Schroder UK Smaller Companies Fund Final Short Report 1 June 2015 to 31 May 2016
Schroder UK Smaller Companies Fund Review of Investment Activities From 29 May 2015 to 31 May 2016, the price of A Accumulation units on a selling price to selling price basis rose 4.77%. In comparison the FTSE* SmallCap ex Investment Trusts Index generated a total return of 0.25% 1 and the FTSE* All Share Index generated a negative total return of 6.31% 1. 1 Source: Thomson Reuters Datastream. The fund has delivered a strong absolute performance over the past twelve months to outperform its FTSE* SmallCap ex Investment Trusts Index benchmark. Our top performing holding over the period was budget package holiday provider Dart Group which published a robust year end trading statement. In a continuation of last year s strong trading, the company revealed that more than 50% of its summer 2016 season had already been booked, which was ahead of the same point in 2015. Off licence and convenience chain operator Conviviality was another top contributor. The market welcomed its acquisition of drinks wholesaler Matthew Clark and news in the year end trading update that results would be ahead of expectations. Defence and security business Cohort also performed well on the back of a well received earnings accretive acquisition of a Portuguese global defence supplier. Although the timeframe for completing the deal has slipped, the company published a robust set of interim results, at which it said full year revenue forecasts (excluding the acquisition) were well underpinned by the order book. On the negative side, not owning electrical retailer Darty was the largest single detractor after it was subject to a bidding contest between France s Groupe Fnac and South African retailer Steinhoff International. Meanwhile, CLS Holdings performed poorly amid weak sentiment towards the prime London residential property market. Although CLS Holdings predominantly invests in commercial property, it is developing Vauxhall Square, a major mixed used development in central London. Following a turbulent year we expect further market volatility amid an uncertain outlook for global growth and as the UK seeks to extricate itself from the European Union (EU) in the wake of a leave vote at the EU referendum. Consequently, our focus will remain on bottom up analysis, seeking out companies with unique assets, strong franchises and the ability to fund their expansion organically from internal resources. As of April 2016, and Rosemary Banyard s departure, Andrew Brough has been the sole manager of the fund. Fund Manager: Andrew Brough
Fund Information Interim Final Accounting dates 30 November 31 May Revenue allocation date 31 July For the year For the year Ongoing charges figure to 31.5.16 to 31.5.15 A Income units 1.66% 1.66% A Accumulation units 1.66% 1.66% S Income units 0.54% 0.54% Z Income units 0.91% 0.91% Z Accumulation units 0.91% 0.91% Performance Record Net Asset Net Asset Value as at Value as at Net Asset 31.5.16 31.5.15 Value Fund performance pence per unit pence per unit % change A Income units 2,270.84 2,177.97 4.26 A Accumulation units 3,037.90 2,903.83 4.62 S Income units 56.29 53.97 4.30 Z Income units 101.14 96.98 4.29 Z Accumulation units 106.11 100.66 5.41 3 months 1 year 5 years Schroder UK Smaller Companies Fund 6.83% 4.77% 86.36% FTSE* SmallCap ex Investment Trusts Index 6.23% 0.25% 78.57% FTSE* All Share Index 3.81% (6.31)% 31.21% Fund Source: A Accumulation units on a selling price to selling price basis to 31.5.16. Indices Source: Thomson Reuters Datastream, total return to 31.5.16. * 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.
Comparative Tables A Income units 2016 2015 2014 Financial year to 31 May p per unit p per unit p per unit Change in net asset value Opening net asset value 2,177.97 1,983.70 1,595.82 Return before operating charges 137.55 234.24 419.63 Operating charges (36.97) (32.49) (31.16) Return after operating charges* 100.58 201.75 388.47 Distributions 1 (7.71) (7.48) (0.59) Closing net asset value 2,270.84 2,177.97 1,983.70 *after direct transaction costs of 0.45 (0.39) (1.50) Performance Return after charges (%) 4.62 10.17 24.34 Other information Closing net asset value ( 000 s) 28,503 38,749 41,739 Closing number of units 1,255,162 1,779,113 2,104,071 Operating charges (%) 1.66 1.66 1.66 Direct transaction costs (%)** (0.02) 2 0.02 0.08 Prices Highest buying price (p) 2,331.00 2,234.00 2,095.00 Lowest selling price (p) 2,052.00 1,765.00 1,574.00
Comparative Tables (continued) A Accumulation units 2016 2015 2014 Financial year to 31 May p per unit p per unit p per unit Change in net asset value Opening net asset value 2,903.83 2,635.77 2,119.78 Return before operating charges 183.38 311.20 557.46 Operating charges (49.31) (43.14) (41.47) Return after operating charges* 134.07 268.06 515.99 Closing net asset value 3,037.90 2,903.83 2,635.77 Retained distributions 1 10.32 9.94 0.91 *after direct transaction costs of 0.59 (0.52) (2.00) Performance Return after charges (%) 4.62 10.17 24.34 Other information Closing net asset value ( 000 s) 329,507 336,057 368,595 Closing number of units 10,846,513 11,572,886 13,984,317 Operating charges (%) 1.66 1.66 1.66 Direct transaction costs (%)** (0.02) 2 0.02 0.08 Prices Highest buying price (p) 3,108.00 2,969.00 2,782.00 Lowest selling price (p) 2,736.00 2,346.00 2,090.00
Comparative Tables (continued) S Income units 2016 2015 2014 Financial year to 31 May p per unit p per unit p per unit Change in net asset value Opening net asset value 53.97 49.10 50.00 Return before operating charges 3.44 5.86 (0.18) Operating charges (0.30) (0.26) (0.14) Return after operating charges* 3.14 5.60 (0.32) Distributions 1 (0.82) (0.73) (0.58) Closing net asset value 56.29 53.97 49.10 *after direct transaction costs of 0.01 (0.01) (0.04) Performance Return after charges (%) 5.82 11.41 (0.64) Other information Closing net asset value ( 000 s) 13,265 13,201 13,214 Closing number of units 23,566,601 24,460,716 26,911,717 Operating charges (%) 0.54 0.54 0.29 Direct transaction costs (%)** (0.02) 2 0.02 0.08 Prices Highest buying price (p) 58.42 55.92 52.30 Lowest selling price (p) 51.26 43.88 48.15 The unit class was launched on 31 January 2014.
Comparative Tables (continued) Z Income units 2016 2015 2014 Financial year to 31 May p per unit p per unit p per unit Change in net asset value Opening net asset value 96.98 88.26 70.96 Return before operating charges 6.17 10.51 18.71 Operating charges (0.91) (0.80) (0.76) Return after operating charges* 5.26 9.71 17.95 Distributions 1 (1.10) (0.99) (0.65) Closing net asset value 101.14 96.98 88.26 *after direct transaction costs of 0.02 (0.02) (0.07) Performance Return after charges (%) 5.42 11.00 25.30 Other information Closing net asset value ( 000 s) 36,842 16,872 8,865 Closing number of units 36,426,812 17,397,440 10,044,267 Operating charges (%) 0.91 0.91 0.91 Direct transaction costs (%)** (0.02) 2 0.02 0.08 Prices Highest buying price (p) 104.60 100.10 93.69 Lowest selling price (p) 91.87 78.77 70.01
Comparative Tables (continued) Z Accumulation units 2016 2015 2014 Financial year to 31 May p per unit p per unit p per unit Change in net asset value Opening net asset value 100.66 90.69 72.38 Return before operating charges 6.39 10.79 19.13 Operating charges (0.94) (0.82) (0.82) Return after operating charges* 5.45 9.97 18.31 Closing net asset value 106.11 100.66 90.69 Retained distributions 1 1.14 1.02 0.68 *after direct transaction costs of 0.02 (0.02) (0.07) Performance Return after charges (%) 5.41 10.99 25.30 Other information Closing net asset value ( 000 s) 186,898 132,058 62,601 Closing number of units 176,137,738 131,194,740 69,024,103 Operating charges (%) 0.91 0.91 0.91 Direct transaction costs (%)** (0.02) 2 0.02 0.08 Prices Highest buying price (p) 108.50 102.90 95.56 Lowest selling price (p) 95.35 80.93 71.39 1 These figures have been rounded to 2 decimal places. 2 The amount received from dilution adjustments, that relate to direct transaction costs, is greater than the direct transaction costs incurred by the fund within the year. ** Direct transaction costs have been stated after deducting the proportion of the amounts collected from dilution adjustments. The Operating charges are calculated on an ex-post basis and as such may differ from the Ongoing charges figure where the Ongoing charges figure has been annualised for a unit class that has not been in existence for a full year. Please remember that past performance is not a guide to future performance and it might not be repeated. The value of investments and the revenue from them may go down as well as up and investors may not get back the amount originally invested. Because of this, you are not certain to make a profit on your investments and you may lose money.
Portfolio Information % of net % of net assets assets as at as at Spread of investments 31.5.16 31.5.15 Oil & Gas 1.79 3.02 Basic Materials 3.74 4.08 Industrials 26.13 30.56 Consumer Goods 8.54 7.57 Health Care 9.90 10.41 Consumer Services 18.56 13.84 Financials 13.54 14.32 Technology 12.55 12.44 Telecommunication Services 0.34 0.00 Net other assets 4.91 3.76 % of net assets as at Major holdings 31.5.16 Dart Group 3.43 Photo-Me International 2.42 Consort Medical 2.34 Avon Rubber 2.26 James Fisher & Sons 2.19 Polypipe Group 2.08 MJ Gleeson 1.94 Servelec Group 1.93 Conviviality 1.79 Safestore Holdings 1.76 % of net assets as at 31.5.15 Dart Group 3.01 Avon Rubber 2.76 Consort Medical 2.57 Photo-Me International 2.33 James Fisher & Sons 2.31 Polypipe Group 2.20 e2v technologies 2.12 4d pharma 2.06 Liontrust Asset Management 2.01 CLS Holdings 1.97
Investment Objective & Policy The fund s investment objective is to aim to achieve capital growth by investing in UK smaller companies. The policy is to invest in smaller companies in the UK which are expected to exhibit superior growth over the long term. Investment will be in directly held transferable securities. The fund may also invest in collective investment schemes, warrants and money market instruments. Risk Profile Risk and reward indicator Lower risk Potentially lower reward Higher risk 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 is in this category because it can take higher risks in search of higher rewards and its price may rise and fall accordingly. 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. Specific risks The fund invests solely in the securities of a particular country. There may be a greater risk than investing in funds that hold securities in a range of countries. The fund invests in smaller companies which may be less liquid than larger companies and price swings may therefore be greater than in larger company funds. For these reasons, the purchase of units should not normally be regarded as a short term investment.
Report & Accounts This document is a short report for Schroder UK Smaller Companies Fund for the year ended 31 May 2016. The long form Report & Accounts for the fund are available on our website www.schroders.co.uk or upon written request to Schroders, FREEPOST, RLTZ-CHSY-HBUT, PO Box 1102, Chelmsford, Essex CM99 2XX. Other Information The information contained in this report is designed to enable unitholders to make an informed judgement on the activities of the fund during the period it covers and the results of those activities at the end of the period. For more information about the activities and performance of the fund during this and previous periods, please contact the Manager. 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.co.uk. Please remember that past performance is not a guide to future performance and it might not be repeated. The value of investments and the revenue from them may go down as well as up and investors may not get back the amount originally invested. Because of this, you are not certain to make a profit on your investments and you may lose money. For investors security, calls to Schroder Investor Services may be recorded. Manager: Schroder Unit Trusts Limited, 31 Gresham Street, London EC2V 7QA. Authorised and regulated by the Financial Conduct Authority. Investment Adviser: Schroder Investment Management Limited, 31 Gresham Street, London, EC2V 7QA. 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. Independent Auditors: PricewaterhouseCoopers LLP, Atria One, 144 Morrison Street, Edinburgh EH3 8EX. For further literature please contact Schroder Investor Services on 0800 718 777 or at investorservices@schroders.com, or visit our website at www.schroders.co.uk. Issued in July 2016 by Schroder Unit Trusts Limited, 31 Gresham Street, London EC2V 7QA. Registered No: 04191730 England. Authorised and regulated by the Financial Conduct Authority. w35659 MR061AF16