer of fees.

The outcome is a balanced fund with multiple sources of yield and, above all, the aim to produce an attractive monthly income in today’s tough, low yield environment.

The capital is not guaranteed. Investment in bonds and other debt instruments including related derivatives is subject to interest rate risk. The value of the fund may go down if interest rate rise and vice versa. The fund will not hedge its market risk in a down cycle. The value of the fund will move similarly to the markets. A security issuer may not be able to meet its obligations to make timely payments of interest and principal.  This will affect the credit rating of those securities. Non-investment grade securities will generally pay higher yields than more highly rated securities but will be subject to greater market, credit and default risk. The fund invests in other funds and its liquidity depends upon the liquidity of those underlying funds.  If underlying funds suspend or defer the payment of redemption proceeds, the fund's ability to meet redemption requests may also be affected. The derivative strategy is applied repeatedly over three-monthly periods. This strategy will increase the income paid to investors and reduce the volatility of returns, but there is the potential the performance or capital value may be eroded. As a result of the annual management fee of the fund being charged to capital, the distributable income of the fund may be higher but there is the potential that performance or capital value may be eroded.