Schroder ISF Annual Report

Schroder International Selection FundAudited Annual Report31 December 2016

Luxembourg

R.C.S Luxembourg B 8.202

Schroder International Selection FundSocit dInvestissement Capital Variable (SICAV)

Audited Annual Report

31 December 2016

No subscriptions can be received on the basis of periodical reports. Subscriptions arevalid only if made on the basis of the current prospectus, the current Key InvestorsInformation Documents, accompanied by the last available audited annual report orunaudited semi-annual report if published thereafter. This report is based on the currentprospectus.

Audited annual and unaudited semi-annual reports, the current prospectus, KIID and theArticles of Incorporation of the Company are available, free of charge, at the Companysregistered office, 5, rue Hhenhof, L-1736 Senningerberg, Grand Duchy of Luxembourg.

Schroder International Selection Fund Audited Annual Report 31 December 2016

Table of contents

Schroder International Selection Fund . . . . . . . . . . . . . . . . . . . . . .9

Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

Directors Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Investment Managers Report . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . .19

Audit Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159

Statement of Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160

Statement of Changes in Net Assets . . . . . . . . . . . . . . . . . . . . . 255

Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 274

Distribution of Investments by Industry . . . . . . . . . . . . . . . . . . . 293

Portfolio of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 312

Mainstream Equity FundsSchroder ISF Asian Opportunities . . . . . . . . . . . . . . . . . . . . . . . 312

Schroder ISF EURO Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 313

Schroder ISF European Large Cap . . . . . . . . . . . . . . . . . . . . . . . 314

Schroder ISF Global Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 315

Schroder ISF Italian Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 316

Schroder ISF Japanese Equity . . . . . . . . . . . . . . . . . . . . . . . . . . 317

Schroder ISF Swiss Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 318

Schroder ISF UK Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 318

Schroder ISF US Large Cap . . . . . . . . . . . . . . . . . . . . . . . . . . . . 319

Specialist Equity FundsSchroder ISF Asia Pacific Cities Real Estate * . . . . . . . . . . . . . . . . 320

Schroder ISF Asian Dividend Maximiser . . . . . . . . . . . . . . . . . . . 320

Schroder ISF Asian Equity Yield . . . . . . . . . . . . . . . . . . . . . . . . . 321

Schroder ISF Asian Smaller Companies . . . . . . . . . . . . . . . . . . . 322

Schroder ISF Asian Total Return . . . . . . . . . . . . . . . . . . . . . . . . . 323

Schroder ISF BRIC (Brazil, Russia, India, China) . . . . . . . . . . . . . 324

Schroder ISF China Opportunities . . . . . . . . . . . . . . . . . . . . . . . . 325

Schroder ISF Emerging Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . 326

Schroder ISF Emerging Europe . . . . . . . . . . . . . . . . . . . . . . . . . . 327

Schroder ISF Emerging Markets . . . . . . . . . . . . . . . . . . . . . . . . . 328

Schroder ISF European Alpha Focus * . . . . . . . . . . . . . . . . . . . . . 330

Schroder ISF European Dividend Maximiser . . . . . . . . . . . . . . . . 331

Schroder ISF European Equity (Ex UK) . . . . . . . . . . . . . . . . . . . . 332

Schroder ISF European Equity Yield . . . . . . . . . . . . . . . . . . . . . . 333

Schroder ISF European Opportunities . . . . . . . . . . . . . . . . . . . . . 334

Schroder ISF European Smaller Companies . . . . . . . . . . . . . . . . 335

Schroder ISF European Special Situations . . . . . . . . . . . . . . . . . . 336

* Please refer to the Directors Report for details of all corporate actions that occurred during the year under review.


Table of contents

Specialist Equity Funds (cont)Schroder ISF European Total Return . . . . . . . . . . . . . . . . . . . . . . 337

Schroder ISF European Value * . . . . . . . . . . . . . . . . . . . . . . . . . . 338

Schroder ISF Frontier Markets Equity . . . . . . . . . . . . . . . . . . . . . 339

Schroder ISF Global Cities Real Estate * . . . . . . . . . . . . . . . . . . . . 340

Schroder ISF Global Climate Change Equity . . . . . . . . . . . . . . . . 341

Schroder ISF Global Demographic Opportunities . . . . . . . . . . . . . 342

Schroder ISF Global Dividend Maximiser . . . . . . . . . . . . . . . . . . . 343

Schroder ISF Global Emerging Market Opportunities . . . . . . . . . . 344

Schroder ISF Global Emerging Markets Smaller Companies . . . . . 345

Schroder ISF Global Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 346

Schroder ISF Global Equity Yield . . . . . . . . . . . . . . . . . . . . . . . . . 347

Schroder ISF Global Gold * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348

Schroder ISF Global Recovery . . . . . . . . . . . . . . . . . . . . . . . . . . 348

Schroder ISF Global Smaller Companies . . . . . . . . . . . . . . . . . . . 349

Schroder ISF Greater China . . . . . . . . . . . . . . . . . . . . . . . . . . . . 352

Schroder ISF Hong Kong Equity . . . . . . . . . . . . . . . . . . . . . . . . . 353

Schroder ISF Indian Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 354

Schroder ISF Indian Opportunities . . . . . . . . . . . . . . . . . . . . . . . . 355

Schroder ISF Japanese Opportunities . . . . . . . . . . . . . . . . . . . . . 355

Schroder ISF Japanese Smaller Companies . . . . . . . . . . . . . . . . 356

Schroder ISF Korean Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 357

Schroder ISF Latin American . . . . . . . . . . . . . . . . . . . . . . . . . . . 358

Schroder ISF Middle East . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 359

Schroder ISF Swiss Equity Opportunities . . . . . . . . . . . . . . . . . . 360

Schroder ISF Swiss Small & Mid Cap Equity . . . . . . . . . . . . . . . . 360

Schroder ISF Taiwanese Equity . . . . . . . . . . . . . . . . . . . . . . . . . . 361

Schroder ISF UK Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . 361

Schroder ISF US Small & Mid Cap Equity . . . . . . . . . . . . . . . . . . 362

Schroder ISF US Smaller Companies . . . . . . . . . . . . . . . . . . . . . 363

Alpha Equity FundsSchroder ISF Global Equity Alpha . . . . . . . . . . . . . . . . . . . . . . . . 365

Quantitative Equity FundsSchroder ISF QEP Global Active Value . . . . . . . . . . . . . . . . . . . . 366

Schroder ISF QEP Global Blend . . . . . . . . . . . . . . . . . . . . . . . . . 372

Schroder ISF QEP Global Core . . . . . . . . . . . . . . . . . . . . . . . . . . 377

Schroder ISF QEP Global Emerging Markets . . . . . . . . . . . . . . . . 383

Schroder ISF QEP Global ESG . . . . . . . . . . . . . . . . . . . . . . . . . . 388

Schroder ISF QEP Global Quality . . . . . . . . . . . . . . . . . . . . . . . . 391

Schroder ISF QEP Global Value Plus . . . . . . . . . . . . . . . . . . . . . . 395

Asset Allocation FundsSchroder ISF Global Tactical Asset Allocation . . . . . . . . . . . . . . . 400



Table of contents

Multi-Asset FundsSchroder ISF Emerging Multi-Asset Income . . . . . . . . . . . . . . . . . 400

Schroder ISF Global Diversified Growth . . . . . . . . . . . . . . . . . . . . 404

Schroder ISF Global Multi-Asset Balanced * . . . . . . . . . . . . . . . . . 405

Schroder ISF Global Multi-Asset Conservative * . . . . . . . . . . . . . . 409

Schroder ISF Global Multi-Asset Flexible * . . . . . . . . . . . . . . . . . . 412

Schroder ISF Global Multi-Asset Income . . . . . . . . . . . . . . . . . . . 415

Schroder ISF Global Target Return * . . . . . . . . . . . . . . . . . . . . . . 430

Schroder ISF Japan DGF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 432

Schroder ISF Multi-Asset Total Return * . . . . . . . . . . . . . . . . . . . . 433

Schroder ISF Strategic Beta 10 . . . . . . . . . . . . . . . . . . . . . . . . . 434

Schroder ISF Wealth Preservation . . . . . . . . . . . . . . . . . . . . . . . . 434

Multi-Manager FundsSchroder ISF Multi-Manager Diversity . . . . . . . . . . . . . . . . . . . . . 435

Absolute Return FundsSchroder ISF Asian Bond Absolute Return . . . . . . . . . . . . . . . . . 436

Schroder ISF Emerging Markets Debt Absolute Return . . . . . . . . 437

Schroder ISF EURO Credit Absolute Return . . . . . . . . . . . . . . . . 439

Schroder ISF European Alpha Absolute Return . . . . . . . . . . . . . . 441

Schroder ISF European Equity Absolute Return . . . . . . . . . . . . . . 441

Schroder ISF QEP Global Absolute . . . . . . . . . . . . . . . . . . . . . . . 442

Mainstream Bond FundsSchroder ISF EURO Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 448

Schroder ISF EURO Government Bond . . . . . . . . . . . . . . . . . . . . 452

Schroder ISF EURO Short Term Bond . . . . . . . . . . . . . . . . . . . . 453

Schroder ISF Global Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 455

Schroder ISF Global Inflation Linked Bond . . . . . . . . . . . . . . . . . . 461

Schroder ISF Hong Kong Dollar Bond . . . . . . . . . . . . . . . . . . . . . 462

Schroder ISF US Dollar Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . 466

Specialist Bond FundsSchroder ISF Asian Convertible Bond . . . . . . . . . . . . . . . . . . . . . 471

Schroder ISF Asian Local Currency Bond . . . . . . . . . . . . . . . . . . 472

Schroder ISF Emerging Market Bond . . . . . . . . . . . . . . . . . . . . . 474

Schroder ISF Emerging Market Corporate Bond . . . . . . . . . . . . . 476

Schroder ISF Emerging Market Local Currency Bond . . . . . . . . . 479

Schroder ISF EURO Corporate Bond . . . . . . . . . . . . . . . . . . . . . 480

Schroder ISF EURO Credit Conviction . . . . . . . . . . . . . . . . . . . . . 486

Schroder ISF EURO High Yield . . . . . . . . . . . . . . . . . . . . . . . . . . 490

Schroder ISF Global Conservative Convertible Bond . . . . . . . . . . 494

Schroder ISF Global Convertible Bond . . . . . . . . . . . . . . . . . . . . 495

Schroder ISF Global Corporate Bond . . . . . . . . . . . . . . . . . . . . . 498

Schroder ISF Global Credit Duration Hedged . . . . . . . . . . . . . . . 504

Schroder ISF Global Credit Income * . . . . . . . . . . . . . . . . . . . . . . 508



Table of contents

Specialist Bond Funds (cont)Schroder ISF Global High Income Bond . . . . . . . . . . . . . . . . . . . 511

Schroder ISF Global High Yield . . . . . . . . . . . . . . . . . . . . . . . . . . 514

Schroder ISF Global Multi Credit * . . . . . . . . . . . . . . . . . . . . . . . . 521

Schroder ISF Global Unconstrained Bond . . . . . . . . . . . . . . . . . . 527

Schroder ISF RMB Fixed Income . . . . . . . . . . . . . . . . . . . . . . . . 531

Schroder ISF Strategic Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . 532

Schroder ISF Strategic Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . 536

Liquidity FundsSchroder ISF EURO Liquidity . . . . . . . . . . . . . . . . . . . . . . . . . . . 540

Schroder ISF US Dollar Liquidity . . . . . . . . . . . . . . . . . . . . . . . . . 542

Appendix I - Comparative Statement . . . . . . . . . . . . . . . . . . . . . 543

Appendix II - Audited TER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 695

Appendix III - Global exposure and leverage (unaudited) . . . . . 697

Appendix IV - Securities Financing Transactions (Unaudited) . . 701

Appendix V Remuneration Disclosures . . . . . . . . . . . . . . . . . . 724

Appendix VI Unaudited Collateral Exposure . . . . . . . . . . . . . . 726



Schroder International Selection Fund (the Company) is an open-ended umbrella companyincorporated under Luxembourg law, which enables investors to choose from Funds (specificportfolios of assets and liabilities within the Company having their own net asset value andrepresented by a separate class or classes of shares) offering different investment objectives.The shares of each Fund are listed on the Luxembourg Stock Exchange. Prices are alsoavailable on Bloomberg and Reuters.

This report covers the year from 1 January 2016 to 31 December 2016. The financialstatements are prepared in accordance with Luxembourg regulations relating to undertakingsfor collective investment. The last day on which prices were calculated was 30 December2016, the last working day of the year. At the date of this report, 111 Funds were available forinvestment. Please refer to the current prospectus for the investment objectives of the Fundsas well as details of investment restrictions. The monthly factsheets for each Fund can beobtained from the Companys registered office and are also available on the website ofSchroder Investment Management (Luxembourg) S.A. (http://www.schroders.lu).

Hereafter, names of the Funds will be preceded by Schroder ISF, e.g. Schroder ISF GlobalEquity Alpha.

Schroders is a FATCA compliant organisation. The FATCA classification of this entity and itsGIIN is as follows: FATCA entity classification: FFI; Sponsoring entity: Schroder InvestmentManagement (Luxembourg) S.A.; Sponsoring entity GIIN: 4RIMT7.00000.SP.442

The Company is subject to corporate governance based on:

1. Its obligations as defined by the UCITS Directive 2009/65/EC dated 13 July 2009, asimplemented in Luxembourg law which is available for inspection at the registered office of theCompany at 5, rue Hhenhof, 1736 Senningerberg, Grand Duchy of Luxembourg.

2. Its articles of incorporation which are available for inspection at the registered office of theCompany and at the Luxembourg corporate and trade register, Registre de Commerce et desSocits (RCSL).

3. Its obligations in respect of the management of the Company, for which the Company hasappointed Schroder Investment Management (Luxembourg) S.A., which is subject to therequirements of the Management Company Directive 2010/43/EC, as implemented inLuxembourg law.

4. The Association of the Luxembourg Fund Industry (ALFI) code of conduct, which theCompany has voluntarily adopted.

Internal Control and Risk Management Systems

The Board of Directors is responsible for establishing and maintaining adequate internal controland risk management systems of the Company in relation to the financial reporting process.Such systems are designed to manage rather than eliminate the risk of error or fraud inachieving the Company's financial reporting objectives and can only provide reasonable andnot absolute assurance against material misstatement or loss.

The Board of Directors has contracted with the Management Company to put procedures inplace to ensure all relevant accounting records are properly maintained and are readilyavailable, including the production of annual and semi-annual reports. The annual and semi-annual reports of the Company are required to be approved by the Board of Directors of theCompany and filed with the Commission de Surveillance du Secteur Financier (CSSF) and, inthe case of annual reports, with the RCSL.

The annual statutory financial statements are required to be audited by independent auditorswho report to the Board of Directors on their findings.

The Board meets at least four times a year and ensures that the Company maintains highstandards of integrity and control in its operations and that it possesses adequate governanceand means of control as law and regulation demand.

Schroder International Selection Fund

The Company

Corporate Governance

http://www.pwc.lu


Massimo Tosato 1

Vice ChairmanSchroder Investment Management Limited31, Gresham Street, London EC2V 7QAUnited Kingdom

Richard Mountford 2

Global Head of ProductSchroder Investment Management Limited31, Gresham Street, London EC2V 7QAUnited Kingdom

Jacques Elvinger 3

AvocatElvinger Hoss Prussen2, place Winston Churchill, 1340 LuxembourgGrand Duchy of Luxembourg

Daniel De Fernando GarciaIndependent DirectorSerano 1, 28001 MadridSpain

Achim KuessnerCountry Head Germany, Austria & CEESchroder Investment Management GmbHTaunustor 1 (TaunusTurm), 60310 Frankfurt am MainGermany

Marie-Jeanne Chevremont-LorenziniIndependent Director19, rue de Bitbourg, 1273 LuxembourgGrand Duchy of Luxembourg

Ketil PetersenCountry Head Nordic RegionSchroders Denmark Filial af Schroder Investment Management (Luxembourg) S.A.Store Strandstraede 21, 1255 Copenhagen KDenmark

Mike ChampionHead of Product DevelopmentSchroder Investment Management Limited31, Gresham Street, London EC2V 7QAUnited Kingdom

Bernard Herman 4

Independent Director19 rue de Bitbourg, 1273 LuxembourgGrand Duchy of Luxembourg

Carlo Trabattoni 5

Head of Pan European Intermediary Distribution and GFIGSchroder Investment Management Limited31, Gresham Street, London EC2V 7QAUnited Kingdom

Board of Directors

1 Massimo Tosato resigned as Director and chairman of the Board of Directors on 31 December 2016.2 Richard Mountford was appointed Director and Chairman of the Board of Directors on 2 February 2017.3 Jacques Elvinger resigned from the Board of Directors on 31 December 2016.4 Bernard Herman was appointed to the Board of Directors on 16 November 2016.5 Carlo Trabattoni resigned from the Board of Directors on 29 July 2016.

Chairman

Directors


5, rue Hhenhof, 1736 Senningerberg, Grand Duchy of Luxembourg

Schroder Investment Management (Luxembourg) S.A.5, rue Hhenhof, 1736 Senningerberg, Grand Duchy of Luxembourg

J.P. Morgan Bank Luxembourg S.A.European Bank & Business Centre, 6, route de Trves, 2633 Senningerberg,Grand Duchy of Luxembourg

Elvinger Hoss Prussen2, place Winston Churchill, 1340 Luxembourg, Grand Duchy of Luxembourg

PricewaterhouseCoopers, Socit cooprative2 rue Gerhard Mercator, 2182 Luxembourg, Grand Duchy of Luxembourg

Schroder Investment Management Limited31, Gresham Street, London EC2V 7QA, United KingdomSchroder ISF Asia Pacific Cities Real Estate*Schroder ISF Asian Dividend MaximiserSchroder ISF BRIC (Brazil, Russia, India, China)Schroder ISF Emerging EuropeSchroder ISF Emerging MarketsSchroder ISF Emerging Markets Debt Absolute ReturnSchroder ISF Emerging Multi-Asset IncomeSchroder ISF EURO BondSchroder ISF EURO Corporate BondSchroder ISF EURO Credit Absolute ReturnSchroder ISF EURO Credit ConvictionSchroder ISF EURO EquitySchroder ISF EURO Government BondSchroder ISF EURO High YieldSchroder ISF EURO LiquiditySchroder ISF EURO Short Term BondSchroder ISF European Alpha Absolute ReturnSchroder ISF European Alpha Focus*Schroder ISF European Dividend MaximiserSchroder ISF European Equity (Ex UK)Schroder ISF European Equity Absolute ReturnSchroder ISF European Equity YieldSchroder ISF European Large CapSchroder ISF European OpportunitiesSchroder ISF European Smaller CompaniesSchroder ISF European Special SituationsSchroder ISF European Total ReturnSchroder ISF European Value*Schroder ISF Frontier Markets EquitySchroder ISF Global BondSchroder ISF Global Cities Real Estate*Schroder ISF Global Climate Change EquitySchroder ISF Global Credit Income*Schroder ISF Global Demographic OpportunitiesSchroder ISF Global Diversified GrowthSchroder ISF Global Dividend MaximiserSchroder ISF Global Emerging Market OpportunitiesSchroder ISF Global Emerging Markets Smaller CompaniesSchroder ISF Global EnergySchroder ISF Global EquitySchroder ISF Global Equity AlphaSchroder ISF Global Equity YieldSchroder ISF Global Gold*Schroder ISF Global Inflation Linked BondSchroder ISF Global Multi Credit*Schroder ISF Global Multi-Asset FlexibleSchroder ISF Global Multi-Asset IncomeSchroder ISF Global RecoverySchroder ISF Global Smaller CompaniesSchroder ISF Global Tactical Asset AllocationSchroder ISF Global Unconstrained Bond

Administration


Registered Office

Management Company, DomiciliaryAgent, Principal Paying Agent,Registrar and Transfer Agent

Custodian and Fund Administrator

Principal Legal Adviser

Auditor

Investment Managers


Schroder Investment Management Limited (cont)31, Gresham Street, London EC2V 7QA, United KingdomSchroder ISF Italian EquitySchroder ISF Latin AmericanSchroder ISF Middle EastSchroder ISF Multi-Manager DiversitySchroder ISF QEP Global AbsoluteSchroder ISF QEP Global Active ValueSchroder ISF QEP Global BlendSchroder ISF QEP Global CoreSchroder ISF QEP Global Emerging MarketsSchroder ISF QEP Global ESGSchroder ISF QEP Global QualitySchroder ISF QEP Global Value PlusSchroder ISF Strategic Beta 10Schroder ISF Strategic BondSchroder ISF Strategic CreditSchroder ISF UK EquitySchroder ISF UK OpportunitiesSchroder ISF Wealth Preservation

Schroder Investment Management Australia LimitedLevel 20 Angel Place, 123 Pitt Street, Sydney NSW 2000, Australia

Schroder ISF Global Target Return*

Schroder Investment Management (Hong Kong) LimitedLevel 33, Two Pacific Place, 88 Queensway, Hong KongSchroder ISF China OpportunitiesSchroder ISF Emerging AsiaSchroder ISF Greater ChinaSchroder ISF Hong Kong Dollar BondSchroder ISF Hong Kong EquitySchroder ISF Japan DGFSchroder ISF RMB Fixed IncomeSchroder ISF Taiwanese Equity

Schroder Investment Management (Japan) Limited21st Floor Marunouchi Trust Tower Main, 1-8-3 Marunouchi, Chiyoda-Ku, Tokyo 100-0005,JapanSchroder ISF Japanese EquitySchroder ISF Japanese Equity AlphaSchroder ISF Japanese OpportunitiesSchroder ISF Japanese Smaller Companies*

Schroder Investment Management North America Inc.875 Third Avenue, 22nd Floor, New York, NY 10022-6225, United States of AmericaSchroder ISF Emerging Market BondSchroder ISF Emerging Market Local Currency BondSchroder ISF Global Corporate BondSchroder ISF Global Credit Duration HedgedSchroder ISF Global High Income BondSchroder ISF Global High YieldSchroder ISF US Dollar BondSchroder ISF US Dollar LiquiditySchroder ISF US Large CapSchroder ISF US Small & Mid Cap EquitySchroder ISF US Smaller Companies

Schroder Investment Management (Singapore) Limited138 Market Street #23-01, CapitaGreen, Singapore 048946, SingaporeSchroder ISF Asian Bond Absolute ReturnSchroder ISF Asian Equity YieldSchroder ISF Asian Local Currency BondSchroder ISF Asian OpportunitiesSchroder ISF Asian Smaller CompaniesSchroder ISF Asian Total ReturnSchroder ISF Emerging Market Corporate BondSchroder ISF Indian EquitySchroder ISF Indian OpportunitiesSchroder ISF Korean Equity

Administration (cont)


Investment Managers (cont)


Schroder Investment Management (Switzerland) AGCentral 2, 8001 Zurich, SwitzerlandSchroder ISF Asian Convertible BondSchroder ISF Global Conservative Convertible BondSchroder ISF Global Convertible BondSchroder ISF Global Multi-Asset Balanced*Schroder ISF Global Multi-Asset Conservative*Schroder ISF Swiss EquitySchroder ISF Swiss Equity OpportunitiesSchroder ISF Swiss Small & Mid Cap Equity

Administration (cont)


Investment Managers (cont)

Introduction

The directors of the Company submit their report and the unaudited financial statements for the year ended 31 December 2016.

Activities during the year

On 31 December 2016, the total net assets of the Company were EUR 90,435,536,972 compared to EUR 85,880,145,553 on 31 December 2015,representing an increase of 5.30%.

1. New FundsDuring the year under review, 5 new Funds were made available for investment within the Company:

8 June 2016 Schroder ISF Global Multi Credit29 June 2016 Schroder ISF Global Gold30 November 2016 Schroder ISF Global Credit Income7 December 2016 Schroder ISF Global Target Return14 December 2016 Schroder ISF Multi-Asset Total Return

2. New share classesIn addition to the 51 share classes launched in new Funds on launch dates, the following share classes were also made available during the yearunder review:

3 February 2016 Schroder ISF EURO Equity C Acc CHF Hedged24 February 2016 Schroder ISF Global High Yield A Acc EUR

Schroder ISF Global Multi-Asset Income I Acc GBP HedgedSchroder ISF Strategic Credit A Dis USD Hedged

2 March 2016 Schroder ISF Global High Yield A Dis HKD & A Dis AUD Hedged9 March 2016 Schroder ISF European Equity (Ex UK) S Dis GBP

Schroder ISF Strategic Credit S Acc & S Dis EUR Hedged13 April 2016 Schroder ISF Asian Opportunities X1 Acc

Schroder ISF Emerging Markets I Acc GBPSchroder ISF European Alpha Absolute Return I AccSchroder ISF Global Multi-Asset Conservative A Acc SEK HedgedSchroder ISF Strategic Credit C Acc SEK Hedged

27 April 2016 Schroder ISF Global High Yield C Acc SEK HedgedSchroder ISF US Dollar Bond C Acc SEK Hedged

18 May 2016 Schroder ISF EURO High Yield A Dis USD HedgedSchroder ISF Global Cities Real Estate X DisSchroder ISF Global Smaller Companies Z AccSchroder ISF Strategic Credit I Acc EUR Hedged

25 May 2016 Schroder ISF EURO Equity C Acc SEK HedgedSchroder ISF European Opportunities C Acc SEK Hedged

8 June 2016 Schroder ISF Strategic Credit C Dis SEK HedgedSchroder ISF US Large Cap C Acc SEK Hedged

15 June 201622 June 2016

Schroder ISF QEP Global Core X1 DisSchroder ISF Global Multi-Asset Balanced I Dis

6 July 2016 Schroder ISF Asian Opportunities C Acc SEK HedgedSchroder ISF Japanese Equity C Acc SEK HedgedSchroder ISF QEP Global ESG S Dis GBPSchroder ISF QEP Global Quality C Acc NOK, C Acc SEK Hedged & C Dis SEK Hedged

10 August 2016 Schroder ISF Global Inflation Linked Bond Z Dis17 August 2016 Schroder ISF Japanese Equity A Acc USD24 August 2016 Schroder ISF Emerging Multi-Asset Income I Acc, A Dis EUR Hedged & B Dis EUR Hedged

Schroder ISF Global Convertible Bond A Acc SEK Hedged & C Acc SEK HedgedSchroder ISF Global Emerging Markets Smaller Companies C Acc EURSchroder ISF Global Smaller Companies Z Acc EUR

31 August 2016 Schroder ISF EURO Credit Absolute Return B Acc & B DisSchroder ISF EURO High Yield B Acc & B DisSchroder ISF Global Multi-Asset Flexible B Acc EUR HedgedSchroder ISF Global Multi-Asset Income X DisSchroder ISF Global Multi Credit B Acc & B Dis EUR HedgedSchroder ISF QEP Global Absolute EUR Hedged B Acc

7 September 2016 Schroder ISF EURO High Yield A Acc SEK HedgedSchroder ISF Global Conservative Convertible Bond C Acc SEK HedgedSchroder ISF Global High Yield A Dis SGD Hedged

5 October 2016 Schroder ISF US Small & Mid-Cap Equity Z Acc12 October 2016 Schroder ISF Emerging Markets Debt Absolute Return IZ Acc EUR Hedged

Schroder ISF EURO High Yield IZ Acc & C Acc USD HedgedSchroder ISF Global Convertible Bond EUR Hedged IZ AccSchroder ISF Global Conservative Convertible Bond IZ Acc EUR Hedged

Page 14 Schroder International Selection Fund Audited Annual Report 31 December 2016

Directors Report

Activities during the year (cont)12 October 2016 (cont) Schroder ISF Japanese Smaller Companies A Acc EUR Hedged, C Acc EUR Hedged,

A Acc USD Hedged & C Acc USD HedgedSchroder ISF QEP Global Absolute A1 AccSchroder ISF Strategic Beta 10 A Acc & A Acc SGD Hedged

19 October 2016 Schroder ISF Asian Smaller Companies X Acc16 November 2016 Schroder ISF Emerging Multi-Asset Income AX Dis

Schroder ISF Global Bond C Acc GBP23 November 2016 Schroder ISF US Dollar Bond X Acc14 December 2016 Schroder ISF Asian Local Currency Bond A Acc CHF Hedged & C Acc CHF Hedged

Schroder ISF Multi-Asset Total Return A Acc, C Acc, I Acc, A Acc EUR Hedged, C Acc EUR Hedged,I Acc EUR HedgedSchroder ISF QEP Global Absolute A Dis EUR HedgedSchroder ISF QEP Global ESG A Acc, C Acc, A Acc EUR & C Acc EUR

3. Classes liquidationsDuring the year under review, the following share classes were liquidated:2 March 2016 Schroder ISF Global Recovery I Acc GBP Hedged31 March 2016 Schroder ISF Asian Dividend Maximiser A Dis RMB Hedged6 June 2016 Schroder ISF European Alpha Absolute Return R Acc22 July 2016 Schroder ISF QEP Global Active Value Z Acc EUR Hedged

Schroder ISF QEP Global Blend Z Acc EUR7 September 2016 Schroder ISF QEP Global Quality Z Acc EUR & Z Acc NOK26 October 2016 Schroder ISF Asia Pacific Property Securities A Acc CHF

Schroder ISF BRIC (Brazil, Russia, India, China) A Acc CHFSchroder ISF Hong Kong Equity A Acc CHF

4. Hard closureDuring the year under review, following share classes were hard closed:12 January 2016 Schroder ISF Global Multi-Asset Conservative A1 Acc and A1 Dis29 February 2016 Schroder ISF European Alpha Absolute Return A Acc, B Acc, C Acc, E Acc, R Acc, C Acc GBP Hedged, R Acc GBP Hedged, A Acc

USD Hedged, C Acc USD Hedged, R Acc USD Hedged, A1 Acc USD Hedged and B Acc USD Hedged27 December 2016 Schroder ISF Emerging Market Local Currency Bond A Acc, A1 Acc, B Acc, C Acc, E Acc, I Acc, A1 Dis, B Dis, I Dis, A Acc EUR

Hedged, A1 Acc EUR Hedged, B Acc EUR Hedged, C Acc EUR Hedged, E Acc EUR Hedged, I Acc EUR Hedged and A Acc GBP

Additionally the following class was hard closed to new investors:19 July 2016 Schroder ISF QEP Global Active Value Z Acc EUR

5. Fund name changeDuring the year under review, the following Funds changed their names:1 June 2016 Schroder ISF Global Conservative changed its name to Schroder ISF Global Multi-Asset Conservative1 June 2016 Schroder ISF Global Dynamic Balanced changed its name to Schroder ISF Global Multi-Asset Balanced1 June 2016 Schroder ISF Global Multi-Asset Allocation changed its name to Schroder ISF Global Multi-Asset Flexible1 December 2016 Schroder ISF Asia Pacific Property Securities changed its name to Schroder ISF Asia Pacific Cities Real Estate

Schroder ISF European Equity Alpha changed its name to Schroder ISF European ValueSchroder ISF Global Property Securities changed its name to Schroder ISF Global Cities Real EstateSchroder ISF European Equity Focus changed its name to Schroder ISF European Alpha Focus

6. Fund merger:During the year under review, the following Fund was merged:17 August 2016 Schroder ISF Japanese Equity Alpha merged into Schroder ISF Japanese Equity

Furthermore, the following changes took effect during the year:

1 January 2016Transfer agent fees reduction for Schroder ISF Global Multi-Asset Conservative A & A1 classes from 0.20% to 0.10%.Transfer agent fees reduction for Schroder ISF Global Multi-Asset Conservative C classes from 0.10% to 0.05%.Schroder ISF Asian Bond Absolute Return A Dis, A1 Dis, Z Dis, A1 Dis EUR, Z Dis EUR, A1 Dis EUR Hedged, Z Dis EUR Hedged, A Dis HKD and ZDis HKD classes changed the distribution policies from monthly 5% fixed to monthly 4% fixed.Schroder ISF Emerging Markets Debt Absolute Return A1 Dis AUD Hedged, A1 Dis EUR Hedged and A1 Dis classes changed the distributionpolicies from monthly 5% fixed to monthly 4% fixed.Schroder ISF Emerging Markets Debt Absolute Return A Dis, B Dis, A Dis EUR Hedged, Z Dis EUR Hedged and A Dis SGD Hedged classeschanged the distribution policies from quarterly 5% fixed to quarterly 4% fixed.Schroder ISF EURO Bond A Dis, A1 Dis and B Dis classes changed the distribution policies from quarterly 3% fixed to quarterly 2.5% fixed.Schroder ISF Global Bond A Dis EUR Hedged, A1 Dis EUR Hedged and B Bis EUR Hedged classes, changed the distribution policies from quarterly3% fixed to quarterly 2.5% fixed.

Page 15Schroder International Selection Fund Audited Annual Report 31 December 2016

Directors Report (cont)

Activities during the year (cont)

6 January 2016Schroder ISF EURO Credit Conviction A Dis EUR classes changed the distribution policies from semi-annual variable to semi-annual 3% fixed.28 April 2016Schroder ISF Global High Yield A Dis class changed the distribution policy from quarterly variable to monthly variable.2 May 2016Disclosure of NAV decimal places on all Schroder ISF classes changed from 2 to 4 decimal places.1 June 2016Management fees reduction for Schroder ISF Asian Opportunities X1 Acc classes from 0.55% to 0.50%.Transfer agent fees reduction for Schroder ISF Global Recovery X Dis classes from 0.20% to 0.10%.Transfer agent fees reduction for Schroder ISF QEP Global Core X Dis classes from 0.12% to 0.10%.Management fees reduction for Schroder ISF QEP Global Core X Dis classes from 0.24% to 0.23%.Clarification of investment objectives and policies for Schroder ISF Asian Dividend Maximiser, Schroder ISF European Dividend Maximiser, SchroderISF Global Dividend Maximiser, Schroder ISF Global Equity Yield, Schroder ISF Global Recovery, Schroder ISF Global Multi-Asset Conservative,Schroder ISF Global Multi-Asset Flexible and Schroder ISF Global Multi-Asset Balanced.Change for Schroder ISF Global Multi-Asset Balanced of its Dealing cut-off from T-1 to T and its settlement from T+4 to T+3.29 June 2016Schroder AS Gold and Precious Metals Fund contributed all of its assets and liabilities in kind to Schroder ISF Global Gold.1 July 2016The maximum transfer agent fees were reducted for Schroder ISF from 0.30% to 0.25%.Management fees for C classes of Schroder ISF QEP Global Active Value, Schroder ISF QEP Global Blend, Schroder ISF QEP Global Quality werereduced from 1.00% to 0.65%.Management fees for C classes of Schroder ISF QEP Global Value Plus were reduced from 1.00% to 0.75%.1 October 2016The management fees were reduced for Schroder ISF EURO Liquidity A Acc, B Acc and A1 Acc from 0.50% to 0.20%. The distribution chargeswere reduced for Schroder ISF EURO Liquidity B Acc and A1 Acc from 0.10% to none.31 November 2016Change of investment horizon for Schroder ISF European Equity Absolute Return and Schroder ISF European Alpha Absolute Return.1 December 2016The management fees were reduced for S shares of Schroder ISF QEP Global Active Value, Schroder ISF QEP Global Blend and Schroder ISF QEPGlobal Quality from 0.50% to 0.325%.The management fees were reduced for S shares of Schroder ISF QEP Global ESG from 0.375% to 0.325%.The distribution fees were reduced for B shares of Schroder ISF Global Multi Credit from 0.50% to 0.30%.Schroder ISF Asia Pacific Cities Real Estate and Schroder ISF Global Cities Real Estate changed their investment objectives and policies as a resultof the name change.Additionally Schroder ISF EURO Credit Absolute Return and Schroder ISF QEP Global Absolute changed their investment objectives and policies.The details of the new investment objectives and policies can be found in current prospectus.Removal of performance fees of Schroder ISF Asian Convertible Bond.Schroder ISF US Dollar Liquidity limited the dealing currency of the Fund to the currency of the relevant share class.

The UCITS Fund Manager has a remuneration policy in place, further details can be found in Appendix V of this report.

The Board of DirectorsSchroder International Selection Fund31 December 2016

The information contained in this report is historical and not necessarily indicative of future performance.


Directors Report (cont)

Economic review

2016 started on an uncertain footing as global investors digested the December 2015 interest rate rise from the US Federal Reserve (Fed), the firstsuch hike since 2006. Following significant stockmarket volatility, the Fed emphasised that future increases would be gradual. Mixed USmacroeconomic data, coupled with uncertainty stemming from other regions, saw the Fed keep monetary policy on hold for much of the period.However, evidence towards the end of the year pointed to a stronger US economy - GDP grew by 3.5% (annualised) in the third quarter - and rateswere raised again in December 2016. Rebounding energy prices contributed to higher inflation expectations. The prospect of higher inflationappeared increasingly certain following the election in November of Donald Trump as the next US president, given his pro-growth policies. The dollargained against other major currencies.

The eurozone economy continued its slow recovery, with quarterly GDP growth of 0.3% in both the second and third quarters. However, inflationremained below target. The European Central Bank (ECB) eased monetary policy early in the year, increasing monthly quantitative easing (QE)purchases to 80 billion and also including corporate bonds in the purchases. However, in December the central bank announced that it would trimthe size of monthly purchases, albeit also extending the timeframe for QE to December 2017. Political events were an important focus given theUKs referendum on EU membership and Italys constitutional referendum which led to a change of prime minister.

In the UK, the referendum on EU membership dominated the year. Sterling fell as the referendum date was announced in February, and tookanother plunge lower after the vote to leave was confirmed in June. Prime Minister David Cameron resigned and was replaced by Theresa May. TheBank of England (BoE) cut interest rates to 0.25% from 0.5% and re-started its quantitative easing programme, buying 60 billion of assets permonth. The impact on economic growth was more limited than had been feared with GDP growth slowing to 0.5% in Q3 from 0.7% in Q2 -although the form of the UKs future relationship with the EU remained unclear.

In Japan, the central bank introduced a negative deposit rate of -0.1% in an effort to encourage lending as economic indicators remained weak. TheJapanese government launched a 4.6 trillion ($45 billion) stimulus package aimed at boosting infrastructure spending and consumption.Subsequently, the Bank of Japan (BoJ) formulated new policy measures, including a stated intention to overshoot the 2% inflation target.

Political factors were to the fore in emerging markets as well. Brazil was a particular focus as more business and political figures were implicated inthe Lava Jato scandal while the economy experienced its longest recession since the 1930s. The Senate formally voted to impeach PresidentDilma Rousseff in September. India approved a long-awaited Goods & Services Tax in a move designed to remove a wide range of distortions andinefficiencies. The introduction of the tax also raised hopes for further economic reform measures. However, the decision to withdraw 500 and 1,000rupee banknotes from circulation led to uncertainty over the implementation of the tax reform.

Elsewhere, the Russian economy remained in recession but the pace of contraction slowed, helped by a weaker currency and gains in the oil pricetowards the end of the period. Chinas central bank announced further easing measures in the first half of the period and these supported aneconomic growth rate of 6.7% in the first, second and third quarters of 2016.

Equity market review

Global equities started 2016 on an uncertain footing reaching a trough in mid-February and then broadly gaining over the subsequent weeks. Theactions of central banks and a recovery in the oil price were important contributors to the market turnaround. Markets made a confident start to Q2although the UKs vote to leave the EU overshadowed other developments by the end of the period. The third quarter was largely marked by lowervolatility, supporting stockmarket gains. The US election then dominated market sentiment towards the end of the year.

Against this backdrop, global equities posted positive returns for the year, with the MSCI World index up 8.2% 1. The gradual improvement inmacroeconomic data from major economies, combined with expectations for reflationary policies in the US under Donald Trump, helped valuestocks to outperform growth.

At the regional level, US equities were strong, returning 12.0% 2, led by the energy sector as oil prices recovered over the year. UK equitiesregistered even higher returns in local currency, up 16.8% 3, although returns were negative in US dollar terms. The basic materials and oil & gassectors saw particularly strong returns, helped by the US-dollar denominated earnings of these sectors.

In the eurozone, returns were positive with Austria, France and the Netherlands leading the way. Italy posted a negative return despite a sharp rally inDecember. Japanese returns were close to flat for the year. Emerging markets outperformed their developed market counterparts, returning 11.6% 4

with particular strength in the Brazilian market given hopes for political change and higher commodity prices.

Bond market review

Risk across most asset classes was shunned in the opening half of Q1 2016 amid concerns over global growth. However, a rebound in the oil pricein mid-February helped to support sentiment while key economic data points also improved. Perhaps most importantly, support from major centralbanks continued. However, the UKs EU referendum in late June ultimately overshadowed other market drivers by the end of Q2. The 10-year USTreasury started 2016 at 2.27% but this dropped back to 1.47% at the end of the second quarter. Other government bond markets followed asimilar trajectory and German 10-year Bund yields turned negative following the UKs Brexit vote.


Investment Managers Report

1 DataStream, MSCI World index in USD.2 DataStream, S&P 500 in USD.3 DataStream, FTSE All-Share in GBP.4 DataStream, MSCI EM in USD.

Bond markets were strikingly calm in Q3, particularly when compared to the tumultuous final week of June. Markets returned to the more familiarground of assessing policy moves from the worlds major central banks. In the final quarter of 2016, global bond market movements wereoverwhelmingly driven by political factors. At the forefront stood the victory of Donald Trump in the US presidential election. Despite the volatility,expectations for global economic growth tentatively grew more optimistic. Overall, government bond yields moved higher and yield curvessteepened. The 10-year US Treasury yield ended the year at 2.44% and German 10-year yields returned to positive territory.

Investment grade bonds outperformed government bonds over the year, returning 4.3% 5. However, high yield debt was even stronger, returning14.8% 6.

Outlook

After a series of downgrades, Schroders economists have revised up their forecasts for global growth with 2016 now expected to come in at 2.6%(previously 2.3%) and at 2.8% in 2017 (previously 2.6%). For 2017, the upgrade was largely a reflection of a more optimistic view on the emergingmarkets (EM), the UK and the US.

Inflation is expected to pick up in 2017 to 2.4% from 2% in 2016, primarily led by oil price base effects in the advanced economies. The picture in2018 is more mixed as price pressures continue to build in the US, but tend to moderate elsewhere.

For the US, our economists still expect the Fed funds rate to rise to 1.25% by end 2017. Moving into 2018, the Fed is expected to tighten further asfiscal policy supports economic growth and with US inflation rising, policy rates are expected to end the year at 2.25%.

The BoE is expected to keep rates on hold throughout the forecast period. The ECB is also assumed to keep the deposit rate at current levels withasset purchases to be maintained at 60 billion per month beyond the end of 2017.

The BoJ is expected to keep rates on hold, but maintain QE as, in a rising US rate environment, purchases will be needed to maintain the 10-yearJapanese government bond yield at zero. The Peoples Bank of China is still expected to ease policy this year.


Investment Managers Report (cont)

5 DataStream, BofA Merrill Lynch Global Corporate Index in USD.6 DataStream, BofA Merrill Lynch Global High Yield index in USD.

The Company

The Company was incorporated in Luxembourg on 5 December 1968 as a socit anonyme. Pursuant to an Extraordinary General Meeting ofShareholders held on 31 January 1989, the form and name of the Company, as well as its establishment period, was changed to a socitdinvestissement capital variable (SICAV) established for an unlimited period under the name of Schroder International Selection Fund. Thecompany qualifies as an undertaking for collective investment (UCI) regulated by the provisions of Part I of the Luxembourg Law of 17 December2010, as amended, regarding undertaking for collective investment (the 2010 law).

Classes of Shares

At the date of this report, seventeen classes of shares are available within the Funds: A, B, C, D, E, F, I, IZ, J, R, S, X, X1, A1, AX, Y and Z shares.All Funds offer A, B and C shares, apart from the following Funds:

Schroder ISF European Alpha Focus* (offers only A, C, I & Z);Schroder ISF European Equity (ex UK) (offers only A, C & S);Schroder ISF Global Conservative Convertible Bond (offers only A, C, E, I & IZ);Schroder ISF Global Demographic Opportunities (offers only A, C, & Z);Schroder ISF Global Gold* (offers only A, A1, C & I);Schroder ISF Global Multi-Asset Conservative* (offers only A, A1,C & I);Schroder ISF Global Tactical Asset Allocation (offers only C & I shares);Schroder ISF Global Target Return* (offers only A, C & I)Schroder ISF Hong Kong Dollar Bond (offers only A, A1, C & I shares);Schroder ISF Indian Opportunities (offers only A, A1,C, E & I);Schroder ISF Japan DGF (offers only C, I & X shares);Schroder ISF Japanese Opportunities (offers only A, A1, C & I);Schroder ISF Multi-Asset Total Return* (offers only A,C & I)Schroder ISF Multi-Manager Diversity (offers only A, C & S);Schroder ISF QEP Global Blend (offers only A, C, I & S);Schroder ISF QEP Global Core (offers only C, I, X & X1 shares);Schroder ISF QEP Global Emerging Markets (offers only A, A1, C, I, IZ & Z);Schroder ISF QEP Global Value Plus (offers only A, C & I);Schroder ISF RMB Fixed Income (offers only A, C, E & I);Schroder ISF Strategic Beta 10 (offers only A, C & I)Schroder ISF UK Opportunities (offers only A, C & S);

Shares are generally issued as Accumulation shares. Distribution shares may be issued within any Fund at the Directors discretion. A list of availableDistribution shares may be obtained upon request at the Management Company.

In accordance with the provisions of the current prospectus, the Directors may also offer classes in multiple currency denominations. The respectiveInvestment Managers have the ability to hedge the shares of such classes in relation to the Fund currency or in relation to currencies in which therelevant Fund's underlying assets are denominated. Where hedging of this kind is undertaken, the respective Investment Managers may engage, forthe exclusive account of such share class, in currency forwards, currency futures, currency option transactions and swaps in order to preserve thevalue of the reference currency against the Fund currency. Where undertaken, the effects of this hedging will be reflected in the Net Asset Value and,therefore, in the performance of such additional share class. Similarly, any expenses arising from such hedging transactions will be borne by theclass in relation to which they have been incurred. The classes of share available for each Fund are set out in detail in the current prospectus.The Directors may decide from time to time for some or all of the Bond Funds to issue duration hedged share classes. Duration hedged shareclasses utilise hedging strategies that seek to reduce the share class' sensitivity to changes in interest rate movements. There is no assurance thatthese hedging strategies will be successful. Where undertaken, the effects of this hedging will be reflected in the Net Asset Value and, therefore, inthe performance of the share class. Similarly, any expenses arising from such hedging transactions will be borne by the duration hedged share class.The performance of the duration hedged share classes may underperform other share classes in the Bond Funds depending on interest ratemovements. Duration hedged share classes can be issued in relation to any type of available share classes of Bond Funds.

The naming convention used for the share classes is as follows:A Acc for base currency share class;A Acc CCY for a multicurrency share class;A Acc CCY Hedged for a hedged share class.

Initial Charge

The Management Company and Distributors are entitled to the following initial charges, which can be partly or fully waived at the Directorsdiscretion.

* Please refer to the Directors Report for the details of all corporate actions that occurred during the year under review.


Notes to the Financial Statementsas at 31 December 2016

Initial Charge (cont)

A and AX Shares

Equity Funds Initial charge of up to 5.26315% of the Net Asset Value per Share

Multi-Asset Funds Initial charge of up to 5.26315% of the Net Asset Value per Share with the exception of:

up to 4.16667% of the Net Asset Value per Share of Schroder ISF Global Multi-Asset Balanced, Schroder ISFGlobal Multi-Asset Flexible, Schroder ISF Global Target Return and Schroder ISF Wealth Preservation

up to 3.09278% of the Net Asset Value per Share of Schroder ISF Global Multi-Asset Conservative and SchroderISF Strategic Beta 10

Multi-Manager Funds Initial charge of up to 4.16667% of the Net Asset Value per Share

Absolute Return Funds and Bond Funds Initial charge of up to 3.09278% of the Net Asset Value per Share

Liquidity Funds No initial charge

F Shares


A1 Shares


Multi-Asset Funds Initial charge of up to 4.16667% of the Net Asset Value per Share with the exception of:

up to 3.09278% of the Net Asset Value per Share of Schroder ISF Global Multi-Asset Balanced, Schroder ISFGlobal Multi-Asset Flexible and Schroder ISF Wealth Preservation

up to 2.04081% of the Net Asset Value per Share of Schroder ISF Global Multi-Asset Conservative

Absolute Return Funds and Bond Funds Initial charge of up to 2.04081%of the Net Asset Value per Share


C and E Shares Initial charge of up to 1.0101% of the Net Asset Value per Share


B, D, I, IZ, J, R , S , X, X1, Y and Z Shares No initial charge

Distribution Charge

A, AX , C, E, F, I, IZ, J, R , S , X, X1, Y and Z Shares No distribution charge

B Shares *

Equity Funds Distribution charge of 0.60% per annum of the net assets of Funds

Absolute Return Funds Distribution charge of 0.50% per annum of the net assets of Funds with the exception of:

0.30% per annum of the net assets of Schroder ISF EURO Credit Absolute Return and Schroder ISF QEP GlobalAbsolute

Bond Funds Distribution charge of 0.50% per annum of the net assets of Funds with the exception of:

0.10% per annum of the net assets of Schroder ISF EURO Short Term Bond

Liquidity Funds No distribution charge

Multi-Asset Funds Distribution charge of 0.60% per annum of the net assets of Funds with the exception of:

0.50% per annum of the net assets of Fund Schroder ISF Wealth Preservation

D Shares ** Distribution charge of 1.00% per annum of the net assets of Funds

A1 Shares **Distribution charge of 0.50% per annum of the net assets of Funds with the exception of: Schroder ISF JapanDGF, Schroder ISF QEP Global Core, Schroder ISF QEP Global ESG for which there is no distribution charge


Notes to the Financial Statementsas at 31 December 2016 (cont)

* Distribution charges in respect of B shares are payable quarterly.** Distribution charges in respect of A1 and D shares are paid at such intervals, as may be agreed upon from time to time between the Company and those Distributors that are appointed specifically for thepurpose of distributing such shares.

Minimum Subscription Amount, Minimum Additional Subscription Amount and Minimum Holding Amount

In accordance with the provisions of the current prospectus, minimum amounts for subscription, additional subscription and holding are as follows:

A, AX, A1, B, D, F and Y Shares The minimum initial subscription, additional subscription and holding amount is EUR 1,000 or USD 1,000 or their near equivalent in anyother freely convertible currency. **

C and E Shares The minimum initial subscription and holding amount is EUR 500,000 or USD 500,000 or their near equivalent in any other freelyconvertible currency. The minimum additional subscription amount is EUR 250,000 or USD 250,000 or their near equivalent in any otherfreely convertible currency. **

E Shares will only be available, with prior agreement of the Management Company.

I and J Shares The minimum initial subscription and holding amount is EUR 5,000,000 or USD 5,000,000 or their near equivalent in any other freelyconvertible currency. The minimum additional subscription amount is EUR 2,500,000 or USD 2,500,000 or their near equivalent in anyother freely convertible currency. **

I shares will only be offered to investors who, at the time the relevant subscription order is received, are clients of Schroders with anagreement covering the charging structure relevant to the clients investments in such shares and who are Institutional Investors.J Shares will only be offered to and can only be acquired by Japanese Fund of Funds, which are Institutional Investors.

IZ & Z Shares The minimum initial subscription and holding amount is EUR 100,000,000 or USD 100,000,000 or their near equivalent in any other freelyconvertible currency. The minimum additional subscription amount is EUR 20,000,000 or USD 20,000,000 or their near equivalent in anyother freely convertible currency. **

IZ Shares will only be offered to and can only be acquired by Institutional Investors, with prior agreement of the Management Company.Z Shares will be offered in limited circumstances to professional investors for distribution in certain countries and through certainDistributors, with the prior agreement of the Management Company.

X Shares The minimum initial subscription and holding amount is EUR 25,000,000 or their near equivalent in any other freely convertible currency.The minimum additional subscription amount is EUR 12,500,000 or their near equivalent in any other freely convertible currency. **

X shares will only be available, with prior agreement of the Management Company, to institutional investors, as may be defined from timeto time by the guidelines or recommendations issued by the Luxembourg supervisory authority.

X1 Shares The minimum initial subscription and holding amount is EUR 22,500,000 or their near equivalent in any other freely convertible currency.The minimum additional subscription amount is EUR 12,500,000 or their near equivalent in any other freely convertible currency. **

X1 shares will only be available, with prior agreement of the Management Company, to institutional investors, as may be defined fromtime to time by the guidelines or recommendations issued by the Luxembourg supervisory authority.

R and S Shares There are no minimum subscription or holding amounts.

Further details on specific features of the different classes of shares and the conditions under which initial and distribution fees are calculated can befound in the current prospectus.

Net Asset Value

Calculation of Net Asset Value per Share

The Net Asset Value per share of each class is calculated on each Dealing Day in the currency of the relevant class. It is calculated by dividing theNet Asset Value attributable to each class, being the proportionate value of its assets less its liabilities, by the number of shares of such class then inissue. The resulting sum is rounded to the nearest four decimal places *. Further details on rules that apply in valuing total assets can be found in thecurrent prospectus.

Valuation of the Assets of the Company

The value of securities, financial derivative instruments and assets is determined on the basis of the last available price on the stock exchange or anyother regulated market on which those securities or assets are traded or admitted for trading. Where such securities or other assets are quoted ordealt in on more than one stock exchange or any other regulated market, the Directors shall make regulations for the order of priority in which stockexchanges or other regulated markets shall be used for the provision of prices of securities or other assets.If a security is not traded on or admitted to any official stock exchange or any other regulated market or, in the case of securities so traded oradmitted, the last available price does not reflect their true value, the Directors are required to proceed on the basis of their expected sales price,which shall be valued with prudence and in good faith.

Liquid assets and money market instruments are usually valued on an amortised cost basis.

Financial derivative instruments, which are not listed on any official stock exchange or any other regulated market, are valued in accordance withmarket practice. The swaps are valued at their fair value based on the underlying securities (at close of business or intraday) as well as on thecharacteristics of the underlying commitments.

Units or shares in undertakings for collective investments are valued on the basis of their last available net asset value.

The value of any cash in hand or on deposit, bills and demand notes and accounts receivable, prepaid expenses, cash dividends and interestdeclared or accrued as aforesaid and not yet received shall be deemed to be the full amount thereof, unless in any case the same is unlikely to bepaid or received in full, in which case the value thereof shall be arrived at after making such discount as the Company may consider appropriate insuch case to reflect the true value thereof.




** These minima may be waived from time to time at the discretion of the Directors.

Net Asset Value (cont)

Valuation of the Assets of the Company (cont)

Any assets or liabilities in currencies other than the base currencies of the Funds will be converted using the relevant spot rate quoted by a bank orother responsible financial institution.

If any of the aforesaid valuation principles do not reflect the valuation method commonly used in specific markets or if any such valuation principlesdo not seem accurate for the purpose of determining the value of the Companys assets, the Directors may fix different valuation principles in goodfaith and in accordance with generally accepted valuation principles and procedures.The Directors are authorised to apply other appropriate valuation principles for the assets of the Funds and/or the assets of a given class if theaforesaid valuation methods appear impossible or inappropriate due to extraordinary circumstances or events.

As of 30 December 2016, fair valuation was applied to the following securities:

Security Name Fund

Irish Bank Resolution Corp. Ltd. Schroder ISF QEP Global CoreAntares Energy Schroder ISF Global EnergyAnxin-China Schroder ISF QEP Global Emerging MarketsAsian Citrus Holdings Ltd. Schroder ISF QEP Global Emerging MarketsAsian Citrus Holdings Ltd. Schroder ISF QEP Global Active ValueBanca Popolare dell'Etruria e del Lazio Schroder ISF QEP Global BlendCaja de Ahorros del Mediterraneo Schroder ISF QEP Global CoreChina Animal Healthcare Schroder ISF QEP Global Emerging MarketsChina Lumena New Materials Corp. Schroder ISF QEP Global Active ValueChina Lumena New Materials Corp. Schroder ISF QEP Global QualityChina Lumena New Materials Corp. Schroder ISF QEP Global Emerging MarketsChina Lumena New Materials Corp. Schroder ISF QEP Global BlendChina Lumena New Materials Corp. Schroder ISF Global Multi-Asset Global Income BasketChina Lumena New Materials Corp. Schroder ISF QEP Global Value PlusChina Lumena New Materials Corp. Schroder ISF QEP Global AbsoluteChina Taifeng Beddings Holdings Ltd. Schroder ISF QEP Global Active ValueChina Taifeng Beddings Holdings Ltd. Schroder ISF QEP Global Emerging MarketsChina Taifeng Beddings Holdings Ltd. Schroder ISF QEP Global Value PlusNational Gulf Holding Schroder ISF Middle EastJurong Technologies Industrial Schroder ISF QEP Global Active ValueLongtop Financial Technologies ADR Schroder ISF Hong Kong EquityNeo Schroder ISF QEP Global Emerging MarketsOW Bunker Schroder ISF European Smaller CompaniesOW Bunker Schroder ISF Global Smaller CompaniesPeace Mark Schroder ISF European ValueSafeway PDC LLC CVR Schroder ISF Global RecoverySafeway PDC LLC CVR (New York) Schroder ISF Global RecoverySNS Bank Schroder ISF EURO High YieldSNS Bank Schroder ISF Global High YieldSNS Bank EMTN 6.25% 26/10/2020 Schroder ISF Global BondSNS REAAL NV Schroder ISF QEP Global Active ValueSNS REAAL NV Schroder ISF QEP Global BlendSNS REAAL NV Schroder ISF QEP Global Value PlusSNS REAAL NV Schroder ISF QEP Global AbsoluteYa Hsin Industrial Co. Ltd. Schroder ISF QEP Global Active Value

Fair Value Pricing

In accordance with the provisions of the current prospectus, fair value pricing may be implemented to protect the interests of the Companysshareholders against market timing practices. Accordingly, if a Fund is primarily invested in markets that are closed for business at the time the Fundis valued, the Directors may, during periods of market volatility and by derogation from the provisions above under Calculation of Net Asset Valueper share, cause the Fund Administrator to allow for the Net Asset Value per share to be adjusted to reflect more accurately the fair value of theFunds investments at the point of valuation.

The level of adjustment is based upon the movement in a chosen surrogate up until the point of valuation, provided that such movement exceedsthe threshold as determined by the Directors for the relevant Fund. The surrogate will usually be in the form of a futures index but might also be abasket of securities, which the Directors believe is strongly correlated to and representative of the performance of the Fund.Where an adjustment is made as per the foregoing, it is applied consistently to all classes of shares in the same Fund.

During the year under review, fair value pricing was applied to 18 Funds. The Directors, however, reserve the right to extend the implementation offair value pricing in respect of other Funds whenever they deem it appropriate.

The Funds in relation to which fair value pricing was applied during the year under review as well as details of the relevant reference indices,thresholds and surrogates are shown in the following table:



Fair Value Pricing (cont)

Fund Threshold Surrogate

Schroder ISF Global Climate Change Equity 0.50% CME S&P 500 Index FuturesSchroder ISF Global Demographic Opportunities 0.50% CME S&P 500 Index FuturesSchroder ISF Global Dividend Maximiser 0.50% CME S&P 500 Index FuturesSchroder ISF Global Equity 0.50% CME S&P 500 Index FuturesSchroder ISF Global Equity Alpha 0.50% CME S&P 500 Index FuturesSchroder ISF Global Equity Yield 0.50% CME S&P 500 Index FuturesSchroder ISF Global Smaller Companies 0.50% CME S&P 500 Index FuturesSchroder ISF Japanese Equity 0.50% CME Yen Denominated Nikkei 225 Index Future

Schroder ISF Japanese Opportunities 0.50% CME Yen Denominated Nikkei 225 Index FutureSchroder ISF Japanese Smaller Companies 0.50% CME Yen Denominated Nikkei 225 Index FutureSchroder ISF QEP Global Active Value 0.50% CME S&P 500 Index FuturesSchroder ISF QEP Global Blend 0.50% CME S&P 500 Index FuturesSchroder ISF QEP Global Core 0.50% CME S&P 500 Index FuturesSchroder ISF QEP Global ESG 0.50% CME S&P 500 Index FuturesSchroder ISF QEP Global Quality 0.50% CME S&P 500 Index FuturesSchroder ISF US Large Cap 0.50% CME S&P 500 Index FuturesSchroder ISF US Small & Mid-Cap Equity 0.50% CME S&P 500 Index FuturesSchroder ISF US Smaller Companies 0.50% CME S&P 500 Index Futures

On 30 December 2016, the last working date of the year under review, no Fund was adjusted.

Exchange Rates

The exchange rates used for the calculation of the combined total in Euro of the financial Statement as at 30 December 2016 are:1 EUR = 1.054349970 USD;1 EUR = 0.854208851 GBP;1 EUR = 1.072600768 CHF;1 EUR = 123.274598449 JPY;1 EUR = 8.176589449 HKD;1 EUR = 7.348608418 CNH.

Swing Pricing Adjustment

A Fund may suffer dilution of the Net Asset Value per Share due to investors buying or selling Shares in a Fund at a price that does not reflect thedealing and other costs that arise when security trades are undertaken by the Investment Manager to accommodate cash inflows or outflows.In order to counter this impact, a Swing Pricing mechanism may be adopted to protect the interests of Shareholders of the Fund. If on any ValuationDate, the aggregate net transactions in Shares of a Fund exceed a pre-determined threshold, as determined and reviewed for each Fund on aquarterly basis by the Management Company, the Net Asset Value per Share may be adjusted upwards or downwards to reflect net inflows and netoutflows respectively.

The net inflows and net outflows is determined by the Management Company based on the latest available information at the time of calculation ofthe Net Asset Value per Share. The Swing Pricing mechanism may be applied across all Funds. The extent of the price adjustment will be set by theManagement Company to reflect dealing and other costs. Such adjustment may vary from Fund to Fund and will not exceed 2% of the original NetAsset Value per Share.

The swing pricing mechanism has been applied to the Companys Funds since 12 January 2009.

On 30 December 2016, the last working day of the year under review, swing pricing adjustment was applied to Schroder ISF Emerging Market LocalCurrency Bond and Schroder ISF EURO Liquidity. The official Net Asset Values per share of these Funds following the application of the swingpricing adjustment are shown in the following table. All other financial information stated in this report is shown before any adjustments for swingpricing.

Schroder ISF EmergingMarket Local Currency Bond

Schroder ISFEURO Liquidity

USD EUR

Net Asset Value per Share (including swing pricing adjustment)as at 30 December 2016A Acc 78.2076 120.4519A1 Acc 76.5201 114.9511A1 Dis 57.9182 -B Acc 76.5432 118.6734B Dis 57.8430 -C Acc 80.0364 126.3899E Acc 80.6200 -



Swing Pricing Adjustment (cont)

Schroder ISF EmergingMarket Local Currency Bond

Schroder ISFEURO Liquidity

USD EUR

I Acc 82.7291 130.1768I Dis 70.0798 -A Acc (GBP) 102.4041 -A Acc (EUR Hedged) 75.3002 -A1 Acc (EUR Hedged) 73.6666 -B Acc (EUR Hedged) 73.6466 -C Acc (EUR Hedged) 77.0599 -E Acc (EUR Hedged) 77.4514 -I Acc (EUR Hedged) 79.6445 -

Taxation

The Company is not subject to any taxes in Luxembourg on income or capital gains. The only tax to which the Company in Luxembourg is subject isthe taxe dabonnement to a rate of 0.05% per annum based on the net asset value of each Fund at the end of the relevant quarter, calculated andpaid quarterly. In respect of any Share Class or Fund which comprises only institutional Investors (within the meaning of Article 174 of the Law), thetax levied will be at the rate of 0.01% per annum.

Changes in the Funds

A list specifying the total purchases and sales for each Fund, which took place during the year under review, may be obtained free of charge uponrequest at the Companys registered office.

Transactions made for a Purpose other than Hedging

In accordance with the provisions of the current prospectus, the Company may, for a purpose other than hedging, purchase and sell futurescontracts, options on any kind of financial instruments and equity swaps provided that the Company will only enter into equity swap transactionswith highly rated financial institutions specialised in this type of transactions.

Securities Lending

There has been no securities lending activity on the Companys Funds since December 2012.

Disclosure of Transaction Costs

The transaction costs are broker commission fees and taxes related to the purchase and sale of transferable securities. The transaction costs areshown net of the corresponding elements of the swing pricing factors that were applied when net flows in a Fund exceeded 1% on any businessday during the year under review. Custodian transaction costs are not included in this table, please refer to the Custodian Fees shown in theStatement of Operations. Bond funds will generally show the figure of zero as the broker commission fees are included in the spread, which isexcluded from the calculation pursuant to Annex I, Schedule B, Chapter V of Directive 2009/65/EC of the European Parliament.



Disclosure of Transaction Costs (cont)

The transactions costs for the year under review are as follows:

Funds Currency Transaction costs

Schroder ISF Asia Pacific Cities Real Estate * USD 56,790Schroder ISF Asian Bond Absolute Return USD 2Schroder ISF Asian Convertible Bond USD -Schroder ISF Asian Diversified Growth * USD -Schroder ISF Asian Dividend Maximiser USD 278,130Schroder ISF Asian Equity Yield USD 2,149,754Schroder ISF Asian Local Currency Bond USD 1,572Schroder ISF Asian Opportunities USD 3,131,398Schroder ISF Asian Smaller Companies USD 396,260Schroder ISF Asian Total Return USD 1,951,413Schroder ISF BRIC (Brazil, Russia, India, China) USD 1,151,250Schroder ISF China Opportunities USD 2,768,667Schroder ISF Emerging Asia USD 2,356,455Schroder ISF Emerging Europe EUR 491,302Schroder ISF Emerging Market Bond USD -Schroder ISF Emerging Market Corporate Bond USD 2Schroder ISF Emerging Market Local Currency Bond USD -Schroder ISF Emerging Markets USD 4,466,275Schroder ISF Emerging Markets Debt Absolute Return USD 8Schroder ISF Emerging Multi-Asset Income * USD 109,058Schroder ISF EURO Bond EUR -Schroder ISF EURO Corporate Bond EUR 2,251Schroder ISF EURO Credit Absolute Return EUR -Schroder ISF EURO Credit Conviction EUR 2Schroder ISF EURO Equity EUR 5,302,046Schroder ISF EURO Government Bond EUR -Schroder ISF EURO High Yield EUR 2Schroder ISF EURO Liquidity EUR -Schroder ISF EURO Short Term Bond EUR -Schroder ISF European Alpha Absolute Return EUR 1,133,256Schroder ISF European Alpha Focus * EUR 33,459Schroder ISF European Dividend Maximiser EUR 1,129,467Schroder ISF European Equity (ex UK) EUR 174,188Schroder ISF European Equity Absolute Return EUR 1,020,234Schroder ISF European Equity Yield EUR 103,405Schroder ISF European Large Cap EUR 337,717Schroder ISF European Opportunities EUR 1,130,627Schroder ISF European Small & Mid-Cap Value * EUR -Schroder ISF European Smaller Companies EUR 438,030Schroder ISF European Special Situations EUR 391,678Schroder ISF European Total Return EUR 51,533Schroder ISF European Value * EUR 514,827Schroder ISF Frontier Markets Equity USD 1,926,854Schroder ISF Global Bond USD 9Schroder ISF Global Cities Real Estate * USD 174,860Schroder ISF Global Climate Change Equity USD 159,596Schroder ISF Global Conservative Convertible Bond USD 3Schroder ISF Global Convertible Bond USD 20Schroder ISF Global Corporate Bond USD 8Schroder ISF Global Credit Duration Hedged EUR 1Schroder ISF Global Credit Income * USD -Schroder ISF Global Demographic Opportunities USD 58,562Schroder ISF Global Diversified Growth EUR 198,870Schroder ISF Global Dividend Maximiser USD 2,217,160Schroder ISF Global Emerging Market Opportunities USD 1,119,417Schroder ISF Global Emerging Markets Smaller Companies USD 93,223Schroder ISF Global Energy USD 374,981Schroder ISF Global Equity USD 98,879Schroder ISF Global Equity Alpha USD 798,295Schroder ISF Global Equity Yield USD 187,298Schroder ISF Global Gold * USD 181,902Schroder ISF Global High Income Bond USD 5Schroder ISF Global High Yield USD 4,721Schroder ISF Global Inflation Linked Bond EUR 1,022Schroder ISF Global Managed Currency * USD -Schroder ISF Global Multi Credit * USD -Schroder ISF Global Multi-Asset Balanced * EUR 195,205




Disclosure of Transaction Costs (cont)

Funds Currency Transaction costs

Schroder ISF Global Multi-Asset Conservative * EUR 7,908Schroder ISF Global Multi-Asset Flexible * USD 80,938Schroder ISF Global Multi-Asset Income USD 2,591,225Schroder ISF Global Recovery USD 166,460Schroder ISF Global Small Cap Energy * USD -Schroder ISF Global Smaller Companies USD 250,879Schroder ISF Global Tactical Asset Allocation USD 31,460Schroder ISF Global Target Return USD 146Schroder ISF Global Unconstrained Bond USD -Schroder ISF Greater China USD 1,595,484Schroder ISF Hong Kong Dollar Bond HKD 6Schroder ISF Hong Kong Equity HKD 9,128,646Schroder ISF Indian Equity USD 461,114Schroder ISF Indian Opportunities USD 650,486Schroder ISF Italian Equity EUR 171,966Schroder ISF Japan DGF JPY 2,970,979Schroder ISF Japanese Equity JPY 129,947,049Schroder ISF Japanese Equity Alpha * JPY -Schroder ISF Japanese Opportunities JPY 37,754,650Schroder ISF Japanese Smaller Companies JPY 3,111,772Schroder ISF Korean Equity USD 367,016Schroder ISF Latin American USD 497,622Schroder ISF Middle East USD 230,231Schroder ISF Multi-Asset Total Return * USD 1,384Schroder ISF Multi-Manager Diversity GBP 1,849Schroder ISF Multi-Manager Global Diversity USD -Schroder ISF QEP Global Absolute USD 27,406Schroder ISF QEP Global Active Value USD 2,260,454Schroder ISF QEP Global Blend USD 476,286Schroder ISF QEP Global Core USD 1,092,973Schroder ISF QEP Global Emerging Markets USD 888,290Schroder ISF QEP Global ESG USD 122,652Schroder ISF QEP Global Quality USD 1,233,241Schroder ISF QEP Global Value Plus USD 124,466Schroder ISF RMB Fixed Income RMB 1Schroder ISF Strategic Beta 10 USD 11,564Schroder ISF Strategic Bond USD 16Schroder ISF Strategic Credit GBP 1Schroder ISF Swiss Equity CHF 65,605Schroder ISF Swiss Equity Opportunities CHF 13,709Schroder ISF Swiss Small & Mid Cap Equity CHF 93,264Schroder ISF Taiwanese Equity USD 1,076,449Schroder ISF UK Equity GBP 344,234Schroder ISF UK Opportunities GBP 203,428Schroder ISF US Dollar Bond USD 6Schroder ISF US Dollar Liquidity USD -Schroder ISF US Large Cap USD 882,082Schroder ISF US Small & Mid Cap Equity USD 1,171,396Schroder ISF US Smaller Companies USD 486,030Schroder ISF Wealth Preservation EUR 117,017

Investing in Russian securities

Those Funds with an investment objective that allows investment in Russian securities may invest directly in Russian securities that are traded on theMoscow Exchange. Securities traded on the Russian Trading Stock Exchange can be treated as investments in securities dealt in on a RegulatedMarket.

Investment Restriction

To ensure eligibility for the French Plan dEpargne en Actions (PEA), Schroder ISF EURO Equity, Schroder ISF European Dividend Maximiser,Schroder ISF European Equity Focus, Schroder ISF European Large Cap, Schroder ISF UK Equity and Schroder ISF UK Opportunities will invest atleast 75% of their assets in equity securities issued by companies which have their head office in the European Union, or in an EEA state that hassigned a tax agreement with France, including a clause on combating fraud and tax avoidance.




Information for Residents of the Hong Kong SAR

Registration of Funds

On 31 December 2016, all the Funds of the Company, except for those indicated in the table below were registered for sale in Hong Kong SAR.In relation to the Funds that were registered in Hong Kong SAR, only A, A1, and D shares were available for retail investors.

Funds not registered for sale in Hong Kong SARSchroder ISF Asian Convertible BondSchroder ISF Emerging Market BondSchroder ISF Emerging Market Corporate BondSchroder ISF Emerging Market Local Currency BondSchroder ISF EURO Credit Absolute ReturnSchroder ISF EURO Credit ConvictionSchroder ISF EURO High YieldSchroder ISF European Alpha Absolute ReturnSchroder ISF European Alpha FocusSchroder ISF European Equity (ex UK)Schroder ISF European Equity Absolute ReturnSchroder ISF European Equity YieldSchroder ISF European OpportunitiesSchroder ISF European Special SituationsSchroder ISF European Total ReturnSchroder ISF Global Conservative Convertible BondSchroder ISF Global Convertible BondSchroder ISF Global Credit Income *Schroder ISF Global Diversified GrowthSchroder ISF Global Emerging Markets Smaller CompaniesSchroder ISF Global High Income BondSchroder ISF Global Multi Credit *Schroder ISF Global Multi-Asset BalancedSchroder ISF Global Multi-Asset ConservativeSchroder ISF Global Multi-Asset FlexibleSchroder ISF Global RecoverySchroder ISF Global Tactical Asset AllocationSchroder ISF Global Target Return *Schroder ISF Global Unconstrained BondSchroder ISF Indian OpportunitiesSchroder ISF Italian EquitySchroder ISF Japan DGFSchroder ISF Multi-Asset Total Return *Schroder ISF Multi-Manager DiversitySchroder ISF QEP Global AbsoluteSchroder ISF QEP Global BlendSchroder ISF QEP Global CoreSchroder ISF QEP Global Emerging MarketsSchroder ISF QEP Global ESGSchroder ISF QEP Global Value PlusSchroder ISF RMB Fixed IncomeSchroder ISF Strategic Beta 10Schroder ISF Strategic CreditSchroder ISF Swiss EquitySchroder ISF Swiss Equity OpportunitiesSchroder ISF Swiss Small & Mid Cap EquitySchroder ISF UK OpportunitiesSchroder ISF Wealth Preservation

Soft Commission Arrangements

Pursuant to the requirements of the Hong Kong Securities and Futures Commission regulations, the following statement is made:Soft commission arrangements have been undertaken in respect of the Company. Services which are paid for through or by soft commission werein majority limited to the following areas:a) research, analysis or price information including computer or other information facilities;b) portfolio valuations;c) performance measurement.




Information for Residents of the Hong Kong SAR (cont)

Transactions with Connected Persons

The Company has entered into agreements and arrangements with Schroder Investment Management Limited and its affiliates, under which amanagement fee, performance fee and a transfer agency fee are payable. These agreements and arrangements have been entered into in theordinary course of business and on normal commercial terms. The details of the management fees and performance fees are set out in the Notes tothe Financial Statements.In addition, the Management Company is entitled to receive the customary charges for its services as administration agent, coordinator, domiciliaryagent, global distributor, principal paying agent and registrar and transfer agent. These fees accrue daily at an annual rate of up to 0.4% byreference to the Net Asset Value of the relevant Fund and are paid monthly in arrears.Further details on fees payable by the Company can be found in the current prospectus. No transactions of the Company were effected through abroker who is a connected person of the Management Company, the Investment Adviser, or the Directors of the Company.

Expense Subsidy

The administration fees, custodian fees, distribution fees, management fees and statutory fees are calculated and accrued daily by reference to theNet Asset Value of the Funds and are paid monthly. These fees were monitored to ensure the total expenses incurred were not deemed to besignificant relative to the Net Asset Value of the Funds (above threshold agreed by the Board of Directors).The following table shows the share classes whose TER was above the designated CAP as at 31st December 2016.

Fund and class TER Cap

Schroder ISF Global Climate Change Equity IZ Acc GBP 0.88%Schroder ISF Global Diversified Growth I Acc 0.03%Schroder ISF Global Diversified Growth X Acc 0.67%Schroder ISF Global Diversified Growth I Acc USD Hedged 0.03%Schroder ISF Global Diversified Growth I Acc GBP Hedged 0.03%Schroder ISF Multi-Asset Total Return A Acc 1.44%Schroder ISF Multi-Asset Total Return C Acc 0.79%Schroder ISF Multi-Asset Total Return A Acc EUR Hedged 1.44%Schroder ISF Multi-Asset Total Return C Acc EUR Hedged 0.79%Schroder ISF QEP Global Value Plus I Acc 0.11%Schroder ISF QEP Global Value Plus I Acc (AUD) 0.11%Schroder ISF QEP Global Value Plus I Acc (EUR) 0.11%Schroder ISF QEP Global Value Plus I Acc (GBP) 0.11%Schroder ISF Strategic Beta 10 I Acc 0.10%Schroder ISF Strategic Beta 10 I Acc GBP Hedged 0.10%

For Schroder ISF Asian Opportunities X Acc, X1 Acc share classes, Schroder ISF Asian Smaller Companies X Acc share classes, Schroder ISFGlobal Multi-Asset Flexible A1 Acc, C Acc share classes, Schroder ISF QEP Global Emerging Markets A Acc, A1 Acc, C Acc, I Acc, A Acc EUR, CAcc EUR, I Acc EUR, A Acc GBP, C Acc GBP, I Acc GBP, Z Acc GBP, Z Dis GBP share classes, Schroder ISF US Dollar Liquidity A Acc, A1 Acc,B Acc share classes, the actual TERs were lower than the TER cap.

Directors Fee

Daniel de Fernando Garcia and Marie-Jeanne Chevremont-Lorenzini each received in remuneration the amount of EUR 17,304 per annum.Georges-Arnaud Saier received in remuneration the amount of EUR 5,000 related to services performed in 2015.The remaining directors have waived their remuneration.

Management Fees

The Investment Managers are entitled to receive management fees for their services, which are calculated and accrued daily by reference to the NetAsset Value of the Funds and are paid monthly. No management fees are payable out of the net assets for I and J share classes, however theInvestors are charged directly by Schroders. The actual rates payable as at 31 December 2016, which vary from Fund to Fund and from share classto share class are set out in the following tables. Please refer to the Directors report for changes to the management fees that occurred during theyear under review:



Management Fees (cont)

Fund *A

AccA1

AccB

AccC

AccD

AccE

AccF

AccIZ

AccR

AccS

AccX

AccX1

AccY

AccZ

Acc

% % % % % % % % % % % % % %

Mainstream Equity FundsSchroder ISF Asian Opportunities 1.50 1.50 1.50 0.75 - - - - - 0.375 0.60 0.50 - -Schroder ISF EURO Equity 1.50 1.50 1.50 0.75 - - - - - - - - - -Schroder ISF European Large Cap 1.25 1.50 1.25 0.75 - - - - - - - - - 0.625Schroder ISF Global Equity 1.25 1.50 1.25 0.75 - - - - - - - - - -Schroder ISF Italian Equity 1.25 1.50 1.25 0.75 - - - - - - - - - -Schroder ISF Japanese Equity 1.25 1.50 1.25 0.75 - - - - - - - - - 0.625Schroder ISF Swiss Equity 1.25 1.50 1.25 0.75 - - - - - - - - - 0.625Schroder ISF UK Equity 1.25 1.50 1.25 0.75 - - - - - 0.375 - - - 0.625Schroder ISF US Large Cap 1.25 1.50 1.25 0.75 - - - - - 0.375 - - - 0.625

Specialist Equity FundsSchroder ISF Asia Pacific Cities RealEstate ** 1.50 1.50 1.50 1.00 - - - - - - - - - 0.75Schroder ISF Asian Dividend Maximiser 1.50 - - 0.75 - - - - - - - - - -Schroder ISF Asian Equity Yield 1.50 1.50 1.50 1.00 - - - - - 0.50 - - - -Schroder ISF Asian Smaller Companies 1.50 1.50 1.50 1.00 - - - - - - 0.55 - - -Schroder ISF Asian Total Return 1.50 1.50 1.50 1.00 - - - - - 0.50 - - - -Schroder ISF BRIC (Brazil, Russia, India,China) 1.50 1.50 1.50 1.00 - - - - - 0.50 - - - -Schroder ISF China Opportunities 1.50 1.50 1.50 1.00 1.50 - - - - - - - - -Schroder ISF Emerging Asia 1.50 1.50 1.50 1.00 - - - 0.75 - - - - - 0.75Schroder ISF Emerging Europe 1.50 1.50 1.50 1.00 - - - - - - - - - -Schroder ISF Emerging Markets 1.50 1.50 1.50 1.00 - - - - - 0.50 1.00 0.75 - -Schroder ISF European Alpha Focus ** 1.50 - - 1.00 - - - - - - - - - 0.75Schroder ISF European DividendMaximiser 1.50 1.50 1.50 1.00 - - - - - - - - - 0.75Schroder ISF European Equity (ex UK) - - - - - - - - - - - - - -Schroder ISF European Equity Yield 1.50 1.50 1.50 1.00 - - - - - - - - - 0.75Schroder ISF European Opportunities 1.50 1.50 1.50 0.75 - - - - - - - - -Schroder ISF European SmallerCompanies 1.50 1.50 1.50 1.00 - - - - - 0.50 - - - 0.75Schroder ISF European Special Situations 1.50 1.50 1.50 1.00 - - - - - 0.50 - - - 0.75Schroder ISF European Total Return 1.50 1.50 1.50 1.00 - 0.50 - - - - - - - 0.75Schroder ISF European Value ** 1.50 1.50 1.50 1.00 - - - - - - - - - 0.75Schroder ISF Frontier Markets Equity 1.50 1.50 1.50 1.00 - - - - - - - - - -Schroder ISF Global Cities Real Estate ** 1.50 1.50 1.50 1.00 - - - - - -