31 March 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 31 March 2015, in HKD
Schroder Asian Asset Income Fund
(A accumulation class) (%)
3 months
Year to date
1 Year
3 Year
(Annualized)
Since
Inception
(Annualized)
*
2.4
2.4
10.5
7.9
9.6
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 March marginally higher on the strength of the Chinese market.
Despite deteriorating growth figures, further stimulus by the Chinese authority boosted investor
sentiment.
31 March 2015

Hong Kong and Chinese stocks delivered solid returns over the period. Elsewhere, most markets
were down in March with Australia underperforming, as investors expected further headwinds
against metal producers given the slowdown of investments in China.

Asian credit finished March in the positive territory as bond yields fell while spreads remained largely
unchanged. Investment grade bonds outperformed given their higher sensitivity to base yields
relative to high yield bonds.

Most markets delivered positive returns except Indonesia, as the volatility in rupiah shook invest
confidence earlier in the month, despite a partial recovery later on the dovish tone by the US Federal
Reserve.
Asset Allocation Strategy

Asset allocation strategy was unchanged in March with 51% and 34% in equities and fixed income
respectively, while 11% was allocated to global assets with the remainder in cash.

Although equity volatility has treaded higher, the positive economic environment, relatively attractive
valuation and increasing central banks’ liquidity in Asia should continue to support the equity and
credit markets in the region.

Although the US dollar should stay strong, we have started to see some values emerging in selective
Asian currencies. As such, we partially reduced our hedges on the Singapore dollar and removed
the hedges on the Thai Baht. Overall, the USD & HKD exposure remains at around 80% of the
portfolio.
Equity Strategy

In March, we continued building the Fund’s positions in the Thai banking and telecom sector, which
should benefit from the economic recovery of Thailand as the political landscape stabilised.

Within Singapore REITs, we rotated from some office names into the hospitality sector, which could
benefit from improving visitors arrivals. After some underperformance of Japan-REITs over last two
months, yields have risen back above 3%* and downside is now reduced with the Bank of Japan
providing support as a purchaser.

The Taiwan technology sector has done well over the past year. With valuation becoming less
cheap, the near term cyclical headwinds from decelerating PC and smartphones demand could
create some pressure, and we are inclined to take profits on strength. The Taiwan telecom sector,
however, looks more attractive with a dividend yield of close to 5%* as the sector enters a phase of
benign competition.
*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

The fixed income strategy remained largely unchanged in March, adding to some selective
commodity-related corporates with strong fundamentals while reducing exposures in Chinese
property developers.

Current valuations of the commodity sector have priced in multiple notches of downgrade. With the
recent consolidation in commodity prices, we believe some selective oil & gas names present us with
interesting opportunities.

On the other hand, despite further measures by the Chinese government to support the property
market, the property developers sector remains vulnerable to a further slow-down in the economy.
We have thus trimmed our holdings and rotated into infrastructure-related names, which could
benefit from the “One-belt One-road” policy.
31 March 2015
Market Outlook

Falling inflation expectations have pushed most central banks in Asia to conduct some form of
monetary easing, which is supportive of yielding assets. However, the market is also faced with the
counterbalancing force of an earlier than expected rate hike by the US Federal Reserve, given the
continuous upside surprise from the US jobs data.

Interest rate forward guidance from the “dots” released by the Fed in March was lowered, showing
concerns that the strong US dollar might dampen inflation and the economy going forward. This
delay in rate hike expectation together with the added stimulus by central banks in Asia should keep
yielding assets buoyed over the short-term.

However, recent data showed that the US labour market remains strong, which could result in an uptick in core inflation as employment costs increase. We are concerned that investors are complacent
about the timing of a US rate hike, which could trigger volatility should we see the Fed turns more
hawkish. In such an environment, risk management and security selection should remain a key
element when investing for income and growth in Asian markets.

Concerning the equity market, while the liquidity driven rally in Hong Kong and Chinese equities
could continue for a while, the euphoria from retail investors has pushed prices to a rather
unsustainable level.

If anything, this strong rally could present us with more dangers than opportunities. We continue to
believe that by focusing on companies with solid fundamentals and healthy dividends backed by
strong cash-flows, we can ultimately help our investors to achieve a relatively steady income and
growth over the long-term.

In fixed income, government bond yields globally remain depressed especially in Europe, where
about 25% of Euro-denominated bonds are with negative nominal yields. 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.

We believe Asian corporates should continue to benefit from this trend given the strong
fundamentals of Asian corporates and relatively attractive valuations over US issuers. In terms of
country, Hong Kong/Chinese credits are bound to benefit as China decidedly switched to an easing
mode. We continue to see opportunities in the CNH market, especially on the short-end of the curve.
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