Benefits of investing in the Schroder Absolute Return Income Fund

The benefits of investing in the Fund include:

• Actively managed absolute return debt strategy offering income, risk control and liquidity

• Flexibility to invest across the fixed income universe, unconstrained by benchmarks, to seek return and control risk

• Full application of investment capabilities including asset allocation, credit sector selection, security selection and risk management, overlaid with management of interest rate risk

• Strong research commitment with the Schroders

• Credit Research team performing fundamental analysis of corporates in Australia and globally

• Experienced and dedicated investment team with clear accountability that is well integrated into the broader Schroders' global fixed income team. This delivers global insight, research and implementation in key regions and asset classes.

Investor suitability

For investors who seek steady distributions from a portfolio of income generating securities and returns in excess of cash over the medium to long term with a focus on capital preservation.

Fund overview

The Schroder Absolute Return Income Fund is an absolute return focused strategy that invests in Australian and international fixed income securities to deliver regular income to investors. With a focus on managing downside risks it aims to outperform cash and term deposits over the medium term, but with less volatility than equity markets and aims to avoid negative returns over any rolling 12-month period. The Fund may also use derivatives and active currency management to help achieve this investment objective.

How the Fund is managed

Adopting an absolute return approach, the most critical element of the investment process is to identify which assets to own and when to own them. This is determined through our valuation driven return/risk framework, underpinned by a focus on downside risk.

Unconstrained by design, the Fund can diversify its exposures across geography, issuer type, maturity, ratings grade and capital structure dimensions, with allocations to these dimensions supplemented by duration management and alpha strategies. Risk management is crucial to control the Fund's exposure to the aggregation of portfolio risks, in particular to limit correlation to equity markets and to minimise volatility and drawdowns.

This approach is complemented by extensive fundamental research by local and global analysts, as well as insights from Schroders' extensive fixed income capability. The targeted result is a well-diversified portfolio of bonds and other debt securities with the potential to deliver consistent returns above cash and term deposits, with high liquidity but with much lower risk than the equity market.

How we invest your money

The Fund may invest across a wide range of Australian and global corporate bonds across the credit spectrum, subordinated securities, mortgage and asset backed securities, government and quasi- government bonds, developing market debt, cash and cash equivalents. The Fund may also use derivatives and active currency management.

Asset classes and investment ranges

(Asset class: Investment Range)

• Australian investment grade: 0% - 100%

• Global investment grade: 0% - 100%

• Australian high yield*: 0% - 40%

• Global high yield*: 0% - 30%

• Cash and cash equivalents: 0% - 100%

*Maximum aggregate exposure to high yield assets will not exceed 50%.