Audited Annual Report a Luxembourg Domiciled Open-Ended Investment Company 31 December 2009 Switzerland
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Schroder International Selection Fund Audited Annual Report A Luxembourg domiciled open-ended investment company 31 December 2009 Switzerland R.C.S. Luxembourg B 8.202 Schroder International Selection Fund A Luxembourg domiciled open-ended investment company Audited Annual Report 31 December 2009 No subscriptions can be received on the basis of financial reports. Subscriptions are valid only if made on the basis of the current Prospectus accompanied by the last available Annual Report or Semi-Annual Report if published thereafter. Annual and Semi-Annual Reports, the current Prospectus, the Simplified Prospectuses and the Articles of Incorporation of the Company are available, free of charge, at the Company `s registered office, 5, rue Höhenhof, L-1736 Senningerberg, Grand Duchy of Luxembourg. The Prospectus, the Simplified Prospectuses, the Articles of Association, the list of securities purchased and sold by the Management Company on behalf of the Company as well as the Annual and Semi- Annual Reports of the Company are available free of charge from Schroder Investment Management (Switzerland) AG, Central 2, CH-8001 Zurich, the Representative of the Company in Switzerland and from Schroder & Co Bank AG, Central 2, CH-8001 Zurich, the paying agent of the company in Switzerland. Schroder International Selection Fund Audited Annual Report 31 December 2009 Page 5 Table of Contents Schroder International Selection Fund .......................... 7 Information for Investors in Switzerland ........................ 8 Board of Directors ............................................... 9 Administration ................................................... 10 Directors’ Report ................................................ 13 Investment Managers’ Report ................................... 15 Notes to the Financial Statements as at 31 December 2009 . 16 Independent Auditor’s Report ................................... 54 Statement of Net Assets as at 31 December 2009 . 55 Statement of Changes in Net Assets for the Year Ended 31 December 2009 ............................................... 94 Statement of Operations for the Year ended 31 December 2009 .............................................. 108 Distribution of Investments by Industry (Unaudited) . 122 Portfolio of Investments as at 31 December 2009 . 135 Mainstream Equity Funds Schroder ISF EURO Equity ..................................... 135 Schroder ISF European Large Cap ............................. 136 Schroder ISF Global Equity ..................................... 137 Schroder ISF Italian Equity ..................................... 138 Schroder ISF Japanese Equity ................................. 139 Schroder ISF Japanese Large Cap ............................. 140 Schroder ISF Pacific Equity .................................... 140 Schroder ISF Swiss Equity ..................................... 141 Schroder ISF UK Equity ........................................ 142 Schroder ISF US Large Cap ................................... 143 Specialist Equity Funds Schroder ISF Asia Pacific Property Securities . 144 Schroder ISF Asian Equity Yield ................................ 144 Schroder ISF Asian Smaller Companies . 145 Schroder ISF Asian Total Return ............................... 146 Schroder ISF BRIC (Brazil, Russia, India, China) . 147 Schroder ISF China Opportunities .............................. 148 Schroder ISF Emerging Asia ................................... 149 Schroder ISF Emerging Europe ................................. 151 Schroder ISF Emerging Markets ................................ 152 Schroder ISF European Dividend Maximiser . 154 Schroder ISF European Equity Yield ............................ 155 Schroder ISF European Smaller Companies . 156 Schroder ISF European Special Situations . 157 Schroder ISF Global Climate Change Equity . 158 Page 6 Schroder International Selection Fund Audited Annual Report 31 December 2009 Table of Contents Schroder ISF Global Dividend Maximiser . 159 Schroder ISF Global Emerging Market Opportunities . 160 Schroder ISF Global Energy .................................... 161 Schroder ISF Global Equity Yield ............................... 162 Schroder ISF Global Property Securities . 163 Schroder ISF Global Smaller Companies . 164 Schroder ISF Greater China .................................... 169 Schroder ISF Hong Kong Equity ................................ 170 Schroder ISF Indian Equity ..................................... 171 Schroder ISF Japanese Smaller Companies . 172 Schroder ISF Korean Equity .................................... 173 Schroder ISF Latin American ................................... 173 Schroder ISF Middle East ...................................... 174 Schroder ISF Swiss Equity Opportunities . 175 Schroder ISF Swiss Small & Mid Cap Equity . 176 Schroder ISF Taiwanese Equity ................................ 176 Schroder ISF US Small & Mid-Cap Equity . 177 Schroder ISF US Smaller Companies . 178 Style Equity Funds Schroder ISF EURO Active Value ............................... 179 Schroder ISF EURO Dynamic Growth . 180 Alpha Equity Funds Schroder ISF European Equity Alpha . 181 Schroder ISF Global Equity Alpha .............................. 182 Schroder ISF Japanese Equity Alpha . 183 Schroder ISF US All Cap a ...................................... 184 Quantitative Equity Funds Schroder ISF QEP Global Active Value . 185 Schroder ISF QEP Global Core ................................. 191 Schroder ISF QEP Global Quality ............................... 198 Schroder ISF QEP US Core .................................... 203 Asset Allocation Funds Schroder ISF European Allocation b ............................. 206 Absolute Return Funds Schroder ISF Asian Bond ...................................... 207 Schroder ISF Emerging Europe Debt Absolute Return . 208 Schroder ISF Emerging Markets Debt Absolute Return . 209 Mainstream Bond Funds Schroder ISF EURO Bond ..................................... 211 Schroder ISF EURO Government Bond c . 215 Schroder ISF EURO Short Term Bond . 216 a Schroder ISF US All Cap was formely known as Schroder ISF US Large Cap Alpha until 1 October 2009. b Schroder ISF European Allocation was formerly known as Schroder ISF European Absolute Return until 1 June 2009. c Schroder ISF EURO Government Bond was formerly known as Schroder ISF European Bond until 1 June 2009. Schroder International Selection Fund Audited Annual Report 31 December 2009 Page 7 Table of Contents Schroder ISF Global Bond ..................................... 218 Schroder ISF Global Inflation Linked Bond . 222 Schroder ISF Hong Kong Dollar Bond . 223 Schroder ISF US Dollar Bond .................................. 223 Specialist Bond Funds Schroder ISF Asian Local Currency Bond . 226 Schroder ISF EURO Corporate Bond . 227 Schroder ISF Global Corporate Bond . 232 Schroder ISF Global High Yield ................................. 236 Schroder ISF Strategic Bond ................................... 239 Specialist Bond Funds (Medium-higher risk) Schroder ISF Asian Convertible Bond . 243 Schroder ISF Global Convertible Bond . 244 Schroder ISF Global Credit Duration Hedged d . 246 Schroder ISF European Defensive .............................. 250 Schroder ISF European Defensive 6 Monthly . 251 Schroder ISF European Defensive Monthly . 251 Schroder ISF World Defensive 3 Monthly . 252 Schroder ISF EURO Liquidity ................................... 252 Schroder ISF US Dollar Liquidity ................................ 254 Appendix Comparative Statement .............................. 255 Appendix II Schroder ISF Performance 31 December 2009 . 315 Appendix III Fees and Expenses (Unaudited) TER (without transaction fees) The Total Expense Ratio and the Portfolio Turnover Ratio were calculated in accordance with the guidelines dated on 16 May 2008 issued by the Swiss Fund Association. 371 Appendix IV Portfolio Turnover Ratios (Unaudited) The Total Expense Ratio and the Portfolio Turnover Ratio were calculated in accordance with the guidelines dated 16 May 2008 issued by the Swiss Fund Association. 388 d Schroder ISF Global Credit Duration Hedged was formerly known as Schroder ISF Strategic Credit until 1 October 2009. Schroder International Selection Fund Audited Annual Report 31 December 2009 Page 9 Schroder International Selection Fund Schroder International Selection Fund (the ‘Company’) is an open-ended ‘umbrella’ company incorporated under Luxembourg law, which enables investors to choose from ‘Funds’ (specific portfolios of assets and liabilities within the Company having their own net asset value and represented by a separate class or classes of Share) offering different investment objectives. The shares of each Fund are listed on the Luxembourg Stock Exchange. Prices are also available on Bloomberg and Reuters. This report covers the year from 1 January 2009 to 31 December 2009. The financial statements are prepared in accordance with Luxembourg regulations relating to undertakings for collective investment. The last day on which prices were calculated was 31 December 2009, the last working day of the year. At the date of this report, 80 Funds were available for investment. Please refer to the current prospectus for the investment objectives of the Funds as well as details of investment restrictions. The Investment Manager’s report for each Fund can be found in the quarterly investment reports, which can be obtained from the Company’s registered office and are also available on the website of Schroder Investment Management (Luxembourg)