schroder institutional uk smaller companies fund interim

Schroder Institutional UK Smaller Companies Fund

Interim Report and Accounts15 August 2021

Contents

2Schroder Institutional UK Smaller Companies Fund Interim Report and Accounts15 August 2021

Fund Information{

1} 3

Fund Performance{

1} 3

Review of Investment Activities{

1} 4

Risk Profile{

1} 5

Statement of the Manager’s Responsibilities 6Portfolio Statement{

1} 7

Financial Statements (unaudited) 9Notes to the Accounts (unaudited) 10General Information{

1} 11

1 Collectively these comprise the Manager's report.


Fund Information

Investment objective and policyThe Schroder Institutional UK Smaller Companies Fund (the ‘Fund’) aims to provide capital growth in excess of the FTSE UK Small Cap ex Investment Trusts (Gross Total Return) index (after fees have been deducted) over a three to five year period by investing in equity and equity related securities of small-sized UK companies.The Fund is actively managed and invests at least 80% of its assets in equity and equity related securities of small-sized UK companies. These are companies that are incorporated, headquartered or have their principal business activities in the UK and, at the time of purchase, are similar in size to those comprising the bottom 10% by market capitalisation of the UK equities market.The small cap universe is an extensive, diverse and constantly changing area of the UK market. Smaller companies offer investors exposure to some niche growth areas that, often, cannot be accessed through large companies. They may also grow more rapidly than larger firms and can go on to become household names.The Fund may also invest directly or indirectly in other securities (including in other asset classes), countries, regions, industries or currencies, collective investment schemes (including Schroder funds), warrants and money market instruments, and hold cash.The Fund may use derivatives with the aim of reducing risk or managing the Fund more efficiently (for more information please refer to section 6 of Appendix I of the Prospectus).

Fund characteristics The Fund’s performance should be assessed against its target benchmark, being to exceed the FTSE UK Series Small Cap ex Investment Trusts (Gross Total Return) index and compared against the Investment Association UK Smaller Companies sector average return. The Investment Manager invests on a discretionary basis and is not limited to investing in accordance with the composition of the benchmark. The target benchmark has been selected because it is representative of the type of investments in which the Fund is likely to invest, and it is, therefore, an appropriate target in relation to the return that the Fund aims to provide. The comparator benchmark has been selected because the Investment Manager and the Manager believe that this benchmark is a suitable comparison for performance purposes given the Fund’s investment objective and policy.

Significant eventsEffective from 1 March 2021 a transparent “all in one” fund management fee was introduced. This is a single percentage based fee to cover certain elements of the separate charges and fees, which were previously charged and are now replaced with a single charge named “Schroders Annual Charge”. Previously all expenses were directly charged to each Fund as incurred. This structure consisted of the Annual Management Charge, plus other fees and expenses, including the Trustee fee, Custody fee, Transfer Agent fee, Audit fee and certain costs and administrative expenses paid by the Manager in relation to the management and operation of the funds, as disclosed in the Prospectus.

Total purchases and salesFor the period

to 15.8.21 £000's

For the year to 15.2.21

£000'sTotal purchases 95,679 106,386Total sales 85,922 81,816

Fund Performance{1}

Number of units in issue

15.8.21

Net asset value per unit

15.8.21

Net asset value per unit

15.2.21I Accumulation units 5,279,211 2,434.87p 2,081.69pI Income units 11,034,453 1,384.80p 1,183.91pX Accumulation units 24,423,198 68.27p 58.23pX Income units 451,396,393 122.43p 104.41p

Past performance is not a 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. Exchange rate changes may cause the value of any overseas investments to rise or fall.

Review of Investment Activities


From 15 February 2021 to 13 August 2021, the price of I Accumulation units on a dealing price basis rose 16.85%. In the same period, the FTSE1 UK Series Small Cap ex Investment Trusts Index generated a total return of 25.82%2.UK small caps outperformed UK equities quite markedly despite the recovery in lowly valued and economically sensitive sectors faltering. This resilience is partly explained by the index’s high industrial exposures to domestically focused sectors, such as business services and construction and materials companies, which performed particularly well. These areas of the market performed well despite signs of moderation in UK domestic industrial activity over the summer.Digital inkjet technology specialist Xaar performed very well following good progress with its recovery plan. Other top contributors included fund manager Liontrust Asset Management and remote people monitoring technology company Big Technologies. Not owning pub operator Marston’s or technology group BATM Advanced Communications also positively contributed. On the negative side, plus-sized fashion retailer N Brown Group performed poorly, as did manufacturer of personal protection equipment for military and law enforcement uses Avon Protection. Other detractors included maker of vanadium-based electricity storage solutions Invinity Energy Systems and solid state battery technology specialist Ilika as well as not owning Tullow Oil. We made a number of changes to the portfolio, including disposing of our position in distressed debt specialist Arrow Global Group and specialist pharmaceuticals group Vectura following bids. We exited intellectual property supports services group RWS Holdings on valuation grounds. We established a number of new holdings in the period, including building merchant Brickability Group and recruitment company Staffline Group. We’re optimistic on the UK economy and many of the domestically focused small cap companies exposed to it. We continue to primarily focus on seeking out the next disruptors, while looking to avoid the next industry to be disrupted.

Co-Fund Manager:Andrew Brough

Andrew is Head of our Pan European Small and Mid Cap Team His investment career commenced in 1987 when he joined Schroders as a UK equity fund manager, becoming Co-Head of our UK Small Cap Team in 2002 He joined PricewaterhouseCoopers LLP in 1985, where he qualified as a Chartered Accountant Degree in Economics

Co-Fund Manager: Iain Staples

Joined Schroders in 2012 from Altium, the UK mid-cap broker, where he led the UK Generalist equity research product Previously worked on the sell-side for 14 years having co-founded Clear Capital, the independent equity research house Broking career commenced in 1999 at Hoare Govett in the tech team Iain started his career at L.E.K. Consulting, the global management consulting firm, in 1995 MA in Mathematics, Cambridge University and MSc in Theoretical Physics, Manchester University

1 FTSE International Limited (“FTSE”) © FTSE. “FTSE®” is a trade mark of London Stock Exchange plc and The Financial Times Limited and is used by FTSE International Limited under licence. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.2 Source: Refinitiv Eikon Datastream.Past performance is not a 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. Exchange rate changes may cause the value of any overseas investments to rise or fall.


Risk Profile

Risk and reward indicatorLower risk Higher riskPotentially lower reward Potentially higher reward

< >1 2 3 4 5 6 7

The risk category was calculated using historical performance data and may not be a reliable indicator of the Fund’s future risk profile. The Fund’s risk category is not guaranteed to remain fixed and may change over time. A Fund in the lowest category does not mean a risk-free investment. For specific risks, including the risk and reward profile, please refer to the Key Investor Information Document available on the following website www.schroders.com.

Statement of the Manager’s Responsibilities

6 Schroder Institutional UK Smaller Companies Fund Interim Report and Accounts15 August 2021

The Financial Conduct Authority’s Collective Investment Schemes sourcebook requires the Manager to prepare accounts for each annual and half yearly accounting period, in accordance with United Kingdom Generally Accepted Accounting Practice, which give a true and fair view of the financial position of the Fund and of its net revenue and the net capital gains on the property of the Fund for the period. In preparing the accounts the Manager is required to: ¯ select suitable accounting policies and then apply them consistently; ¯ comply with the disclosure requirements of the Statement of Recommended Practice for UK Authorised Funds issued by the Investment Management

Association (now the Investment Association) in May 2014; ¯ follow generally accepted accounting principles and applicable accounting standards; ¯ prepare the accounts on the basis that the Fund will continue in operation unless it is inappropriate to do so; ¯ keep proper accounting records which enable it to demonstrate that the accounts as prepared comply with the above requirements; ¯ make judgements and estimates that are prudent and reasonable.

The Manager is responsible for the management of the Fund in accordance with its Trust Deed, the Prospectus and the Collective Investment Schemes sourcebook, and for taking reasonable steps for the prevention and detection of fraud, error and non-compliance with law or regulations.The Manager's report and accounts for the period ended 15 August 2021 were signed on 7 October 2021 on behalf of the Manager by:

P. Chislett S. Reedy Directors

7Schroder Institutional UK Smaller Companies Fund Interim Report and Accounts

15 August 2021

Portfolio Statement

Holding at 15.8.21

Market Value £000's

% of net assets

Equities 96.80% (95.92%)

Basic Materials 3.77% (4.08%)Anglo Pacific Group 8,294,136 10,898 1.28Chamberlin# 330,000 30 0.00Directa Plus# 2,679,965 3,270 0.39Trifast 5,534,999 8,302 0.98Zotefoams 2,172,644 9,560 1.12

32,060 3.77Consumer Discretionary 24.23% (24.32%)Air Partner 3,300,000 2,640 0.31Autins Group# 2,443,810 513 0.06Colefax Group# 1,764,776 9,883 1.16Dignity 951,123 7,324 0.86Games Workshop Group 80,000 9,360 1.10Guild Esports 17,000,000 1,105 0.13Hostelworld Group 1,249,914 1,144 0.14M&C Saatchi# 387,746 527 0.06Merit Group# 549,450 302 0.04MJ Gleeson 1,643,200 13,343 1.57MusicMagpie# 3,150,259 5,544 0.65MySale Group# 32,620,982 1,974 0.23N Brown Group# 24,164,405 12,421 1.46NAHL Group# 2,896,184 1,622 0.19Patisserie Holdings^ 2,400,000 0 0.00Pendragon 30,289,375 5,543 0.65Photo-Me International 9,202,636 6,488 0.76Quiz# 6,361,587 1,081 0.13Reach 3,859,686 15,400 1.81RM 4,876,527 11,606 1.37Studio Retail Group 2,961,571 8,411 0.99STV Group 793,248 2,816 0.33Superdry 1,598,562 5,979 0.70Ted Baker 5,977,402 8,649 1.02TheWorks.co.uk 4,221,788 2,575 0.30Tremor International# 6,752,408 50,643 5.95UP Global Sourcing Holdings PL 5,903,431 12,220 1.44Warpaint London# 4,029,145 7,011 0.82

206,124 24.23Consumer Staples 1.14% (1.82%)Accrol Group Holdings# 6,943,602 3,402 0.40MP Evans Group# 883,471 6,273 0.74

9,675 1.14Energy 3.37% (3.17%)AFC Energy# 12,130,123 7,193 0.85EnQuest 27,978,218 6,701 0.79Kistos# 3,870,968 9,213 1.08Lamprell 11,591,615 4,451 0.52President Energy# 56,600,000 1,075 0.13

28,633 3.37Financials 11.06% (11.32%)Appreciate Group# 8,000,693 2,112 0.25Aquis Exchange# 758,058 5,079 0.60

Holding at

15.8.21Market Value

£000’s% of net

assetsAugmentum Fintech 2,250,000 3,510 0.41Bonhill Group# 3,657,484 384 0.05Charles Stanley Group 1,705,000 8,610 1.01CMC Markets 3,412,402 14,332 1.68Foresight Group Holdings 1,169,725 4,738 0.56Frenkel Topping Group# 2,500,000 1,650 0.19Gresham House# 144,189 1,283 0.15International Personal Finance 2,984,115 4,625 0.54JPMorgan Chase 651,035 1,107 0.13K3 Capital Group# 3,149,851 11,340 1.33LendInvest 1,616,039 3,329 0.39Liontrust Asset Management 620,000 13,485 1.59Mattioli Woods# 812,120 5,807 0.68Mercia Asset Management# 10,000,000 3,560 0.42NFT Investments 25,125,000 678 0.08Sivota 49,450 74 0.01XPS Pensions Group 6,153,214 8,430 0.99

94,133 11.06Health Care 4.13% (5.98%)Bioventix# 150,000 5,775 0.68Circassia Group# 5,200,000 2,067 0.24Clinigen Group# 711,057 4,490 0.53Eco Animal Health Group# 1,761,924 5,286 0.62EKF Diagnostics Holdings# 10,600,000 8,268 0.97Oxford BioDynamics# 1,488,029 744 0.09Spire Healthcare Group 3,317,822 7,780 0.91Trellus Health# 667,692 448 0.05Verici Dx# 450,651 320 0.04

35,178 4.13Industrials 29.83% (28.38%)Avon Protection 510,000 10,873 1.28Boku# 1,176,471 2,294 0.27Brickability Group# 2,368,500 2,392 0.28Carclo 4,034,981 1,747 0.20Chemring Group 3,230,870 10,791 1.27Cohort# 2,350,619 12,458 1.46De La Rue 2,400,000 4,565 0.54Dialight 1,350,000 4,766 0.56DX Group# 10,306,365 3,350 0.39Epwin Group# 2,500,000 2,875 0.34Equals Group# 5,385,000 2,854 0.34Fintel# 1,406,444 3,305 0.39Genuit Group 1,220,000 8,076 0.95Ilika# 4,659,433 6,616 0.78Invinity Energy Systems# 5,796,390 7,535 0.89James Fisher & Sons 552,842 5,252 0.62James Latham# 499,550 5,795 0.68


Portfolio Statement (continued)

Holding at

15.8.21Market Value

£000’s% of net

assetsJohnson Service Group# 4,560,000 7,059 0.83Keller Group 1,536,943 15,062 1.77Lords Group Trading# 4,200,000 4,788 0.56Luceco 1,377,911 5,553 0.65Macfarlane Group 3,500,000 4,060 0.48Management Consulting Group 13,000,004 30 0.00Mercantile Ports and Logistics# 10,000,000 52 0.01Midwich Group# 1,046,389 5,504 0.65Mitie Group 20,442,310 14,351 1.69Oxford Instruments 207,899 5,198 0.61PayPoint 377,436 2,423 0.28Pressure Technologies# 3,692,941 3,324 0.39RBG Holdings# 974,000 1,266 0.15Redde Northgate 1,925,000 8,383 0.98Restore# 1,343,657 6,584 0.77Ricardo 764,519 3,058 0.36Solid State# 200,000 2,100 0.25Speedy Hire 17,500,000 12,338 1.45Staffline Group# 7,575,721 5,379 0.63Thruvision Group# 8,886,928 2,133 0.25Vitec Group 1,067,176 16,381 1.93Vp 542,799 5,178 0.61Wincanton 1,564,343 6,320 0.74Xaar 8,672,074 21,680 2.55

253,748 29.83Real Estate 5.17% (5.01%)CLS Holdings 3,800,000 9,652 1.13Harworth Group 1,060,207 1,633 0.19Helical 2,050,000 9,881 1.16Henry Boot 1,406,500 3,910 0.46OnTheMarket# 2,539,180 2,285 0.27Raven Property Group 9,343,407 2,513 0.30Sirius Real Estate 11,492,645 14,113 1.66

43,987 5.17Technology 13.39% (11.23%)ActiveOps 1,852,958 3,057 0.36

Holding at

15.8.21Market Value

£000’s% of net

assetsAlbert Technologies#^ 2,533,903 0 0.00Aptitude Software Group 2,425,625 14,893 1.75Attraqt Group# 4,000,000 1,720 0.20Big Technologies 2,897,330 8,996 1.06Blancco Technology Group# 2,439,895 5,856 0.69CentralNic Group# 4,994,750 4,715 0.55Concurrent Technologies# 610,000 506 0.06Eagle Eye Solutions Group# 464,719 2,393 0.28Eleco# 2,467,325 3,232 0.38Gresham Technologies 4,070,182 6,431 0.76Kape Technologies# 1,662,671 5,853 0.69Kin & Carta 4,333,327 11,397 1.34Mirriad Advertising# 2,250,000 765 0.09NCC Group 4,980,932 15,914 1.87Samarkand Group 2,406,413 3,489 0.41Shearwater Group# 1,567,502 2,289 0.27Trackwise Designs# 750,000 1,725 0.20Tracsis# 672,000 6,922 0.81Tribal Group# 4,830,471 5,120 0.60TT Electronics 3,030,673 8,638 1.02

113,911 13.39Utilities 0.71% (0.61%)Augean# 2,153,877 6,031 0.71

6,031 0.71Equities total 823,480 96.80

Collective Investment Schemes 0.05% (0.05%)Private Equity Funds 0.05% (0.05%)LMS Capital§ 1,174,555 399 0.05

399 0.05Collective Investment Schemes total 399 0.05

Portfolio of investments 823,879 96.85

Net other assets 26,791 3.15

Net assets attributable to unitholders 850,670 100.00

The comparative percentage figures in brackets are as at 15 February 2021.Unless otherwise stated, all securities are admitted to official stock exchange listings.

# Security traded on another regulated market.^ Unlisted, suspended or delisted security.§ Closed ended Fund.

9Schroder Institutional UK Smaller Companies Fund Interim Report and Accounts

15 August 2021

Statement of Total Return (unaudited)For the six months ended 15 August 2021

15.8.21 15.8.20 £000's £000's £000's £000's

Income

Net capital gains/(losses) – 119,796 – (105,896)Revenue 5,463 – 3,055 –

Expenses (696) – (509) –Net revenue before taxation 4,767 – 2,546 –

Taxation (6) – 4 –

Net revenue after taxation 4,761 2,550

Total return before distributions 124,557 (103,346)

Distributions 3 33

Change in net assets attributable to unitholders from investment activities 124,560 (103,313)

Statement of Change in Net Assets Attributable to Unitholders (unaudited)

For the six months ended 15 August 202115.8.21 15.8.20

£000's £000's £000's £000'sOpening net assets attributable to unitholders 723,490^ 613,932Amounts receivable on issue of units 25,553 – 31,506 –Amounts payable on cancellation of units (22,933) – (19,555) –

2,620 11,951

Dilution adjustment – 353Change in net assets attributable to unitholders from investment activities 124,560 (103,313)Closing net assets attributable to unitholders 850,670 522,923^

^ The opening net assets attributable to unitholders for the current period do not equal the closing net assets attributable to unitholders for the comparative period as they are not consecutive periods.

Balance Sheet (unaudited)

As at 15 August 2021

15.8.21 15.2.21 £000's £000's

AssetsInvestments 823,879 694,324

Current assetsDebtors 3,444 2,877Cash and bank balances 23,838 32,997

Total assets 851,161 730,198 – –

Liabilities – –Creditors

Distributions payable – (4,922)Other creditors (491) (1,786)

Total liabilities (491) (6,708) – –

Net assets attributable to unitholders 850,670 723,490

Notes to the Accounts (unaudited)

10 Schroder Institutional UK Smaller Companies Fund Interim Report and Accounts15 August 2021

Accounting policiesBasis of preparationThe accounts have been prepared under the historical cost basis, as modified by the revaluation of investments, and in accordance with the Statement of Recommended Practice for UK Authorised Funds issued by the Investment Management Association in May 2014 and in accordance with United Kingdom Generally Accepted Accounting Practice, including Financial Reporting Standard 102 (The Financial Reporting Standard Applicable in the UK and Republic of Ireland (FRS 102)).The accounting policies applied are consistent with those of the annual accounts for the year ended 15 February 2021 and are described in those annual accounts.

General Information


Manager Schroder Unit Trusts Limited 1 London Wall Place London EC2Y 5AU Authorised and regulated by the Financial Conduct Authority

Investment Adviser Schroder Investment Management Limited1 London Wall Place London EC2Y 5AU Authorised and regulated by the Financial Conduct Authority

Trustee J.P. Morgan Europe Limited Chaseside Bournemouth BH7 7DA Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority

Registrar Schroder Unit Trusts Limited 1 London Wall Place London EC2Y 5AU Authorised and regulated by the Financial Conduct Authority The Manager is responsible for maintaining the register for each Fund. It has delegated certain registrar functions to HSBC Bank Plc, 8 Canada Square, London, E14 8HQ.

Administration Details Schroders Investor ServicesPO Box 1402SunderlandSR43 4AF

Independent Auditors PricewaterhouseCoopers LLP Atria One 144 Morrison Street Edinburgh EH3 8EX

Authorisation The Fund is an authorised unit trust and is constituted pursuant to the Collective Investment Schemes sourcebook and is structured as a Trust. The Fund is a UCITS scheme for the purpose of the categorisation of the Collective Investment Schemes sourcebook.

Value Assessment A statement on the Assessment of Value is published on the Global Fund Centre in the Fund Literature section at www.Schroders.com within 4 months of the annual 'reference date' 31 December.

Other information The Prospectus, the Key Investor Information Document and details of investment charges and costs are available on request or can be downloaded from our website www.schroders.com.

For further literature please contact Schroder Investor Services on 0800 182 2399 or [email protected] for Retail Clients, or 0345 030 7277 or [email protected] for Institutional Clients, or visit our website at www.schroders.com.Issued in October 2021 by Schroder Unit Trusts Limited, 1 London Wall Place, London EC2Y 5AU. Registered Number 4191730 England. Schroder Unit Trusts Limited is an authorised corporate director, authorised unit trust manager and an ISA plan manager, and is authorised and regulated by the Financial Conduct Authority. For your security, communications may be taped and monitored.

schroder institutional uk smaller companies fund interim

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