30 April 2015
Important Information:
1. The fund invests primarily in Asian equities and fixed income securities which offer attractive yields and sustainable dividend payments. The fund
will have limited Renminbi (RMB) denominated underlying investments.
2. In respect of the distribution units, the manager will declare and pay monthly distributions. However, the distribution rate is not guaranteed.
Distribution yield is not indicative of the return of the fund. Distribution may be paid from capital of the fund. Investors should note that where the
payment of distributions are paid out of capital, this represents and amounts to a return or withdrawal of part of the amount you originally invested
or capital gains attributable to that and may result in an immediate decrease in the value of units.
3. Changes in market interest rates will affect the value of debt securities held by the fund. The fund invests in below investment grade and/or
unrated debt securities may be subject to higher counterparty, credit and liquidity risk than higher rated securities.
4. The fund’s investment in emerging and less developed markets may be subject to significant risks such as political and economic risks, legal and
regulatory risks, market and settlement risks, execution and counterparty risk, and currency risk.
5. The fund may invest into investments denominated in currencies other than the fund's base currency and subject to currency and exchange risk.
If the investor’s based currency is a different currency than the share class’s currency being invested in, the investor needs to carry out conversion
and would involve conversion costs. RMB is currently not freely convertible. There is no assurance that RMB will not be subject to devaluation.
6. The effects of hedging will be reflected in the net asset values of the respective hedged classes. Expenses arising from hedging transactions
may be significant and will be borne by the relevant hedged classes. This may preclude such investors to benefit from an increase in the value of
the fund’s base currency. Hedged share class hedges the fund’s base currency back to its currency of denomination on a best efforts basis. The
volatility of the hedged classes measured in the fund’s base currency may be higher than that of the equivalent class denominated in the fund’s
base currency.
7. The fund may invest in financial derivative instruments (FDI) for hedging purposes. In adverse situations, the fund’s use of FDI may become
ineffective in hedging and the fund may suffer significant losses. Risks associated with FDI include counterparty risk, credit risk and liquidity risk.
Such exposure may lead to a high risk of capital loss.
You should not make any investment decision solely based on this document. Please read the relevant offering document carefully for further fund
details including risk factors.
Schroder Asian Asset Income Fund
Monthly Fund Update
Fund Performance
As at 30 April 2015, in HKD
Schroder Asian Asset Income Fund
(A accumulation class) (%)
3 months
Year to date
1 Year
3 Year
(Annualized)
Since
Inception
(Annualized)
*
+1.3
+3.2
+9.4
+9.0
+8.0
Source: Schroders, HKD, NAV to NAV, A accumulation share class and net of fees, with dividends reinvested. The Fund is
benchmark unconstrained. Past performance is not indicative of future performance. *Launch date is 27 June 2011.
2014 annual performance: +10.4%, 2013 annual performance: +0.8%, 2012 annual performance: +26.1%, 2011 (since inception
from 27 Jun 2011) annual performance: -7.3%
Market Overview

Asia ex Japan equities finished April up strongly, driven mainly by a surge of liquidity into Chinese
and Hong Kong markets on expectations of further easing measures by the Chinese authorities.
30 April 2015

Elsewhere in Asia, Korea gained value as cheaper valuations fuelled foreign buying of Korean stocks.
ASEAN markets however underperformed as sentiment on India and Thailand was dented by
disappointing corporate earnings for the former and downward revision of GDP growth of the latter.

Both US dollar and local currency Asian credit markets delivered positive returns, while investment
grade bonds underperformed given the rise in base yields.

In terms of country, the optimism in Chinese equity spilled over to the fixed income market, with
Chinese property developers gaining value on improving sentiment.
Indonesia and India
underperformed given growth concerns and weaker corporate earnings.
Asset Allocation Strategy

There was no change to the overall asset allocation of the Fund. The current environment remains
supportive for equity and credit markets given strong momentum and increasing liquidity from central
banks.

Investors have recently pushed back their expectation of the first rate hike by the US Federal
Reserve given the recent soft-patch in US economic data, and the US dollar weakened over the last
few weeks as a result.

However, we believe momentum of the US economy remains intact as the recent weakness is
largely temporary from the impact of the colder-than-normal winter and the recent port closures due
to strikes. These transient factors are likely to fade away in coming months, and as data improves,
investors will re-focus on the timing of an interest rate rise.

The greenback is likely to appreciate again as a result. Therefore, in the portfolio we keep our
hedges on the vulnerable Australian, New Zealand and Singapore dollar. Overall, the USD & HKD
exposure remains at above 80%.
Equity Strategy

Broadly speaking the equity strategy remains unchanged in April. Given less attractive value and
headwinds on the sector, we reduced our holdings in one of the Taiwan technology names.

For purchases, we continued to focus on the Taiwan telecom, Thailand banking / telecom and some
utilities names in New Zealand. These defensive sectors with strong cash flows could continue to
pay sustainable dividends despite the recent soft-patch in global economic growth.

In addition, we continued to increase our position in the Macau gaming sector, which have priced in
substantial downward revision on revenues. We believe that the risk/reward is attractive here, and
we expect revenue rebound later in the year on consumption improvement due to the wealth effect
from the equity bull market.

We have also added to a Chinese bank which could benefit the most from the recent easing by the
Chinese authority, while its 5%* dividend yield is also attractive.
*For illustrative purpose only. The mentioned yield is not indicative of the return of the fund, and this is not a recommendation to
invest or divest in the above mentioned company, sector and/or country.
Fixed Income Strategy

Portfolio activities were focused on the oil & gas and the Chinese property developers sector. While
easing policy from China is supportive of the Chinese property sector, headwinds of lower demands
from the anti-corruption program and the large quantity of inventory remain. We remain cautious and
added selectively to names which have healthy credit profile, strong access to funding and
increasing market share.

In the commodity space, we took profit in a few Chinese energy names and rotated into longer
maturity names in India and Malaysia given the steep credit spread curve. In addition, we continued
adding to infrastructure names which could benefit from the “One-belt One-road” policy.
Market Outlook
30 April 2015

Recently volatility has picked up in the fixed income market with European government bond yields
rising sharply, while the 10-year yield of the US Treasury also rose back to 2.2%. While this volatility
has yet to affect Asia in general, we might start to see some spill over effect if this move continues.

Our duration hedges should help the portfolio cushion some losses if yields continue to rise.
Uncertainty about growth and inflation will likely be the key risks for markets for the rest of the year
given the increasing data dependency of central banks’ monetary policy. Risk management, security
selection and nimble asset allocation remain key to navigate this environment when investing for
income and growth in Asian markets.

In equities, the rally in Chinese equities was mainly driven by retail participation, margin financing
and supportive government measures without any fundamental support. In the absence of any
significant economic recovery in China, the rally is likely to be unsustainable and may experience a
meaningful correction as investors revert from the current phase of massive speculation back to
basic fundamental investing.

Elsewhere in Asia, we remain positive on the Indian economy over the long-term. However while the
Indian equity market experienced some short-term correction, we believe current valuation remains
unattractive. If the weakness extends further, it could create an entry point to some interesting
dividend opportunities.

For fixed income, government bond yields globally remain depressed especially in Europe, where
about 25% of Euro-denominated bonds are with negative nominal yields. Despite the recent spike
up in yields, spreads of Asian relative to US and European bonds remain attractive. Therefore,
investors with an income need will continue to re-allocate away from these assets to markets which
still offer a relatively higher level of yields.

Asian corporates should continue to benefit from this trend given the strong fundamentals of Asian
corporates and relatively attractive valuations over US and European issuers. While the new
issuance market is active in Asia, neither quality nor pricing of these deals are compelling. Therefore,
we prefer to focus on rotation among existing issuers and sectors.
Important Information
Any security(s) mentioned above is for illustrative purpose only, not a recommendation to invest or divest.
This document is intended to be for information purposes only and it is not intended as promotional material in any respect. The material is not
intended to provide, and should not be relied on for investment advice or recommendation. Opinions stated are matters of judgment, which may
change. Information herein is believed to be reliable, but Schroder Investment Management (Hong Kong) Limited does not warrant its completeness
or accuracy.
Investment involves risks. Past performance and any forecasts are not necessarily a guide to future or likely performance. You should remember that
the value of investments can go down as well as up and is not guaranteed. Exchange rate changes may cause the value of the overseas
investments to rise or fall. For risks associated with investment in securities in emerging and less developed markets, please refer to the relevant
offering document.
The information contained in this document is provided for information purpose only and does not constitute any solicitation and offering of
investment products. Potential investors should be aware that such investments involve market risk and should be regarded as long-term
investments.
Derivatives carry a high degree of risk and should only be considered by sophisticated investors.
This material has not been reviewed by the SFC. Issued by Schroder Investment Management (Hong Kong) Limited.
Schroder Investment Management (Hong Kong) Limited
Level 33, Two Pacific Place, 88 Queensway, Hong Kong
Telephone +852 2521 1633 Fax +852 2530 9095