Schroder Asian Total
Return Investment
Company plc
Report and Accounts for the year
ended 31 December 2021
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Investment objective
The Company seeks to provide a high rate of total return
through investment in equities and equity-related securities
of companies trading in the Asia Pacific region (excluding
Japan). The Company seeks to offer a degree of capital
preservation through tactical use of derivative instruments.
Investment policy
The Company invests principally in a diversified portfolio of
40-70 companies operating primarily in Asia, including
Australasia but excluding Japan. It is intended that the
Company will have a bias to investing in small and mid cap
companies.
Investments may be made in companies listed on the stock
markets of countries located in the region and/or listed
elsewhere but controlled from within the region and/or with
a material exposure to the region. The Company will focus
on investing in companies with sound balance sheets,
professional management and capital allocation policies that
are aligned with the interests of minority shareholders.
The use of derivatives to protect the capital value of the
portfolio or for efficient portfolio management is
fundamental to the strategy of the Company’s Portfolio
Managers. Such derivatives may include listed futures, call
options, long puts, OTC instruments and instruments to
hedge currency exposure with Board approval. The Board
will monitor the effectiveness of the underlying process and
the use of derivatives.
In order to obtain further exposure to equity indices or
individual stocks, the Company may enter into contracts for
difference where the underlying investments are not
delivered and settlement is made in cash. In extreme
circumstances, and subject to Board approval, the majority,
or even all, of the Company’s assets could be held in cash or
near cash instruments, with appropriate diversification of
cash held on deposit.
The Company may use gearing to enhance performance but
net gearing will not exceed 30% of net asset value.
The Company does not tie its portfolio construction to the
constituents of any benchmark; instead, the size of stock
positions are set on an absolute basis reflecting where the
best potential risk adjusted returns are to be found.
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Annual Report and Accounts
for the year ended 31 December 2021
Strategic Report
Contents
Strategic Report
Key Performance Indicators and
Long-Term Performance Record 2
10 Year Financial Record 3
Chairman’s Statement 4
Portfolio Managers’ Review 6
Investment Portfolio 34
Strategic Report 36
Governance
Board of Directors 47
Directors’ Report 49
Audit and Risk Committee Report 52
Management Engagement Committee Report 54
Nomination Committee Report 55
Directors’ Remuneration Report 57
Statement of Directors’ Responsibilities in respect of the
Annual Report and Accounts 60
Financial
Independent Auditor’s Report 61
Income Statement 67
Statement of Changes in Equity 68
Statement of Financial Position 69
Cash Flow Statement 70
Notes to the Accounts 71
Annual General Meeting
Annual General Meeting – Recommendations 86
Notice of Annual General Meeting 88
Explanatory Notes to the Notice of Meeting 89
Definitions of Terms and Performance Measures 91
Shareholder Information inside back cover
Annual Report and Accounts
for the year ended 31 December 2021
1
Strategic Report
Governance Financial
Annual General Meeting
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2
Schroder Asian Total Return Investment Company plc
Key Performance Indicators and Long-Term Performance
Record
Other financial information
31 December 31 December
2021 2020 % Change
Shareholders’ funds (£’000) 551,745 483,548 +14.1
NAV per share (pence) 507.24 479.07 +5.9
Share price (pence) 506.00 489.00 +3.5
Share price (discount)/premium to NAV per share (%)* (0.2) 2.1
Gearing (%)* 8.3 5.7
Year ended Year ended
31 December 31 December
2021 2020 % Change
Net revenue return after taxation (£’000) 9,809 8,308 +18.1
Revenue return per share (pence) 9.25 8.46 +9.3
Dividend per share (pence) 8.50 7.10 +19.7
Ongoing Charges (%)* 0.8 0.9
Total returns for the year ended 31 December 2021. (Total returns include the impact
of dividends paid. Details of the calculations are given on page 91).
+4.9
%
Share price total return*
-2.0
%
Reference index
1
1
Source: Thomson Reuters.
2
Source: Morningstar. The arithmetic average of a group of nine investment trust competitors.
2020: +33.7% 2020: +35.6% 2020: +18.7%
6.8
%
Peer group
NAV per share total return
2
2020: +30.9%
+7.4
%
Net asset value (“NAV”)
per share total return*
Some of the financial measures below are classified as Alternative Performance Measures, as defined
by the European Securities and Markets Authority and are indicated with an asterisk (*). Definitions
of these performance measures, and other terms used in this report, are given on page 91 together
with supporting calculations where appropriate.
10 year NAV per share, share price and Reference Index total returns
1
1
Source: Morningstar/Thomson Reuters. Rebased to 100 at 31 December 2011.
31-Dec-11 31-Dec-12 31-Dec-13 31-Dec-14 31-Dec-15 31-Dec-16 31-Dec-17 31-Dec-18
31-Dec-19 31-Dec-20 31-Dec-21
Reference Index total return
NAV total return
Share price total return
50
100
150
200
250
300
350
400
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Annual Report and Accounts
for the year ended 31 December 2021
3
Strategic Report
10 Year Financial Record
Definitions of terms and performance measures are provided on page 91.
At 31December 2012 2013
1
2014 2015 2016 2017 2018 2019 2020 2021
Shareholders’ funds (£’000) 298,076 135,240 152,342 154,186 195,017 294,426 293,783 357,871 483,548 551,745
NAV per share, diluted where
applicable (pence) 201.2 181.8 208.1 211.4 267.1 354.8 321.4 365.6 479.1 507.2
Share price (pence) 185.0 176.0 194.0 190.0 255.5 362.0 331.0 368.0 489.0 506.0
Share price (discount)/premium
to NAV per share*(%) (8.1) (3.2) (6.8) (10.1) (4.3) 2.0 3.0 0.7 2.1 (0.2)
Gearing/(net cash)*% (0.2) (1.4) (1.3) 1.0 7.0 4.5 (0.9) 2.2 5.7 8.3
Year ended 31 December 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Net revenue after taxation (£’000) 4,526 1,793 2,272 3,236 3,940 4,183 6,303 7,653 8,308 9,809
Net revenue return per share (pence) 2.92 1.98 3.07 4.43 5.40 5.48 7.18 8.10 8.46 9.25
Dividends per share (pence) 3.25 3.25 3.25 3.80 4.50 4.80 6.20 6.50 7.10 TBA
Ongoing Charges*(%) 0.9 0.7 1.1 1.0 1.0 1.0 0.9 0.9 0.9 0.8
Performance
2
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
NAV per share total return* 100.0 122.1 112.0 130.5 134.3 172.7 232.8 213.9 247.5 331.0 355.4
Share price total return* 100.0 123.7 119.5 134.3 133.5 182.9 263.2 244.0 275.9 374.1 392.5
Reference Index total return 100.0 117.3 115.4 126.0 120.8 153.9 192.5 176.0 201.6 239.3 234.5
1
Schroder Investment Management Limited was appointed as investment manager on 15 March 2013.
2
Source: Morningstar/Thomson Reuters/Schroders. Rebased to 100 at 31 December 2011.
*Alternative Performance Measures.
10 year share price (discount)/premium to NAV per share
1
1
Source: Morningstar.
-20
-15
-10
-5
0
5
31-Dec-2131-Dec-11 31-Dec-12 31-Dec-13 31-Dec-14 31-Dec-15 31-Dec-16 31-Dec-17 31-Dec-18 31-Dec-19 31-Dec-20
%
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4
Schroder Asian Total Return Investment Company plc
It is very satisfactory to
report that during the year
ended 31 December 2021
the Company produced a
net asset value (“NAV”)
total return of 7.4%,
outperforming the
Reference Index which fell
by –2.0%. This is an
excellent result for the
Company in a challenging
year for Asian equities.
The share price total
return was 4.9%.
Nevertheless the
Company’s share price
traded above asset value for most of the year, at an average
premium of 0.4%. The Company outperformed the NAV
performance of the peer group, which produced an average
total return of 6.8% for the calendar year.
2021 was a difficult year for Asian stock markets which
significantly underperformed global stocks. In particular,
China performed poorly due to increased regulatory
pressure applied to education, technology and healthcare
sectors. Defaults at Evergrande, China’s largest property
company, exacerbated concern of overborrowing in the
property market and the implications for the banking sector.
China is no longer the Company’s largest country weighting
with exposure reduced to an underweight position in the
first half of the year, prior to the majority of the regulatory
changes, in favour of India and Taiwan where the Company’s
technology stocks performed particularly well.
Further comment on performance and investment policy
may be found in the Portfolio Managers’ review.
Earnings and dividends
The revenue return from the portfolio for the year increased
by 9.3% to 9.25p per share from 8.46p per share in 2020. The
Board has recommended a final dividend of 8.50p per share
for the year ended 31 December 2021, an increase of 19.7%
over the final dividend of 7.10p per share paid in respect of
the previous financial year. Subject to shareholder approval
at the AGM, the dividend will be paid on 27 May 2022 to
shareholders on the register on 29 April 2022.
Promotion, discount control and share
issuance
At the AGM on 7 May 2021, shareholders granted the Board
authority to issue shares, including out of treasury. The
Company’s buyback authority was also renewed. 7,840,000
new shares were issued during the year. These were issued
at an average premium to NAV of 1.1%. A resolution to
renew the share issuance authorities will be proposed at the
AGM, details of which can be found on page 86.
The Company will continue to implement both an issuance
and a discount management policy. Shares will be issued at a
moderate premium to net asset value and the discount
policy will continue to target a discount to NAV of no more
than 5% in normal market conditions. The Board believes
that overall liquidity and the relative discount to the
Company’s peers has also to be considered in any decision to
issue and to buy back shares. However, the Board continues
to be of the view that good performance supported by good
marketing is the best way to sustain a premium in the long
term. The Board will be seeking approval from shareholders
to renew the issuance and the buy back authorities at the
AGM.
Gearing and the use of derivatives
Gearing was used effectively by the Portfolio Managers
during the year. The Company may use gearing to enhance
performance but net gearing will not exceed 30% of NAV.
The Board has agreed a disciplined framework for using
gearing to increase market exposure, based on a number of
valuation indicators. The Company started the year with
gearing of 5.7% and this increased to 8.3% at the year end
with average debt during the year at 6.9%. Shareholders
should be aware that the use of borrowing must be seen in
the context of the use of derivative hedging instruments.
Continuation vote
The Board has committed to put to shareholders a resolution
at the AGM that the Company continue as an investment
trust for a further three years.
Over the three year period ended 31 December 2021, the
Company’s NAV produced a total return of 18.4% per annum,
outperforming the reference index’s total return of 10.0% per
annum, while our share price produced a total return of
17.2% per annum. The peer group NAV total return average
over the same period was 16.7%. The Board believes that the
Manager remains well qualified and suitable to manage the
portfolio and to assist the Company in meeting its
investment objective. The Board also believes that the
Company remains well placed as an investment vehicle
within its peer group, and that its long-term investment
objectives remain appropriate and the structure beneficial to
shareholders.
The Board therefore unanimously recommends that the
Company continues as an investment trust, and the Directors
intend to vote their shares accordingly.
Annual General Meeting
The AGM will be held at 1pm on Wednesday, 11 May 2022 at
the Manager’s offices at 1 London Wall Place, London EC2Y
5AU. Prior to the formal business of the AGM, there will be a
presentation by the Portfolio Manager, at 12pm. It will be
available to watch online and the details are set out below.
However, any shareholders planning on attending the AGM
will also be able to watch the Portfolio Manager’s
presentation.
To sign up to watch the presentation. Please click on this link
https://schroders.zoom.us/webinar/register/WN_61WWYTkR
QjG5xPMtwdAQVw. By using a webinar, I hope more
Chairman’s Statement
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Annual Report and Accounts
for the year ended 31 December 2021
5
Strategic Report
shareholders, and interested parties, will be able to listen to,
and ask questions of, the Portfolio Managers. Details on how
to join are on the Company’s webpage:
www.schroders.co.uk/satric.
All shareholders should vote by proxy. Proxy votes can be
submitted electronically through the registrar’s portal, and
also by email. Details are included with the proxy forms and
on the Company’s webpages.
Proposed changes to the Articles
In light of the circumstances created by the COVID-19
pandemic, the Board is proposing to make amendments to
the Articles to give the Company the flexibility to hold
general meetings (wholly or partially) by electronic means
and to enable members to attend and participate in general
meetings at one or more satellite meeting places. In
addition, the Board is proposing to amend the Articles to
give it certain additional powers in respect of postponing or
adjourning meetings in appropriate circumstances and the
security arrangements at meetings. The amendments are
being proposed in response to restrictions on social
interactions during the pandemic which have, on occasion,
made it impossible or impractical for shareholders to attend
physical general meetings.
The Board’s objective is to make it easier for shareholders to
participate in general meetings through introducing
electronic access for those not able to travel and to ensure
appropriate security measures are in place for the protection
and wellbeing of shareholders. I should make it clear that
these powers would only be used if the specific
circumstances or applicable law and regulation require it and
the Board’s intention is always to hold a physical AGM
provided it is both safe and practical to do so. The safety of
all of the Company’s stakeholders must of course remain
paramount.
The Board is also proposing to update the Articles to deal
with certain US and tax matters and to correct certain
typographical errors.
The principal changes proposed to be introduced in the
Articles, and their effect, are set out in more detail in the
AGM Recommendations on pages 86 and 87.
Outlook
The first few months of 2022 have proved exceptionally
difficult for global stock markets. Russia’s invasion of Ukraine
and the escalation of aggression in recent weeks has
alarmed investors. Inflationary expectations have heightened
in response to this crisis given Russia’s pivotal role in the
global supply of natural gas and oil, in addition to significant
numbers of essential commodities such as fertilisers, wheat,
nickel and aluminium. The debate as to whether inflation is
‘transitory’ or not has been firmly put aside as inflation
forecasts have pushed higher for a more prolonged period.
This puts even greater pressure on central banks to raise
rates which gives stock markets cause for concern. On a
more positive note, consumer spending remains strong and
will continue to be buoyed by significant amounts of pent-up
savings accumulated during the last two years of the
pandemic. Following market corrections across many of the
Asian markets, equity valuations are moderate with an
increasing number of attractive opportunities for our
portfolio managers. The disparate geographical performance
across the region and sectoral rotation between growth and
value which occurred last year is likely to continue, allowing
the active manager to find excellent stock selection
opportunities. The considerable investment experience of
our portfolio managers, supported by an extensive team of
Asian based research analysts, gives us confidence in their
ability to produce attractive total returns to the Company’s
investors through investment in the region. The investment
trust structure allows for the use of gearing when
advantageous and the portfolio managers may employ
tactical hedging to mitigate against downside risk.
Sarah MacAulay
Chairman
1 April 2022
Chairman’s Statement
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6
Schroder Asian Total Return Investment Company plc
Portfolio Managers’ Review
Our 2021 review is split into two parts: a shorter review of
2021’s performance and changes made over the year and
then a more detailed update of our investment outlook for
the upcoming Year of the Tiger, which hopefully explains
where we see the best long-term investment opportunities in
the Asian region.
Review of 2021
Performance and Attribution
• After the strong returns from Asian stockmarkets in
2020 there was a significant reversal in fortunes in 2021,
with the reference index we use for the Company, the
MSCI AC Asia Pacific ex Japan index falling 2% in sterling
terms. The Company enjoyed a reasonable year with the
NAV in absolute terms rising 7.4%.
• The overwhelming factor behind the fall in the reference
index was the 21% fall in the MSCI China index which
given it comprises around one third of the reference
index dragged down overall returns. In contrast the
MSCI India and MSCI Taiwan both rose 27% over the
course of 2021, so it really was a year of differing
fortunes.
• What were the reasons behind the divergent returns?
The MSCI China index was hit firstly by a major
regulatory and policy reset (discussed in the outlook
section) which affected the internet stocks in particular,
and secondly by worries over the slowing economy and
the impact of rolling bankruptcies in the property sector.
This caused broad based weakness across all sectors in
the Chinese stockmarket, but in particular those stocks
hit by new regulations were very weak. Education stocks
dropped 90% as their principal activity (tutoring school
age children) was turned overnight into a non-profit
sector, meanwhile moves to control pricing and
“fairness” hit the healthcare, internet and insurance
sectors. Outside a few perceived policy beneficiaries in
the “green” space and technology areas there were few
places to hide in China.
• In contrast India did well as, after a very traumatic start
to 2021, it was viewed as a post COVID recovery play. It
also appeared to be the default market to buy as
investors switched out of China. Taiwan’s strong
performance in 2021 was primarily driven by the
technology sector which continued to benefit from very
strong demand dynamics coming from both near term
working from home demand and also strong secular
growth drivers in the semiconductor and software areas.
• Other markets were less noteworthy. The MSCI Australia
rose 10% as the banks and financials, which are heavily
weighted in the index, rebounded on hopes rising
interest rates would lead to a recovery in net interest
margins. The smaller ASEAN markets (Thailand,
Malaysia, Indonesia, Philippines) all ended the year close
to flat as governments continued to struggle with COVID
and the delayed reopening of economies led to earnings
downgrades. Korea, after a strong 2020, fell 8% as
companies (as is often the case in Korea) failed to deliver
on sell side analysts’ overly optimistic earnings forecasts.
• The Company did well (vs the reference index) due to
two key positions. We reduced our China positions and
internet stocks in particular during the first half of the
2021. When the major Chinese regulatory changes were
announced over the summer the Company was (vs
reference index) substantially underweight so, whilst we
lost money, our positioning was relatively less painful.
The second key positive for performance was our
exposure to technology stocks in Taiwan
(semiconductors) and India (software) both of which did
well. The combination of these led to nearly all the
relative outperformance over the year.
• The biggest negative to performance was our
underweight position in financials which across the
region rebounded on hopes that rising interest rates
would rescue net interest margins. We added some
exposure to financials over the course of 2021 but
remain cautious long-term on most names in the sector
due to the rise of well funded and innovative fintech
competitors and in many countries risks of Government
interference/regulations. The other negative was our
zero exposure to fossil fuel stocks which did well on the
back of rising energy prices. In the Company we do not
invest in Asian fossil fuel companies given our long-term
views on energy dynamics and market developments,
and for ESG reasons.
Review of Hedging Models and Stock Changes
Made in 2021
• There were no changes made to the Company’s
investment process over 2021. We continue to focus on
stock picking as our primary way of generating
performance. We then use a series of quantitative
models to help us to determine whether to put in place
any capital preservation strategies and also whether to
utilise borrowing facilities.
• Over the course of 2021 our hedging models moved
quite materially. Our hedging models which are
primarily based around valuations started the year
cautiously suggesting to deploy some capital
preservation strategies if pricing attractive. This meant
the fund did have some puts
1
in place during the falls in
China over the summer which was beneficial to
performance. Unfortunately due to technical (legal)
reasons around buying options
2
on indices containing
Chinese stocks on US restricted lists we were unable to
have the full hedging we would have wanted which
meant the gains to performance were limited. With puts
elsewhere (on Taiwan indices) losing money it meant
over the course of the year there was a small negative to
performance from the Company’s hedging strategies.
Overall though the hedging process did reduce the
volatility of the Company’s returns and we remain
confident in the hedging models and process.
• After the falls in the second half of 2021 the hedging
models moved from a cautious stance at the beginning
1
Put: a put is an options contract that gives the owner the right, but
not the obligation, to sell a certain amount of the underlying asset,
at a set price within a specific time.
2
Options: Options are financial derivatives that give buyers the right,
but not the obligation, to buy or sell an underlying asset at an
agreed-upon price and date.
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Annual Report and Accounts
for the year ended 31 December 2021
7
Strategic Report
Portfolio Managers’ Review
of 2021 to a neutral position in November and we
effectively reduced our position in puts by no longer
rolling outstanding positions. The decision was made
easier by put pricing which by the end of 2021 had
spiked due to inflationary concerns and geopolitics
(Russia-Ukraine tensions). As we explain in the outlook
section below our models are now turning more positive
as markets fall and we are no longer buying puts or
capital preservation strategies. The gearing (debt)
indicator however remains neutral.
• At the stock level it was not a particularly active year. Key
changes were to reduce China stocks where our
long-term investment thesis had been undermined by
regulatory changes. This included selling our positions in
Alibaba, Galaxy Entertainment, Ping An, New Oriental
Education and reducing Tencent. Purchases were much
more diversified. We added to Indian IT services, ASEAN
financials (DBS, Bank Mandiri, Singapore Exchange), big
box DIY retailers (Wilcon, Siam Global) and selected
technology names that had fallen on worries over a peak
of working from home demand. As we explain in the
outlook section we think there are more important
secular drivers of technology spend than home working.
Review Positioning at end December 2021
• The tables below have the positioning of the Company
both on an absolute basis and relative to index. Looking
on an absolute basis first the Company is quite balanced
across countries having c.24% in HK/China, 22% Taiwan,
15% Australia (inc UK listed BHP/Rio), 13% India, 12%
Korea, 9% Singapore, 6% smaller ASEAN markets.
Compared to the reference index however in the second
table the Company is very underweight China. As we
explain in the outlook section this reflects the fact that
we now view a significant part of the Chinese
stockmarket as less attractive for investment as
government policy looks set to drive the business
outlook not market forces. This is the key change in the
management of the portfolio from December 2020.
• At a sector level there is one item of note. The Company
now has c.40% in stocks classified as information
technology by MSCI. We go on to explain in some detail
this position in the outlook section. But we would
highlight here this is a mix of companies across different
sectors principally software services, memory, foundry,
semiconductor design, automation related and capital
expenditure. These are the companies in Asia that are
often world leaders in their space and in our view have a
sustainable competitive edge.
Portfolio Weight
Sector/Country (%)
Australia
China
Hong Kong
India
Indonesia
Korea
Malaysia
New
Zealand
Philippines
Singapore
Taiwan
Thailand
United
Kingdom
United
States
France
Vietnam
Cash &
Others
Grand
Total
Communication Services 1.2 5.1 0.7 1.6 2.3 10.9
Consumer Discretionary 1.7 4.6 1.5 2.4 2.7 1.0 1.5 15.5
Consumer Staples 0.8 0.8
Energy –
Financials 1.2 3.1 3.3 1.3 3.6 12.6
Banks 3.3 1.3 2.4 6.9
Diversified Financials 1.2 1.3 2.5
Insurance 1.2 1.9 3.2
Healthcare 4.5 0.0 0.4 4.9
Industrials 0.5 3.7 0.6 0.2 3.5 8.6
Information Technology 2.5 0.9 6.0 10.0 1.1 22.7 43.2
Materials 1.8 3.8 5.7
Real Estate 2.4 1.1 3.5
Utilities –
Cash -8.3 -8.3
Derivatives -6.3 -0.6 6.9 0.0
Collective Investments 2.5 2.5
Grand Total 10.5 12.7 11.7 12.9 1.3 11.7 – – 3.0 8.5 22.6 1.0 3.8 -0.6 1.5 0.8 -1.3 100.0
Source: Schroders
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8
Schroder Asian Total Return Investment Company plc
Portfolio Managers’ Review
Active Weight
Sector/Country (%)
Australia
China
Hong Kong
India
Indonesia
Korea
Malaysia
New
Zealand
Philippines
Singapore
Taiwan
Thailand
United
Kingdom
United
States
France
Vietnam
Cash &
Others
Grand
Total
Communication Services 0.9 -0.7 -0.1 0.4 -0.2 0.3
-0.1 -0.1 -0.1
1.8
-0.3 -0.2
1.6
Consumer Discretionary 0.6 -4.6 1.2 -1.0 -0.1 -1.2 -0.1 2.4
-0.0
2.4 0.8 1.5 2.0
Consumer Staples -0.8 -1.9
-0.1 -1.0 -0.1 -0.4 -0.2 -0.0 -0.1 -0.2 -0.2
0.8 -4.2
Energy -0.5
-0.5 -1.4 -0.1 -0.2 -0.0 -0.0 -0.2
-2.9
Financials -3.9 -4.5 0.4 0.4 0.5 -0.9
-0.5 -0.1
2.4
-2.0 -0.1
-8.3
Banks -3.9 -2.8 -0.3 1.3 0.5
-0.7 -0.5 -0.1
1,2
-1.2 -0.1
-6.5
Diversified Financials -1.0 -0.6 0.3
-0.6 -0.1 -0.0
1.2
-0.5 -0.1
-1.4
Insurance 0.9 -1.1 0.4
-0.3 -0.1 -0.3
-0.4
Healthcare 2.9 -2.2 -0.2
-0.0 -0.7 -0.1 -0.2 -0.0 -0.1
-0.7
Industrials -0.8 -1.4 2.8 -0.6 -0.9
-0.1 -0.1
0.3 0.0 3.0
-0.1
2.2
Information Technology -0.5 0.3 0.9 3.6 4.1 -0.0 1.1 11.5
-0.0
20.8
Materials -0.8 -1.1
-1.2 -0.1 -0.9 -0.1 -0.8 -0.2
3.8 -1.4
Real Estate -1.1 -1.1 1.2 -0.1
-0.2
0.7
-0.0 -0.1
-0.5
Utilities -0.2
-0.9 -0.6 -0.6 -0.1 -0.1 -0.1 -0.0 -0.2
-2.7
Cash -8.3 -8.3
Derivatives -6.3 -0.6 6.9 0.0
Collective Investments 2.5 2.5
Grand Total -4.2 -18.7 5.8 0.9 -0.1 -0.7 -1.3 -0.4 2.3 5.9 7.0 -0.6 3.8 -0.6 1.5 0.8 -1.3 –
Source: Schroders. Any reference to sectors/countries/stocks/securities are for illustrative purposes only and not a recommendation to buy or sell any
financial instrument/securities or adopt any investment strategy.
INVESTMENT OUTLOOK
At the beginning of each Chinese Lunar New Year your fund
managers normally write a more detailed investment update
on how we are approaching investment in the Asian region,
and the update below is a shortened version of our recently
published Year of Tiger report, written before the invasion of
Ukraine. For an updated view please read the Addendum at
the end of this report. The update focuses on where we see
the best investment opportunities in the region and why,
rather than opining on geopolitics, inflation, global liquidity
and exchange rates. All of the latter are subjects we have
views on but in truth no actual insights that can give us an
investment edge. The Company invests in the equity of
companies in Asia not countries, indices or economic
numbers – so whilst we want to understand risks to
businesses under changing environments, we rarely make
explicit forecasts or assumptions on global macroeconomic
variables.
The report is divided into different sections and contains lots
of charts in order to make it a little more “digestible”. For
readers with less time or patience there is a short summary
at the end.
TOPIC 1: CHINA – UPDATED VIEWS ON ECONOMY
AND STOCKMARKET
We discussed our China strategy in detail in the interim
report in 2021 (available on the Company’s website) – it was
by far the biggest focus for your portfolio managers over the
course of 2021. It was also the area where we saw the
biggest changes to the Company with the bulk of our
turnover coming here as we substantially reduced the
Company’s weighting in Chinese equities, in particular to the
internet sector. This proved beneficial to Company returns
given the very sharp sell off in Chinese stockmarkets over the
second half of 2021.
So, after a very difficult 2021 for Chinese stockmarkets, a
year dominated by major regulatory change, debt defaults in
a sharply weakening property sector and a tight credit
market, do we now see light at the end of the tunnel?
Despite the difficult start to the year we believe that 2022 can
be a better year for Hong Kong listed Chinese stocks. But
unlike the endless bulls on the sell side who are nearly
universally pushing a self-interested (given their IPO backlog)
maximum bullish call on Chinese equities we do not think a
“better” year necessarily means a “good” year.
There are many headwinds from 2021 that are likely to
continue to have a material impact on both the economy and
stockmarket in China this year – whether that is zero-COVID
policies impacting consumption and production, continued
slowdown in construction and particularly residential activity,
sluggish income growth, a potential slowdown in the export
sector as economies elsewhere reopen and service activity
picks up (less widgets, more holidays etc), and lastly the
impact of the major policy reset under “common prosperity”
and “dual circulation”.
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The charts below perhaps highlight some of our worries. As Chart1 shows, retail sales growth in China has been slowing and
disposable income growth is now dropping (Chart2). Anecdotally we hear rumours of large layoffs in the internet, education,
and construction sectors – this along with zero-COVID policies is likely to mean weaker consumption numbers. Recent calls
with Chinese consumer related business have flagged significant near-term headwinds.
Chart 1: Retail sales numbers are weakening after the post COVID jump
*Series was revised in 2018, with some entities taken out. **Enterprises with annual main business revenue of CNY20mn or more.
Source: CEIC, Autonomous Research, January 2022
Chart 2: Slowing income growth and rising worries over layoffs likely to weigh on retail sales growth in
2022
Source: CEIC, Autonomous Research, January 2022
Across the board it looks like fixed asset investment is slowing in China (Chart 3), not just in the real estate sector. Exports
remain the bright spot (Chart 4) with both volumes and prices strong though short-term trends indicate some slowdown in
volume, and we anticipate reopening outside of China should lead to a recovery in services and a slowdown in Chinese
manufactured goods exports in 2022.
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10
Schroder Asian Total Return Investment Company plc
Portfolio Managers’ Review
Chart 3: China: Urban Fixed Asset Investment Growth
Source: DSG Asia, January 2022
Chart 4: China export growth has been the bright spot – but now set to slow as demand switches to
services and prices normalise?
*Derived from export value and volume in the chart on the left. Source: CEIC, Autonomous Research, January 2022
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175681 Schroders Asian Total Return Annual Report Pt1.qxp_175681 Schroders Asian Total Return Annual Report Pt1 04/04/2022 11:09 Page 10

Annual Report and Accounts
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11
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The stockmarket bulls with positive views on Chinese
stockmarkets will counter this is all backward looking and
stimulus is coming. We do indeed expect some loosening of
policy and stimulus measures but expect these to be muted
and smaller in scale than we have seen historically. As Chart
5 shows China is currently running a significant fiscal deficit
once local government funding vehicles are included, leaving
less scope for manoeuvre versus past slowdowns. Also, as
Chart6 shows China after years of extraordinarily high
investment rates has a large capital stock and relative to the
other countries at a similar stage of development a large
debt burden. Reflating the debt and investment bubble
would be dangerous and counter to President Xi’s very
clearly stated policies to reduce financial risks in the
economy.
Chart 5: China is trying to rein in excessive leverage and local government excesses, and there is little
scope for large scale fiscal policy stimulus or tax cuts
*includes LGFVs and other off-budget activity (government guided funds and special construction funds, social capital portion only) Source: DSG Asia,
January 2022
Chart 6: China’s debt levels at this stage of development is high, large scale debt funded capital
investment looks unlikely
Source: DSG Asia, January 2022
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12
Schroder Asian Total Return Investment Company plc
Portfolio Managers’ Review
On a more positive note, we do expect policy easing –
though we doubt whether nudging 5bp off short-term
lending rates as we saw in December has any real impact.
Also, on a more positive note we do not believe, as it stands
today, the property sector slowdown is likely to have major
ramifications for the broader financial sector given the ability
of the Government to contain the problems (controlling
major banks and state-owned developers has its uses). This
should also mean the impact on consumer confidence from
the property slowdown remains limited.
The China bulls will counter that loosening credit (as proxied
by the Total Social Financing or TSF) will lead to an equity
rally. As Chart 7 shows, movements in the TSF have indeed
sometimes correlated with the boom and busts of the
domestic Chinese stockmarket. We are not really interested
in playing short term rallies based on temporary stimulus
and would also highlight as shown in Chart 7 the last time (in
2014/15) we had a rise in TSF with a weak property market
share prices didn’t perform.
Chart 7: Chinese A-shares tend to follow the TSF impulse, except in ‘14-15’s equity boom-bust. In ‘13-14,
equities lagged the rise in the impulse due to curbs on property, and there is a chance of that in ‘22
*Calculated based on the weighting of financial and real estate stocks in the CSI 300. %yoy return of average monthly values for each calculated index.
Source: Bloomberg, CEIC, Autonomous Research, January 2022
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So, to sum up whilst we see many ongoing headwinds for
Chinese stockmarkets we are optimistic returns this year will
be better than 2021. However, that does not mean we expect
a strong sustainable recovery in Chinese stockmarkets – the
economic and earnings outlook is difficult for many sectors,
and the risks of a more significant economic slowdown in
China look real.
The other headwind for Chinese stockmarkets that we
believe is more structural and materially affects our long-
term exposure to Chinese equities is the on-going major
policy reset. We have written extensively on Chinese policies
over the course of 2021 so will not rehash our views here (as
they haven’t changed) but, in summary, we see four sets of
major policies that are impacting our investments in China:
1. “Common Prosperity” – or the aim to make society fairer,
more equal and spread the benefits of growth more
evenly.
2. “Definancialization” – reduction of financial risks posed
by excessive debt fuelled speculation in property and
other financial assets.
3. “Regulation of data, both its use and control” – ensuring
that personal data is not misused or monopolised and
that social media and other internet sites adhere with
the long-term goals of a harmonious society etc.
4. “Dual circulation” – investment priorities and capital
allocation is aligned with long-term development goals
and in particular priority areas: decarbonisation,
semiconductors, artificial intelligence, healthcare,
biotechnology, electric vehicles.
One could also perhaps describe this reset as curbing the
excesses of unfettered capitalism and, unlike many past
policy pronouncements in China, we do see these policies as
real and part of a conscious effort to remould society. We will
not go into a discussion of the merits of the policies – other
than to say that some of the policies we do sympathise with
– however the issue for the stockmarket is their
implementation.
In China the implementation is top down and by instruction
rather than by market forces and “nudges”. This has come as
a shock to many investors. In truth even though your
portfolio managers consider themselves pretty open eyed
(a.k.a. cynical) in our investing approach we have been
surprised by how quickly policy has been implemented. It
does appear in many parts of the Chinese economy the state
is advancing and the private sector is in retreat (or Adam
Smith’s invisible hand is being replaced by the Communist
Party’s rather more visible one) in order to ensure capital is
allocated in accordance with long-term policy priorities.
So, in essence, we have a stockmarket in China where an
increasingly large part of the constituents are investing
aligned with state priorities rather than the maximisation of
long-term shareholder returns. This has clearly applied to
most state-owned banks, utilities, telecom, energy stocks for
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13
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Portfolio Managers’ Review
some time. But with the new policy push to ensure common
prosperity and social harmony we see education, healthcare,
insurance, social media companies now likely to put policy
priorities first (or as in the case of education stocks be told
they are now a non-profit sector). For the large internet
stocks the priority now appears to be helping with common
prosperity projects and investing in areas outlined under
dual circulation rather than building huge monopolistic data
platforms or investing in ever cheaper community group buy
programmes that put Mum and Pop shops out of business.
For the average person in China this is popular and may well
be good news, however clearly for stockmarkets and foreign
capitalist hoarders in particular this is not good news. The
move to increase state/policy directed investment and
control is we believe likely to lower long term investment
returns in those companies affected, making their shares
less attractive. It also means the Company is likely to have a
materially lower weight in Chinese equities.
As Chart 8 shows we have been through this twice before in
China. This was when the telecom and bank stocks listed
which in their euphoric heydays were around 50% of the
MSCI China by market capitalisation. For a while the market
thought these stocks would be great proxies for strong GDP
growth and thus make exceptional returns. However, state
control, as it does in most countries, has led to a different set
of priorities and poor return on invested capital (ROIC) and
share prices. As Chart 9 shows on a more positive note this
does not make China stocks uninvestible (on this subject we
believe Mr Soros is wrong) however it does not feel to us that
the market has fully digested the long-term implications of
the policy changes affecting many sectors of the Chinese
stockmarket.
Chart 8: China – why is the market so worried about the new wave of regulation
Source: BofA Research, Bloomberg, MSCI, Company data, August 2021
If the government priority is shifting from fostering the on-line economy to a much greater focus on
‘common prosperity’ then revenues/margins/ROIC/capex may have to be sacrificed for the ‘greater
good’. Other large SOE sectors have trodden this path……. from ‘growth’ to ‘value’……
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14
Schroder Asian Total Return Investment Company plc
Portfolio Managers’ Review
Chart 9: The derating of SOE banks and telecoms took several years
Source: Bloomberg, August 2021
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So how are we investing in China? Schroder Asian Total
Return has about 15% of its assets in stocks classified as
“Chinese” by the MSCI China, this is down substantially from
the level twelve months ago but is still the second biggest
country exposure in the fund. As indicated above we
definitely do not think China is “uninvestible”. Instead, the
areas we are interested in investing in have shrunk given we
don’t invest in state owned or heavily state directed
businesses for the ROIC reasons outlined above. This means
in China we are now unlikely to own education, healthcare,
insurance, banks, property, energy, utility, Macau gaming,
telecom, mining, chemical and infrastructure companies.
Areas where we still have exposure and are interested in
investing tend to be consumer names, exporters, industrials,
technology and green energy. The big area we have not
mentioned is internet names. In general, we remain cautious
here. Clearly the large internet groups now need to align
their priorities with the new policy objectives. This combined
with what remains intense competition in a slowing economy
and still high hopes from most sell side analysts leave us
cautious. Chinese internet stocks are not uninvestible but
given the correction across many sectors of the market we
feel there are better investment opportunities elsewhere.
TOPIC 2 – DOES THE END OF CHIMERICA AFFECT
OUR INVESTMENTS?
For readers not familiar with the term “Chimerica” in this
context we are referring to economist Niall Ferguson’s
definition of Chimerica as a “symbiotic relationship between
China and the USA” where, in a prolonged period after
China’s opening up in the 1990s to the financial crisis in
2007/08, “excess savings and investment in China funded
overconsumption in USA leading to an incredible period of
wealth creation” (well according to Wikipedia at least!).
Our view for some time has been that many interlinkages
between China and the USA are likely to be unwound and
that tensions between Sinosphere and Anglosphere are likely
to lead to onshoring and shrinking global trade to GDP. As
Chart 10 shows whilst early days there is evidence that the
structural growth in globalisation (via physical trade) is now
reversing. Chart 11 has a table from Viktor Shvets from
Macquarie looking at the size of the potentially emerging
blocks.
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Annual Report and Accounts
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15
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Portfolio Managers’ Review
Chart 10: A golden era from 1989 coming to an end? Globalisation to reverse and tensions rise?
Source: The World Bank, January 2022
Chart 11: In a less certain world how do potential blocs shape up?
Source: World Bank, OECD, Macquarie Research, January 2022
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Obviously our job is not to comment on geopolitics.
However, clearly US-China tensions do impact our
investment thinking and create risks and uncertainties. We
think as we move out of our COVID pandemic world many of
the trends around onshoring and increasing trade tensions
should reassert themselves as the West (or Anglosphere) and
China (or Sinosphere) start to view each other as unreliable
rivals rather than partners.
As Chart 12 shows China has been overinvesting or perhaps
under “Chimerica” has been used as a cheap investment
base by US companies for years (if Chart 13 is anything to go
by). This may perhaps also explain (along with endless
quantitative easing) why Tobin’s Q (Chart 14) in the USA is so
elevated. Logically a Tobin’s Q above 1 should lead to large
scale investment (as the value of equity is above the book
value of assets). We wonder whether all these trends are
about to reverse.
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16
Schroder Asian Total Return Investment Company plc
Portfolio Managers’ Review
Chart 12: China becomes the world’s factory Chart 13: Whilst the US underinvests in physical
capital and capacity
Source: World Development Indicator – Source: BEA Fixed Asset Table 1.1, 1.3 & 1.5, Orlock Advisors, January 2022
The World Bank, Orlock Advisors, January 2022
Chart 14: US Tobin Q Ratio (the market value of companies divided by their replacement cost)
Source: http://www.smithers.co.uk/page.php?id=51, Orlock Advisors, January 2022
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Regardless of the somewhat academic contortions above we
think we have come to the end of an era of ever-growing
interdependence and globalisation. This affects our long-
term investment thinking and analysis, throwing up threats
and opportunities. For export companies in China where the
investment thesis is based on significant global market share
gains we tread with caution. In particular we find much of
the domestic sell side research in China on A share
companies does not consider deteriorating trade
relationships and a greater political desire in West for self-
sufficiency when analysing likely growth in export markets.
In China onshore however we see opportunities as there is
likely to be an ever-increasing focus on building national
champions and being less reliant on pesky foreigners for
critical parts. This could be a negative for European, Japanese
or US companies that have high hopes of growth in China.
Nationalism for better or worse appears to be to the fore,
and we need to adapt our thinking for a less benign world.
Dan McFetrich our global industrials analyst at Schroders has
done some interesting work on this area looking at trends in
capital expenditure and onshoring, which back up our thesis
regarding the end of Chimerica and what it might mean. As
Chart15 shows announced onshoring to USA and foreign
direct investment (FDI) has picked up sharply. On Chart16
and chart 17 we have UBS evidence surveys regarding
percentage of companies looking to move out of China and
where they are looking to move too. In Chart 16 it can be
seen c.90% of respondents expect to set up facilities outside
of China within 2 years. Chart 17 has the countries that
respondents expect to move too – North Asia, USA and
Vietnam are the most commonly mentioned i.e. those
countries with the closest/best trade ties with USA.
175681 Schroders Asian Total Return Annual Report Pt1.qxp_175681 Schroders Asian Total Return Annual Report Pt1 04/04/2022 11:10 Page 16

Annual Report and Accounts
for the year ended 31 December 2021
17
Strategic Report
Portfolio Managers’ Review
Chart 15: The End of Chimerica – Onshoring to the USA
Source: UBS Evidence Lab, 2021
Chart 16: The End of Chimerica – 90% of respondents plan to expand outside China
Source: UBS Evidence Lab, 2021
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175681 Schroders Asian Total Return Annual Report Pt1.qxp_175681 Schroders Asian Total Return Annual Report Pt1 04/04/2022 11:10 Page 17

18
Schroder Asian Total Return Investment Company plc
Portfolio Managers’ Review
Chart 18: Where will the capital expenditure go – automation and software?
1
Source: IFR, CEIC, Macquarie Research, January 2022.
2
Source: IFR, Macquarie Research, January 2022.
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Given the expected shifts in capital expenditure, we have
added to names in Taiwan that have exposure to automation
and systems integration in the USA and Europe. An overall
pick up in corporate expenditure on systems and software
should also benefit our Indian IT services names which are
currently reporting strong order wins. A recovery in
corporate expenditure and high-end automation should also
add another structural driver to semiconductor demand,
which remains a key position in the Company.
The bigger long-term question is whether in certain key
industries where China is also investing heavily (under dual
circulation policies) we will see overcapacity. Industries we
are monitoring closely are batteries, electric vehicles (EVs),
semiconductors, solar, wind, biotech. It seems inevitable
there is likely to be overcapacity in lower end batteries, mass
EVs, simpler semiconductors given the amount of capital
being committed to these industries. However, where we see
genuine barriers to entry due to strong intellectual property
we are more comfortable and at the current time we are
maintaining our positions in TSMC, Samsung Electronics and
Mediatek all of which are top 10 positions in the Company.
On the other hand we are more cautious on the battery, EV
and solar sectors where barriers to entry appear lower.
Chart 17: The End of Chimerica – most plan to expand in a deemed USA trade friendly location
Source: UBS Evidence Lab, 2021
So, what does this mean for the Company? We are bullish on capital expenditure names. With the labour market tight in the
USA capital expenditure is likely to be focussed on automation, digitalisation and software. As Chart 18 shows despite high
labour costs and falling robotics prices the USA is currently lagging other countries in its level of manufacturing automation.
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175681 Schroders Asian Total Return Annual Report Pt1.qxp_175681 Schroders Asian Total Return Annual Report Pt1 04/04/2022 11:10 Page 18

Annual Report and Accounts
for the year ended 31 December 2021
19
Strategic Report
Portfolio Managers’ Review
TOPIC 3: KEY POSITIONS IN SATRIC –
TECHNOLOGY
Chart 19 has a country and sector breakdown of the
Company as at December 2021. As can be seen at that date
the fund had 43% of its assets in stocks classified as
information technology stocks by MSCI. Just to be clear this is
not internet stocks (they are classified under communication
services or consumer discretionary) but a mixture of
semiconductor, software and hardware stocks.
Chart 19: Positioning breakdown by country and sector as at 31 December 2021
Any reference to sectors/countries/stocks/securities are for illustrative purposes only and not a recommendation to buy or sell any financial
instrument/securities or adopt any investment strategy.
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Relative to the Company’s reference index (the MSCI AC Asia
Pacific ex Japan index) this would be a c.15-20% overweight
position, which along with the underweight in China of
c.15-20%, are the two biggest deviations from the
benchmark weights. Hopefully we have explained the
reasons for the China positioning in the first section, but why
are we so overweight technology stocks in the region?
First we would highlight that “technology” can mean rather
different things to different people. It is a pretty generic
word and of course nearly all companies claim to be
“technology champions”. Chart 20 has a table from Bernstein
showing how their technology subsectors have changed (in
terms or revenues) over time.
175681 Schroders Asian Total Return Annual Report Pt1.qxp_175681 Schroders Asian Total Return Annual Report Pt1 04/04/2022 11:10 Page 19

20
Schroder Asian Total Return Investment Company plc
Portfolio Managers’ Review
Chart 20: Why we will be focussing on the real “IP” in the Asian tech sector – this is work in progress – a
key analytical challenge
1
Source: Bernstein Quant Team (Larson), August 2020;
2
Source: Bloomberg, Bernstein analysis, August 2020
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What is clear from the chart is some parts of “technology”
are mature with lower barriers to entry whereas others have
strong secular growth trends. It is the latter area where we
are focussed i.e.semiconductors, software and services.
Within these sectors we are looking for companies creating
genuine intellectual property (IP) and Warren Buffet’s moats
(i.e.barriers to entry).
We want to own shares in companies which are successfully
building capabilities and products through their continuous
R&D and investment in people and products. As Chart 21
highlights investment in intangible assets is rapidly rising –
our key job is to try and work out which companies in Asia
are doing this well and which ones poorly. In Asia we believe
the best semiconductor companies (both chip fabrication
and chip design) and software companies are using their
comparative advantages to create strong intellectual
property (IP). TSMC for example should never be looked at
on a price to book basis. The real value of TSMC is its years
and years of accumulated engineering expertise, its
relationships with key customers and suppliers, and its
network effect of clustering its main operations in Hsinchu in
Taiwan. Every foundry competitor we have looked at over the
last 25 years has found out it impossible to compete with
TSMC in high end semiconductors no matter now much
capital they have had.
175681 Schroders Asian Total Return Annual Report Pt1.qxp_175681 Schroders Asian Total Return Annual Report Pt1 04/04/2022 11:10 Page 20

Annual Report and Accounts
for the year ended 31 December 2021
21
Strategic Report
Portfolio Managers’ Review
Chart 21: With increasingly amounts of corporate value stored in intangibles – and 55% of investment
now in intangibles perhaps it is not surprising traditional measures of value struggle
1
Source: Corrado, Haskel et al; Macquarie Research, June 2020;
2
Source: CEIC; Macquarie Research, June 2020
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The best companies in Asia, those with world class
technology, strong intellectual property, large scale
comparative advantages from scale and proximity of
customers, often tend to be in the semiconductor and
technology space. The secular growth trends for these
companies has we believe also materially improved. This is
not just about much discussed working from home trends
but the real drivers are cloud migration, electric vehicles,
decarbonisation, automation, artificial intelligence, 5G and
connectivity (Chart 22 and Chart 23). Nearly all the trends we
discuss as investors at the moment involve materially greater
use of semiconductors and software. Taiwan and Korea are
world leaders in semiconductors and India has key
comparative advantages (young, well educated, cheaper
engineers) in software services. This is why we have c.40% of
the fund’s assets in technology – these are the Asian stocks
that are world leaders in their respective industries.
Chart 22: Hardware Tech/Industrials – Strong tailwinds to continue in 2022
Securities shown are for illustrative purposes only and should not be viewed as a recommendation to buy or sell.
Source: Bloomberg, Schroders, 15 Feb 2022. ^as at 14 Feb 2022. *Trailing 12 months
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175681 Schroders Asian Total Return Annual Report Pt1.qxp_175681 Schroders Asian Total Return Annual Report Pt1 04/04/2022 11:10 Page 21

What about the risks? Are we heading into potential
overcapacity in semiconductors and aren’t stocks expensive
after strong performance in 2020/2021?
We touched on overcapacity in the China section. We do
worry about overcapacity in the low end foundry space
particularly in China. However US-China trade sanctions,
which make high end semiconductor equipment supply
difficult, and limited semiconductor engineering expertise
globally we believe will make it difficult for China (or anyone
else) to catch up at the higher end, more complex part of the
foundry industry. For chip designers this space has
significant intellectual property and for higher end chips
again barriers to entry (you need a good foundry partner for
starters). In the memory space the industry has now
consolidated down to three main players (Samsung, SK
Hynix, Micron) and we believe this should make the industry
less cyclical going forward as capital expenditure is more
disciplined. So in summary whilst we do worry some parts of
technology industry are likely to see overcapacity, for our key
exposures in the Company we are confident the long-term
secular growth trends outweigh any shorter-term cyclical
worries.
And what of valuations – aren’t Asian technology stocks
expensive? As Chart 24 highlights Asian technology stocks
have actually derated over the last 12 months – TSMC at time
of writing is flat over 12 months and Samsung Electronics is
actually down 15% and trading at a large discount to US
listed peer Micron (Chart 25). The valuation gap between
global and Asian technology stocks is at an all time high.
Worries over US-China tensions, internet regulations in
China, Taiwan-China worries and the sustainability of
working from home demand have we believe combined to
give investors an excuse to sell the sector. Given the
underlying strengths of the technology businesses we own in
Asia and the strong secular growth drivers we view this as
our highest conviction long-term position in the Company.
22
Schroder Asian Total Return Investment Company plc
Portfolio Managers’ Review
Chart 23: We not see any slowdown in capital expenditure from key US and Chinese tech giants – the
arms race is on. . .
Source: Reuters, January 2022
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175681 Schroders Asian Total Return Annual Report Pt1.qxp_175681 Schroders Asian Total Return Annual Report Pt1 04/04/2022 11:10 Page 22

Annual Report and Accounts
for the year ended 31 December 2021
23
Strategic Report
Portfolio Managers’ Review
Chart 24: Asian and Global technology stocks have shown a marked divergence in valuations since 2019
Source: Refinitiv Eikon Datastream, as at 31 December 2021, in GBP.
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Source: Refinitiv, January 2022
175681 Schroders Asian Total Return Annual Report Pt1.qxp_175681 Schroders Asian Total Return Annual Report Pt1 04/04/2022 11:10 Page 23

Chart 26: Is value outperformance sustainable? Selectively we see opportunities but the big value
sectors (Banks, Property, Energy) are challenged
Source: Jefferies, Factset, August 2021. Note: Current MSCI universe (ex-China A) with three or more analyst coverage as of Jul 21. For illustrative
purposes only and should not be viewed as a recommendation to buy or sell.
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24
Schroder Asian Total Return Investment Company plc
Portfolio Managers’ Review
TOPIC 4: KEY POSITIONS IN THE SATRIC – VALUE
AND CYCLICAL STOCKS
Given the discussion above it will probably be of no surprise
that we are not chasing perceived “value” sectors in Asia (like
banks or oil stocks) or making a “cyclical” trade on global
economic recovery.
Your fund managers have never considered themselves
good short term traders and most cyclical stocks in Asia are
low ROIC (Return on Invested Capital) business with little IP
or comparative advantage so lack long-term investment
attractions. Chart 26 has a split of the MSCI Asian value index
by sector. In Asia “value” on this definition is mostly in
sectors facing long-term headwinds or with heavy state
involvement like banks, insurance and property. We did add
to our financial exposure over the course of 2021 – mostly to
better banks in ASEAN and India. But we see little attraction
of adding more broadly to the sector, given we have no
strong view on the medium term inflation outlook and
instead see most banks in Asia as still vulnerable to
disruption from internet and fintech companies.
We do have some cyclical exposure in the Company however
this is principally in Australia via BHP and Rio, and some
related mining services companies. We are not particularly
optimistic on iron ore prices due to the construction outlook
in China, however after a sell off in mid-2021 on China
worries we added to our positions. We felt stocks were
discounting a much lower long-term iron ore price than was
likely given the lack of new supply in the industry. The other
long-term factor we felt favourable was the market was
missing the fact decarbonisation needs many of the metals
mined by BHP and Rio, so the large “ESG” discount was
overdone. BHP and Rio may be far from perfect but they are
better than most other miners we meet in Asia and are
committed to carbon neutrality. BHP and Rio are likely to
remain the key more cyclical exposures in the Company.
175681 Schroders Asian Total Return Annual Report Pt1.qxp_175681 Schroders Asian Total Return Annual Report Pt1 04/04/2022 11:10 Page 24

Annual Report and Accounts
for the year ended 31 December 2021
25
Strategic Report
Portfolio Managers’ Review
Chart 27 : Why we hold BHP and Rio – the solution not the problem to decarbonisation
Source: Citi Research, BNEF, IPCC, November 2021. For illustrative purposes only and should not be viewed as a recommendation to buy or sell.
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the best names in industry who are committed to carbon neutrality
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TOPIC 5: KEY POSITIONS IN THE SATRIC – ASEAN
AND INDIA
Going back to Chart 19 readers will notice the Company has
very little exposure to the small ASEAN markets (Singapore,
Malaysia, Thailand, Indonesia and Philippines). We continue
to struggle to find much attraction in these stockmarkets. A
lot of this is due to structural factors. We tend to view most
of these countries as perhaps stuck in a middle income trap.
As Chart28 highlights R&D spending is very low in most
ASEAN countries and there are few of the vibrant technology
or internet stocks we see in North Asia.
Chart 28: North Asia can continue to thrive
1
Source: OECD; Macquarie Research, October 2020;
2
Source: https://nsf.gov/nsb/sei/one-pagers/China-2018.pdf
This is reflected in a stockmarket that is dominated by banks, real estate, energy and utilities (Chart 29). Perhaps it is not
surprising that ASEAN stockmarkets have struggled given disruptive trends facing all these sectors.
Higher education levels and R&D spend key to driving ‘knowledge’ industries
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175681 Schroders Asian Total Return Annual Report Pt1.qxp_175681 Schroders Asian Total Return Annual Report Pt1 04/04/2022 11:10 Page 25

26
Schroder Asian Total Return Investment Company plc
Portfolio Managers’ Review
Chart 29: Moribund SE Asian markets
Source: FactSet, MSCI, Macquarie Research, June 2020. Pricing date as of 26 June 2020, calculated based on EM Asia universe
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But what of the macroeconomic picture in ASEAN – surely
the outlook for investment should improve as firms move
production out of China? This is where ASEAN looks set to
miss out. Relatively poor educational attainment, corruption,
weak legal systems, often messy politics have not created a
great investment environment. As Chart 30 shows on most
measures of ease of doing business the key middle income
ASEAN countries rank poorly and there has been no
improvements over the last few years. On Chart 31 surveys
of likely relocation of factories and actual FDI suggest limited
use of ASEAN as an export base.
Chart 30: ASEAN needs to up its game to get out of the middle income trap
Source: Transparency International, World Bank, Fraser Institute, 2022
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175681 Schroders Asian Total Return Annual Report Pt1.qxp_175681 Schroders Asian Total Return Annual Report Pt1 04/04/2022 11:10 Page 26

Annual Report and Accounts
for the year ended 31 December 2021
27
Strategic Report
Portfolio Managers’ Review
Chart 31: Surveys Suggest most ASEAN countries will miss out on the relocation of facilities from China
Source: UBS, June 2019
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So, both at a macroeconomic level and bottom up stock level
we cannot get terribly excited by the ASEAN region. There
are some good companies listed in ASEAN the problem of
course being that they trade on a scarcity premium as so
much of the market is unattractive. We do however have a
few names on our watchlist and will continue to monitor for
opportunities to pick up the strong ROIC business in ASEAN
at the right price.
What are our current investment views on India? The
Company’s weighting in India moved up over 2021 – mostly
during the sell off in March/April when we added to our
banks and Indian IT services exposure. We also initiated a
position in a healthcare name.
The macroeconomic picture in India does look promising. As
Chart32 suggests there have been genuine reforms in India
some of which have accelerated under the pandemic. On
most ease of doing business surveys (back to Chart30) India
is at least improving, albeit there is still plenty of room for
further improvement. As Chart 33 show the roll out of digital
infrastructure (along with better physical infrastructure) has
been quite rapid and should bring significant productivity
benefits to the economy. As Chart 31 suggests FDI should be
set to accelerate along with domestic investment as we move
into a more normal post-COVID world.
Chart 32: India – Government continues to reform
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175681 Schroders Asian Total Return Annual Report Pt1.qxp_175681 Schroders Asian Total Return Annual Report Pt1 04/04/2022 11:10 Page 27

28
Schroder Asian Total Return Investment Company plc
Portfolio Managers’ Review
Chart 33: India is building a strong digital infrastructure
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The problem however comes when we look at the
stockmarket. Valuations are expensive across the board and
well above Indian historic norms and the normal premium to
the region now looks to have overshot (Chart 34). In order to
justify ever higher multiples stockbrokers have further raised
their earnings forecast for 2022 and 2023 (India has a March
year end). However, as can be seen from the right hand
chart of Chart 35, like most stockmarkets historically Indian
earnings forecasts tend to be downgraded over time. Given
an element of euphoria has seeped into Indian markets we
think the risk of earnings downgrades is high. With interest
rates likely to rise as inflation picks up in India we also see
risks of multiple contraction as higher discount rates bring
growth stocks down to earth. The market may not be priced
for perfection but it is certainly vulnerable to scares –
whether that be on politics, earnings, inflation or the
economy. We are happy with our current private sector bank
and Indian IT services exposure but are not chasing Indian
internet or consumer names which we believe are vulnerable
in a rising rate environment.
Chart 34: Indian market looks expensive after recent outperformance
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175681 Schroders Asian Total Return Annual Report Pt1.qxp_175681 Schroders Asian Total Return Annual Report Pt1 04/04/2022 11:10 Page 28

Annual Report and Accounts
for the year ended 31 December 2021
29
Strategic Report
Portfolio Managers’ Review
Chart 35: Can FY23 deliver another year of strong earnings growth?
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TOPIC 6: VALUATIONS AND HEDGING MODELS
For the last part of the report we provide a brief comment on
the hedging and valuation models we use to help us gauge
whether to deploy capital preservation strategies or to use
gearing. Chart 36 has a summary of the Company’s
positioning at the end of December. At the time of writing
the first draft of this report (early February) there have been
no changes to models. In summary the long-term country
models are now neutral to positive on all the major
stockmarkets in the region – only India and the Philippines
are cautious – so we are not undertaking any hedging based
on the longer-term models. The shorter term tactical models,
which have been working well over the last two years, have
moved back to neutral (from sell). The consequence of this is
the models are suggesting only to buy protection (via puts) if
pricing is at the lower levels of recent historic ranges. With
put pricing currently very expensive due to Ukraine worries
and taper tantrums we are not rolling or buying new puts.
The main valuation indicators we use to determine whether
to deploy gearing are both currently neutral (Chart 37), so
whilst the Company is slightly geared we have neutralised
this by selling Taiwan index futures to bring SATRIC down to
an effectively neutral position. Further markets falls however
would be likely to trigger a “buy” or deploy gearing signal (if
indicators cross the green lines in the charts).
175681 Schroders Asian Total Return Annual Report Pt1.qxp_175681 Schroders Asian Total Return Annual Report Pt1 04/04/2022 11:10 Page 29
Banks, Metals and Telecom driving current year’s expected earnings growth of 34%

Chart 36 – Portfolio positioning as at end of December 2021
Chart 37 – Valuation models
Source: Schroders, as at end of 31 January 2021
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30
Schroder Asian Total Return Investment Company plc
Portfolio Managers’ Review
In summary, after the recent market correction Asian equity
valuations both top down and bottom up are increasingly
attractive and now look reasonable both on an absolute
basis and relative to other equity markets. The key risk
(outside the obvious macro ones) are that Asian earnings
disappoint however, outside of India, expectations for
earnings have come down and now look more realistic. The
technology and internet stocks in particular look to have
seen most of 2021’s “froth” dissipate as indicated by Chart38
below. This leave us relatively upbeat that we should make
money in 2022 and that, whilst somewhat uncomfortable,
not paying up for expensive hedging is the correct long-term
approach.
175681 Schroders Asian Total Return Annual Report Pt1.qxp_175681 Schroders Asian Total Return Annual Report Pt1 04/04/2022 11:10 Page 30
Investment process and portfolio as at 331 December 20212021

Chart 38: All of 2020’s froth is now pretty much gone – valuations across old and new economy stocks
are back to “normal”
Source: Factset, MSCI, Macquarie Research, December 2021.
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Annual Report and Accounts
for the year ended 31 December 2021
31
Strategic Report
Portfolio Managers’ Review
SUMMARY
• After a difficult 2021 we are optimistic we should see
better returns from Asian equities for the Year of the
Tiger. Valuations are reasonable on an absolute basis
and cheap versus history on a relative basis (to global
equities). The Company’s gearing and hedging models
have moved to a neutral/positive bias from a more
cautious positioning six months ago.
• China remains the biggest risk in the region and a
potential drag. Zero-COVID policies are likely to slow an
economy already weakening due to the unwind of the
property market, however this should be partly offset by
looser monetary and fiscal policy.
• For Chinese equities we expect a better year but not
necessarily a good year. Earnings are likely to disappoint
and the market has still to fully absorb the implications
of 2021’s major policy reset, which in many sectors is
likely to reduce the operation of free market forces and
thus lower long-term ROIC. In particular we remain
relatively cautious on most Chinese internet stocks.
• On a positive note Asian macro fundamentals are
generally sound with current account surpluses,
relatively low Government debt levels, high FX reserves
meaning the vulnerability to rising US interest rates
should be less than has historically been the case.
• The key positions for the Company are mostly in stocks
where we see strong secular growth trends like
technology, software, Australian healthcare, Chinese
consumer, the best Indian and ASEAN private sector
banks. We are not thematically chasing value or cyclical
names in Asia and we still view inflation as likely to be
ultimately transitory. The preference remains for stocks
creating genuine intellectual property by which means
they can sustain and grow their ROIC (Return on
Invested Capital).
175681 Schroders Asian Total Return Annual Report Pt1.qxp_175681 Schroders Asian Total Return Annual Report Pt1 04/04/2022 11:10 Page 31

ADDENDUM
The above report was finalised mid-February in order to
meet deadlines that, for compliance reasons, are set in
advance of the publishing date. Clearly since the date of
writing there have been significant changes to the geo-
political backdrop following Russia’s invasion of the Ukraine.
As mentioned in the report we rarely comment on geo-
politics but given the gravity of the situation we provide
some additional comments on how the war in Ukraine may
affect the Company and our investment views.
Firstly, we would highlight none of the Company’s
investments have significant exposure to Russia either in
terms of revenues from Russia or as owners of assets in
Russia so the direct impact on our investments is limited. For
the Asia region as a whole Russia is a very small trading
partner as highlighted by Chart 1 below. Even China with its
“partnership without limits” only has c.2% of its exports
currently going to Russia so we are not overly concerned
about the impact of Russia’s pariah status on the region’s
trading outlook.
Chart 1: The Direct Impact on Asia from Russia’s
Pariah Status is limited
Source: CEIC, Morgan Stanley Research. Note: Latest data as of Dec-
21/Jan-22.
What is more significant for the region is the various indirect
impacts from what, at the time of writing, looks set to be a
prolonged conflict. As Chart 2 shows most Asian countries
are heavily reliant on oil as an energy source and run a
significant trade deficit in oil as, with the exception of
Malaysia, all are net oil importers. Rising oil prices will
therefore act as a drag on economies.
Chart 2: With the exception of Malaysian Asian
Economies are oil importers and all are heavily
reliant on oil as an energy source
Source: CEIC, Morgan Stanley Research, March 2022
However, where we are actually more concerned is on food
prices. Ukraine and Russia are both major food exporters
and if we see a prolonged supply dislocation and rise in basic
food staples this is likely to have a material impact on
discretionary consumption, particularly in the lower income
countries in the region where food and energy costs take up
a large part of consumer expenditure. Chart 3 below shows
how food and energy are weighted in the CPI baskets across
Asia and whilst not an exact science this provides a
reasonable proxy for vulnerabilities in the region to the rising
costs of essential items. Already recent calls with companies
in ASEAN and India have flagged a drop off in sales volumes
and trading down (buying smaller items, cheaper products)
by consumers as incomes are squeezed by food prices in
particular.
Chart 3: A prolonged squeeze rise in food and
energy costs will squeeze consumption in Asia
On a slightly more positive note, we are less worried that we
will get a double squeeze in Asia (rapidly tightening
monetary policy combined with falling consumption) as the
starting CPI level is quite low in Asia and historically there is
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32
Schroder Asian Total Return Investment Company plc
Portfolio Managers’ Review
175681 Schroders Asian Total Return Annual Report Pt1.qxp_175681 Schroders Asian Total Return Annual Report Pt1 04/04/2022 11:10 Page 32

not a close correlation between global food prices and Asian
CPI (Chart 4) so the risks of a perfect “stagflationary” storm
look low. The key issue really is likely to be lower
consumption as wage growth (Chart 5) fails to offset the
squeeze in incomes from the rising cost of essentials. This is
likely to lead to earnings downgrades for many of our
consumer stocks, particularly those exposed to lower income
countries where the impact of higher commodity prices is
higher. At the current time we have not made any material
changes to the Company’s positions. We are long-term
investors and our exposure to domestic consumption is
relatively low as we already viewed most consumer stocks in
places like India, Philippines and Indonesia as fully valued.
Chart 4: We are less worried about the direct
impact on inflation and monetary policy
1
Source: CEIC, Morgan Stanley Research, March 2022.
2
Source: Bloomberg, Morgan Stanley Research, March 2022
Chart 5: Wage growth is currently low in region
and unlikely to offset a prolonged spike in food
and energy costs
Source: CEIC, Haver, Morgan Stanley Research, March 2022
The other indirect impact of the conflict is likely to be an
acceleration of the trends we discussed in Topic 2 above.
With China effectively, albeit not openly, siding with Russia it
is likely the move towards greater self-sufficiency, localisation
of supply chains, and a reduction on unreliable partners for
critical goods will accelerate. Deglobalisation will become
increasing real as will the discussion of new Cold Wars and
Anglosphere vs Sinosphere. This means we need to be even
more careful how we approach our investments in China and
our exporters in particular if many start being locked out of
European and US markets. It clearly also has implications for
global companies with high hopes of large sales in China as
politicians there accelerate dual circulation policies (self
sufficiency in critical industries). It does feel to us February
24th may end up being a watershed moment where trends
that were already in motion suddenly accelerate. The
Company was already positioned for some of these trends
but clearly we are monitoring the situation and may make
changes to the portfolio as the situation develops.
Robin Parbook and Lee King Fuei
1 April 2022
Past performance is not guide to future performance and may
not be repeated. The value of investments and the income from
them may go down as well as up and investors may not get back
the amounts originally invested.
The securities shown above are for illustrative purposes only and
are not to be considered a recommendation to buy or sell.
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Annual Report and Accounts
for the year ended 31 December 2021
33
Strategic Report
Portfolio Managers’ Review
175681 Schroders Asian Total Return Annual Report Pt1.qxp_175681 Schroders Asian Total Return Annual Report Pt1 04/04/2022 11:10 Page 33

Investments are classified by the investment manager in the country of their main business operations. Stocks in bold are the
20 largest investments, which by value account for 55.5% (2020: 58.9%) of total investments and derivative financial
instruments.
Investment Portfolio
as at 31 December 2021
Taiwan
Taiwan Semiconductor
Manufacturing 50,466 8.4
Mediatek 19,985 3.3
Voltronic Power Technology 14,885 2.5
Chroma ATE 8,939 1.5
Novatek Microelectronics 8,671 1.5
Merida Industry 8,578 1.4
Advantech 7,902 1.3
Getac Technology 7,060 1.2
Nien Made Enterprise 6,633 1.1
Vanguard International Semicon 6,185 1.0
Simplo Technology 6,144 1.0
Realtek Semiconductor 6,067 1.0
Sporton International 4,518 0.8
ASE Technology 4,155 0.7
Total Taiwan 160,188 26.7
Australia
BHP Billiton
1
14,996 2.5
CSL 10,056 1.7
Aristocrat Leisure 9,084 1.5
ResMed 9,037 1.5
Medibank Private 6,912 1.2
Seek 6,656 1.1
Cochlear 6,007 1.0
Incitec Pivot 5,613 0.9
Orica 4,468 0.7
Crown 361 0.1
Total Australia 73,190 12.2
India
Infosys (ADR)
2
13,867 2.3
Schroder International Selection
Fund – Indian Opportunities
3
13,747 2.3
Tech Mahindra 13,530 2.3
HDFC Bank 11,105 1.9
Housing Development Finance 7,289 1.2
Tata Consultancy 5,942 1.0
Info Edge 4,043 0.7
Apollo Hospitals Enterprise 2,090 0.3
Total India 71,613 12.0
Hong Kong (SAR)
Techtronic Industries 20,783 3.5
AIA 10,735 1.8
Hong Kong Exchanges and Clearing 6,736 1.1
Hong Kong Television Network 5,293 0.9
ASM Pacific Technology 5,046 0.8
Swire Pacific 4,962 0.8
Hang Lung 4,955 0.8
Lenovo 3,822 0.6
Swire Properties 3,316 0.6
Johnson Electric Holdings 2,889 0.5
Total Hong Kong (SAR) 68,537 11.4
Mainland China
Tencent Holdings
4
23,055 3.8
Midea A 11,716 2.0
Shenzhou International Group
4
8,316 1.4
Thunder Software Technology A 7,730 1.3
Yum China
4
5,499 0.9
NetEase
4
4,982 0.8
Haitian International Holdings
4
2,821 0.5
Beijing Kingsoft Office A 2,333 0.4
Wuxi Biologics
4
4 –
Total Mainland China 66,456 11.1
£’000 % £’000 %
34
Schroder Asian Total Return Investment Company plc
175681 Schroders Asian Total Return Annual Report Pt1.qxp_175681 Schroders Asian Total Return Annual Report Pt1 04/04/2022 11:10 Page 34

Annual Report and Accounts
for the year ended 31 December 2021
35
Strategic Report
Investment Portfolio
as at 31 December 2021
South Korea
Samsung Electronics 38,201 6.4
SK Hynix 10,840 1.8
Naver 8,929 1.5
Samsung SDI 6,643 1.1
Total South Korea 64,613 10.8
Singapore
DBS 13,062 2.2
Sea (ADR)
2
9,164 1.5
Singapore Exchange 7,139 1.2
Mapletree Commercial Trust 6,353 1.1
Venture 6,085 1.0
Singapore Telecommunication 3,835 0.6
SATS 1,284 0.2
Total Singapore 46,922 7.8
Philippines
Wilcon 13,510 2.3
International Container
Terminal Services 3,098 0.5
Total Philippines 16,608 2.8
France
LVMH 8,497 1.4
Total France 8,497 1.4
Indonesia
Bank Mandiri 7,030 1.2
Total Indonesia 7,030 1.2
United Kingdom
Rio Tinto 6,248 1.0
Total United Kingdom 6,248 1.0
Thailand
Siam Global House 5,416 0.9
Total Thailand 5,416 0.9
Vietnam
Vietnam Dairy Products 4,684 0.8
Total Vietnam 4,684 0.8
Total Investments
5
600,002 100.1
Derivative Financial Instruments
Index Put Options
TWSE Put Option 17000
February 2022 103 –
S and P 500 Index Put Option
4615 January 2022 71 –
TWSE Put Option 17200
January 2022 8 –
Total Index Put Options
6
182 –
Index Futures
FTX TAIEX Future January 2022 (730) (0.1)
Total Index Futures (730) (0.1)
Total Investments and
Derivative Financial
Instruments 599,454 100.0
1
Listed in the UK.
2
Listed in the USA.
3
Open-ended collective investment fund.
4
Listed in Hong Kong (SAR)
5
Total investments comprise the following
£’000
Equities 563,224
American Depositary Receipts (ADR) 23,031
Collective investment fund 13,747
Total investments 600,002
6
The options give downside protection to 6.9% of total investments.
£’000 % £’000 %
175681 Schroders Asian Total Return Annual Report Pt1.qxp_175681 Schroders Asian Total Return Annual Report Pt1 04/04/2022 11:10 Page 35

36
Schroder Asian Total Return Investment Company plc
Strategic Report
Business model
The Board has appointed the Manager, Schroder Unit Trusts
Limited, to implement the investment strategy and to
manage the Company’s assets in line with the appropriate
restrictions placed on it by the Board, including limits on the
type and relative size of holdings which may be held in the
portfolio and on the use of gearing, cash, derivatives and
other financial instruments as appropriate. The terms of the
appointment are described more completely in the Directors’
Report. The Manager also promotes the Company using its
sales and marketing teams. The Board and Manager work
together to deliver the Company’s investment objective, as
demonstrated in the diagram above. The investment and
promotion processes set out in the diagram are described in
more detail below.
Investment
Investment approach
The Company’s strategy has its foundations in the conviction
that while there are many excellent companies in Asia, there
is also a large percentage of stocks quoted in Asia that are
fundamentally challenged and benchmark conscious
investment is therefore flawed. Furthermore, the Asian
stockmarkets have proved to be exceptionally volatile over
the past thirty years. The strategy aims to invest in a
portfolio of 40-70 well managed companies, chosen without
reference to a benchmark and whose success, profitability,
shareholder focus and shareholder returns come from the
significant potential of North and South East Asia, India and
Australasia (the “region”). It aims to add a degree of capital
protection over the full market cycle through hedging
market exposure – thus providing attractive stock returns
and lower volatility than the wider Asian markets in the
longer term.
The Company invests principally in equity and equity-related
securities of companies operating primarily in the region,
wherever they may be listed, including exposure to small and
mid cap companies. Volatility reduction and offering a
degree of capital preservation is achieved through the
strategic and tactical use of derivatives as described below
and on page 37.
Investment process – an overview
Key attributes of the investment process are as follows:
– Stock selection is unconstrained and driven by
proprietary research and investment conviction
– Focus on stocks for absolute return potential, or stocks
with significant alpha generation potential
– Decreases overall volatility and risks associated with
investing in the Asian region through the use of
derivatives for hedging
– A disciplined and repeatable investment process with
strong risk controls
The Company’s Portfolio Managers, Robin Parbrook in
London and King Fuei Lee in Singapore, seek strong
fundamentals and value through the bottom-up analysis of
companies that look likely to grow shareholder value in the
long term. The Portfolio Managers believe that Asian
markets are not efficient, are subject to irrational sentiments
and many of the best investment ideas are not well
researched or understood by investors. This results in the
Company having a bias to small and mid cap stocks.
•
Responsible for
overall strategy and
oversight including
risk management
• Activities centred
on the creation of
shareholder value
Investor
Value
• Manager implements
the investment strategy
by following an
investment process
• Support by strong
research and risk
environment
• Regular reporting and
interaction with the
Board
• Set objectives,
strategy and KPIs
• Appoint Manager
and other service
providers to achieve
objectives
• Marketing and sales
capability of the
Manager
• Support from the
Corporate Broker with
secondary market
intervention to support
discount/premium
management
Board is focused on
ensuring:
• that the fees
and Ongoing
Charges remain
competitive
• that the Company
remains attractive
to shareholders and
potential investors
Investment
Strategy
Promotion
Competitiveness
Board
• Oversee portfolio
management
• Monitor achievement
of KPIs
• Oversee the use of
gearing
• Oversee the management
of the discount/premium
and the provision of
liquidity through share
buybacks and issuance
Oversight
The Strategic Report sets out the Company’s strategy for delivering the investment objective (set out on the
inside front cover), the business model, the risks involved and how the Board manages and mitigates those
risks. It also details the Company’s purpose, values and culture, and how it interacts with stakeholders.
175681 Schroders Asian Total Return Annual Report Pt1.qxp_175681 Schroders Asian Total Return Annual Report Pt1 04/04/2022 11:10 Page 36

Annual Report and Accounts
for the year ended 31 December 2021
37
Strategic Report
Strategic Report
The Manager’s investment idea generation process has a
strong valuation discipline and uses a combination of
quantitative screens (using valuation, momentum and quality
ratios), and analyst stock ideas which tend to result in the
Company exhibiting a tilt towards quality and value.
The Portfolio Managers are supported by an experienced
team of 41 research analysts, based in Asia, with an average
of 15years of experience. They also have access to the
management of Asian companies – with over 2,300 meetings
taking place throughout the Asia Pacific ex Japan region (in
2021).
The Portfolio Managers have wide scope in stock selection
and are not constrained in terms of the portfolio’s exposures
by geography or sector. The portfolio is constructed by way
of bottom-up stock selection without reference to index
weightings. Individual stock positions are sized on an
absolute basis around the Portfolio Managers’ views on
which investments offer the best potential risk adjusted
returns and their level of conviction for each company they
decide to invest in. By being indifferent to market indices and
their constituents, the Company’s unconstrained portfolio
construction allows for significant participation in sectors and
parts of the market in the Asian region that offer attractive
growth and investment opportunities. Conversely, the
Portfolio Managers are also free to move to more defensive
holdings if market conditions prove to be challenging.
Considerations around diversification and liquidity provide a
risk management overlay to this unconstrained approach to
portfolio construction.
The Portfolio Managers may at different junctures identify
significant stock level opportunities or attractive entry levels
as indicated by prevailing market valuations, and may
exercise discretion in capitalising on these opportunities by
increasing market exposure through bank borrowing or the
use of contracts for difference within limits agreed by the
Board.
The Company’s strategy also aims to reduce volatility and
offer a degree of capital preservation, and this is
implemented through the strategic and tactical use of
derivatives (principally futures and options on market indices
and forward foreign currency contracts) to hedge market
risks inherent in the Company’s underlying equity holdings.
Here the Portfolio Managers use quantitative models and a
top-down overlay analysing economic and market trends to
assess near and medium term market risks and its resultant
impact on the Company’s equity holdings, and decide on the
level of hedging desired.
If the Portfolio Managers judge markets to be significantly
overpriced or are facing material risks of a substantial
correction, they may also choose to exit selected equity
holdings and go into cash or cash equivalents to provide
further downside protection.
Integration of ESG into the investment
process
Schroders has been considering Environmental, Social and
Governance (“ESG”) issues, and sustainability generally, for
over 20years, as detailed in the timeline below.
Schroders has a team of 32 dedicated ESG analysts in
London. They analyse long-term trends and implications
around sustainability and how this is likely to affect different
industries and stakeholders. The team operates as a central
resource to both disseminate trends and analysis to the rest
of the group and also provides training and input to the
Manager’s Asian analysts when they are undertaking their
sustainability work as part of their industry and company
research. Schroders uses research on sustainability to make
more complete and informed investment decisions.
SustaSSustainability at SchrodersSustainability at SchrodersSustainability at SchrodersSustainability at SchrodersiSustainability at SchrodersnSustainability at SchrodersaSustainability at SchrodersbSustainability at SchrodersiSustainability at SchroderslSustainability at SchrodersiSustainability at Schrodersty Sustainability at SchrodersSustainability at SchrodersSustainability at SchrodersaSustainability at Schroderst Sustainability at SchrodersSustainability at SchrodersScSustainability at SchrodersSustainability at SchrodershSustainability at SchrodersrSustainability at SchrodersoSustainability at SchrodersdeSustainability at SchrodersSustainability at SchrodersrSustainability at SchroderssSustainability at Schroders
A continually evolving approach
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175681 Schroders Asian Total Return Annual Report Pt1.qxp_175681 Schroders Asian Total Return Annual Report Pt1 04/04/2022 11:10 Page 37

38
Schroder Asian Total Return Investment Company plc
The reason Schroders places such a high importance on its own research is that from our experience third-party ESG ratings
are often backward-looking, opaque and adopt inconsistent methodology. These issues have led to these third-party ESG
ratings usually having poor track records and generating inconsistent results that contradict each other, as demonstrated by
the chart below:
The need for a proprietary approach
Low correlation of company ESG scores across providers
Source: Schroders analysis, 2020.
0
20
40
60
80
100
0246810
0
20
40
60
80
100
0246810
0
20
40
60
80
100
020406080100
Thomson Reuters (TR) vs MSCI
Sustainalytics vs MSCI
Sustainalytics vs TR
Sustainalytics
TR
MSCI
MSCI
Sustainalytics
TR
External ESG ratings are inconsistent across providers and we find individual company ratings often make
little sense. As a result, Schroders needs to undertake its own ESG work and not rely on third parties.
ESG and Sustainability in Asia
Sustainability and ESG analysis in Asia is, in Schroders’ view,
of greater importance when making investment decisions
than perhaps any other region in the world. Firstly, there are
risks of poor corporate governance and fraud owing to
family and/or state shareholder structures and poor minority
investor protection. Secondly, Asia is the biggest greenhouse
gas emitter in the world and the region that faces the
biggest environmental and economic costs of global
warming. Finally, environmental degradation and the social
costs of industrialisation and malpractice is widespread in
Asia.
How does ESG analysis embed itself into the investment
process for the Company?
The first section of all Asian research reports covers
governance – the management, their background and track
record, whether they treated minority shareholders poorly in
the past, and if they are credible and professional. The
Manager only invests in companies where it is believed
management is trustworthy, where interests are aligned and
where there is no historic record of misdemeanours. This
screens out a significant part of the Asian universe.
In order to capture broader ESG considerations Schroders’
Asian Equity analysts are expected to provide additional
written ESG analysis for all companies under coverage. In
order for this to be more robust and integrated, our research
team has also drawn upon the Schroders CONTEXT
framework as outlined in the chart below and adapted it to
an Asian version (“Asia Context”) using a broader
stakeholder-based approach to ESG analysis. The Schroders
CONTEXT framework is shown overleaf, and a description of
how the team uses the Asia Context model follows.
Strategic Report
175681 Schroders Asian Total Return Annual Report Pt1.qxp_175681 Schroders Asian Total Return Annual Report Pt1 04/04/2022 11:10 Page 38

Annual Report and Accounts
for the year ended 31 December 2021
39
Strategic Report
Strategic Report
ESG integration – CONTEXT framework
Stakeholder analysis provides insights into managing change
Source: Schroders
Employees
How do your employees perform?
How motivated is your team?
How exposed is your supply chain
to disruption risks? How strong are
your supplier relationships?
Have you put in place an
energy transition plan? Are you
managing operating impacts?
Suppliers
Communities
What support do you offer your local
community? Have you committed to
protect human rights?
Regulators
How competitive is your market?
Are you paying a fair rate of tax?
Customers
How is your brand perceived?
What’s in your produce pipeline?
Environment
The Asia Context template captures our ESG analysis in one
template and is a key step in the overall assessment of a
company. In addition the Asia Context analysis provides a
clear and broad roadmap on the issues requiring
engagement, and enhances the appreciation of the
downside and upside risks to a company’s business model.
The Asia Context report generates separate rankings for “E”,
“S” & “G” and provides an overall numerical ESG score for
each company. The analysts also have the ability to apply an
explicit discount or premium to their fair value estimates for
companies as a result of their ESG analysis within the Asia
Context analysis.
The final part of the ESG process in Asia is our SustainEx
reporting which uses a variety of data feeds to consider
environmental and sustainability factors. Combined with the
Governance and Asia Context analysis this gives the Manager
a complete overview of the ESG characteristics of the
Company’s holdings.
In summary, the Manager looks for companies with
sustainable business models that are doing the right thing
for broader stakeholders in order to generate the best
performance for the Company.
What is the practical reality of all the Manager’s ESG work?
The table below show the current positioning of the
Company in sectors generally considered “sensitive”. The
manager does not invest in companies where their principal
activity is tobacco, coal, oil & gas, thermal utilities, or
agribusiness. All of these are sectors where we would
question the long-term sustainability of the business models
due to environmental and social factors. The Company does
have exposure to gaming companies and the resource
sector, but the exposure is limited to those stocks in well
regulated markets where we are confident of best practice.
Exposure in both industries is unlikely to exceed 10% of the
Company’s assets respectively.
175681 Schroders Asian Total Return Annual Report Pt1.qxp_175681 Schroders Asian Total Return Annual Report Pt1 04/04/2022 11:10 Page 39

40
Schroder Asian Total Return Investment Company plc
Strategic Report
ESG and Sustainability in Action – the practical reality for the Company
Source: Schroders, as at end of December 2021. For illustrative purposes only and should not be viewed as a recommendation to buy or sell.
The last table below has a calculation of the Company’s investee companies’ carbon footprint versus the Reference Index.
Whilst data for these calculations can be open to interpretation, given the difficulties of measuring scope 2 emissions, the
Company appears to have a very low carbon footprint versus the Reference Index. On current calculations the Company’s
investee companies’ carbon footprint on Scope 1 and Scope 2 emissions is around 20% of the Reference Index levels.
Source: Reference index data MSCI AC Asia Pacific ex JP (GBP). Climate exposures represents % weight of portfolio deriving any revenue from coal/tar
sands/renewables.
Sector Reasons for Caution Our Approach
Approx. Company Exposure
Agribusinesses
Environmental, Social, Governance, (low barriers of
entry, widespread questionable practices)
Avoid 0%
Tobacco Social, Governance Avoid 0%
Gaming
Social, Governance
Limited exposure to best-in-class players in well-
regulated markets (such as Macau and Australia)
1.7% (2 stocks)
Utilities
Environmental, Governance, (national service
obligations, uncertain regulations/risks of backlash
against coal plants, mostly state-owned enterprises)
Avoid carbon heavy energy providers, focus on hydro
and sustainable energy providers in well-regulated
markets (if such a thing exists?)
0%
Auto
Environmental (regulations against the sector – too
much hot money in EVs and multiple players will mean
poor returns for all)
Avoid OEMs, minimise exposure to supply chains 0.5% (1 stock)
Resources
Environmental, Social, Governance (questionable
practices such as bribery and poor environmental and
safety controls widespread in Asia ex Australia)
Avoid except for Australia blue chips, with minimal coal
exposure
3.8% (2 stocks)
Oil and Gas
Environmental, Governance (regulations, unfavourable
taxes, mostly state-owned)
Limited exposure to best-in-class companies ideally
with an LNG/gas focus
0%
Property
Environmental, Social, Governance (bribery issues,
flooding, land clearance compensation)
Exposure principally to Hong Kong and Singapore
where there are better practices and cities that “work”.
Outside HK/SG, only invest in management teams we
100% trust (this is a small number of companies)
3.5% (4 stocks)
Carbon metricsClimate exposures
-9.2%
-9.8%
-15.0%
-10.0%
-5.0%
0.0%
Reference Index
Carbon footprint
Tonnes of CO2 per $mn invested
Source: MSCI.
Scope 1: Company coverage: 93%, Reference Index coverage: 99%
Scope 2: Company coverage: 93%, Reference Index coverage: 99%
22.0
15.0
84.8
18.9
0.0
50.0
100.0
Scope 1 Scope 2
Exposure to transition risk: Carbon VaR
% earnings at risk
Source: Schroders.
Company coverage: 95%, Reference Index coverage: 100%
Carbon intensity
Tonnes of CO2 per $mn sales
123.2
278.8
0.0
100.0
200.0
300.0
Company CompanyReference Index
Source: MSCI.
Company coverage: 93%, Reference Index coverage: 100%
5.3%
7.3%
0.0%
2.0%
4.0%
6.0%
8.0%
Company Reference Index
Source: MSCI.
Exposure to renewables
% exposure based on revenues
Exposure to coal
% exposure based on revenues
2.7% 2.7%
0.0%
1.0%
2.0%
3.0%
Company Reference Index
Source: MSCI.
0.0%
0.2%
0.0%
0.1%
0.2%
0.3%
Company Reference Index
Exposure to tar sands
% exposure based on revenues
Source: MSCI.
Company Reference Index
175681 Schroders Asian Total Return Annual Report Pt1.qxp_175681 Schroders Asian Total Return Annual Report Pt1 04/04/2022 11:10 Page 40

Annual Report and Accounts
for the year ended 31 December 2021
41
Strategic Report
Investment restrictions and spread of risk
In accordance with its investment objective, the Company
invests in a diversified portfolio with the aim of spreading
investment risk which is monitored by the Board and the
Manager.
The key restrictions imposed on the Manager are that:
(a) no more than 15% of the Company’s total net assets, at
the date of acquisition, may be invested in any one
single company or group of companies;
(b) subject to the approval of the Board, the Company may
invest in collective vehicles. If it was to do so, however,
no more than 10% of the Company’s total net assets, at
the date of acquisition, may be invested in UK listed
closed-ended investment companies unless such
companies have a stated investment policy not to invest
more than 15% of their gross assets in other UK listed
closed-ended investment companies;
(c) the Company will not invest more than 15% of its gross
assets in UK listed closed-ended investment companies;
(d) no more than 50% of the Company’s total net assets
may be invested in equities listed on a single stock
exchange; and
(e) the Manager will not invest in unlisted equities other
than with the approval of the Board or when
entitlements are received or immediately prior to a
listing.
The Investment Portfolio on pages34 and 35 demonstrates
that, as at 31December 2021, the Company held 73
investments spread over a range of industry sectors. The
largest investment, Taiwan Semiconductor Manufacturing,
represented 8.4% of total investments. The Board therefore
believes that the objective of spreading investment risk has
been achieved.
Promotion
The Company promotes its shares to a broad range of
investors including discretionary wealth managers, private
investors, financial advisers and institutions which have the
potential to be long-term supporters of the investment
strategy. The Company seeks to achieve this through its
Manager and corporate broker, which promote the shares of
the Company through regular contact with both current and
potential shareholders, as well as their advisers.
During the restrictions related to the COVID-19 pandemic,
the Manager also used virtual meetings, telephone calls and
webinars to engage with shareholders.
However, in normal times these activities consist of investor
lunches, one-on-one meetings, regional road shows and
attendance at conferences for professional investors. In
addition, the Company’s shares are supported by the
Manager’s wider marketing of investment companies
targeted at all types of investors. This includes maintaining
close relationships with adviser and execution-only
platforms, advertising in the trade press, maintaining
relationships with financial journalists and the provision of
digital information on Schroders’ website. The Board also
seeks active engagement with investors, and meetings with
the Chairman are offered to investors when appropriate.
Shareholders are encouraged to sign up to the Manager’s
Investment Trusts update, to receive information on the
Company directly
https://www.schroders.com/en/uk/
privateinvestor/fund-centre/funds-in-focus/investment-
trusts/schroders-investment-trusts/never-miss-an-update/
.
Details of the Board’s approach to discount/premium
management and share issuance may be found in the
Chairman’s Statement on page4 and in the Annual General
Meeting – Recommendations on page86.
Key Performance Indicators
The Board reviews performance, using a number of key
measures, to monitor and assess the Company’s success in
achieving its objective. Further comment on performance
can be found in the Chairman’s statement. The following
KPIs are used:
• NAV performance;
• Share price discount/premium management; and
• Ongoing charges ratio.
Some KPIs are Alternative Performance Measures (APMs).
Further details can be found on page 2 and definitions of
these terms on page 91
Purpose, Values and Culture
The Company’s purpose is to create long-term shareholder
value, in line with the investment objective.
The Company’s culture is driven by its values: Transparency,
Engagement and Rigour, with collegial behaviour and
constructive, robust challenge. The values are all centred on
achieving returns for shareholders in line with the
Company’s investment objective. The Board also promotes
the effective management or mitigation of the risks faced by
the Company and, to the extent it does not conflict with the
investment objective, aims to structure the Company’s
operations with regard to all its stakeholders and take
account of the impact of the Company’s operations on the
environment and community.
As the Company has no employees and acts through its
service providers, its culture is represented by the values and
behaviour of the Board and third parties to which it
delegates. The Board aims to fulfill the Company’s
investment objective by encouraging a culture of constructive
challenge with all key suppliers and openness with all
stakeholders. The Board is responsible for embedding the
Company’s culture in the Company‘s operations.
The Board recognises the Company’s responsibilities with
respect to corporate and social responsibility and engages
with its outsourced service providers to safeguard the
Company’s interests. As part of this ongoing monitoring, the
Board receives reporting from its service providers with
respect to their anti-bribery and corruption policies; Modern
Slavery Act 2015 statements; diversity policies; and
greenhouse gas and energy usage reporting.
Strategic Report
175681 Schroders Asian Total Return Annual Report Pt1.qxp_175681 Schroders Asian Total Return Annual Report Pt1 04/04/2022 11:10 Page 41

42
Schroder Asian Total Return Investment Company plc
Strategic Report
Corporate and Social Responsibility
Diversity
As at 31 December 2021, the Board comprised two men and
two women. The Board has adopted a diversity and inclusion
policy. With respect to recruitment of non-executive
Directors, the Company will not discriminate on the grounds
of gender, social or ethnic backgrounds. It will encourage
any recruitment agencies it engages to find a diverse range
of candidates that meet the objective criteria agreed for each
appointment. Appointments will always be based on merit
alone. Candidates for Board vacancies are selected based on
their skills and experience, which are matched against the
balance of skills and experience of the overall Board taking
into account the criteria for the role being offered.
Bribery and corruption
The Company continues to be committed to carrying out its
business fairly, honestly and openly and continues to operate
an anti-bribery and corruption policy, as well as seeking
confirmation that the Company’s service providers’ policies
are operating soundly.
Greenhouse gas emissions and energy usage
As the Company outsources its operations to third parties, it
consumed less than 40,000kWh during the year and so has
no greenhouse gas emissions, energy consumption or
energy efficiency action to report. The Manager has sought
to estimate the carbon usage of the Company’s investee
companies and this estimate included on page40, for
illustrative purposes only.
Relations with shareholders
Shareholder relations are given high priority by both the
Board and the Manager. The Company communicates with
shareholders through its webpages and the annual and half
year reports which aim to provide shareholders with a clear
understanding of the Company’s activities and its results.
In addition to the engagement and meetings held during the
year described on page 51, the chairs of the Board and
committees, as well as the Senior Independent Director and
the other Directors, attend the AGM and are available to
respond to queries and concerns from shareholders.
Responsible investment
The Company delegates to its Manager the responsibility for
taking environmental, social and governance (“ESG”) issues
into account when assessing the selection, retention and
realisation of investments. The Board expects the Manager
to engage with investee companies on social, environmental
and business ethics issues and to promote best practice. The
Board expects the Manager to exercise the Company’s voting
rights in consideration of these issues.
The Company voted all of its proxy votes in line with the
Manager’s corporate governance policy. This covered 673
resolutions, of which the Company voted against
management recommendations or abstained on 9.51%.
Voting instructions are considered on a case by case basis
and are a result of continued engagement with the
Company’s holdings. Where the Manager believes the
interests of minority shareholders are not adequately
protected, they may look to vote against a variety of issues.
These can range from a lack of independence or diversity on
boards, pay packages which are not aligned with
performance and capital issuance requests which are not in
minority shareholder interests.
In addition to the description of the Manager’s integration of
ESG into the investment process and the details in the
Managers’ Review, a description of the Manager’s policy on
these matters can be found on the Schroders website at
https://www.schroders.com/en/sustainability/making-
animpact-through-sustainability/.
The Board notes that Schroders believes that companies with
good ESG management often perform better and deliver
superior returns over time. Engaging with companies to
understand how they approach ESG management is an
integral part of the investment process. Schroders is
compliant with the UK Stewardship Code and its application
with the principles therein is reported on its website
https://www.schroders.com/en/sustainability/activeowner
ship/voting/
.
The Board has received reporting from the Manager on the
application of its policy.
The Board’s commitment to stakeholders – section172
Companies Act 2006 statement
The Board has identified its key stakeholders as the
Company’s shareholders and service providers. The Board
notes the Company has no employees and the impact of
its own operations on the environment and local
community is through the impact its service providers
have.
Engagement with key stakeholders assists the Board in
meeting the obligation for Directors to act in a way that
promotes the success of the Company, taking into account
their interests. This statement outlines this engagement
and the impact on decision making where appropriate,
and cross-refers to the decisions made by the Board
during the year, detailed elsewhere in this report.
As detailed in “Promotion” on page 41 and Relations with
Shareholders on page 42, the Company engages with its
shareholders. The Board considered feedback from
shareholders when making decisions relating to share
issuance, dividend decisions and review of Board
composition.
As detailed in “Purpose, Values and Culture” on page41,
the Board engages with service providers, and receives
regular reporting, either directly, or through the Manager
or Company Secretary, on performance and other matters.
The effect of such engagement, if relevant, is detailed in
the Chairman’s Statement, Managers’ Review and
Management Engagement Committee Report.
Principal decisions by the Board during the year were:
(1)to agree to continue to issue shares to meet demand in
line with the Company’s issuance and discount
management policy; and (2) to provide further details on
the Manager’s integration of ESG analysis into the
investment process and detail some of the outcomes of
that process in the annual report. For these decisions, the
Board took into account feedback from shareholders,
either directly, or through service providers and advisers.
The Board also took into account the views of its service
providers, including the Manager. The Board is pleased to
report that its engagements were constructive and led to
positive outcomes, as detailed in the Chairman’s Statement
and committee reports.
175681 Schroders Asian Total Return Annual Report Pt1.qxp_175681 Schroders Asian Total Return Annual Report Pt1 04/04/2022 11:10 Page 42

Principal risks and uncertainties
The Board is responsible for the Company’s system of risk management and internal controls and for reviewing its
effectiveness. The Board has adopted a detailed matrix of principal risks affecting the Company’s business as an
investment trust and has established associated policies and processes designed to manage and, where possible, mitigate
those risks, which are monitored by the audit and risk committee on an ongoing basis. This system assists the Board in
determining the nature and extent of the risks it is willing to take in achieving the Company’s strategic objectives. Both the
principal risks and the monitoring system are also subject to regular, robust review. The last review took place in
March2022.
Although the Board believes that it has a robust framework of internal controls in place this can provide only reasonable,
and not absolute, assurance against material financial misstatement or loss and is designed to manage, not eliminate, risk.
Actions taken by the Board and, where appropriate, its committees, to manage and mitigate the Company’s principal risks
and uncertainties are set out in the table below.
Emerging risks and uncertainties
During the year, the Board also discussed and monitored a number of risks that could potentially impact the Company’s
ability to meet its strategic objectives. These were political risk and climate change risk. The Board reviewed political risk
and climate change risk and noted that they had both become more significant during the year. The Board receives
updates from the Manager, Company Secretary and other service providers on potential other risks that could affect the
Company.
Political risk includes geopolitical risk, regional tensions, trade wars and sanctions. Currency rates and borrowings drawn
down by the Company, as well as markets generally, may be affected by geopolitical developments. The Board is also
mindful that changes to public policy in the US, UK, or in the Asia Pacific region, could impact the Company in the future.
Climate change risk includes how climate change could affect the Company’s investments, and potentially shareholder
returns. The Board notes the Manager has integrated ESG considerations, including climate change, into the investment
process. The Board will continue to monitor this.
Annual Report and Accounts
for the year ended 31 December 2021
43
Strategic Report
Risk Mitigation and management
Strategic
The Company’s investment objectives may become out of
line with the requirements of investors, resulting in a wide
discount of the share price to underlying NAV per share.
The appropriateness of the Company’s investment remit is
periodically reviewed and the success of the Company in
meeting its stated objectives is monitored.
The share price relative to NAV per share is monitored and
the use of buy back authorities is considered on a regular
basis.
The marketing and distribution activity is actively reviewed.
Proactive engagement with shareholders.
The Company’s cost base could become uncompetitive,
particularly in light of open ended alternatives.
The ongoing competitiveness of all service provider fees is
subject to periodic benchmarking against their competitors.
Annual consideration of management fee levels.
Strategic Report
175681 Schroders Asian Total Return Annual Report Pt1.qxp_175681 Schroders Asian Total Return Annual Report Pt1 04/04/2022 11:10 Page 43

44
Schroder Asian Total Return Investment Company plc
Strategic Report
Risk Mitigation and management
Investment management
The Manager’s investment strategy, if inappropriate, may
result in the Company underperforming the market and/or
peer group companies, leading to the Company and its
objectives becoming unattractive to investors.
Review of: the Manager’s compliance with its agreed
investment restrictions, investment performance and risk
against investment objectives and strategy; relative
performance; the portfolio’s risk profile; and whether
appropriate strategies are employed to mitigate any
negative impact of substantial changes in markets.
Annual review of the ongoing suitability of the Manager is
undertaken.
Financial and currency
The Company is exposed to the effect of market and
currency fluctuations due to the nature of its business. A
significant fall in regional equity markets or substantial
currency fluctuation could have an adverse impact on the
market value of the Company’s underlying investments.
The risk profile of the portfolio and appropriate strategies
to mitigate any negative impact of substantial changes in
markets are discussed with the Manager.
The derivative strategy employed by the Manager is subject
to review by the Board.
The Board considers the overall hedging policy on a regular
basis.
The Company’s operating expenses comprise
predominantly variable costs, which would fall pro-rata in
the event of a market downturn.
Custody
Safe custody of the Company’s assets may be compromised
through control failures by the depositary.
The depositary reports on safe custody of the Company’s
assets, including cash, and portfolio holdings are
independently reconciled with the Manager’s records.
Review of audited internal controls reports covering
custodial arrangements.
An annual report from the depositary on its activities,
including matters arising from custody operations is
received.
Gearing and leverage
The Company utilises credit facilities. These arrangements
increase the funds available for investment through
borrowing. While this has the potential to enhance
investment returns in rising markets, in falling markets the
impact could be detrimental to performance.
Gearing is monitored and strict restrictions on borrowings
imposed: gearing continues to operate within pre-agreed
limits so as not to exceed 30% of net asset value.
The Board oversees the Manager’s use of derivatives.
Accounting, legal and regulatory
In order to continue to qualify as an investment trust, the
Company must comply with the requirements of Section
1158 of the Corporation Tax Act 2010.
Breaches of the UK Listing Rules, the Companies Act or
other regulations with which the Company is required to
comply, could lead to a number of detrimental outcomes.
Service providers give regular confirmation of compliance
with relevant laws and regulations.
Shareholder documents and announcements, including the
Company’s published annual report, are subject to stringent
review processes.
Procedures established to safeguard against disclosure of
inside information.
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Annual Report and Accounts
for the year ended 31 December 2021
45
Strategic Report
Strategic Report
Risk Mitigation and management
Service provider
The Company has no employees and has delegated certain
functions to a number of service providers, principally the
Manager, depositary and registrar. Failure of controls, and
poor performance of any service provider, could lead to
disruption, reputational damage or loss.
Service providers are appointed subject to due diligence
processes and with clearly documented contractual
arrangements detailing service expectations.
Regular reports are provided by key service providers and
the quality of their services is monitored. The Directors also
receive presentations from the Manager, depositary and
custodian, and the registrar on an annual basis.
Review of annual audited internal controls reports from key
service providers, including confirmation of business
continuity arrangements and IT controls, and follow up of
remedial actions as required.
Cyber
The Company’s service providers are all exposed to the risk
of cyber attacks. Cyber attacks could lead to loss of
personal or confidential information or disrupt operations.
Service providers report on cyber risk mitigation and
management at least annually, which includes confirmation
of business continuity capability in the event of a cyber
attack.
In addition, the Board received presentations from the
Manager, depositary and custodian, and the registrar on
cyber risk.
Risk assessment and internal controls review by the Board
Risk assessment includes consideration of the scope and quality of the systems of internal control operating within key
service providers, and ensures regular communication of the results of monitoring by such providers to the audit and risk
committee, including the incidence of significant control failings or weaknesses that have been identified at any time and
the extent to which they have resulted in unforeseen outcomes or contingencies that may have a material impact on the
Company’s performance or condition.
No significant control failings or weaknesses were identified from the audit and risk committee’s ongoing risk assessment
which has been in place throughout the financial year and up to the date of this report. The Board is satisfied that it has
undertaken a detailed review of the risks facing the Company.
A full analysis of the financial risks facing the Company is set out in note 21 to the accounts on pages80 to 85.
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46
Schroder Asian Total Return Investment Company plc
Strategic Report
Viability statement
The Directors have assessed the viability of the Company
over a five year period, taking into account the Company’s
position at 31 December 2021 and the potential impact of
the principal risks and uncertainties it faces for the review
period. This is further detailed in the Chairman’s Statement,
Portfolio Managers’ Review and Emerging Risks sections of
this report. The Directors have assessed the Company’s
operational resilience and they are satisfied that the
Company’s outsourced service providers will continue to
operate effectively.
The Board believes that a period of five years reflects a
suitable time horizon for strategic planning, taking into
account the investment policy, liquidity of investments,
potential impact of economic cycles, nature of operating
costs, dividends and availability of funding. In its assessment
of the viability of the Company, the Directors have
considered each of the Company’s principal risks and
uncertainties detailed on pages43 and 45 and in particular
the impact of a significant fall in regional equity markets on
the value of the Company’s investment portfolio. Whilst the
Company’s articles of association require that a proposal for
the continuation of the Company be put forward at the
Company’s AGM, the directors have no reason to believe that
such a resolution will not be passed by shareholders.
In preparing these financial statements the Directors have
considered the impact of climate change risk as an emerging
risk as set out on page 43, and have concluded that there
was no further impact of climate change to be taken into
account as the investments are valued based on market
pricing. In line with FRS102 investments are valued at fair
value, which for the Company are quoted bid prices for
investments in active markets at the statement of financial
position date and therefore reflect market participants view
of climate change risk on the investments held.
The Directors considered the beneficial tax treatment the
Company is eligible for as an investment trust. If changes to
these taxation arrangements were to be made it would
affect the viability of the Company to act as an effective
investment vehicle.
The Directors reviewed a stress test in which the Company's
NAV dropped by 50% and noted that, based on the
assumptions in the test, the Company would continue to be
viable over a five year period.
The Directors have also considered the Company’s income
and expenditure projections and the fact that the Company’s
investments comprise readily realisable securities which can
be sold to meet funding requirements if necessary. Based on
the Company’s processes for monitoring operating costs, the
Board’s view that the Manager has the appropriate depth
and quality of resource to achieve superior returns in the
longer term, the portfolio risk profile, limits imposed on
gearing, counterparty exposure, liquidity risk and financial
controls, the Directors have concluded that there is a
reasonable expectation that the Company will be able to
continue in operation and meet its liabilities as they fall due
over the five year period of their assessment.
Going concern
The Directors have assessed the principal risks, the impact of
the emerging risks and uncertainties and the matters
referred to in the viability statement. The Directors noted the
Company’s portfolio compound liquid stocks, and the
Company’s operating expenses comprise predominantly
variable costs, which would fall pro-rata in the event of a
severe market downturn. The Board is confident that
shareholders will support the continuation vote to be
proposed at the forthcoming AGM. Based on the work the
Directors have performed, they have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Company’s ability to continue as a going concern for the
period assessed by the Directors, being the period to
31December 2023 which is at least 12 months from the date
the financial statements were authorised for issue.
By order of the Board
Schroder Investment Management Limited
Company Secretary
1 April 2022
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Annual Report and Accounts
for the year ended 31 December 2021
Governance
47
Board of Directors
Sarah MacAulay
Status: Independent non-executive Chairman
Length of service: 4 years – appointed a Director in March 2018 and as Chairman
from 19May 2020
Experience: Ms MacAulay has twenty years of Asian fund management experience
based in both London and Hong Kong, managing institutional assets and unit
trusts. She was formerly a director of Baring Asset Management (Asia) Ltd, head of
Asian equities at Kleinwort Benson Investment Management and Eagle Star
Investment Management. She is currently Chairman of JPMorgan Multi-Asset
Growth and Income plc, non-executive director of Fidelity Japan Trust plc and
Abrdn China Investment Company Ltd. She is also a Trustee of Glendower School
Trust, an educational charitable Trust.
Committee membership: audit and risk, management engagement (Chair) and
nominations committees (Chair)
Current remuneration: £45,000 per annum
Number of shares held: 53,975*
Andrew Cainey
Status: Independent non-executive Director
Length of service: 3 years – appointed a Director on 7 March 2019
Experience: Mr Cainey is an experienced business consultant, policy adviser,
speaker and writer. He is Co-founder of Asiability, a Senior Associate Fellow of RUSI
(The Royal United Services Institute), a Director of the UK National Committee in
China and a Senior Advisor of Lumen Capital Investors. He previously held roles
with the Boston Consulting Group, Booz & Company and Tony Blair Associates.
During the course of his career he spent over 15 years in Asia, including China,
Korea and Singapore.
Committee membership: audit and risk, management engagement and
nominations committees
Current remuneration: £35,000 per annum
Number of shares held: 28,786*
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Schroder Asian Total Return Investment Company plc
48
Board of Directors
Caroline Hitch
Status: Senior Independent non-executive Director
Length of service: 7years – appointed a Director in February 2015 and Senior
Independent Director in May 2018
Experience: Ms Hitch has worked in the financial services industry since the
early1980s, mostly with the HSBC group. Her experience includes Head of Wealth
Portfolio Management at HSBC Global Asset Management (UK) Ltd. with
investment management responsibility for their flagship multi asset retail
funds.Prior roles took her to various locations including Hong Kong. MsHitch is a
non-executive director of Aberdeen Standard Equity Income Trust plc and Chair of
CQS New City High Yield Ltd.
Committee membership: audit and risk, management engagement and
nominations committees
Current remuneration: £35,000 per annum
Number of shares held: 10,000*.
Mike Holt
Status: Independent non-executive Director and Chair of the audit
and risk committee
Length of service: 7years – appointed a Director in July 2014 and Chair of the
audit and risk committee in October 2014
Experience: Mr Holt was CFO of Low & Bonar PLC, an international performance
materials group, from 2010 until 2017 and was Group Finance Director of Vpplc
from 2004 to 2010. Prior to 2004, he held a number of senior financial positions
with Rolls-Royce Group plc in the UK, the USA and Hong Kong. He is a Fellow of The
Institute of Chartered Accountants in England & Wales and an associate member of
The Association of Corporate Treasurers. Mr Holt is Executive Chairman of Real
Good Food plc, an AIM listed food manufacturer.
Committee membership: audit and risk (Chair), management engagement and
nominations committees
Current remuneration: £40,000 per annum
Number of shares held: 10,000*
*Shareholdings are as at 30 March 2022, full details of Directors’ shareholdings are set out in the Remuneration Report on
page57.
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Annual Report and Accounts
for the year ended 31 December 2021
Governance
49
Directors’ Report
The Directors submit their report and the audited financial
statements of the Company for the year ended 31December
2021.
Directors and officers
Chairman
The Chairman is an independent non-executive Director who
is responsible for leadership of the Board and ensuring its
effectiveness in all aspects of its role. The Chairman’s other
significant commitments are detailed on page 47. She has no
conflicting relationships.
Senior Independent Director (“SID”)
The SID is responsible for the evaluation of the Chairman, and
also serves as a secondary point of contact for shareholders.
Company Secretary
Schroder Investment Management Limited provides
company secretarial support to the Board and is responsible
for assisting the Chairman with Board meetings and advising
the Board with respect to governance. The Company
Secretary also manages the relationship with the Company’s
service providers, except for the Manager. Shareholders
wishing to lodge questions in advance of the AGM are invited
to do so by writing to the Company Secretary at the address
given on the outside back cover or by email to:
amcompanysecretary@schroders.com.
Role and operation of the Board
The Board (of four Directors, listed on pages 47 and 48) is the
Company’s governing body; it sets the Company’s strategy
and is collectively responsible to shareholders for its long-
term success. The Board is responsible for appointing and
subsequently monitoring the activities of the Manager and
other service providers to ensure that the investment
objective of the Company continues to be met. The Board also
ensures that the Manager adheres to the investment
restrictions set by the Board and acts within the parameters
set by it in respect of any gearing. The Strategic Report on
pages36 to 46 sets out further detail of how the Board
reviews the Company’s strategy, risk management and
internal controls and also includes other information required
for the Directors’ Report, and is incorporated by reference.
A formal schedule of matters specifically reserved for decision
by the Board has been defined and a procedure adopted for
Directors, in the furtherance of their duties, to take
independent professional advice at the expense of the
Company.
The Chairman ensures that all Directors receive relevant
management, regulatory and financial information in a timely
manner and that they are provided, on a regular basis, with
key information on the Company’s policies, regulatory
requirements and internal controls. The Board meets at least
quarterly and receives and considers reports regularly from
the Manager and other key advisers and ad hoc reports and
information are supplied to the Board as required.
Four Board meetings are usually scheduled each year to deal
with matters including: the setting and monitoring of
investment strategy; approval of borrowings and/or cash
positions; review of investment performance; the level of
premium or discount of the Company’s shares to NAV per
share and promotion of the Company; and services provided
by third parties. Additional meetings of the Board are
arranged as required.
The Board has approved a policy on Directors’ conflicts of
interest. Under this policy, Directors are required to disclose
all actual and potential conflicts of interest to the Board as
they arise for consideration and approval. The Board may
impose restrictions or refuse to authorise such conflicts if
deemed appropriate. No Directors have any connections with
the Manager, shared directorships with other Directors or
material interests in any contract which is significant to the
Company’s business.
Key service providers
The Board has adopted an outsourced business model and
has appointed the following key service providers:
Manager
The Company is an Alternative Investment Fund as defined by
the AIFM Directive and has appointed Schroder Unit Trusts
Limited (“SUTL”) as the Manager in accordance with the terms
of an Alternative Investment Fund Manager (“AIFM”)
agreement. The AIFM agreement, which is governed by the
laws of England and Wales, can be terminated by either party
on sixmonths’ notice or on immediate notice in the event of
certain breaches or the insolvency of either party. As at the
date of this report no such notice had been given by either
party.
SUTL is authorised and regulated by the FCA and provides
portfolio management, risk management, accounting and
company secretarial services to the Company under the AIFM
agreement. The Manager also provides general marketing
support for the Company and manages relationships with key
investors, in conjunction with the Chairman, other Board
members or the corporate broker as appropriate. The
Manager has delegated investment management,
accounting, administration and company secretarial services
to another wholly owned subsidiary of Schroders plc,
Schroder Investment Management Limited (“SIM”). The
Manager has in place appropriate professional indemnity
cover.
The Schroders Group manages £731.6 billion (as at 31
December 2021) on behalf of institutional and retail investors,
financial institutions and high net worth clients from around
the world, invested in a broad range of asset classes across
equities, fixed income, multi-asset and alternatives.
Under the terms of the AIFM agreement, the Manager is
entitled to a fee at a rate of 0.65% of gross assets less cash
and cash equivalents.
A performance fee is payable amounting to 10% of any
outperformance of the NAV over an annual hurdle of 7%,
provided that the closing NAV per share exceeds the “high
water mark” NAV at the date the last performance fee was
paid. The sum of the base fee and any performance fee
payable is capped at 1.25% of the closing net assets.
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Schroder Asian Total Return Investment Company plc
50
Directors’ Report
In addition, the Manager may only be paid a performance fee
when the Company’s NAV total return is equal or greater to
the total return of the Reference Index.
If the Company invests in funds managed or advised by the
Manager, any fees earned by the Manager from those
investments are rebated to the Company.
The management fee payable in respect of the year ended
31December 2021 amounted to £3,653,000 (2020: £2,701,000).
A performance fee of £133,000 is payable for the year (2020:
£4,552,000). The Manager is also entitled to a fee for providing
administrative, accounting and company secretarial services to
the Company. For these services in the year ended
31December 2021, the Manager received a fee of £75,000
(2020: £75,000).
Details of all amounts payable to the Manager are set out in
note18 to the accounts on page79.
Depositary
HSBC Bank plc, which is authorised by the Prudential
Regulation Authority and regulated by the FCA and the
Prudential Regulation Authority, carries out certain duties of a
depositary specified in the AIFM Directive including, in
relation to the Company:
– safekeeping of the assets of the Company which are
entrusted to it;
– cash monitoring and verifying the Company’s cash flows;
and
– oversight of the Company and the Manager.
The Company, the Manager and the depositary may
terminate the depositary agreement at any time by giving
90days’ notice in writing. The depositary may only be
removed from office when a new depositary is appointed by
the Company.
Compliance with the UK Corporate
Governance Code
The Board is committed to high standards of corporate
governance and has implemented a framework for corporate
governance which it considers to be appropriate for an
investment trust in order to comply with the principles of the
UK Corporate Governance Code (the “Code”). The disclosures
in this statement report against the provisions of the Code, as
revised in July 2018. The Code is published by the UK Financial
Reporting Council and is available to download from
www.frc.org.uk.
The Financial Conduct Authority requires all UK listed
companies to disclose how they have complied with the
provisions of the Code. This statement, together with the
Statement of Directors’ Responsibilities, viability statement
and going concern statement set out on pages60 and 46,
respectively, indicates how the Company has complied with
the principles of good governance of the Code and its
requirements on internal control. The Strategic Report and
Directors’ Report provide further details on the Company’s
internal controls (including risk management), governance
and diversity policy.
The Board is satisfied that the Company’s current governance
framework is compliant with the provisions, except with
respect to the principles and provisions relating to executive
directors and employees as the Company has neither. The
nomination committee reviews Directors’ remuneration and
makes recommendations to the Board, so there is no
separate remuneration committee. The Board has agreed
that due to the small size of the Board, the Chairman should
also be a member of the audit and risk committee. Also, as
the Company has no employees, it does not have an internal
audit function.
Revenue, final dividend and dividend
policy
The net revenue return for the year, after finance costs and
taxation, was £9,809,000 (2020:£8,308,000), equivalent to a
revenue return per ordinary share of 9.25pence (2020:
8.46pence).
The Board has recommended the payment of a final dividend
for the year ended 31 December 2021 of 8.50pence per share
(2020: 7.10pence) payable on 27May 2022 to shareholders
on the register on 29April 2022, subject to approval by
shareholders at the AGM on 11 May 2022.
The Board’s policy is to pay out substantially all the
Company’s normal revenue.
Committees
In order to assist the Board in fulfilling its governance
responsibilities, it has delegated certain functions to
committees. The roles and responsibilities of these
committees, together with details of work undertaken during
the year under review, are outlined in the next few pages.
The reports of the audit and risk committee, management
engagement committee and nominations committee are
incorporated into and form part of the Directors’ Report.
Other required Directors’ Report
disclosures under laws, regulations, and
the Code
Status
The Company carries on business as an investment trust. Its
shares are listed and admitted to trading on the premium
segment of the main market of the London Stock Exchange. It
has been approved by HM Revenue & Customs as an
investment trust in accordance with section 1158 of the
Corporation Tax Act 2010, by way of a one-off application and
it is intended that the Company will continue to conduct its
affairs in a manner which will enable it to retain this status.
The Company is domiciled in the UK and is an investment
company within the meaning of section 833 of the Companies
Act 2006. The Company is not a “close” company for taxation
purposes.
It is not intended that the Company should have a limited life
but the Directors consider it desirable that the shareholders
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Annual Report and Accounts
for the year ended 31 December 2021
Governance
51
should have the opportunity to review the future of the
Company at appropriate intervals. Accordingly, the articles of
association contain provisions requiring the Directors to put a
proposal for the continuation of the Company to
shareholders at the upcoming Annual General Meeting
(“AGM”) and thereafter at three yearly intervals.
Share capital and substantial share
interests
As at 31March 2022, the Company had 109,114,651 ordinary
shares of 5p in issue. No shares were held in treasury.
Accordingly, the total number of voting rights in the Company
at 31 March 2022 is 109,114,651. Details of changes to the
Company’s share capital during the year under review are
given in note13 to the accounts on page 78. All shares in
issue rank equally with respect to voting, dividends and any
distribution on winding up.
The Board noted that the Company’s shareholders
appreciated the Board’s discount and premium management
control. The Board agreed to request renewal of the
authorities to issue and buyback shares as described on
page87.
The Company has received notifications in accordance with
the Financial Conduct Authority’s (“FCA”) Disclosure Guidance
and Transparency Rule 5.1.2R of the below interests in 3% or
more of the voting rights attaching to the Company’s issued
share capital.
Ordinary %
shares held as of total
at 31 December voting
2021 rights
Tilney Smith & Williamson
Limited 10,264,905 10.06
Quilter PLC 9,994,906 9.99
Charles Stanley Group plc 5,857,502 5.85
Rathbones Management
Limited and Rathbones
Investment Management
Limited 5,335,742 5.01
Investec Wealth &
Investment Limited 5,432,256 4.99
F&C Asset Management plc 3,547,705 4.28
Following the year end and at the date of this report, Investec
Wealth & Investment Limited notified the Company its
holding of 5,428,126 represented 4.99% of the Company’s
total voting rights.
Provision of information to the auditor
The Directors at the date of approval of this report confirm
that, so far as each of them is aware, there is no relevant
audit information of which the Company’s auditor is unaware;
and each Director has taken all the steps that he or she ought
to have taken as a Director in order to make himself or herself
aware of any relevant audit information and to establish that
the Company’s auditor is aware of that information.
Directors’ attendance at meetings
The number of scheduled meetings of the Board and its
committees held during the financial year and the attendance
of individual Directors is shown below. Whenever possible all
Directors attend the AGM.
Audit Management
and Risk Engagement Nomination
Director Board Committee Committee Committee
Sarah MacAulay 5/5 2/2 1/1 1/1
Andrew Cainey 5/5 2/2 1/1 1/1
Caroline Hitch 5/5 2/2 1/1 1/1
Mike Holt 5/5 2/2 1/1 1/1
Directors’ and officers’ liability insurance and
indemnities
Directors’ and officers’ liability insurance cover was in place
for the Directors throughout the year. The Company’s articles
of association provide, subject to the provisions of UK
legislation, an indemnity for Directors in respect of costs
which they may incur relating to the defence of any
proceedings brought against them arising out of their
positions as Directors, in which they are acquitted or
judgment is given in their favour by the court. This is a
qualifying third party indemnity policy and was in place
throughout the year under review for each Director and to
the date of this report.
By order of the Board
Schroder Investment Management Limited
Company Secretary
1 April 2022
Directors’ Report
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Schroder Asian Total Return Investment Company plc
52
Audit and Risk Committee Report
The responsibilities and work carried out by the audit and risk committee during the year under review are set out in the follow-
ing report. The duties and responsibilities of the committee, which include monitoring the integrity of the Company’s financial
reporting and internal controls, are set out in further detail below, and may be found in the terms of reference which are set out
on the Company’s webpages, www.schroders.co.uk/satric.
All Directors are members of the committee. Mike Holt is the chair of committee. The Board has satisfied itself that at least one
of the committee’s members has recent and relevant financial experience and that the committee as a whole has competence
relevant to the sector in which the Company operates.
Ongoing risk review
Half year
report
Audit
planning
Audit
Annual
report
Post-audit
review
Approach
The committee’s key roles and responsibilities are set out in the table below.
Risks and Internal Controls Financial Reports and Valuation Audit
Principal risks
To establish a process for identifying,
assessing, managing and monitoring the
principal risks of the Company.
Financial statements
To monitor the integrity of the financial
statements of the Company and any
formal announcements relating to the
Company’s financial performance and
valuation. To review the half year report.
Audit results
To discuss any matters arising from the
audit and recommendations made by
the auditor.
Emerging risks and uncertainties
To ensure a robust assessment of the
Company’s emerging risks and
uncertainties and procedures are in
place to identify emerging risks, and an
explanation of how these are being
managed or mitigated.
Going concern
To review the position and make
recommendations to the Board in
relation to whether it considers it
appropriate to adopt the going concern
basis of accounting in preparing its
annual and half-yearly financial
statements.
Auditor appointment, independence
and performance
To make recommendations to the Board,
in relation to the appointment,
reappointment, effectiveness and
removal of the external auditor, to
review their independence, and to
approve their remuneration and terms
of engagement. Reviewing and agr
eeing
the audit plan and engagement letter.
The below table sets out how the committee discharged its duties during the year. The committee met twice during the year.
Further details on attendance can be found on page 51. An evaluation of the committee’s effectiveness and review of its terms of
reference was completed during the year.
Significant issues identified during the committee’s review of the Company’s principal risks and uncertainties, and key matters
communicated by the auditor during its reporting are included below.
Application during the year
Risks and Internal Controls Financial Reports and Valuation Audit
Service provider controls
Reviewing the operational controls
maintained by the Manager,
administrator, depositary and registrar.
Recognition of investment income
Considered dividends received against
forecast and the allocation of special
dividends to income or capital.
Effectiveness of the independent audit
process and auditor performance
Evaluated the effectiveness of the
independent audit firm and process
prior to making a recommendation that
it should be re-appointed at the
forthcoming AGM. Evaluated the
auditor’s performance against agreed
criteria including: qualification;
knowledge, expertise and resources;
independence policies; effectiveness of
audit planning; adherence to auditing
standards; and overall competence was
considered, alongside feedback from the
Manager on the audit process. The
committee noted the auditor had
demonstrated its professional scepticism
during the audit. The committee was
satisfied with the auditor’s replies.
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Annual Report and Accounts
for the year ended 31 December 2021
Governance
53
Audit and Risk Committee Report
Application during the year
Risks and Internal Controls Financial Reports and Valuation Audit
Internal controls and risk management
Consideration of several key aspects of
internal control and risk management
operating within the Manager,
depositary and registrar, including
assurance reports and presentations on
these controls.
Calculation of the investment
management and performance fees
Consideration of methodology used to
calculate the fees, matched against the
criteria set out in the AIFM agreement.
Allocation rate of indirect expenses to
capital
Consideration of policy of allocating
certain indirect expenses to capital.
Further details in Note 1(e).
Auditor independence
Ernst & Young LLP has provided audit
services to the Company, for three years,
since it was appointed on 6September
2019.
The auditors are required to rotate the
senior statutory auditor every five years.
There are no contractual obligations
restricting the choice of external
auditors.
This is the third year that the senior
statutory auditor, Caroline Mercer has
conducted the audit of the Company’s
financial statements.
Compliance with the investment trust
qualifying rules in S1158 of the Corpo-
ration Tax Act 2010
Consideration of the Manager’s report
confirming compliance.
Overall accuracy of the annual report
and accounts
Consideration of the draft annual report
and accounts and the letter from the
Manager in support of the letter of
representation to the auditor.
Audit results
Met with and reviewed a comprehensive
report from the auditor which detailed
the results of the audit, compliance with
regulatory requirements, safeguards
that have been established, and on their
own internal quality control procedures.
Principal risks
Reviewing the principal risks faced by the
Company and the system of internal
control.
Valuation and existence of holdings
Quarterly review of portfolio holdings
and assurance reports.
Meetings with the auditor
Met the auditors without representatives
of the Manager present. Representatives
of the auditors attended the committee
meeting at which the draft annual report
and accounts was considered.
Emerging risks and uncertainties
Reviewing the emerging risks and
uncertainties for the Company.
Fair, balanced and understandable
Received the annual report and accounts
to ensure that it was fair, balanced and
understandable.
Provision of non-audit services by the
auditor
The committee has reviewed the FRC’s
Guidance on Audit Committees and has
formulated a policy on the provision of
non-audit services by the Company’s
auditor. The committee has determined
that the Company’s appointed auditor
will not be considered for the provision
of certain non-audit services, such as
accounting and preparation of the
financial statements, internal audit and
custody. The auditor may, if required,
provide other non-audit services which
will be judged on a case-by-case basis.
The auditor did not provide any non-
audit services to the Company during the
year.
Going concern and viability
Reviewed the impact of risks on going
concern and longer-term viability.
Consent to continue as auditor
Ernst & Young LLP indicated to the
committee their willingness to continue
to act as auditor.
Recommendations made to, and approved by, the Board:
As a result of the work performed, the committee has concluded that the annual report for the year ended 31 December 2021,
taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the
Company’s position, performance, business model and strategy, and has reported on these findings to the Board. The Board’s
conclusions in this respect are set out in the Statement of Directors’ Responsibilities on page 60.
Having reviewed the performance of the auditors as described above, and, subject to annual shareholder approval, agreed a
three-year pricing model, the committee considered it appropriate to recommend the firm’s re-appointment. Resolutions to
re-appoint Ernst & Young LLP as auditor to the Company, and to authorise the Directors to determine their remuneration will be
proposed at the AGM.
Mike Holt
Audit and risk committee chair
1 April 2022
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Schroder Asian Total Return Investment Company plc
54
Oversight of other service providers
The committee reviews the performance and
competitiveness of the following service providers on at
least an annual basis:
• Depositary and custodian
• Corporate broker
• Registrar
• Lender
The committee also receives a report from the Company
Secretary on ancillary service providers, and considers
any recommendations.
The committee notes the audit and risk committee’s
review of the auditor.
Oversight of the Manager
The committee:
• reviews the Manager’s performance, over the short
and long term, against the Reference Index, peer
group and the market.
• considers the reporting it has received from the
Manager throughout the year, and the reporting
from the Manager to the shareholders.
• assesses management fees on an absolute and
relative basis, receiving input from the Company’s
broker, including peer group and industry figures, as
well as the structure of the fees.
• reviews the appropriateness of the Manager’s
contract, including terms such as notice period.
• assesses whether the Company receives appropriate
administrative, accounting, company secretarial and
marketing support from the Manager.
The committee undertook a detailed review of the
Manager’s performance and agreed that it has the
appropriate depth and quality of resource to deliver
superior returns over the longer term. The committee
also reviewed the terms of the AIFM agreement,
including the fee structure, and agreed they remained
fit for purpose.
The committee reviewed the other services provided by
the Manager and agreed they were satisfactory.
The annual review of each of the service providers was
satisfactory.
The committee noted that the audit and risk committee
had undertaken a detailed evaluation of the internal
controls of Manager, registrar, depositary and
custodian.
Application during the year
Management Engagement Committee Report
The management engagement committee is responsible for (1) the monitoring and oversight of the Manager’s performance
and fees, and confirming the Manager’s ongoing suitability, and (2) reviewing and assessing the Company’s other service
providers, including reviewing their fees. All Directors are members of the committee. Sarah MacAulay is the chair of the
committee. Its terms of reference are available on the Company’s webpages, www.schroders.co.uk/satric.
Approach
Recommendations made to, and approved by, the Board:
• That the ongoing appointment of the Manager on the terms of the AIFM agreement, including the fee, was in the best
interests of shareholders as a whole.
• That the Company’s service providers’ performance remained satisfactory.
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Annual Report and Accounts
for the year ended 31 December 2021
Governance
55
Selection and induction
• Committee prepares a job
specification for each role, and
an independent recruitment
firm is appointed. For the
Chairman and the chairs of
committees, the committee
considers current Board
members too.
• Job specification outlines the
knowledge, professional skills,
personal qualities and
experience requirements.
• Potential candidates assessed
against the Company’s diversity
policy.
• Committee discusses the long
list, invites a number of
candidates for interview and
makes a recommendation to
the Board.
• Committee reviews the
induction and training of new
Directors.
Board evaluation and Directors’ fees
• Committee assesses each Director
annually, and considers if an external
evaluation is appropriate.
• Evaluation focuses on whether each
Director continues to demonstrate
commitment to their role and provides a
valuable contribution to the Board during
the year, taking into account time
commitment, independence, conflicts and
training needs.
• Following the evaluation, the committee
provides a recommendation to
shareholders with respect to the annual
re-election of Directors at the AGM.
• All Directors retire at the AGM and their
re-election is subject to shareholder
approval.
• Committee reviews Directors’ fees, taking
into account comparative data and reports
to shareholders.
• Any proposed changes to the
remuneration policy for Directors
discussed and reported to shareholders.
Succession
• The Board’s succession policy is
that Directors’ tenure will be for
no longer than nine years,
except in exceptional
circumstances, and that each
Director will be subject to
annual re-election at the AGM.
• Committee reviews the Board’s
current and future needs at
least annually. Should any need
be identified the committee will
initiate the selection process.
• Committee oversees the
handover process for retiring
Directors.
Nomination Committee Report
The nomination committee is responsible for (1) the recruitment, selection and induction of Directors, (2) their assessment
during their tenure, and (3) the board’s succession. All Directors are members of the committee. Sarah MacAulay is the chair
of the committee. Its terms of reference are available on the Company’s webpages, www.schroders.co.uk/satric.
Approach
Oversight of Directors
Selection
Induction
Annual
evaluation
Annual review
of succession
policy
Application
of succession
policy
For application see page 56.
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Schroder Asian Total Return Investment Company plc
56
Selection and induction
• The committee agreed to
discuss the appointment of a
recruitment agency and to
agree a job description for the
recruitment planned in 2022 to
hire a successor for MrHolt as
audit and risk committee chair.
Board evaluation and Directors’ fees
• The Board and committee evaluation
process was undertaken in December 2021.
• The committee also reviewed each
Director’s time commitment and
independence by reviewing a complete list
of appointments, including pro bono not for
profit roles, to ensure that each Director
remained free from conflict and had
sufficient time available to discharge each
of their duties effectively. Notwithstanding
that the Chairman is a director or chairman
of four companies listed on the London
Stock Exchange (as listed on page47), the
committee has noted the Chairman is a full-
time non-executive Director and that the
less-complex nature of the companies for
which the Chairman acts as a Director
means that the level of time commitment
required to fulfil her duties is lower than
larger trading companies. All Directors were
considered to be independent in character
and judgement.
• The committee considered each Director’s
contributions, and noted that in addition to
extensive experience as professionals and
non-executive Directors, each Director had
valuable skills and experience, as detailed in
their biographies on pages 47 and 48.
• Based on its assessment, the committee
provided individual recommendations for
each Director’s re-election.
• The committee reviewed Directors’ fees,
using external benchmarking, and
recommended that Directors’ fees, remain
unchanged as detailed in the remuneration
report. However, to accommodate future
recruitment, the committee recommended
increasing the aggregate level of Directors’
fees to £300,000.
Succession
• The committee reviewed the
succession policy and agreed it
was still fit for purpose.
• The committee noted that
Mr Holt would be retiring in
2023 and Ms Hitch in 2024 and
identified the need to initiate
the selection process.
Nomination Committee Report
Recommendations made to, and approved by, the Board:
• That the aggregate level of Directors’ fees be increased to £300,000.
• That all Directors continue to demonstrate commitment to their roles, provide a valuable contribution to the deliberations of
the board and remain free from conflicts with the Company and its Directors, so should all be recommended for re-election by
shareholders at the AGM.
Application during the year
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Annual Report and Accounts
for the year ended 31 December 2021
Governance
57
Directors’ Remuneration Report
Introduction
The remuneration policy below is currently in force and is
subject to a binding vote every three years. The next vote will
take place at the 2023 AGM and the current policy provisions
will apply until that date. The below Directors’ annual report
on remuneration is subject to an annual advisory vote. An
ordinary resolution to approve this report will be put to
shareholders at the forthcoming AGM.
At the AGM held on 19 May 2020, 99.86% of the votes cast
(including votes cast at the Chairman’s discretion) in respect
of approval of the remuneration policy were in favour, while
0.14% were against. 31,561 votes were withheld.
At the AGM held on 7 May 2021, 99.81% of the votes cast
(including votes cast at the Chairman’s discretion) in respect
of approval of the annual report on remuneration for the
year ended 31 December 2020 were in favour, while 0.19%
were against. 9,043votes were withheld.
Directors’ remuneration policy
The determination of the Directors’ fees is a matter dealt with
by the Board and the nomination committee.
It is the Board’s policy to determine the level of Directors’
remuneration having regard to amounts payable to
non-executive Directors in the industry generally, the role
that individual Directors fulfil in respect of Board and
committee responsibilities, and time committed to the
Company’s affairs, taking into account the aggregate limit of
fees set out in the Company’s articles of association. This
aggregate level of Directors’ fees is currently set at £250,000
per financial year and any increase in this level requires
approval by the Board and the Company’s shareholders.
The Chairman of the Board and the chair of the audit and risk
committee each receive fees at a higher rate than the other
Directors to reflect their additional responsibilities. Directors’
fees are set at a level to recruit and retain individuals of
sufficient calibre, with the level of knowledge, experience and
expertise necessary, and to promote the success of the
Company in reaching its short and long-term strategic
objectives.
The Board and its committees exclusively comprise non-
executive Directors. No Director past or present has an
entitlement to a pension from the Company and the
Company has not, and does not intend to, operate a share
scheme for Directors or to award any share options or long-
term performance incentives to any Director. No Director has
a service contract with the Company; however Directors have
a letter of appointment. Directors do not receive exit
payments and are not provided with any compensation for
loss of office. No other payments are made to Directors other
than the reimbursement of reasonable out-of-pocket
expenses incurred in attending to the Company’s business.
The terms of Directors’ letters of appointment are available
for inspection at the Company’s registered office address
during normal business hours and during the AGM at the
location of such meeting.
Implementation of policy
The Board did not seek the views of shareholders in setting
this remuneration policy. Any comments on the policy
received from shareholders would be considered on a case
by case basis.
As the Company does not have any employees, no employee
pay and employment conditions were taken into account
when setting this remuneration policy and no employees
were consulted in its construction.
Directors’ fees are reviewed annually and take into account
research from third parties on the fee levels of Directors of
peer group companies, as well as industry norms and factors
affecting the time commitment expected of the Directors.
New Directors are subject to the provisions set out in this
remuneration policy.
Directors’ annual report on remuneration
This report sets out how the remuneration policy was
implemented during the year ended 31 December 2021.
Consideration of matters relating to Directors’
remuneration
Directors’ remuneration was last reviewed by the nomination
committee and the Board in December 2020. The members
of the Board at the time that remuneration levels were
considered were as set out on pages47 and 48. Although no
external advice was sought in considering the levels of
Directors’ fees, information on fees paid to Directors of other
investment companies managed by Schroders and peer
group companies provided by the Manager and corporate
broker was taken into consideration as was independent
third party research.
Following this review, the Board agreed that Directors’ fees
should not be increased. However, the Board would
recommend to shareholders that the aggregate level of
Directors’ fees be increased to £300,000, as part of the
proposed changes to the articles of association. Further
details can be found in the Annual General Meeting –
Recommendations on page 86.
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Schroder Asian Total Return Investment Company plc
58
Directors’ Remuneration Report
Distributions to shareholders
Year Year
ended 31 ended 31
December December
2021 2020 Change
£’000 £’000 (%)
Remuneration payable
to Directors 156 171 (8.8)
Distributions paid to
shareholders
– Dividends 7,435 6,362 16.9
Performance graph
A graph showing the Company’s share price total return
compared with the Reference Index over the last 10 years is
set out below. The Reference Index has been selected as an
appropriate comparison based on the composition of the
Company’s investment portfolio.
Ten year share price and reference index total
returns
1,2
1
Source: Morningstar/Thomson Reuters. Rebased to 100 at 31 December
2011.
2
Definitions of terms and performance measures are given on page 91
Reference Index total return
Share price total return
31-Dec-20 31-Dec-21 31-Dec-11 31-Dec-12 31-Dec-13 31-Dec-14 31-Dec-15 31-Dec-16 31-Dec-17 31-Dec-18 31-Dec-19
75
100
125
150
175
200
225
250
275
300
325
350
375
400
Fees paid to Directors
The following amounts were paid by the Company to Directors for their services in respect of the year ended 31 December
2021 and the preceding financial year. Directors’ remuneration is all fixed; they do not receive any variable remuneration. The
performance of the Company over the financial year is presented on page 2, under the heading “Other financial information”.
Change in annual
fee over years
Fees Taxable benefits
1
Total ended 31 December
2021 2020 2021 2020 2021 2020 2021 2020
£ £ £ £ £ £ % %
Sarah MacAulay
2
45,000 41,190 203 – 45,203 41,190 28.6 16.7
David Brief
3
– 17,342 – 1,024 – 18,366 N/a 12.5
Andrew Cainey
35,000 35,000 461 281 35,461 35,281 0.0 16.7
Caroline Hitch
35,000 35,000 366 175 35,366 35,175 0.0 16.7
Mike Holt 40,000 40,000 271 746 40,271 40,746 0.0 14.3
Total 155,000 168,532 1,301 2,226 156,301 170,758
1
Comprise amounts reimbursed for expenses incurred in carrying out business for the Company, and which have been grossed up, to include PAYE and NI
contributions.
2
Appointed Chairman on 19 May 2020.
3
Retired as Chairman and from the board on 19 May 2020.
The information in the above table has been audited.
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Annual Report and Accounts
for the year ended 31 December 2021
Governance
59
Directors’ Remuneration Report
Directors’ share interests
The Company’s articles of association do not require Directors
to own shares in the Company. The interests of Directors,
including those of connected persons, at the beginning and
end of the financial year under review, are set out below.
At 31 December At 31 December
2021
1
2020
1
Sarah MacAulay 53,975 53,975
Andrew Cainey 28,786 24,636
2
Caroline Hitch 10,000 10,000
Mike Holt 10,000 10,000
1
Ordinary shares of 5p each
2
It has been identified that the Annual Report and Accounts for the year
ended 31 December 2020 incorrectly stated Mr Cainey’s beneficial holding
as being 24,726 ordinary shares. The figures shown in the table above
reflect the correct beneficial holdings at their respective dates. The
Company confirms that all announcements released via a regulatory news
service in relation to Mr Cainey’s shareholdings were correct.
There have been no changes notified to the Company since the year end.
The information in the above table has been audited.
The Portfolio Managers and connected persons’ interests in
the Company were approximately 500,000 ordinary shares as
at the date of this report.
On behalf of the Board
Sarah MacAulay
Chairman
1 April 2022
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Schroder Asian Total Return Investment Company plc
60
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the annual
report, and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the
Directors have prepared the financial statements in
accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards,
comprising Financial Reporting Standard (FRS) 102 “The
Financial Reporting Standard applicable in the UK and
Republic of Ireland” and applicable law). Under company law
the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of
the state of affairs of the Company and of the return or loss
of the Company for that period. In preparing these financial
statements, the Directors are required to:
– select suitable accounting policies and then apply them
consistently;
– make judgements and accounting estimates that are
reasonable and prudent;
– state whether applicable UK Accounting Standards,
comprising FRS 102, have been followed, subject to any
material departures disclosed and explained in the
financial statements;
– notify the Company’s shareholders in writing about the
use of disclosure exemptions in FRS 102, used in the
preparation of the financial statements; and
– prepare the financial statements on a going concern
basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Company
and enable them to ensure that the financial statements and
the Directors’ Remuneration Report comply with the
Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud
and other irregularities.
The Manager is responsible for the maintenance and
integrity of the webpage dedicated to the Company.
Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
Each of the Directors, whose names and functions are listed
on pages47 and 48, confirm that to the best of their
knowledge:
– the financial statements, which have been prepared in
accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting
Standards and applicable law), give a true and fair view
of the assets, liabilities, financial position and net return
of the Company;
– the Strategic Report contained in the report and
accounts includes a fair review of the development and
performance of the business and the position of the
Company, together with a description of the principal
risks and uncertainties that it faces; and
– the annual report and accounts, taken as a whole, is fair,
balanced and understandable and provides the
information necessary for shareholders to assess the
Company’s position and performance, business model
and strategy.
On behalf of the Board
Sarah MacAulay
Chairman
1 April 2022
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Annual Report and Accounts
for the year ended 31 December 2021
61
Financial
Independent Auditor’s Report
to the Members of Schroder Asian Total Return
Investment Company plc
Opinion
We have audited the financial statements of Schroder Asian Total Return Investment Company plc (the ‘Company’) for the year
ended 31 December 2021 which comprise the Income Statement, the Statement of Changes in Equity, the Statement of
Financial Position, the Cash Flow Statement and the related notes 1 to 23, including a summary of significant accounting
policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom
Accounting Standards including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”
(United Kingdom Generally Accepted Accounting Practice).
In our opinion, the financial statements:
– give a true and fair view of the Company’s affairs as at 31 December 2021 and of its profit for the year then ended;
– have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
– have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion
Independence
We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied to public interest entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Company and we remain
independent of the Company in conducting the audit.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the Company’s ability to
continue to adopt the going concern basis of accounting included:
– Confirming our understanding of the Company’s going concern assessment process by engaging with the Directors and
the Company Secretary to determine if all key factors were considered in their assessment.
– Inspecting the Directors’ assessment of going concern, including the forecast, for the period to 31 December 2023 which
is at least 12 months from the date these financial statements were authorised for issue. In preparing the forecast, the
Company has concluded that it is able to continue to meet its ongoing costs as they fall due.
– Reviewing the factors and assumptions, including the impact of the Covid-19 pandemic, as applied to the forecast and the
liquidity assessment of the investments. We considered the appropriateness of the methods used to calculate the forecast
and the liquidity assessment and determined, through testing of the methodology and calculations, that the methods,
inputs and assumptions utilised were appropriate to be able to make an assessment for the Company.
– Considering the mitigating factors included in the revenue forecast that are within the control of the Company. We
reviewed the Company’s assessment of the liquidity of investments held and evaluated the Company’s ability to sell those
investments to cover the working capital requirements should revenue decline significantly.
– In relation to the Company’s borrowing arrangements, our inspection of the Directors’ assessment of the risk of
breaching the debt covenants as a result of a reduction in the value of the Company’s portfolio. We recalculated the
Company’s compliance with debt covenants in the scenarios assessed by the Directors and reviewed the Directors’ reverse
stress testing in order to identify what factors would lead to the Company breaching the financial covenants.
– Assessing the impact of the continuation vote at the 2022 AGM on the going concern basis of preparation by considering
the current and historical performance of the Company, reviewing minutes from the Broker’s discussions with certain
shareholders about their current intentions in relation to the continuation vote and assessing the Directors’ own analysis
of the impact the continuation vote may have on going concern.
– Reviewing the Company’s going concern disclosures included in the annual report in order to assess that the disclosures
were appropriate and in conformity with the reporting standards.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for the period
assessed by the Directors, being the period to 31 December 2023, which is at least 12 months from the date these financial
statements were authorised for issue.
In relation to the Company’s reporting on how they have applied the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the
directors considered it appropriate to adopt the going concern basis of accounting.
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62
Schroder Asian Total Return Investment Company plc
Independent Auditor’s Report
to the Members of Schroder Asian Total Return
Investment Company plc
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report. However, because not all future events or conditions can be predicted, this statement is not a
guarantee as to the Company’s ability to continue as a going concern.
Overview of our audit approach
Key audit matters – Risk of incomplete or inaccurate revenue recognition, including the classification of special
dividends as revenue or capital items in the Income Statement.
– Risk of incorrect valuation or ownership of the investment portfolio.
Materiality – Overall materiality of £5.52m (2020: £4.84m) which represents 1% (2020: 1%) of shareholders’ funds.
An overview of the scope of our audit
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit
scope for the Company. This enables us to form an opinion on the financial statements. We take into account size, risk profile,
the organisation of the Company and effectiveness of controls, including controls and changes in the business environment
when assessing the level of work to be performed. All audit work was performed directly by the audit engagement team
Climate change
There has been increasing interest from stakeholders as to how climate change will impact companies. The Company has
determined that the impact of climate change could affect the Company’s investments, and potentially shareholder returns.
This is explained in the emerging risks and uncertainties section on page 43, which forms part of the “Other information,”
rather than the audited financial statements. Our procedures on these disclosures therefore consisted solely of considering
whether they are materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or
otherwise appear to be materially misstated.
Our audit effort in considering climate change was focused on the adequacy of the Company’s disclosures in the financial
statements as set out in note 1(a) and conclusion that there was no further impact of climate change to be taken into account
as the investments are valued based on market pricing as required by FRS102. We also challenged the Directors’
considerations of climate change in their assessment of viability and associated disclosures.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not
due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the
allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the
context of our audit of the financial statements as a whole, and in our opinion thereon, and we do not provide a separate
opinion on these matters.
Risk Our response to the risk Key observations
communicated to the
Audit and Risk Committee
Incomplete or inaccurate revenue
recognition, including the
classification of special dividends as
revenue or capital items in the
Income Statement (as described on
page 52 in the Audit and Risk
Committee’s Report and as per the
accounting policy set out on page 71).
The total revenue for the year to
31December 2021 was £12.28m (2020:
£9.22m), consisting primarily of
dividend income from listed
investments.
The Company received twelve (2020:
eight) special dividends amounting to
We performed the following
procedures:
We obtained an understanding of the
processes and controls surrounding
revenue recognition and classification
of special dividends by performing
walkthrough procedures.
For all dividends received and accrued
we recalculated the dividend income by
multiplying the investment holdings at
the ex-dividend date, traced from the
accounting records, by the dividend per
share, which was agreed to an
independent data vendor. We also
agreed all exchange rates to an
The results of our procedures identified
no material misstatement in relation to
the risk of incomplete or inaccurate
revenue recognition, including incorrect
classification of special dividends as
revenue or capital items in the Income
Statement.
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Annual Report and Accounts
for the year ended 31 December 2021
63
Financial
Independent Auditor’s Report
to the Members of Schroder Asian Total Return
Investment Company plc
Risk Our response to the risk Key observations
communicated to the
Audit and Risk Committee
£4.35m (2020: £2.96 million), of which
£1.01m (2020: £0.98m) were classified
as revenue and £3.34m (2020: £1.98m)
were classified as capital.
There is a risk of incomplete or
inaccurate recognition of revenue
through the failure to recognise proper
income entitlements or to apply an
appropriate accounting treatment.
In addition to the above, the Directors
may be required to exercise judgement
in determining whether income
receivable in the form of special
dividends should be classified as
‘revenue’ or ‘capital’ in the Income
Statement.
Incorrect valuation or ownership of the
investment portfolio (as described on
page 53 in the Audit and Risk Committee’s
Report and as per the accounting policy
set out on page 71).
The valuation of the portfolio at
31December 2021 was £600.00m
(2020: £513.67m) consisting of listed
investments. The Company also holds
exchange traded derivatives and these
have been recognised separately in the
Statement of Financial Position. The
receivable in relation to the exchange
traded derivatives as at 31 December
2021 was £0.18m (2020: £0.95m) and the
amount payable was £0.73m (2020: nil).
The valuation of the assets held by the
Company is the key driver of the
Company’s net asset value and total
return. Incorrect investment pricing, or a
failure to maintain proper legal title of the
assets held by the Company could have a
significant impact on the net asset value
and the return generated for
shareholders.
The fair value of listed investments and
exchange traded derivatives is determined
using quoted market bid prices at close of
business on the reporting date.
external source and, for a sample of
dividends received and dividends
accrued, we agreed amounts to bank
statements.
For all accrued dividends, we assessed
whether the dividend obligations arose
prior to 31 December 2021 with
reference to an external source.
To test completeness of recorded
income, we tested that all expected
dividends for each investee company
had been recorded as income with
reference to an external source.
For all investments held during the
year, we reviewed the type of dividends
paid with reference to an external data
source to identify those which were
special dividends. We confirmed twelve
special dividends, amounting to
£4.35m, were received during the year.
We have tested four special dividends,
amounting to £3.94m, by recalculating
the amount received and assessing the
appropriateness of classification as
revenue or capital by reviewing the
underlying circumstances of the special
dividends received.
We performed the following
procedures:
We obtained an understanding of the
Administrator’s processes surrounding
the existence and pricing of listed
securities and exchange traded
derivatives, by performing walkthrough
procedures.
For all listed investments and exchange
traded derivatives, we compared the
market prices and exchange rates
applied to an independent pricing
vendor and recalculated the valuations
as at the year end.
We inspected the security price
movement reports produced by the
Administrator to identify prices that
have not changed within seven days
from year end and verified whether the
listed price is a valid fair value through
review of trading activity. No stale
prices were identified.
We agreed the Company’s investments
and derivative positions to independent
confirmations received from the
Company’s Custodian and Depositary at
31 December 2021.
The results of our procedures identified
no material misstatement in relation to
the risk of incorrect valuation or
ownership of the investment portfolio.
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64
Schroder Asian Total Return Investment Company plc
Our key audit matters are consistent with the prior year.
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements
on the audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the
economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our
audit procedures.
We determined materiality for the Company to be £5.52m (2020: £4.84m), which is 1% (2020: 1%) of shareholders’ funds. We
believe that shareholders’ funds provides us with materiality aligned to the key measurement of the Company’s performance.
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level
the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Company’s overall control environment, our
judgement was that performance materiality was 75% (2020: 75%) of our planning materiality, namely £4.14m (2020: £3.63m).
We have set performance materiality at this percentage due to our past experience of the audit that indicates a lower risk of
misstatements, both corrected and uncorrected.
Given the importance of the distinction between revenue and capital for investment trusts, we also applied a separate testing
threshold for the revenue column of the Income Statement of £0.52m (2020: £0.39m), being 5% of the revenue column profit
before taxation.
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit and Risk Committee that we would report to them all uncorrected audit differences in excess of
£0.28m (2020: £0.24m), which is set at 5% of planning materiality, as well as differences below that threshold that, in our view,
warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in
light of other relevant qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the annual report other than the financial statements and our
auditor’s report thereon. The Directors are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly
stated in this report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be
materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we
have performed, we conclude that there is a material misstatement of the other information, we are required to report that
fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with
the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
– the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
– the Strategic Report and Directors’ Reports have been prepared in accordance with applicable legal requirements;
Independent Auditor’s Report
to the Members of Schroder Asian Total Return
Investment Company plc
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Annual Report and Accounts
for the year ended 31 December 2021
65
Financial
Independent Auditor’s Report
to the Members of Schroder Asian Total Return
Investment Company plc
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we
have not identified material misstatements in the Strategic Report or Directors’ Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion:
– adequate accounting records have not been kept, or returns adequate for our audit have not been received from
branches not visited by us; or
– the financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the
accounting records and returns; or
– certain disclosures of Directors’ remuneration specified by law are not made; or
– we have not received all the information and explanations we require for our audit
Corporate Governance Statement
We have reviewed the Directors’ statement in relation to going concern, longer-term viability and that part of the Corporate
Governance Statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code
specified for our review by the Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit:
– Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any
material uncertainties identified set out on page 46;
– Directors’ explanation as to its assessment of the Company’s prospects, the period this assessment covers and why the
period is appropriate set out on page 46;
– Director’s statement on whether it has a reasonable expectation that the group will be able to continue in operation and
meets its liabilities set out on page 46;
– Directors’ statement on fair, balanced and understandable set out on page 60;
– Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 43;
– The section of the annual report that describes the review of effectiveness of risk management and internal control
systems set out on page 43 ; and
– The section describing the work of the audit committee set out on page 52.
Responsibilities of directors
As explained more fully in the Directors’ Responsibilities Statement set out on page 60, the Directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal contro
l
as the Directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless
the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
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66
Schroder Asian Total Return Investment Company plc
Independent Auditor’s Report
to the Members of Schroder Asian Total Return
Investment Company plc
Explanation as to what extent the audit was considered capable of detecting irregularities, including
fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement
due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by,
for example, forgery or intentional misrepresentations, or through collusion. The extent to which our procedures are capable
of detecting irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance
of the Company and management.
– We obtained an understanding of the legal and regulatory frameworks that are applicable to the Company and
determined that the most significant are FRS 102, the Companies Act 2006, the Listing Rules, the UK Corporate
Governance Code, the Statement of Recommended Practice for the Financial Statements of Investment Trust Companies
as issued by the Association of Investment Companies, Section 1158 of the Corporation Tax Act 2010 and The Companies
(Miscellaneous Reporting) Regulations 2018.
– We understood how the Company is complying with those frameworks through discussions with the Audit and Risk
Committee and Company Secretary, review of board and committee minutes and review of papers provided to the Audit
and Risk Committee.
– We assessed the susceptibility of the Company’s financial statements to material misstatement, including how fraud
might occur by considering the key risks impacting the financial statements. We identified a fraud risk with respect to the
incomplete or inaccurate revenue recognition, through incorrect classification of special dividends as revenue or capital
items in the Income Statement. Further discussion of our approach is set out in the section on key audit matters above.
– Based on this understanding we designed our audit procedures to identify non-compliance with such laws and
regulations. Our procedures involved review of the reporting to the Directors with respect to the application of the
documented policies and procedures and review of the financial statements to ensure compliance with the reporting
requirements of the Company.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Other matters we are required to address
Following the recommendation from the audit committee, we were appointed by the Company on 6 September 2019 to audit
the financial statements for the year ending 31 December 2019 and subsequent financial periods.
The period of total uninterrupted engagement including previous renewals and reappointments is three years, covering the
years ending 31 December 2019 to 31 December 2021.
– The audit opinion is consistent with the additional report to the audit committee.
Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are
required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
Signature
Caroline Mercer (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
1 April 2022
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Annual Report and Accounts
for the year ended 31 December 2021
67
Financial
Income Statement
for the year ended 31 December 2021
2021 2020
Revenue Capital Total Revenue Capital Total
Note £’000 £’000 £’000 £’000 £’000 £’000
Gains on investments held at
fair value through profit or loss 2
– 35,882 35,882 – 111,853 111,853
Net (losses)/gains on derivative contracts –
(7,881) (7,881) – 1,555 1,555
Net foreign currency (losses)/ gains –
(502) (502) – 1,168 1,168
Income from investments 3
12,195 3,338 15,533 9,211 1,979 11,190
Other interest receivable and similar income 3 84 – 84 7 – 7
Gross return 12,279 30,837 43,116 9,218 116,555 125,773
Investment management fee 4
(913) (2,740) (3,653) (675) (2,026) (2,701)
Performance fee 4
– (133) (133) – (4,552) (4,552)
Administrative expenses 5 (793) – (793) (689) – (689)
Net return before finance costs and
taxation 10,573 27,964 38,537
7,854 109,977 117,831
Finance costs 6 (122) (352) (474) (113) (338) (451)
Net return before taxation 10,451 27,612 38,063 7,741 109,639 117,380
Taxation 7 (642) (1,110) (1,752) 567 – 567
Net return after taxation 9,809 26,502 36,311 8,308 109,639 117,947
Return per share 9 9.25p 24.99p 34.24p 8.46p 111.59p 120.05p
The “Total” column of this statement is the profit and loss account of the Company. The “Revenue” and “Capital” columns
represent supplementary information prepared under guidance issued by The Association of Investment Companies. The
Company has no other items of other comprehensive income, and therefore the net return after taxation is also the total
comprehensive income for the year.
All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or
discontinued in the year.
The notes on pages 71 to 85 form an integral part of these accounts.
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Schroder Asian Total Return Investment Company plc
Statement of Changes in Equity
for the year ended 31 December 2021
Called-up Capital
share Share redemption Special Capital Revenue
capital premium reserve reserve reserves reserve Total
Note £’000 £’000 £’000 £’000 £’000 £’000 £’000
At 31 December 2019 4,895 60,135 11,646 29,182 234,828 17,185 357,871
Repurchase of the Company’s own
shares into treasury – – – – (648) – (648)
Reissue of shares out of treasury – 156 – – 648 – 804
Issue of shares 152 13,784 – – – – 13,936
Net return after taxation – – – – 109,639 8,308 117,947
Dividend paid in the year 8 – – – – – (6,362) (6,362)
At 31 December 2020 5,047 74,075 11,646 29,182 344,467 19,131 483,548
Issue of shares 392 38,929 – – – – 39,321
Net return after taxation – – – – 26,502 9,809 36,311
Dividend paid in the year 8 – – – – – (7,435) (7,435)
At 31 December 2021 5,439 113,004 11,646 29,182 370,969 21,505 551,745
The notes on pages 71 to 85 form an integral part of these accounts.
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Annual Report and Accounts
for the year ended 31 December 2021
69
Financial
Statement of Financial Position
at 31 December 2021
2021 2020
Note £’000 £’000
Fixed assets
Investments held at fair value through profit or loss 10 600,002 513,671
Current assets 11
Debtors
667 2,411
Cash at bank and in hand
2,876 2,010
Derivative financial instruments held at fair value through profit or loss 182 947
3,725 5,368
Current liabilities 12
Creditors: amounts falling due within one year
(24,159) (28,276)
Bank overdraft
(25,983) (7,215)
Derivative financial instruments held at fair value through profit or loss (730) –
(50,872) (35,491)
Net current liabilities (47,147) (30,123)
Total assets less current liabilities 552,855 483,548
Non current liabilities
Provision for overseas capital gains tax (1,110) –
Net assets 551,745 483,548
Capital and reserves
Called-up share capital 13 5,439 5,047
Share premium 14
113,004 74,075
Capital redemption reserve 14
11,646 11,646
Special reserve 14
29,182 29,182
Capital reserves 14
370,969 344,467
Revenue reserve 14 21,505 19,131
Total equity shareholders’ funds 551,745 483,548
Net asset value per share 15 507.24p 479.07p
The accounts were approved and authorised for issue by the Board of Directors on 1 April 2022 and signed on its behalf by:
Sarah MacAulay
Chairman
The notes on pages 71 to 85 form an integral part of these accounts.
Registered in England and Wales as a public company limited by shares.
Company registration number: 02153093
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Schroder Asian Total Return Investment Company plc
Cash Flow Statement
for the year ended 31 December 2021
2021 2020
Note £’000 £’000
Net cash inflow from operating activities
16 7,996 3,841
Investing activities
Purchases of investments (224,921) (169,974)
Sales of investments
174,268 136,762
Net cash flows on derivative instruments (6,386) 1,085
Net cash outflow from investing activities (57,039) (32,127)
Net cash outflow before financing (49,043) (28,286)
Financing activities
Dividends paid (7,435) (6,362)
Interest paid
(451) (438)
Net bank loans drawn down
– 11,979
Repurchase of the Company’s own shares into treasury
– (648)
Reissue of shares out of treasury
– 804
Issue of new shares 39,321 13,936
Net cash inflow from financing activities 31,435 19,271
Net cash outflow in the year 17 (17,608) (9,015)
Cash and cash equivalents at the beginning of the year (5,205) 4,202
Net cash outflow in the year (17,608) (9,015)
Exchange movements (294) (392)
Cash and cash equivalents at the end of the year (23,107) (5,205)
Dividends received during the year amounted to £16,218,000 (2020: £10,171,000) and interest receipts amounted to £84,000
(2020: £8,000).
The notes on pages 71 to 85 form an integral part of these accounts.
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Annual Report and Accounts
for the year ended 31 December 2021
71
Financial
1. Accounting Policies
(a) Basis of accounting
Schroder Asian Total Return Investment Company plc (“the Company”) is registered in England and Wales as a public company
limited by shares. The Company’s registered office is 1 London Wall Place, London EC2Y 5AU.
The accounts are prepared in accordance with the Companies Act 2006, United Kingdom Generally Accepted Accounting
Practice (“UK GAAP”), in particular in accordance with Financial Reporting Standard (FRS) 102 “The Financial Reporting
Standard applicable in the UK and Republic of Ireland”, and with the Statement of Recommended Practice “Financial
Statements of Investment Trust Companies and Venture Capital Trusts” (the “SORP”) issued by the Association of Investment
Companies in April 2021. All of the Company’s operations are of a continuing nature.
The accounts have been prepared on a going concern basis under the historical cost convention, as modified by the
revaluation of investments and derivative financial instruments held at fair value through profit or loss. The Directors believe
that the Company has adequate resources to continue operating for the period to 31 December 2023, which is at least 12
months from the date of approval of these accounts. In forming this opinion, the Directors have taken into consideration: the
controls and monitoring processes in place; the Company’s low level of debt and other payables; the low level of operating
expenses, comprising largely variable costs which would reduce pro rata in the event of a market downturn; the likely success
of the continuation vote at the forthcoming AGM; and that the Company’s assets comprise cash and readily realisable
securities quoted in active markets. In forming this opinion, the Directors have also considered any potential adverse
consequences of the COVID-19 pandemic on the viability of the Company.
In preparing these financial statements the Directors have considered the impact of climate change risk as an emerging risk
as set out on page 43, and have concluded that there was no further impact of climate change to be taken into account as the
investments are valued based on market pricing. In line with FRS102 investments are valued at fair value, which for the
Company are quoted bid prices for investments in active markets at the statement of financial position date and therefore
reflect market participants view of climate change risk on the investments held.
The accounts are presented in sterling and amounts have been rounded to the nearest thousand.
The accounting policies applied to these accounts are consistent with those applied in the accounts for the year ended
31December 2020.
No significant judgements, estimates or assumptions have been required in the preparation of the accounts for the current or
preceding financial year.
(b) Valuation of investments
The Company’s business is investing in financial assets with a view to profiting from their total return in the form of income
and capital growth. This portfolio of financial assets and derivative financial instruments is managed, and its performance
evaluated, on a fair value basis, in accordance with a documented investment strategy and information is provided internally
on that basis to the Company’s Board of Directors. Accordingly, upon initial recognition the investments are recognised by the
Company as “held at fair value through profit or loss”. Investments are included initially at fair value which is taken to be their
cost, excluding expenses incidental to purchase, which are written off to capital at the time of acquisition. Subsequently,
investments are valued at fair value, which are quoted bid prices at the close of each market on the accounting date, for
investments traded in active markets. Participatory notes are valued using the quoted bid prices of the underlying securities.
Investments that are unlisted or not actively traded are valued using a variety of techniques to determine their fair value; all
such valuations are reviewed by both the AIFM’s Fair Value Pricing Committee and by the directors.
All purchases and sales are accounted for on a trade date basis.
(c) Accounting for reserves
Gains and losses on sales of investments are included in the Income Statement and in capital reserves within “gains and
losses on sales of investments”. Increases and decreases in the valuation of investments held at the year end are included in
the Income Statement and in capital reserves within “holding gains and losses on investments”.
Foreign exchange gains and losses on cash and deposit balances are included in the Income Statement and in capital
reserves.
The cost of repurchasing the Company’s own shares for cancellation or to hold in treasury, including the related stamp duty
and transactions costs is charged to a distributable capital reserve.
(d) Income
Dividends receivable are included in revenue on an ex-dividend basis except where, in the opinion of the Board, the dividend
is capital in nature, in which case it is included in capital.
Notes to the Accounts
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72
Schroder Asian Total Return Investment Company plc
Dividends from overseas companies are included gross of any withholding tax.
Where the Company has elected to receive dividends in the form of additional shares rather than in cash, the amount of the
cash dividend foregone is recognised in revenue. Any excess in the value of the shares received over the amount of the cash
dividend is recognised in capital.
Deposit interest outstanding at the year end is calculated and accrued on a time apportionment basis using market rates of
interest.
(e) Expenses
All expenses are accounted for on an accruals basis. Expenses are allocated wholly to the revenue column of the Income
Statement with the following exceptions:
– The management fee is allocated 25% to revenue and 75% to capital in line with the board’s expected long-term split
of revenue and capital return from the Company’s investment portfolio.
– Any performance fee is allocated 100% to capital.
– Expenses incidental to the purchase or sale of an investment are charged to capital. These expenses are commonly
referred to as transaction costs and mainly comprise brokerage commission. Details of transaction costs are given in
note 10 on page 76.
(f) Finance costs
Finance costs are accounted for on an accruals basis using the effective interest method in accordance with FRS 102.
Finance costs are allocated 25% to revenue and 75% to capital in line with the board’s expected long-term split of revenue and
capital return from the Company’s investment portfolio.
(g) Other financial instruments
Other debtors and creditors do not carry any interest, are short-term in nature and are accordingly stated at nominal value,
with debtors reduced by appropriate allowances for estimated irrecoverable amounts.
Cash at bank and in hand may comprise cash and demand deposits which are readily convertible to a known amount of cash
and are subject to insignificant risk of changes in value.
Bank loans and overdrafts are initially recognised at cost, being the proceeds received net of direct issue costs, and
subsequently at amortised cost.
(h) Taxation
The tax charge for the year includes a provision for all amounts expected to be received or paid.
Deferred tax is provided on all timing differences that have originated but not reversed by the balance sheet date.
Deferred tax liabilities are recognised for all taxable timing differences but deferred tax assets are only recognised to the
extent that it is probable that taxable profits will be available against which those timing differences can be utilised.
Deferred tax is measured at the tax rate which is expected to apply in the periods in which the timing differences are expected
to reverse, based on tax rates that have been enacted or substantively enacted at the balance sheet date and is measured on
an undiscounted basis.
(i) Value added tax (“VAT”)
Expenses are disclosed inclusive of any related irrecoverable VAT.
(j) Foreign currency
In accordance with FRS 102, the Company is required to nominate a functional currency, being the currency in which the
Company predominantly operates. The board, having regard to the currency of the Company’s share capital and the
predominant currency in which its shareholders operate, has determined that sterling is the functional currency and the
currency in which the accounts are presented.
Transactions denominated in foreign currencies are converted at actual exchange rates as at the date of the transaction.
Monetary assets, liabilities and equity investments, denominated in foreign currencies at the year end, are translated at the
rates of exchange prevailing at the year end.
(k) Dividends payable
In accordance with FRS 102, the final dividend is included in the accounts in the year in which it is approved by shareholders.
Notes to the Accounts
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Annual Report and Accounts
for the year ended 31 December 2021
73
Financial
(l) Repurchases of shares into treasury and subsequent reissues
The cost of repurchasing shares into treasury, including the related stamp duty and transaction costs is dealt with in the
Statement of Changes in Equity. Share repurchase transactions are accounted for on a trade date basis.
The sales proceeds of treasury shares reissued are treated as a realised profit up to the amount of the purchase price of those
shares and is transferred to capital reserves. The excess of the sales proceeds over the purchase price is transferred to “share
premium”.
2. Gains on investments held at fair value through profit or loss
2021 2020
£’000 £’000
Gains on sales of investments based on historic cost 27,735 19,823
Amounts recognised in investment holding gains and losses in the previous year
in respect of investments sold in the year (42,336) (17,737)
(Losses)/gains on sales of investments based on the carrying value at the previous balance
sheet date
(14,601) 2,086
Net movement in investment holding gains and losses 50,483 109,767
Gains on investments held at fair value through profit or loss 35,882 111,853
3. Income
2021 2020
£’000 £’000
Income from investments:
Overseas dividends
11,214 8,184
Overseas special dividends
971 975
Stock dividend 10 52
12,195 9,211
Other interest receivable and similar income
Interest received from HMRC on corporation tax recovered
84 –
Deposit interest – 7
84 7
12,279 9,218
Capital:
Special dividend allocated to capital 3,338 1,979
4. Investment management fee and performance fee
2021 2020
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Investment management fee 913 2,740 3,653 675 2,026 2,701
Performance fee – 133 133 – 4,552 4,552
913 2,873 3,786 675 6,578 7,253
The bases for calculating the investment management and performance fees are set out in the Directors’ Report on page 49
and details of all amounts payable to the Manager are given in note 18 on page 79.
Notes to the Accounts
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Schroder Asian Total Return Investment Company plc
5. Administrative expenses
2021 2020
£’000 £’000
Administration expenses 299 288
Directors’ fees
1
155 169
Custody fees
238 131
Secretarial fee
75 75
Auditor’s remuneration for audit services 26 26
793 689
1
Details of all amounts payable to Directors are given in the Remuneration Report on page 58.
6. Finance costs
2021 2020
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Interest on bank loans and overdrafts 122 352 474 113 338 451
7. Taxation
(a) Analysis of charge in the year:
2021 2020
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Irrecoverable overseas tax 634 – 634 753 – 753
Corporation tax relating to prior years
8 – 8 (1,320) – (1,320)
Provision for overseas capital gains tax – 1,110 1,110 – – –
Taxation for the year 642 1,110 1,752 (567) – (567)
The Company has no corporation tax liability for the year (2020: nil).
The provision for overseas capital gains tax relates to the deferred tax liability on unrealised gains on Indian investments held
at the year end.
(b) Factors affecting tax charge for the year
The standard rate of corporation tax in the UK is 19%, effective from 1 April 2017. Accordingly, the Company’s profits for this
accounting year would be taxed at a rate of 19.0% (2020: 19.0%). However the corporation tax charge for the year is nil (2020:
nil), as dividends and capital gains are not subject to corporation tax. The tax charge comprises irrecoverable withholding tax
deducted at source from dividends receivable and a provision for overseas capital gains tax.
Notes to the Accounts
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Annual Report and Accounts
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75
Financial
The table below reconciles the expected corporation tax due on the net return before tax based on current tax rates, to the
actual tax charge for the year.
2021 2020
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Net return on ordinary activities before taxation 10,451 27,612 38,063 7,741 109,639 117,380
Net return on ordinary activities before taxation
multiplied by the Company’s applicable rate of
corporation tax for the year of 19.0% (2020: 19.0%)
1,986 5,246 7,232 1,471 20,831 22,302
Effects of:
Capital gains on investments
– (5,225) (5,225) – (21,769) (21,769)
Income not subject to taxation
(2,240) (635) (2,875) (1,695) (376) (2,071)
Provision for overseas capital gains tax
– 1,110 1,110 – – –
Irrecoverable overseas tax
634 – 634 753 – 753
Corporation tax relating to prior years
8 – 8 (1,320) – (1,320)
Relief for overseas tax expensed
(6) – (6) (5) – (5)
Unrelieved expenses 260 614 874 229 1,314 1,543
Taxation on ordinary activities 642 1,110 1,752 (567) – (567)
(c) Deferred taxation
The Company has an unrecognised deferred tax asset of £14,888,000 (2020: £10,442,000) based on a prospective corporation
tax rate of 25.0% (2020: 19%). In 2021 budget, the government announced that the main rate of corporation tax would
increase to 25% for the fiscal year beginning on 1 April 2023. This deferred tax asset has arisen due to the cumulative excess
of deductible expenses over taxable income. Given the composition of the Company’s portfolio, it is not likely that this asset
will be utilised in the foreseeable future and therefore no asset has been recognised in the accounts.
Given the Company’s intention to meet the conditions required to retain its status as an Investment Trust Company, no
provision has been made for UK capital gains tax on any capital gains or losses arising on the revaluation or disposal of
investments.
8. Dividends
Dividends paid and declared
2021 2020
£’000 £’000
2020 final dividend of 7.1p (2019: 6.5p), paid out of revenue profits
1
7,435 6,362
2021 2020
£’000 £’000
2021 final dividend proposed of 8.5p (2020: 7.1p), to be paid out of revenue profits
2
9,246 7,166
1
The proposed 2020 final dividend amounted to £7,166,000. However the amount actually paid was £7,435,000 due to share issues after the accounting
date but prior to the dividend Record Date.
2
The proposed final dividend amounting to £9,246,000 (2020: £7,166,000) is the amount used for the basis of determining whether the Company has
satisfied the distribution requirements of Section 1158 of the Corporation Tax Act 2010. The revenue available for distribution by way of dividend for the
year is £9,809,000 (2020: £8,308,000).
Notes to the Accounts
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Schroder Asian Total Return Investment Company plc
9. Return per share
2021 2020
£’000 £’000
Revenue return 9,809 8,308
Capital return 26,502 109,639
Total return 36,311 117,947
Weighted average number of shares in issue during the year
106,058,048 98,248,381
Revenue return per share
9.25p 8.46p
Capital return per share 24.99p 111.59p
Total return per share 34.24p 120.05p
10. Investments held at fair value through profit or loss
2021 2020
£’000 £’000
Opening book cost 331,222 278,119
Opening investment holding gains 182,449 90,418
Opening fair value
513,671 368,537
Analysis of transactions made during the year
Purchases at cost 224,817 170,043
Sales proceeds
(174,368) (136,762)
Gains on investments held at fair value 35,882 111,853
Closing fair value 600,002 513,671
Closing book cost
409,406 331,222
Closing investment holding gains 190,596 182,449
Closing fair value 600,002 513,671
Sales proceeds amounting to £174,368,000 (2020: £136,762,000) were receivable from disposals of investments in the year.
The book cost of these investments when they were purchased was £146,633,000 (2020: £116,940,000). These investments
have been revalued over time and until they were sold any unrealised gains and losses were included in the fair value of the
investments.
The following transaction costs, mainly comprising brokerage commissions, were incurred during the year:
2021 2020
£’000 £’000
On acquisitions 344 174
On disposals 229 162
573 336
Notes to the Accounts
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Annual Report and Accounts
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77
Financial
11. Current assets
Debtors
2021 2020
£’000 £’000
Dividends and interest receivable 526 1,061
Securities sold awaiting settlement
100 –
Taxation recoverable
9 7
Reimbursement of corporation tax receivable
– 1,320
Other debtors 32 23
667 2,411
The Directors consider that the carrying amount of debtors approximates to their fair value.
Cash at bank and in hand
The carrying amount of cash, amounting to £2,876,000 (2020: £2,010,000), represents its fair value.
2021 2020
£’000 £’000
Derivative financial instruments held at fair value through profit or loss
Index put options 182 947
Details of the index put options held at the year end are given on page 35.
12. Current liabilities
Creditors: amounts falling due within one year
2021 2020
£’000 £’000
Bank loan 22,780 22,572
Purchases awaiting settlement
– 114
Other creditors and accruals 1,379 5,590
24,159 28,276
The directors consider that the carrying amount of creditors falling due within one year approximates to their fair value.
The bank loan comprises US$30.9 million (2020: US$15 million) drawn down on the Company’s £25 million, 364 day
multi-currency credit facility with Scotiabank Europe plc. The facility is unsecured but is subject to covenants and restrictions
which are customary for a facility of this nature, all of which have been complied with during the year. Further details of this
facility are given in note 21(a)(ii) on page 82.
Bank overdraft
The carrying amount of bank overdraft, amounting to £25,983,000 (2020: £7,215,000), represents its fair value.
2021 2020
£’000 £’000
Derivative financial instruments held at fair value through profit or loss
Index futures 730 –
Details of the index futures held at the year end are given on page 35.
Notes to the Accounts
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Schroder Asian Total Return Investment Company plc
13. Called-up share capital
2021 2020
£’000 £’000
Allotted, called-up and fully paid:
Ordinary shares of 5p each:
Opening balance of 100,934,651 (2020: 97,895,159) shares
5,047 4,895
Issue of 7,840,000 (2020: 3,039,492) new shares
392 152
Repurchase of nil (2020: 180,508) shares into treasury
– (9)
Reissue of nil (2020: 180,508) shares out of treasury – 9
Total of 108,774,651 (2020: 100,934,651) shares 5,439 5,047
During the year, 7,840,000 new shares, nominal value £392,000, were issued to the market at a premium to NAV per share to
satisfy demand. These shares were issued at an average price of 501.5p per share and the net consideration received
amounted to £39,321,000.
14. Reserves
Capital reserves
Investment
Capital Gains and holding
Share redemption Special losses on sales gains and Revenue
premium
1
reserve
1
reserve
2
of investments
2
losses
3
reserve
4
£’000 £’000 £’000 £’000 £’000 £’000
Opening balance 74,075 11,646 29,182 162,367 182,100 19,131
Losses on sales of investments based on the
carrying value at the previous balance
sheet date
– – – (14,601) – –
Net movement in investment holding
gains and losses
– – – – 50,483 –
Transfer on disposal of investments – – – 42,336 (42,336) –
Realised losses on derivatives – – – (7,900) – –
Unrealised gains on open derivative contracts – – – – 19 –
Realised exchange losses on cash and
short-term deposits
– – – (294) – –
Exchange losses on foreign currency loans – – – – (208) –
Special dividend allocated to capital – – – 3,338 – –
Issue of new shares 38,929 – – – – –
Performance fee allocated to capital – – – (133) – –
Management fee and finance costs
allocated to capital
– – – (3,092) – –
Capital gains tax provision – – – – (1,110) –
Dividend paid – – – – – (7,435)
Retained revenue for the year – – – – – 9,809
Closing balance 113,004 11,646 29,182 182,021 188,948 21,505
1
These reserves are not distributable.
2
These are realised (distributable) capital reserves which may be used for the payment of dividends or to repurchase the Company’s own shares.
3
This reserve comprises holding gains on liquid investments (which may be deemed to be realised) and other amounts which are unrealised. An analysis
has not been made between those amounts that are realised (and may be used for the payment of dividends or to repurchase the Company
’s own
shares) and those that are unrealised.
4
The revenue reserve may be used for the payment of dividends or to re-purchase the Company’s own shares.
Notes to the Accounts
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Annual Report and Accounts
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79
Financial
15. Net asset value per share
2021 2020
Total equity shareholders’ funds (£’000) 551,745 483,548
Shares in issue at the year end 108,774,651 100,934,651
Net asset value per share 507.24p 479.07p
16. Reconciliation of total return on ordinary activities before finance costs and
taxation to net cash inflow from operating activities
2021 2020
£’000 £’000
Total return on ordinary activities before finance costs and taxation 38,537 117,831
Less capital return on ordinary activities before finance costs and taxation
(27,964) (109,977)
Decrease/(increase) in prepayments and accrued income
698 (967)
(Increase)/decrease in other debtors
(2) 7
(Decrease)/increase in other creditors
(4,233) 2,028
Special dividend allocated to capital
3,338 1,979
Less stock dividend
(10) (52)
Management fee allocated to capital
(2,740) (2,026)
Performance fee allocated to capital
(133) (4,552)
Corporation tax recovered, relating to prior years
1,312 –
Overseas withholding tax deducted at source (807) (430)
Net cash inflow from operating activities 7,996 3,841
17. Analysis of changes in net debt
Exchange
2020 Cash flow movements 2021
£’000 £’000 £’000 £’000
Cash at bank and in hand (5,205) (17,608) (294) (23,107)
Bank loan (22,572) – (208) (22,780)
Net debt (27,777) (17,608) (502) (45,887)
18. Transactions with the Manager
Under the terms of the Alternative Investment Fund Manager Agreement, the Manager is entitled to receive management,
secretarial and performance fees. Details of the basis of these calculations are given in the Directors’ Report on page 49. If the
Company invests in funds managed or advised by the Manager, any fees earned by the Manager are rebated to the Company.
The management fee payable in respect of the year ended 31 December 2021 amounted to £3,653,000 (2020: £2,701,000) of
which £966,000 (2020: £825,000) was outstanding at the year end.
A performance fee amounting to £133,000 (2020: £4,552,000) is payable in respect of the year, and the whole of this amount
(2020: same) was outstanding at the year end.
The secretarial fee payable for the year amounted to £75,000 (2020: £75,000) of which £19,000 (2020: £19,000) was
outstanding at the year end.
No Director of the Company served as a Director of any company within the Schroder Group at any time during the year.
19. Related party transactions
Details of the remuneration payable to Directors are given in the Directors’ Remuneration Report on page 58 and details of
directors’ shareholdings are given in the Directors’ Remuneration Report on page 59. Details of transactions with the Manager
are given in note 18 above. There have been no other transactions with related parties during the year (2020: nil).
Notes to the Accounts
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Schroder Asian Total Return Investment Company plc
20. Disclosures regarding financial instruments measured at fair value
The Company’s financial instruments within the scope of FRS 102 that are held at fair value include its investment portfolio
and derivative financial instruments.
FRS 102 requires financial instruments to be categorised into a hierarchy consisting of the three levels below.
Level 1 – valued using unadjusted quoted prices in active markets for identical assets.
Level 2 – valued using observable inputs other than quoted prices included within Level 1.
Level 3 – valued using inputs that are unobservable.
Details of the Company’s policy for valuing investments and derivative instruments are given in note 1(b) on page 71.
The following table sets out the fair value measurements using the FRS 102 hierarchy at 31 December:
2021
Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Financial instruments held at fair value
through profit or loss
Equity investments 600,002 – – 600,002
Derivative financial instruments – index
put options and index futures (548) – – (548)
Total 599,454 – – 599,454
2020
Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Financial instruments held at fair value
through profit or loss
Equity investments 502,401 – – 502,401
Derivative financial instruments – index put options 947 – – 947
Participatory notes
1
– 11,270 – 11,270
Total 503,348 11,270 – 514,618
1
Participatory notes are valued using the quoted bid prices of the underlying securities and have been allocated to Level 2 as strictly, they are not
identical assets.
21. Financial instruments’ exposure to risk and risk management policies
In pursuing its objective, the Company is exposed to a variety of financial risks including market risk (comprising currency risk,
interest rate risk and market price risk), liquidity risk and credit risk. The Directors’ policy for managing these risks is set out
below.
The process for managing risk is unchanged from the previous year. The Company’s financial instruments may comprise:
– investments in equities and equity related securities which are held in accordance with the Company’s investment
objective;
– short-term debtors, creditors and cash arising directly from its operations;
– a multi-currency overdraft facility with HSBC, the purpose of which is to assist in financing the Company’s operations;
– a multi-currency credit facility with Scotiabank, the purpose of which is to assist in financing the Company’s operations;
and
– index put options and index futures, which are used to protect the capital value of the portfolio.
(a) Market risk
Market risk comprises three elements – currency risk, interest rate risk and market price risk. Information to enable an
evaluation of the nature and extent of these three elements of market risk is given in parts (i) to (iii) of this note, together with
sensitivity analyses where appropriate.
Notes to the Accounts
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Annual Report and Accounts
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Financial
(i) Currency risk
The majority of the Company’s assets, liabilities and income are denominated in currencies other than sterling, which is the
Company’s functional currency and the presentational currency of the accounts. As a result, movements in exchange rates will
affect the sterling value of those items.
The Manager monitors the Company’s exposure to foreign currencies on a daily basis and reports to the Board. The Board
has authorised the use of derivative instruments to hedge currency exposure as part of the investment strategy to protect the
capital value of the portfolio, or for efficient portfolio management.
The fair value of the Company’s monetary items that have foreign currency exposure at 31 December are shown below. The
Company’s investments, index futures and index put options (which are not monetary items) have been included separately in
the analysis so as to show the overall level of exposure.
2021
South
Hong Kong US Taiwanese Korean Indian Singaporean Chinese Australian
dollars dollars dollars won Rupees dollars Yuan dollars Other Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Current assets 45 2,450 281 228 – 75 – 55 277 3,411
Current liabilities – (22,794) – – – – – – – (22,794)
Non current liabilities – – – – (1,110) – – – – (1,110)
Foreign currency exposure on net
monetary items 45 (20,344) 281 228 (1,110) 75 – 55 277 (20,493)
Investments held at fair value through
profit or loss
113,214 23,031 160,188 64,613 43,999 37,758 21,779 58,194 42,235 565,011
Derivative instruments held at fair value
through profit or loss – index put options
and index futures – 71 (619) – – – – – – (548)
Total net foreign currency exposure 113,259 2,758 159,850 64,841 42,889 37,833 21,779 58,249 42,512 543,970
2020
South
Hong Kong US Taiwanese Korean Indian Singaporean Chinese Australian
dollars dollars dollars won Rupees dollars Yuan dollars Other Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Current assets 1,789 53 293 841 – 37 – 51 6 3,070
Current liabilities – (22,588) (114) – – – – (31) – (22,733)
Foreign currency exposure on net
monetary items
1,789 (22,535) 179 841 – 37 – 20 6 (19,663)
Investments held at fair value through
profit or loss 160,610 73,111 96,323 59,084 – 22,939 – 64,084 19,507 495,658
Derivative instruments held at fair value
through profit or loss – index put options 947 – – – – – – – – 947
Total net foreign currency exposure 163,346 50,576 96,502 59,925 – 22,976 – 64,104 19,513 476,942
The above year end amounts are broadly representative of the exposure to foreign currency risk during the current and
comparative year.
The following tables illustrate the sensitivity of net profit for the year and net assets with regard to the Company’s monetary
financial assets and financial liabilities and exchange rates. The sensitivity analysis is based on the Company’s monetary
currency financial instruments held at each balance sheet date and assumes a 10% (2020: 10%) appreciation or depreciation in
sterling against the currencies to which the Company is exposed, which is considered to be a reasonable illustration based on
the volatility of exchange rates during the year.
If sterling had weakened by 10% this would have had the following effect:
2021 2020
£’000 £’000
Income Statement – return after taxation
Revenue return
1,152 835
Capital return (1,862) (1,802)
Total return after taxation (710) (967)
Net assets (710) (967)
Notes to the Accounts
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Schroder Asian Total Return Investment Company plc
Conversely if sterling had strengthened by 10% this would have had the following effect:
2021 2020
£’000 £’000
Income Statement – return after taxation
Revenue return
(1,152) (835)
Capital return 1,862 1,802
Total return after taxation 710 967
Net assets 710 967
In the opinion of the Directors, the above sensitivity analyses with respect to monetary financial assets and liabilities is broadly
representative of the whole of the current and comparative year. The sensitivity with regard to the Company’s investments,
index futures and index put options to changes in foreign currency exchange rates is subsumed into market price risk
sensitivity below.
(ii) Interest rate risk
Interest rate movements may affect the level of income receivable on cash deposits and the interest payable on variable rate
borrowings when rates are re-set.
Management of interest rate risk
Liquidity and borrowings are managed with the aim of increasing returns to shareholders. The Board would not expect
gearing to exceed 30% where gearing is defined as borrowings used for investment purposes, less cash, expressed as a
percentage of net assets.
The possible effects on cash flows that could arise as a result of changes in interest rates are taken into account when the
Company draws on its overdraft facility or its credit facility. However, amounts drawings on these facilities are for short-term
periods and therefore exposure to interest rate risk is not significant.
Interest rate exposure
The exposure of financial assets and financial liabilities to floating interest rates, giving cash flow interest rate risk when rates
are re-set, is shown below:
2021 2020
£’000 £’000
Exposure to floating interest rates:
Cash at bank and in hand
2,876 2,010
Creditors: amounts falling due within one year:
Bank loan
(22,780) (22,572)
Bank overdraft (25,983) (7,215)
Total exposure (45,887) (27,777)
Interest receivable on cash balances, or paid on overdrafts, is at a margin below or above the applicable Risk Free Reference
Rates, respectively (2020: same).
During the year, the Company extended its £25 million multi-currency credit facility with Scotiabank Europe plc to 5 July 2022.
The limit may be further extended to £50 million, subject to credit approval by the lender. Amounts are normally drawn down
on the facility for one month periods. Interest is payable at a rate based on the Secured Overnight Financing Rate, plus a
margin, plus the Credit Adjustment Spread. At 31 December 2021, the Company had drawn down US$30.9 million
(£22.8million) at an interest rate of 0.91448%, repayable on 10 January 2022.
At 31 December 2020, the Company had drawn down US$30.9 million (£22.6 million) at an interest rate of 1.50% based on
LIBOR plus a margin, repayable on 14 January 2021.
The above year end amounts are not representative of the exposure to interest rates during the year as the level of cash
balances and drawings on the credit facility have fluctuated. The maximum and minimum net debt balances during the year
are as follows:
2021 2020
£’000 £’000
Maximum debit interest rate exposure during the year – net debt (45,887) (41,927)
Minimum debit interest rate exposure during the year – net debt (22,514) (11,651)
Notes to the Accounts
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Financial
Interest rate sensitivity
The following table illustrates the sensitivity of the return after taxation for the year and net assets to a 0.5% (2020: 0.5%)
increase or decrease in interest rates in regards to the Company’s monetary financial assets and financial liabilities. This level
of change is considered to be a reasonable illustration based on observation of current market conditions. The sensitivity
analysis is based on the Company’s monetary financial instruments held at the balance sheet date with all other variables held
constant.
2021 2020
0.5% increase 0.5% decrease 0.5% increase 0.5% decrease
in rate in rate in rate in rate
£’000 £’000 £’000 £’000
Income statement – return after taxation
Revenue return
(47) 47 (27) 27
Capital return (183) 183 (112) 112
Total return after taxation (230) 230 (139) 139
Net assets (230) 230 (139) 139
In the opinion of the Directors, this sensitivity analysis may not be representative of the Company’s future exposure to interest
rate changes due to fluctuations in the level of cash balances and drawings on the credit facility.
(iii) Market price risk
Market price risk includes changes in market prices, other than those arising from interest rate risk, which may affect the
value of equity investments.
Management of market price risk
The Board meets on at least four occasions each year to consider the asset allocation of the portfolio and the risk associated
with particular countries and industry sectors. The Board has authorised the Manager to enter derivative transactions as a
means of seeking capital preservation, subject to limits on the percentage of the portfolio hedged and the duration of
derivatives used.
Market price risk exposure
The Company’s total exposure to changes in market prices at 31 December comprises the following investments:
2021 2020
£’000 £’000
Investments held at fair value through profit or loss 600,002 513,671
Derivative financial instruments held at fair value through profit or loss:
Index put options
182 947
Index futures (730) –
599,454 514,618
The above data is broadly representative of the exposure to market price risk during the year.
An analysis of the Company’s investments is given on page 34. This shows that the portfolio mainly comprises investments
quoted on Asian stock markets. Accordingly there is a concentration of exposure to that region. However it should be noted
that an investment may not be entirely exposed to the economic conditions in its country of classification.
Market price risk sensitivity
The following table illustrates the sensitivity of net return after taxation for the year and net assets to an increase or decrease
of 10% (2020: 10%) in market prices. This level of change is considered to be a reasonable illustration based on observation of
current market conditions. The sensitivity analysis is based on the Company’s investments, adjusting for the hedging effect of
the index put options and including the resulting effect on the management fee, but with all other variables held constant.
The sensitivity analysis also takes account of the “beta coefficient” of the portfolio. This is a measure of the volatility of the
Notes to the Accounts
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Schroder Asian Total Return Investment Company plc
portfolio compared to the systemic risk of the entire market. As a result, the percentages in the table below represent a 6.59%
(2020: 7.40%) increase in fair value and a 6.32% (2020: 6.55%) decrease in fair value.
2021 2020
Impact on fair Impact on fair Impact on fair Impact on fair
value from value from value from value from
10% increase 10% decrease 10% increase 10% decrease
in markets in markets in markets in markets
£’000 £’000 £’000 £’000
Income statement – return after taxation
Revenue return
(64) 62 (62) 55
Capital return 39,348 (37,734) 37,826 (33,480)
39,284 (37,672) 37,764 (33,425)
Percentage change in net asset value
7.1% (6.8%) 7.8% (6.9%)
(b) Liquidity risk
This is the risk that the Company will encounter difficulty in meeting its obligations associated with financial liabilities that are
settled by delivering cash or another financial asset.
Management of the risk
Liquidity risk is not significant as the Company’s assets comprise mainly readily realisable securities, which can be sold to
meet funding requirements if necessary. Short-term flexibility is achieved through the use of overdraft and credit facilities.
Liquidity risk exposure
Contractual maturities of financial liabilities, based on the earliest date on which payment can be required are as follows:
2021 2020
Three months Three months
or less or less
£’000 £’000
Creditors: amounts falling due within one year
Bank loan – including interest 22,799 22,601
Bank overdraft – including interest
26,016 7,223
Securities purchased awaiting settlement
– 114
Other creditors and accruals 1,333 5,566
50,148 35,504
(c) Credit risk
Credit risk is the risk that the failure of the counterparty to a transaction to discharge its obligations under that transaction
could result in loss to the Company.
This risk is not significant and is managed as follows:
The Company invests in markets that operate a “Delivery Versus Payment” settlement process which mitigates the risk of
losing the principal of a trade during settlement.
Counterparties are subject to daily credit analysis by the Manager. Cash balances are deposited with the custodian of the
Company’s assets, HSBC Bank plc, which has Long Term Credit Ratings of AA- with Fitch and Aa3 with Moody’s.
The Company’s investments are held in accounts which are segregated from the custodian’s own trading assets. If the
custodian were to become insolvent, the Company’s right of ownership of its investments is clear and they are therefore
protected. However the Company’s cash balances are all deposited with the custodian as banker and held on the custodian’s
balance sheet. Accordingly, in accordance with usual banking practice, the Company will rank as a general creditor to the
custodian in respect of cash balances.
The amounts shown in the balance sheet under cash at bank and in hand and debtors represents the maximum exposure to
credit risk at the current and comparative year ends. No debtors are past their due date and none have been provided for.
There has been no stock lending during the year (2020: nil).
Notes to the Accounts
175681 Schroders Asian Total Return Annual Report Pt3.qxp_175681 Schroders Asian Total Return Annual Report Pt3 04/04/2022 11:22 Page 84

Annual Report and Accounts
for the year ended 31 December 2021
85
Financial
(d) Fair values of financial assets and financial liabilities
All financial assets and liabilities are either carried in the balance sheet at fair value or the balance sheet amount is a
reasonable approximation of fair value.
22. Capital management policies and procedures
The Company’s capital is represented by its net assets and borrowings, which are managed to achieve the Company’s
investment objective, as set out on the inside front cover of this annual report.
The Company has overdraft and credit facilities in place which may be used to maximise the return to shareholders through
an appropriate level of gearing. The Board would not expect the level of gearing to exceed 30%, where gearing is defined as
borrowings used for investment purposes, less cash, expressed as a percentage of net assets.
The Board, with the assistance of the Manager, monitors and reviews the broad structure of the Company’s capital on an
ongoing basis. This review includes:
– the planned level of gearing, which takes into account the Manager’s views on the market;
– the need to buy back the Company’s own shares for cancellation or to hold in treasury, which takes into account the
share price discount;
– the opportunities for issues of new shares or to reissue shares out of treasury; and
– the amount of dividend to be paid, in excess of that which is required to be distributed.
23. Events after the accounting date that have not been reflected in the financial
statements
Post the accounting date, the Company has agreed with Scotiabank Europe plc to extend the limit on its multi-currency credit
facility from £25million to £45 million. An additional USD 26.8 million was subsequently drawn down on the facility and the
overdraft with HSBC reduced accordingly.
Notes to the Accounts
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Schroder Asian Total Return Investment Company plc
86
Annual General Meeting – Recommendations
The Annual General Meeting (“AGM”) of the Company will
be held on Wednesday, 11May 2022 at 1.00 p.m. The
formal Notice of Meeting is set out on page88.
The following information is important and requires your
immediate attention. If you are in any doubt about the
action you should take, you should consult an
independent financial adviser, authorised under the
Financial Services and Markets Act 2000. If you have sold
or transferred all of your ordinary shares in the
Company, please forward this document with its
accompanying form of proxy at once to the purchaser or
transferee, or to the stockbroker, bank or other agent
through whom the sale or transfer was effected, for
onward transmission to the purchaser or transferee.
COVID-19 and the AGM
Shareholders are encouraged to vote by proxy, appointing
the chair of the meeting as their proxy.
Ordinary business
Resolutions 1 to 9 are all ordinary resolutions. Resolution 1 is
a required resolution. Resolution 2 invites shareholders to
approve the final dividend. Resolution 3 concerns the
Directors’ Remuneration Report, on pages 57 to 59.
Resolutions4 to 7 invite shareholders to re-elect each of the
Directors for another year, following the recommendations
of the nomination committee, set out on pages55 and 56
(their biographies are set out on pages47 and 48).
Resolutions8 and 9 concern the re-appointment and
remuneration of the Company’s auditor, discussed in the
Audit and Risk Committee Report on pages52 to 53.
Special business
Resolution 10: Continuation (Ordinary Resolution)
In accordance with the Company’s articles of association, the
Directors are required to put forward a proposal for the
continuation of the Company to shareholders at three yearly
intervals. The Board considers that the long-term investment
objectives of the Company remain appropriate and that the
current Manager has delivered superior returns over the last
three years and remains well placed to continue to do so
over the long-term. An ordinary resolution has therefore
been proposed at the AGM to agree that the Company
should continue as an investment trust for a further three
year period.
Resolution 11 – Amendment of the Articles
(special resolution)
The Board is proposing to make amendments to the Articles
to give the Company the flexibility to hold general meetings
(wholly or partially) by electronic means and to enable
members to attend and participate in general meetings at
one or more satellite meeting places. In addition, the Board
is proposing to amend the Articles to give it certain
additional powers in respect of postponing or adjourning
meetings in appropriate circumstances and the security
arrangements at meetings. The amendments are being
proposed in response to restrictions on social interactions
during the COVID-19 pandemic which have, on occasion,
made it impossible or impractical for shareholders to attend
physical general meetings. The Board’s aim in introducing
these changes is to make it easier for shareholders to
participate in general meetings through introducing
electronic access for those not able to travel and to ensure
appropriate security measures are in place for the protection
and wellbeing of shareholders.
The Board is also proposing to update the Articles to deal
with certain US and tax matters and to correct certain
typographical errors.
The principal changes proposed to be introduced in the
Articles, and their effect, are set out below.
(i) Electronic participation in general meetings
The Board will have the ability to determine the means of
attendance and participation used in relation to general
meetings of the Company, including whether the meeting
shall be held physically (at one or more locations), through
an electronic facility, or partly in one way and partly in
another.
(ii) Adjournment of general meetings
The chairman of the meeting will have the ability to interrupt
or adjourn general meetings to such time and with such
means of attendance and participation as the chairman may
determine without the consent of the meeting if it appears
to the chairman that the facilities at any general meeting
(including those conducted wholly or partly electronically)
have become inadequate.
(iii) Postponement of general meeting
The Board's existing powers to postpone and/or move the
location of a general meeting will be expanded to allow the
Board to change a physical meeting to an electronic meeting
and vice versa. The Board may exercise its ability to postpone
a meeting if, in its absolute discretion, it considers that it is
impractical or unreasonable for any reason to hold the
meeting on the date or at the time or at any place specified
in the notice calling the general meeting.
(iv) Documents available for inspection at a
meeting
If, in the case of a general meeting which is held wholly or
partly by means of an electronic facility, any document is
required to be on display or available for inspection at that
meeting (whether prior to and/or for the duration of the
meeting), the Company shall ensure that it is electronically
available to persons entitled to inspect it for at least the
required period of time.
(v) Accommodation of members and security
arrangements
The Board may make such arrangements as the Board shall
in its absolute discretion consider to be appropriate to
ensure the security and orderly conduct of the meeting and
to control the level of attendance at any meeting (including
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at any principal meeting place, satellite meeting place or
electronic facility). Similarly, if a general meeting is held
wholly or partly by means of an electronic facility, the Board
may make any arrangement and impose any requirement or
restriction that is necessary to ensure the identification of
those taking part by way of such electronic facility and the
security of electronic communication.
(vi) Method of voting at meetings conducted
wholly or partly electronically
A resolution put to the vote at a general meeting held wholly
or partly by means of an electronic facility or facilities shall
be decided on a poll, with poll votes to be cast by such
electronic means as the Board, in its sole discretion, deems
appropriate for the purposes of the meeting.
(vii) US and other tax matters
The Board is seeking the addition of a new Article 144 to deal
with certain US and tax matters. The new article will allow
the Board to require the transfer of any shares that are held
by a "Non-Qualified Holder" (broadly, any shareholder who
fails to supply information that is required by the Company
to comply with applicable law, including the US Foreign
Account Tax Compliance Act 2010, or whose holding of
shares may subject the Company to certain onerous
overseas legislative requirements).
(viii) Directors’ aggregate fees
The Company’s articles of association currently limit the fees
payable to Directors to £250,000 in aggregate per annum.
The Directors believe that the Board should have additional
flexibility in setting the level of Directors’ remuneration,
taking into account their increasing responsibilities. In
particular, the Board is mindful of the fact that it in order to
manage succession it may, from time to time, need to
temporarily increase the size of the Board which would
increase the aggregate total Director fees for that time
period. The Board is proposing to increase the limit to
£300,000.
(ix) Continuation vote
In 2013, at the time of the appointment of Schroders as
investment manager, the Board committed to put a
continuation vote at the AGM to be held in 2016 and at every
third AGM thereafter. Continuations votes were proposed
and passed at the AGMs held in 2016 and 2019, and a
further continuation vote will be proposed at the 2022 AGM.
It is proposed to include the obligation to hold future
continuation votes in the Articles.
Resolution 12 – Directors’ authority to allot
shares (ordinary resolution) and resolution 13 –
power to disapply pre-emption rights (special
resolution)
The Directors are seeking authority to allot a limited number
of unissued ordinary shares for cash without first offering
them to existing shareholders in accordance with statutory
pre-emption procedures.
Appropriate resolutions will be proposed at the forthcoming
AGM and are set out in full in the Notice of AGM. An ordinary
resolution will be proposed to authorise the Directors to allot
shares up to a maximum aggregate nominal amount of
£545,573 (being 10% of the issued share capital (excluding
any shares held in treasury) as at 31 March 2022).
A special resolution will be proposed to authorise the
Directors to allot shares up to a maximum aggregate
nominal amount of £545,573 (being 10% of the issued share
capital as at 31 March 2022) on a non pre-emptive basis. This
authority includes shares that the Company sells or transfers
that have been held in treasury. The Directors do not intend
to allot ordinary shares or sell treasury shares, on a non pre-
emptive basis, pursuant to this authority other than to take
advantage of opportunities in the market as they arise and
only if they believe it to be advantageous to the Company as
a whole. Shares issued or treasury shares reissued, under
this authority, will be at a price that is equal to or greater
than the Company’s NAV per share, plus any applicable costs,
as at the latest practicable date before the allotment of such
shares.
If approved, both of these authorities will expire at the
conclusion of the AGM in 2023 unless renewed, varied or
revoked earlier.
Resolution 14: authority to make market
purchases of the Company’s own shares
(special resolution)
At the AGM held on 7 May 2021, the Company was granted
authority to make market purchases of up to 15,459,884
ordinary shares of 5p each for cancellation or holding in
treasury. No shares have been bought back under this
authority and the Company therefore has remaining
authority to purchase up to 15,459,884 ordinary shares. This
authority will expire at the forthcoming AGM.
The Directors believe it is in the best interests of the
Company and its shareholders to have a general authority
for the Company to buy back its ordinary shares in the
market as they keep under review the share price discount to
NAV. A special resolution will be proposed at the forthcoming
AGM to give the Company authority to make market
purchases of up to 14.99% of the ordinary shares in issue as
at 31 March 2022 (excluding treasury shares). The Directors
will exercise this authority to buy back shares only when the
share price is at a discount to the Company’s NAV and only if
the Directors consider that any purchase would be for the
benefit of the Company and its shareholders, taking into
account relevant factors and circumstances at the time. Any
shares so purchased would be cancelled or held in treasury
for potential reissue.
If renewed, this authority will lapse at the conclusion of the
AGM in 2023 unless renewed, varied or revoked earlier.
Recommendations
The Board considers that the resolutions relating to the
above items of business are in the best interests of
shareholders as a whole. Accordingly, the Board
unanimously recommends to shareholders that they vote in
favour of the resolutions to be proposed at the forthcoming
AGM, as they intend to do in respect of their own beneficial
holdings.
Annual Report and Accounts
for the year ended 31 December 2021
Annual General Meeting
87
Annual General Meeting – Recommendations
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Schroder Asian Total Return Investment Company plc
88
Notice of Annual General Meeting
Notice is hereby given that the thirty-fourth Annual General
Meeting of Schroder Asian Total Return Investment Company plc
will be held on Wednesday, 11 May 2022 at 1.00 p.m. at 1London
Wall Place, London EC2Y5AU to consider the following resolutions,
of which resolutions1 to 10 and 12 will be proposed as ordinary
resolutions, and resolutions11, 13 and 14 will be proposed as
special resolutions:
1. To receive the Directors’ Report and the audited accounts for
the year ended 31 December 2021.
2. To approve a final dividend of 8.50pence per share for the
year ended 31 December 2021.
3. To approve the Directors’ Remuneration Report for the year
ended 31 December 2021.
4. To approve the re-election of Andrew Cainey as a Director of
the Company.
5. To approve the re-election of Caroline Hitch as a Director of
the Company.
6. To approve the re-election of Mike Holt as a Director of the
Company.
7. To approve the re-election of Sarah MacAulay as a Director of
the Company.
8. To re-appoint Ernst & Young LLP as auditor to the Company.
9. To authorise the Directors to determine the remuneration of
Ernst & Young LLP as auditor to the Company.
10. To consider, and if thought fit, to pass the following
resolution as an ordinary resolution:
“THAT in accordance with the articles of association, the
Company should continue as an investment trust for a
further three year period.”
11. To consider and, if thought fit, to pass the following
resolution as a special resolution:
“That the amended Articles as set out in the printed
document produced to the meeting (and initialled by the
Chairman of the meeting for the purposes of identification)
be and are hereby approved and adopted as the Articles of
Association of the Company in substitution for, and to the
exclusion of, all existing Articles of Association.”
12. To consider, and if thought fit, pass the following resolution
as an ordinary resolution:
“THAT in substitution for all existing authorities the Directors
be generally and unconditionally authorised pursuant to
section 551 of the Companies Act 2006 (the “Act”) to exercise
all the powers of the Company to allot relevant securities
(within the meaning of section 551 of the Act) up to an
aggregate nominal amount of £545,573 (being 10% of the
issued ordinary share capital at
31 March 2022) for a period
expiring (unless previously renewed, varied or revoked by the
Company in general meeting) at the conclusion of the Annual
General Meeting of the Company in 2023, but that the
Company may make an offer or agreement which would or
might require relevant securities to be allotted after expiry of
this authority and the Board may allot relevant securities in
pursuance of that offer or agreement.”
13. To consider and, if thought fit, to pass the following
resolution as a special resolution:
“That, subject to the passing of Resolution12 set out above,
the Directors be and are hereby empowered, pursuant to
Section 571 of the Act, to allot equity securities (including any
shares held in treasury) (as defined in section 560(1) of the
Act) pursuant to the authority given in accordance with
section 551 of the Act by the said Resolution 11 and/or where
such allotment constitutes an allotment of equity securities
by virtue of section 560(2) of the Act as if Section 561(1) of the
Act did not apply to any such allotment, provided that this
power shall be limited to the allotment of equity securities up
to an aggregate nominal amount of £545,573 (representing
10% of the aggregate nominal amount of the share capital in
issue at 31 March 2022); and where equity securities are
issued pursuant to this power they will only be issued at a
price which is equal or greater than the Company’s NAV per
share as at the latest practicable date before the allotment;
and provided that this power shall expire at the conclusion of
the next Annual General Meeting of the Company but so that
this power shall enable the Company to make offers or
agreements before such expiry which would or might require
equity securities to be allotted after such expiry.”
14. To consider and, if thought fit, to pass the following
resolution as a special resolution:
“THAT the Company be and is hereby generally and
unconditionally authorised in accordance with Section701 of
the Companies Act 2006 (the “Act”) to make market purchases
(within the meaning of Section693 of the Act) of ordinary
shares of 5p each in the capital of the Company (“Share”) at
whatever discount the prevailing market price represents to
the prevailing net asset value per Share provided that:
(a) the maximum number of Shares which may be
purchased is 16,356,286, representing 14.99% of the
Company’s issued ordinary share capital as at 31 March
2022 (excluding treasury shares);
(b) the maximum price (exclusive of expenses) which may
be paid for a Share shall not exceed the higher of;
i) 105% of the average of the middle market
quotations for the Shares as taken from the London
Stock Exchange Daily Official List for the five
business days preceding the date of purchase; and
ii) the higher of the last independent bid and the
highest current independent bid on the London
Stock Exchange;
(c) the minimum price (exclusive of expenses) which may be
paid for a Share shall be 5p, being the nominal value per
Share;
(d) this authority hereby conferred shall expire at the
conclusion of the next Annual General Meeting of the
Company in 2023 (unless previously renewed, varied or
revoked by the Company prior to such date);
(e) the Company may make a contract to purchase Shares
under the authority hereby conferred which will or may
be executed wholly or partly after the expiration of such
authority and may make a purchase of Shares pursuant
to any such contract; and
(f) any Shares so purchased will be cancelled or held in
treasury.”
By order of the Board
Registered Office:
Schroder Investment Management Limited 1 London Wall Place,
Company Secretary London EC2Y 5AU
1 April 2022 Registered Number: 02153093
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Annual Report and Accounts
for the year ended 31 December 2021
Annual General Meeting
89
1. Ordinary shareholders are entitled to attend, ask questions
and vote at the meeting and to appoint one or more
proxies, who need not be a shareholder, as their proxy to
exercise all or any of their rights to attend, speak and vote
on their behalf at the meeting.
A proxy form is attached. Due to COVID-19 shareholders
are encouraged to appoint the Chairman as proxy. If you
wish to appoint a person other than the Chairman as your
proxy, please insert the name of your chosen proxy holder
in the space provided at the top of the form. If the proxy is
being appointed in relation to less than your full voting
entitlement, please enter in the box next to the proxy
holder’s name the number of shares in relation to which
they are authorised to act as your proxy. If left blank your
proxy will be deemed to be authorised in respect of your
full voting entitlement (or if this proxy form has been
issued in respect of a designated account for a
shareholder, the full voting entitlement for that designated
account). Additional proxy forms can be obtained by
contacting the Company’s Registrars, Equiniti Limited, on
0800032 0641 or +44(0) 121 415 0207 for overseas callers,
or you may photocopy the attached proxy form. Please
indicate in the box next to the proxy holder’s name the
number of shares in relation to which they are authorised
to act as your proxy. Please also indicate by ticking the box
provided if the proxy instruction is one of multiple
instructions being given. Completion and return of a form
of proxy will not preclude a member from attending the
Annual General Meeting and voting in person.
On a vote by show of hands, every ordinary shareholder
who is present in person has one vote and every duly
appointed proxy who is present has one vote. On a poll
vote, every ordinary shareholder who is present in person
or by way of a proxy has one vote for every share of which
he/she is a holder. Voting will be by poll.
The “Vote Withheld” option on the proxy form is provided
to enable you to abstain on any particular resolution.
However it should be noted that a “Vote Withheld” is not a
vote in law and will not be counted in the calculation of the
proportion of the votes ‘For’ and ‘Against’ a resolution.
A proxy form must be signed and dated by the shareholder
or his or her attorney duly authorised in writing. In the
case of joint holdings, any one holder may sign this form.
The vote of the senior joint holder who tenders a vote,
whether in person or by proxy, will be accepted to the
exclusion of the votes of the other joint holder and for this
purpose seniority will be determined by the order in which
the names appear on the Register of Members in respect
of the joint holding. To be valid, proxy form(s) must be
completed and returned to the Company’s Registrars,
Equiniti Limited, Aspect House, Spencer Road, Lancing,
West Sussex BN996DA, in the enclosed envelope together
with any power of attorney or other authority under which
it is signed or a copy of such authority certified notarially,
to arrive no later than 48 hours before the time fixed for
the meeting, or an adjourned meeting. Shareholders may
also appoint a proxy to vote on the resolutions being put to
the meeting electronically at
www.sharevote.co.uk.
Shareholders who are not registered to vote electronically,
will need to enter the Voting ID, Task ID and Shareholder
Reference ID set out in their personalised proxy form.
Alternatively, shareholders who have already registered
with Equiniti’s Shareview service can appoint a proxy by
logging onto their portfolio at
www.shareview.co.uk using
their user ID and password. Once logged in simply click
“View” on the “My Investments” page, click on the link to
vote then follow the on-screen instructions. The on-screen
instructions give details on how to complete the
appointment process. Please note that to be valid, your
proxy instructions must be received by Equiniti no later
than 12.00 p.m. on 9May 2022. If you have any difficulties
with online voting, you should contact the shareholder
helpline on 0800032 0641 (or +44(0) 121 415 0207 for
overseas callers).
If an ordinary shareholder submits more than one valid
proxy appointment, the appointment received last before
the latest time for receipt of proxies will take precedence.
Shareholders may not use any electronic address provided
either in this Notice of Annual General Meeting or any
related documents to communicate with the Company for
any purposes other than expressly stated.
Representatives of shareholders that are corporations will
have to produce evidence of their proper appointment
when attending the Annual General Meeting.
2. Any person to whom this notice is sent who is a person
nominated under section 146 of the Companies Act 2006 to
enjoy information rights (a “Nominated Person”) may,
under an agreement between him or her and the
shareholder by whom he or she was nominated, have a
right to be appointed (or to have someone else appointed)
as a proxy for the Annual General Meeting. If a Nominated
Person has no such proxy appointment right or does not
wish to exercise it, he or she may, under any such
agreement, have a right to give instructions to the
shareholder as to the exercise of voting rights.
The statement of the rights of ordinary shareholders in
relation to the appointment of proxies in note 1 above
does not apply to Nominated Persons. The rights described
in that note can only be exercised by ordinary shareholders
of the Company.
3. Pursuant to Regulation 41 of the Uncertificated Securities
Regulations 2001, the Company has specified that only
those shareholders registered in the Register of members
of the Company at 6.30 p.m. on 9May 2022, or 6.30 p.m.
two days prior to the date of an adjourned meeting, shall
be entitled to attend and vote at the meeting in respect of
the number of shares registered in their name at that time.
Changes to the Register of Members after 6.30 p.m. on
9May 2022 shall be disregarded in determining the right
of any person to attend and vote at the meeting.
4. CREST members who wish to appoint a proxy or proxies
through the CREST electronic proxy appointment service
may do so by using the procedures described in the CREST
manual. The CREST manual can be viewed at
www.euroclear.com. A CREST message appointing a proxy
(a “CREST proxy instruction”) regardless of whether it
constitutes the appointment of a proxy or an amendment
to the instruction previously given to a previously
appointed proxy must, in order to be valid, be transmitted
so as to be received by the issuer’s agent (ID RA19) by the
latest time for receipt of proxy appointments.
Explanatory Notes to the Notice of Meeting
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Schroder Asian Total Return Investment Company plc
90
5. Copies of the terms of appointment of the non-executive
Directors and a statement of all transactions of each
Director and of their family interests in the shares of the
Company, will be available for inspection by any member
of the Company at the registered office of the Company
during normal business hours on any weekday (English
public holidays excepted) and at the Annual General
Meeting by any attendee, for at least 15minutes prior to,
and during, the Annual General Meeting. None of the
Directors has a contract of service with the Company.
6. The biographies of the Directors offering themselves for
election and re-election are set out on pages47 and 48 of
the Company’s annual report and accounts for the year
ended 31 December 2021.
7. As at 31 March 2022, 109,114,651 ordinary shares of
5 pence each were in issue (no shares were held in
treasury). Therefore the total number of voting rights of the
Company as at 31March 2022 was 109,114,651.
8. A copy of this Notice of meeting, which includes details of
shareholder voting rights, together with any other
information as required under Section311A of the
Companies Act 2006, is available from the Company’s
webpage,
www.schroders.co.uk/satric.
9. Pursuant to Section 319A of the Companies Act 2006, the
Company must cause to be answered at the Annual
General Meeting any question relating to the business
being dealt with at the AGM which is put by a member
attending the meeting, except in certain circumstances,
including if it is undesirable in the interests of the
Company or the good order of the meeting that the
question be answered or if to do so would involve the
disclosure of confidential information. Due to COVID-19
shareholders are asked to send their questions by post or
by email (
amcompanysecretary@schroders.com).
10. Members satisfying the thresholds in section 527 of the
Companies Act 2006 can require the Company to publish a
statement on its website setting out any matter relating to:
(a) the audit of the Company’s Accounts (including the
auditor’s report and the conduct of the audit) that are
to be laid before the Meeting; or
(b) any circumstance connected with an auditor of the
Company ceasing to hold office since the last AGM,
that the members propose to raise at the Meeting. The
Company cannot require the members requesting the
publication to pay its expenses. Any statement placed
on the website must also be sent to the Company’s
auditors no later than the time it makes its statement
available on the website. The business which may be
dealt with at the meeting includes any statement that
the Company has been required to publish on its
website.
11. The Company’s privacy policy is available on its webpages:
www.schroders.co.uk/satric. Shareholders can contact
Equiniti for details of how Equiniti processes their personal
information as part of the AGM.
Explanatory Notes to the Notice of Meeting
175681 Schroders Asian Total Return Annual Report Pt4.qxp_175681 Schroders Asian Total Return Annual Report Pt4 04/04/2022 11:27 Page 90

Annual Report and Accounts
for the year ended 31 December 2021
Annual General Meeting
91
The terms and performance measures below are those
commonly used by investment companies to assess
values, investment performance and operating costs.
Someofthefinancialmeasuresbelow are classified as
Alternative Performance Measures, as defined by the
European Securities and Markets Authority, and some
numerical calculations are given for those.
Net asset value (”NAV”) per share
The NAV per share of 507.24p (2020: 479.07p) represents the
net assets attributable to equity shareholders of
£551,745,000 (2020: £483,548,000) divided by the number of
shares in issue, excluding any shares held in treasury, of
108,774,651 (2020: 100,934,651).
The change in the NAV amounted to +5.9% (2020: +31.0%)
over the year. However this performance measure excludes
the positive impact of the dividend paid out by the Company
during the year. When the dividend is factored into the
calculation, the resulting performance measure is termed
the “total return”. Total return calculations and definitions are
given below.
Total return
The combined effect of any dividends paid, together with the
rise or fall in the share price or NAV per share. Total return
statistics enable the investor to make performance
comparisons between investment companies with different
dividend policies. Any dividends received by a shareholder
are assumed to have been reinvested in either the assets of
the Company at its NAV per share at the time the shares
were quoted ex-dividend (to calculate the NAV per share
total return) or in additional shares of the Company (to
calculate the share price total return).
The NAV total return for the year ended 31 December 2021 is
calculated as follows:
Opening NAV at 31/12/20 479.07p
Closing NAV at 31/12/21 507.24p
Dividend NAV on
paid XD date XD date Factor
7.10p 15/4/21 501.09p 1.0142
NAV total return, being the closing NAV,
multiplied by the factor, expressed as a
percentage change in the opening NAV: +7.4%
The NAV total return for the year ended 31 December 2020 is
calculated as follows:
Opening NAV at 31/12/19 365.57p
Closing NAV at 31/12/20 479.07p
Dividend NAV on
paid XD date XD date Factor
6.50p 9/4/20 319.05p 1.0204
NAV total return, being the closing NAV,
multiplied by the factor, expressed as a
percentage change in the opening NAV: +33.7%
The share price total return for the year ended 31 December
2021 is calculated as follows
Opening share price at 31/12/20 489.00p
Closing share price at 31/12/21 506.00p
Share
Dividend price on
paid XD date XD date Factor
7.10p 15/4/2021 508.00p 1.014
Share price total return, being the closing share
price, multiplied by the factor, expressed as a
percentage change in the opening share price: +4.9%
The share price total return for the year ended 31 December
2020 is calculated as follows
Opening share price at 31/12/19 368.00p
Closing share price at 31/12/20 489.00p
Share
Dividend price on
paid XD date XD date Factor
6.50p 9/4/2020 319.00p 1.020
Share price total return, being the closing share
price, multiplied by the factor, expressed as a
percentage change in the opening share price: +35.6%
Reference Index
The measure against which the Company compares its
performance. With effect from 15 March 2013, the Reference
Index has been the MSCI AC Asia Pacific ex-Japan Index (with
net income reinvested), sterling adjusted. Prior to that date it
was the MSCI AC Asia Pacific ex-Japan Index (with gross
income reinvested), sterling adjusted
Definitions of Terms and Performance Measures
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Schroder Asian Total Return Investment Company plc
92
Discount/premium
The amount by which the share price of an investment trust
is lower (discount) or higher (premium) than the NAV per
share. The discount or premium is expressed as a
percentage of the NAV per share. The discount at the year
end amounted to 0.2% (2020: 2.1% premium), as the closing
share price at 506.0p (2020: 489.0p) was 0.2% lower (2020:
2.1% higher) than the closing NAV of 507.24p (2020:
479.07p).
Gearing
The gearing percentage reflects the amount of borrowings
(i.e. bank loans or overdrafts) which the Company has drawn
down and invested in the market. This figure is indicative of
the extra amount by which shareholders’ funds would move
if the Company’s investments were to rise or fall. This
represents borrowings used for investment purposes, less
cash, expressed as a percentage of net assets. If the figure
so calculated is negative, this is shown as a “Net cash”
position. The gearing figure at the year end is calculated as
follows:
2021 2020
£’000 £’000
Borrowings used for investment
purposes, less cash 45,887 27,777
Net assets 551,745 483,548
Gearing 8.3% 5.7%
Ongoing Charges
Ongoing Charges represents the management fee and all
other operating expenses excluding finance costs,
transaction costs and any performance fee payable,
expressed as a percentage of the average daily net assets
values during the year, as follows:
2021 2020
Management fee and all other
operating expenses excluding
finance costs, transaction costs
and any performance fee
payable (£’000) 4,446 3,390
Average daily net asset values
during the year (£’000) 530,595 384,472
Ongoing charges (%) 0.8 0.9
Leverage
For the purpose of the Alternative Investment Fund
Managers (AIFM) Directive, leverage is any method which
increases the Company’s exposure to financial risk, including
the borrowing of cash and the use of derivatives. It is
expressed as the ratio of the Company’s exposure to its net
asset value and is required to be calculated both on a “Gross”
and a “Commitment” method. Under the Gross method,
exposure represents the sum of the absolute values of all
positions, so as to give an indication of overall exposure.
Under the Commitment method, exposure is calculated in a
similar way, but after netting off hedges which satisfy certain
strict criteria.
Definitions of Terms and Performance Measures
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Annual General Meeting
Shareholder Information
Webpages and share price information
The Company has dedicated webpages, which may be found
at
www.schroders.co.uk/satric. The webpages have been
designed to be used as the Company’s primary method of
electronic communication with shareholders. They contain
details of the Company’s share price and copies of annual
report and other documents published by the Company as
well as information on the Directors, terms of reference of
committees and other governance arrangements. In
addition, the webpages contain links to announcements
made by the Company to the market, Equiniti’s shareview
service and Schroders’ website. There is also a section
entitled “How to Invest”.
The Company releases its NAV per share on both a cum and
ex-income basis, diluted where applicable, to the market on
a daily basis.
Share price information may also be found in the Financial
Times and at the Company’s webpages.
Association of Investment Companies
The Company is a member of the Association of Investment
Companies. Further information on the Association can be
found on its website,
www.theaic.co.uk.
ISA status
The Company’s shares are eligible for stocks and shares ISAs.
Non-Mainstream Pooled
Investments Status
The Company currently conducts its affairs so that its
shares can be recommended by IFAs to ordinary retail
investors in accordance with the FCA’s rules in relation to
non-mainstream investment products and intends to
continue to do so for the foreseeable future. The Company’s
shares are excluded from the FCA’s restrictions which apply
to non-mainstream investment products because they are
shares in an investment trust.
Financial calendar
Annual results announced April
Annual General Meeting May
Final dividend paid May
Half year results announced September
Financial year end 31 December
Alternative Investment Fund Managers
Directive (“AIFMD”) disclosures
The AIFMD, as transposed into the FCA Handbook in the UK,
requires that certain pre-investment information be made
available to investors in Alternative Investment Funds (such
as the Company) and also that certain regular and periodic
disclosures are made. This information and these disclosures
may be found either below, elsewhere in this annual report,
or in the Company’s AIFMD information disclosure document
published on the Company’s webpages.
Leverage
The Company’s leverage policy and details of its leverage
ratio calculation and exposure limits as required by the
AIFMD are published on the Company’s webpages. The
Company is also required to periodically publish its actual
leverage exposures. As at 31 December 2021 these were:
Leverage exposure Maximum ratio Actual ratio
Gross method 2.50 1.24
Commitment method 2.00 1.20
Illiquid assets
As at the date of this report, none of the Company’s assets
are subject to special arrangements arising from their illiquid
nature.
Remuneration disclosures
Quantitative remuneration disclosures to be made in this
annual report in accordance with FCA Handbook rule
FUND3.3.5 may also be found in the Company’s AIFMD
information disclosure document published on the
Company’s webpages.
Publication of Key Information Document
(“KID”) by the AIFM
Pursuant to the Packaged Retail and Insurance-based
Products (“PRIIPs”) Regulation, the Manager, as the
Company’s AIFM, is required to publish a short KID on the
Company. KIDs are designed to provide certain prescribed
information to retail investors, including details of potential
returns under different performance scenarios and a
risk/reward indicator. The Company’s KID is available on its
webpages.
Complaints
The Company has adopted a policy on complaints and other
shareholder communications which ensures that
shareholder complaints and communications addressed to
the Company Secretary, the Chairman or the Board are, in
each case, considered by the Chairman and the Board.
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Directors
Sarah MacAulay (Chairman)
Andrew Cainey
Caroline Hitch
Mike Holt
Advisers
Alternative Investment Fund Manager
(the “Manager”)
Schroder Unit Trusts Limited
1 London Wall Place
London EC2Y 5AU
Investment Manager and Company Secretary
Schroder Investment Management Limited
1 London Wall Place
London EC2Y 5AU
Telephone: 020 7658 3847
Registered Office
1 London Wall Place
London EC2Y 5AU
Depositary and Custodian
HSBC Bank plc
8 Canada Square
London E14 5HQ
Lending Bank
Scotiabank Europe PLC
201 Bishopsgate
6th Floor
London EC2M 3NS
Corporate Broker
Winterflood Investment Trusts
The Atrium Building
Canon Bridge House
Dowgate Hill
London EC4R 2GA
Independent Auditors
Ernst & Young LLP
Atria One
144 Morrison Street
Edinburgh EH3 8EX
Registrars
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Shareholder helpline: 0800 389 0306
1
Website:
www.shareview.co.uk
1
Calls to this number are free of charge from UK landlines.
Communications with shareholders are mailed to the
address held on the register. Any notifications and enquiries
relating to shareholdings, including a change of address or
other amendment should be directed to Equiniti Limited at
the above address and telephone number above.
Shareholder enquiries
General enquiries about the Company should be addressed
to the Company Secretary at the Company’s Registered
Office.
Dealing Codes
ISIN: GB0008710799
SEDOL: 0871079
Ticker: ATR
Global Intermediary Identification Number (GIIN)
TRPJG6.99999.SL.826
Legal Entity Identifier (LEI)
549300TQNNGZ0JHO2L78
www.schroders.co.uk/satric
The Company’s privacy notice is
available on its webpages.
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