Investment Fund Company

Schroder Investment Fund Company

Interim Report and Accounts June 2017 Contents

Schroder Investment Fund Company

Schroder Investment Fund Company ...... 8 Company Information 1 ...... 8 General information ...... 8 Principle activities ...... 8 Liabilities of the company ...... 8 Statement of the Authorised Corporate Director’s Responsibilities ...... 9 Statement of Cross Holdings ...... 10 Basis of preparation ...... 11 Accounting policies ...... 11

Schroder UK Opportunities Fund ...... 12 Fund Information 1 ...... 12 Investment objective and policy ...... 12 Financial highlights ...... 12 Fund information ...... 12 Ongoing charges figure ...... 13 Total purchases and sales ...... 13 Review of Investment Activities 1 ...... 14 Risk Profile 1 ...... 15 Risk and reward indicator ...... 15 Specific risks ...... 15 Net Asset Value and Comparative Tables 1 ...... 16 Share price range ...... 16 Net revenue ...... 17 Net asset value ...... 18 Fund performance ...... 19 Portfolio Statement 1 ...... 20 Summary of Portfolio Transactions 1 ...... 23 Largest purchases ...... 23 Largest sales ...... 23 Statement of Total Return (unaudited) ...... 24 Statement of Change in Net Assets Attributable to Shareholders (unaudited) ...... 24 Balance Sheet (unaudited) ...... 25 Notes to the Accounts (unaudited) ...... 26 Accounting policies ...... 26 Distribution Table (unaudited) ...... 27 Interim distribution for the six months ended 30 June 2017 ...... 27 Corporate shareholders ...... 27 Equalisation ...... 27

Schroder UK Dynamic Smaller Companies Fund ...... 28 Fund Information 1 ...... 28 Investment objective and policy ...... 28 Financial highlights ...... 28 Fund information ...... 29 Ongoing charges figure ...... 29 Total purchases and sales ...... 29 Review of Investment Activities 1 ...... 30 Risk Profile 1 ...... 31 Risk and reward indicator ...... 31 Specific risks ...... 31 Contents (continued)

Schroder Investment Fund Company

Net Asset Value and Comparative Tables 1 ...... 32 Share price range ...... 32 Net revenue ...... 33 Net asset value ...... 34 Fund performance ...... 35 Portfolio Statement 1 ...... 36 Summary of Portfolio Transactions 1 ...... 39 Largest purchases ...... 39 Largest sales ...... 39 Statement of Total Return (unaudited) ...... 40 Statement of Change in Net Assets Attributable to Shareholders (unaudited) ...... 40 Balance Sheet (unaudited) ...... 41 Notes to the Accounts (unaudited) ...... 42 Accounting policies ...... 42 Distribution Table (unaudited) ...... 43 Interim distribution for the six months ended 30 June 2017 ...... 43 Corporate shareholders ...... 43 Equalisation ...... 43

Schroder UK Corporate Bond Fund ...... 44 Fund Information 1 ...... 44 Investment objective and policy ...... 44 Financial highlights ...... 44 Fund information ...... 45 Ongoing charges figure ...... 45 Total purchases and sales ...... 45 Review of Investment Activities 1 ...... 46 Risk Profile 1 ...... 47 Risk and reward indicator ...... 47 Specific risks ...... 47 Net Asset Value and Comparative Tables 1 ...... 48 Share price range ...... 48 Net revenue ...... 49 Net asset value ...... 50 Fund performance ...... 51 Portfolio Statement 1 ...... 52 Summary of Portfolio Transactions 1 ...... 64 Largest purchases ...... 64 Largest sales ...... 64 Statement of Total Return (unaudited) ...... 65 Statement of Change in Net Assets Attributable to Shareholders (unaudited) ...... 65 Balance Sheet (unaudited) ...... 66 Notes to the Accounts (unaudited) ...... 67 Accounting policies ...... 67 Securities Financing Transactions (unaudited) ...... 68 Distribution Table (unaudited) ...... 69 Quarterly distribution for the three months ended 31 March 2017 ...... 69 Interim distribution for the three months ended 30 June 2017 ...... 70 Equalisation ...... 70 Contents (continued)

Schroder Investment Fund Company

Schroder European Opportunities Fund ...... 71 Fund Information 1 ...... 71 Investment objective and policy ...... 71 Financial highlights ...... 71 Fund information ...... 72 Ongoing charges figure ...... 72 Total purchases and sales ...... 73 Review of Investment Activities 1 ...... 74 Risk Profile 1 ...... 75 Risk and reward indicator ...... 75 Specific risks ...... 75 Net Asset Value and Comparative Tables 1 ...... 76 Share price range ...... 76 Net revenue ...... 77 Net asset value ...... 78 Fund performance ...... 79 Portfolio Statement 1 ...... 80 Summary of Portfolio Transactions 1 ...... 83 Largest purchases ...... 83 Largest sales ...... 83 Statement of Total Return (unaudited) ...... 84 Statement of Change in Net Assets Attributable to Shareholders (unaudited) ...... 84 Balance Sheet (unaudited) ...... 85 Notes to the Accounts (unaudited) ...... 86 Accounting policies ...... 86

Schroder Core UK Equity Fund ...... 87 Fund Information 1 ...... 87 Investment objective and policy ...... 87 Financial highlights ...... 87 Fund information ...... 87 Ongoing charges figure ...... 88 Total purchases and sales ...... 88 Review of Investment Activities 1 ...... 89 Risk Profile 1 ...... 90 Risk and reward indicator ...... 90 Specific risks ...... 90 Net Asset Value and Comparative Tables 1 ...... 91 Share price range ...... 91 Net revenue ...... 92 Net asset value ...... 94 Fund performance ...... 95 Portfolio Statement 1 ...... 96 Summary of Portfolio Transactions 1 ...... 99 Largest purchases ...... 99 Largest sales ...... 99 Statement of Total Return (unaudited) ...... 100 Statement of Change in Net Assets Attributable to Shareholders (unaudited) ...... 100 Balance Sheet (unaudited) ...... 101 Notes to the Accounts (unaudited) ...... 102 Accounting policies ...... 102 Contents (continued)

Schroder Investment Fund Company

Distribution Table (unaudited) ...... 103 Interim distribution for the six months ended 30 June 2017 ...... 103 Corporate shareholders ...... 103 Equalisation ...... 103

Schroder UK Alpha Income Fund ...... 104 Fund Information 1 ...... 104 Investment objective and policy ...... 104 Financial highlights ...... 104 Fund information ...... 104 Ongoing charges figure ...... 105 Total purchases and sales ...... 105 Review of Investment Activities 1 ...... 106 Risk Profile 1 ...... 107 Risk and reward indicator ...... 107 Specific risks ...... 107 Net Asset Value and Comparative Tables 1 ...... 108 Share price range ...... 108 Net revenue ...... 109 Net asset value ...... 110 Fund performance ...... 111 Portfolio Statement 1 ...... 112 Summary of Portfolio Transactions 1 ...... 115 Largest purchases ...... 115 Largest sales ...... 115 Statement of Total Return (unaudited) ...... 116 Statement of Change in Net Assets Attributable to Shareholders (unaudited) ...... 116 Balance Sheet (unaudited) ...... 117 Notes to the Accounts (unaudited) ...... 118 Accounting policies ...... 118 Distribution Table (unaudited) ...... 119 Interim distribution for the six months ended 30 June 2017 ...... 119 Corporate shareholders ...... 119 Equalisation ...... 120

Schroder Strategic Credit Fund ...... 122 Fund Information 1 ...... 121 Investment objective and policy ...... 121 Financial highlights ...... 121 Fund information ...... 122 Ongoing charges figure ...... 123 Total purchases and sales ...... 123 Review of Investment Activities 1 ...... 124 Risk Profile 1 ...... 125 Risk and reward indicator ...... 125 Specific risks ...... 125 Net Asset Value and Comparative Tables 1 ...... 126 Share price range ...... 126 Net revenue ...... 127 Net asset value ...... 129 Fund performance ...... 130 Contents (continued)

Schroder Investment Fund Company

Portfolio Statement 1 ...... 131 Summary of Portfolio Transactions 1 ...... 148 Largest purchases ...... 148 Largest sales ...... 148 Statement of Total Return (unaudited) ...... 149 Statement of Change in Net Assets Attributable to Shareholders (unaudited) ...... 149 Balance Sheet (unaudited) ...... 150 Notes to the Accounts (unaudited) ...... 151 Accounting policies ...... 151 Securities Financing Transactions (unaudited) ...... 152 Distribution Table (unaudited) ...... 153 Interim distribution for the six months ended 30 June 2017 ...... 153 Equalisation ...... 154

Schroder European Alpha Income Fund ...... 155 Fund Information 1 ...... 155 Investment objective and policy ...... 155 Financial highlights ...... 155 Fund information ...... 156 Ongoing charges figure ...... 157 Total purchases and sales ...... 157 Review of Investment Activities 1 ...... 158 Risk Profile 1 ...... 159 Risk and reward indicator ...... 159 Specific risks ...... 159 Net Asset Value and Comparative Tables 1 ...... 160 Share price range ...... 160 Net revenue ...... 161 Net asset value ...... 162 Fund performance ...... 164 Portfolio Statement 1 ...... 165 Summary of Portfolio Transactions 1 ...... 169 Largest purchases ...... 169 Largest sales ...... 169 Statement of Total Return (unaudited) ...... 170 Statement of Change in Net Assets Attributable to Shareholders (unaudited) ...... 170 Balance Sheet (unaudited) ...... 171 Notes to the Accounts (unaudited) ...... 172 Accounting policies ...... 172 Distribution Table (unaudited) ...... 173 Quarterly distribution for the three months ended 31 March 2017 ...... 173 Interim distribution for the three months ended 30 June 2017 ...... 174 Corporate shareholders ...... 175 Equalisation ...... 175

Schroder Global Recovery Fund ...... 176 Fund Information 1 ...... 176 Investment objective and policy ...... 176 Financial highlights ...... 176 Fund information ...... 177 Ongoing charges figure ...... 177 Total purchases and sales ...... 177 Contents (continued)

Schroder Investment Fund Company

Review of Investment Activities 1 ...... 178 Risk Profile 1 ...... 179 Risk and reward indicator ...... 179 Specific risks ...... 179 Net Asset Value and Comparative Tables 1 ...... 180 Share price range ...... 180 Net revenue ...... 180 Net asset value ...... 181 Fund performance ...... 181 Portfolio Statement 1 ...... 182 Summary of Portfolio Transactions 1 ...... 186 Largest purchases ...... 186 Largest sales ...... 186 Statement of Total Return (unaudited) ...... 187 Statement of Change in Net Assets Attributable to Shareholders (unaudited) ...... 187 Balance Sheet (unaudited) ...... 188 Notes to the Accounts (unaudited) ...... 189 Accounting policies ...... 189

Schroder Multi-Asset Total Return Fund ...... 190 Fund Information 1 ...... 190 Investment objective and policy ...... 190 Financial highlights ...... 190 Fund information ...... 191 Ongoing charges figure ...... 191 Total purchases and sales ...... 192 Review of Investment Activities 1 ...... 193 Risk Profile 1 ...... 194 Risk and reward indicator ...... 194 Specific risks ...... 194 Net Asset Value and Comparative Tables 1 ...... 196 Share price range ...... 196 Net revenue ...... 196 Net asset value ...... 196 Fund performance ...... 197 Portfolio Statement 1 ...... 198 Summary of Portfolio Transactions 1 ...... 204 Largest purchases ...... 204 Largest sales ...... 204 Statement of Total Return (unaudited) ...... 205 Statement of Change in Net Assets Attributable to Shareholders (unaudited) ...... 205 Balance Sheet (unaudited) ...... 206 Notes to the Accounts (unaudited) ...... 207 Accounting policies ...... 207 Securities Financing Transactions (unaudited) ...... 208

General Information 1 ...... 209 Other information ...... 209 Authorisation ...... 209

1 Collectively these comprise the Authorised Corporate Director’s (ACD’s) report. Schroder Investment Fund Company

Schroder Investment Fund Company

Company Information

General information Schroder Investment Fund Company (SIFCo or the company) is an umbrella company comprising ten sub funds which have their own investment objectives and policies. As at 30 June 2017 the company had the following sub funds available:

Schroder UK Opportunities Fund Schroder UK Dynamic Smaller Companies Fund Schroder UK Corporate Bond Fund Schroder European Opportunities Fund Schroder Core UK Equity Fund Schroder UK Alpha Income Fund Schroder Strategic Credit Fund Schroder European Alpha Income Fund Schroder Global Recovery Fund Schroder Multi-Asset Total Return Fund 1

1 Schroder Multi-Asset Total Return Fund was launched on 28 April 2017.

Principle activities The company’s principle activity is to carry on business as an Open Ended Investment Company (OEIC). The company is structured as an umbrella company and different sub funds may be established by the ACD from time to time with the agreement of the Depositary and approval from the Financial Conduct Authority (FCA).

The sub funds are operated separately and the assets of each sub fund are managed in accordance with the investment objective and policy applicable to that sub fund.

Liabilities of the The sub funds are segregated portfolios of assets and, accordingly, the assets of each sub fund belong exclusively to that sub fund and shall not be used to company discharge directly or indirectly the liabilities of, or claims against, any other person or body, including the company, or any other sub fund, and shall not be available for any such purpose. Subject to the above, each sub fund will be charged with the liabilities, expenses, costs and charges attributable to that sub fund and within each sub fund charges will be allocated as far as possible according to the net asset value of that particular share class. Any assets, liabilities, expenses, costs or charges not attributable to a particular sub fund may be allocated by the ACD in a manner which it believes is fair to the shareholders generally. This will normally be pro rata to the net asset value of the relevant sub funds.

Shareholders are not liable for the debts of the company.

Shareholders are not liable to make any further payments to the company after they have paid the purchase price of the share.

8 Schroder Investment Fund Company

Statement of the Authorised Corporate Director’s Responsibilities

The FCA’s Collective Investment Schemes sourcebook (COLL) requires the ACD 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 company and of its net revenue and the net capital gains on the property of the company for the period. In preparing the accounts the ACD is required to:

– select suitable accounting policies and then apply them consistently; – comply with the disclosure requirements of the Statement of Recommended Practice (SORP) for UK Authorised Funds issued by the Investment Management Association (IMA (now the Investment Association (IA))) in May 2014; – follow generally accepted accounting principles and applicable accounting standards; – prepare the accounts on the basis that the company 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 ACD is responsible for the management of the company in accordance with The Open Ended Investment Companies Regulations 200 1 (SI 2001/1228) (‘the OEIC Regulations’), the Company’s Instrument of Incorporation, Prospectus and the COLL and for taking reasonable steps for the prevention and detection of fraud, error and non-compliance with law or regulations.

The ACD’s report and accounts for the period ended 30 June 2017 were signed on 21 August 2017 on behalf of the ACD by:

J.A. Walker-Hazell J.M. Cardew Directors

9 Schroder Investment Fund Company

Statement of Cross Holdings

As at 30 June 2017 there were no sub fund cross holdings within the company.

10 Schroder Investment Fund Company

Basis of preparation

The accounts have been prepared under the historical cost basis, as modified by the revaluation of investments, and in accordance with the SORP for UK Authorised Funds issued by the IMA 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)).

Accounting policies

The accounting policies applied are consistent with those of the annual accounts for the year ended 31 December 2016 and are described in those annual accounts.

Schroder UK Opportunities Fund

Fund Information

Investment objective The fund aims to achieve an income return, together with long term capital growth, by investing in any economic sector of the UK market. The ACD invests and policy predominantly in UK equities.

Financial Dealing price 30.6.17 30.12.16 % change A Accumulation shares 420.30p 386.90p 8.63 highlights C Income shares 325.80p 301.40p 8.10 C Accumulation shares 464.70p 426.70p 8.91 D Income shares 52.69p 48.75p 8.08 D Accumulation shares 57.27p 52.51p 9.06 S Income shares 50.96p 47.14p 8.10 Z Income shares 435.20p 402.60p 8.10 Z Accumulation shares 491.60p 450.90p 9.03 31.8.17 31.8.16 Interim distribution per Z Income share 6.2893p 5.9921p

Fund information Launch date 2 July 1999 Launch price 135.27p per C Income share 135.27p per C Accumulation share 135.27p per Z Accumulation share Launch date 25 February 2002 Launch price 110.56p per A Accumulation share Launch date 1 December 2011 Launch price 250.64p per Z Income share Launch date 1 October 2013 Launch price 50.00p per D Income share 50.00p per D Accumulation share Launch date 1 November 2013 Launch price 50.00p per S Income share

Interim Final Accounting dates 30 June 31 December Revenue allocation dates 31 August 28 February

12 Schroder UK Opportunities Fund

Fund Information (continued)

For the period For the year Ongoing charges to 30.6.17 to 31.12.16 figure A Accumulation shares 1.67% 1 1.67% C Income shares 1.17% 1 1.17% C Accumulation shares 1.17% 1 1.17% D Income shares 0.84% 1 0.84% D Accumulation shares 0.84% 1 0.84% S Income shares 0.54% 1 0.54% Z Income shares 0.92% 1 0.92% Z Accumulation shares 0.92% 1 0.92%

1 The Ongoing charges figure is annualised based on the fees incurred during the accounting period.

For the period For the year Total purchases to 30.6.17 to 31.12.16 and sales £000’s £000’s Total purchases 65,537 175,212 Total sales 136,643 330,912

13 Schroder UK Opportunities Fund

Review of Investment Activities

From 30 December 2016 to 30 June 2017, the price of Z Accumulation shares on a dealing price to dealing price basis rose 9.03%. In comparison, the FTSE 1 All Share Index generated a total return of 5.50% 2.

Over the period the FTSE 1 All Share Index delivered a total return of 5.5% 3; the FTSE 1 100 Index, 4.7% 3; the FTSE 1 250 Index 8.5% 3; and the FTSE 1 Small Cap Index, 10.2% 3 as the UK equity market continued to recover from the lows of the prior year. At a sector level, the personal goods, paper, electronics and Fund Manager: household goods sectors were the strongest performers with aerospace & Matthew Hudson defence and finance services also outperforming. Conversely, the oil services, fixed line telecommunications and oil sectors underperformed in the period while the electricity and general retailers sectors also struggled. Matthew Hudson joined Schroders in The fund outperformed the benchmark index in the period with stock selection July 2013 following the acquisition of the key driver of returns although business cycle positioning was also a positive Cazenove Capital contributor. Key positive stocks included Sophos Group, Melrose Industries, Man He joined Cazenove Capital in 2001 Group, Hiscox, NEX Group and Standard Chartered. Conversely, holdings in from AIB Govett Investment Dixons Carphone, Anglo American and ITV delivered negative returns while Management. Prior to this he was a underweight positions in Unilever, British American Tobacco and HSBC Holdings chartered accountant at held back relative returns. PriceWaterhouseCoopers

Within the six months, the fund established new holdings in some domestic He is the Head of the Pan European shares where valuations are very depressed such as Forterra (construction) and Business Cycle equity Team at EI Group (leisure). These additions were funded by disposals such as Merlin Schroders with responsibility for UK Entertainments (extended valuation), Pets at Home Group (potential new equity income and UK opportunities competition) and Intermediate Capital Group (profit taking). portfolios

Whilst uncertainty on the macro economy has remained, the UK market is still an He manages the Schroder UK Alpha attractive hunting ground for real returns. The fund has maintained a later cycle Income Fund, Schroder UK tilt and continues to look for opportunities to find value, particularly in stocks or Opportunities Fund, SISF UK sectors out of favour with many investors. Opportunities Fund and Equity Income 1 FTSE International Limited (“FTSE”) © FTSE. “FTSE®” is a trade mark of London Stock Exchange plc and The Trust for Charities, a UK authorised 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 Common Investment Fund 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. He is responsible for the following UK 2 Source: Thomson Reuters Datastream. sectors – banks, construction and

3 Source: FactSet. materials, gas, water and multi-utilities, mining and electricity 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 He Graduated from Cambridge them may go down as well as up and investors may not get back the amount University with a degree in history and originally invested. Because of this, you are not certain to make a profit on your has 18 years’ investment experience investments and you may lose money.

14 Schroder UK Opportunities Fund

Risk Profile

Risk and reward Lower risk Highe r risk Potentially lower reward Potentially higher reward indicator

1 2 3 4 55 6 7

The risk and reward indicator changed from 6 to 5 with effect from 17 February 2017.

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 predominantly 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 a smaller number of stocks. This carries more risk than funds spread across a larger number of companies.

The fund may invest in a wide range of derivatives in order to meet its investment objectives and for leverage. The use of leverage can increase gains as well as losses and expose the fund to increased risk.

For these reasons, the purchase of shares should not normally be regarded as a short term investment.

15 Schroder UK Opportunities Fund

Net Asset Value and Comparative Tables

A Accumulation Share price range Financial year to 31 December shares C Income shares Highest Lowest Highest Lowest dealing dealing dealing dealing p p p p 2014 400.98 325.00 327.28 262.40 2015 399.70 344.40 320.80 273.30 2016 387.40 317.80 301.50 250.30 Financial period to 30 June 2017 431.00 389.60 334.00 301.30

C Accumulation Financial year to 31 December shares D Income shares Highest Lowest Highest Lowest dealing dealing dealing dealing p p p p 2014 435.90 354.40 52.92 42.42 2015 437.20 377.80 51.88 44.21 2016 426.70 348.90 48.75 40.44 Financial period to 30 June 2017 476.30 429.80 54.00 48.66

D Accumulation Financial year to 31 December shares S Income shares Highest Lowest Highest Lowest dealing dealing dealing dealing p p p p 2014 53.14 43.30 51.08 40.99 2015 53.52 46.33 50.15 42.74 2016 52.51 42.80 47.14 39.05 Financial period to 30 June 2017 58.70 52.90 52.21 47.00

Financial year to 31 December Z Income shares Z Accumulation shares Highest Lowest Highest Lowest dealing dealing dealing dealing p p p p 2014 436.82 350.30 457.28 372.40 2015 428.40 365.00 460.10 398.20 2016 402.60 334.00 450.90 367.80 Financial period to 30 June 2017 446.00 402.00 503.80 454.20

16 Schroder UK Opportunities Fund

Net Asset Value and Comparative Tables (continued) A Accumulation shares C Income shares Net revenue Financial year to 31 December pence per share pence per share 2014 6.5578 6.8411 2015 6.3716 6.6425 2016 6.3052 6.4082 Financial period to 30 June 2017 4.5493 4.3173

C Accumulation shares D Income shares Financial year to 31 December pence per share pence per share 2014 9.1671 1.2972 2015 9.0982 1.2264 2016 8.9821 1.1996 Financial period to 30 June 2017 6.1567 0.7824

D Accumulation shares S Income shares Financial year to 31 December pence per share pence per share 2014 1.2992 1.3542 2015 1.2715 1.3300 2016 1.2630 1.2774 Financial period to 30 June 2017 0.8535 0.8292

Z Income shares Z Accumulation shares Financial year to 31 December pence per share pence per share 2014 10.1398 10.6961 2015 9.8680 10.6597 2016 9.5016 10.5332 Financial period to 30 June 2017 6.2893 7.0989

17 Schroder UK Opportunities Fund

Net Asset Value and Comparative Tables (continued) Net asset Net asset value Net asset value value per share Number of As at 31 December £000’s p shares in issue 2014 A Accumulation shares 243,565 361.02 67,465,730 C Income shares 39,592 289.18 13,691,037 C Accumulation shares 32,952 394.12 8,360,723 D Income shares 551 46.71 1,179,161 D Accumulation shares 3,052 48.19 6,334,610 S Income shares 1 45.09 3,000 Z Income shares 124,266 385.79 32,210,416 Z Accumulation shares 437,542 414.35 105,596,722 2015 A Accumulation shares 92,572 361.60 25,600,406 C Income shares 31,832 284.62 11,183,985 C Accumulation shares 23,793 396.77 5,996,813 D Income shares 89 45.97 192,565 D Accumulation shares 372 48.66 764,777 S Income shares 531 44.38 1,197,104 Z Income shares 52,160 379.69 13,737,690 Z Accumulation shares 303,440 418.18 72,562,509 2016 A Accumulation shares 61,817 388.39 15,916,242 C Income shares 23,078 300.29 7,684,942 C Accumulation shares 17,403 428.30 4,063,375 D Income shares 2,672 48.49 5,511,424 D Accumulation shares 1,700 52.70 3,226,315 S Income shares 821 46.82 1,753,483 Z Income shares 39,730 400.60 9,917,603 Z Accumulation shares 213,932 452.54 47,273,962 2017 at 30 June A Accumulation shares 57,555 418.08 13,766,288 C Income shares 20,843 319.74 6,518,777 C Accumulation shares 17,184 462.20 3,717,909 D Income shares 1,001 51.63 1,938,985 D Accumulation shares 1,522 56.97 2,671,188 S Income shares 821 49.86 1,646,930 Z Income shares 33,677 426.55 7,895,231 Z Accumulation shares 167,821 488.97 34,320,939

18 Schroder UK Opportunities Fund

Net Asset Value and Comparative Tables (continued) Net asset Net asset Fund performance value per share value per share pp as at 30.6.17 as at 31.12.16 % change A Accumulation shares 418.08 388.39 7.64 C Income shares 319.74 300.29 6.48 C Accumulation shares 462.20 428.30 7.92 D Income shares 51.63 48.49 6.48 D Accumulation shares 56.97 52.70 8.10 S Income shares 49.86 46.82 6.49 Z Income shares 426.55 400.60 6.48 Z Accumulation shares 488.97 452.54 8.05

19 Schroder UK Opportunities Fund

Portfolio Statement

Holding at Market Value % of net 30.6.17 £000’s assets Oil & Gas 7.55% (31.12.16 – 8.80%) Royal Dutch Shell B 1,100,000 22,687 7.55 22,687 7.55

Basic Materials 6.87% (31.12.16 – 4.09%) Anglo American 690,000 7,065 2.35 Johnson Matthey 70,000 2,010 0.67 Rio Tinto 356,874 11,570 3.85 20,645 6.87

Industrials 12.71% (31.12.16 – 7.17%) Babcock International Group 650,000 5,720 1.90 Balfour Beatty 1,450,000 3,919 1.31 Cobham 2,800,000 3,629 1.21 DS Smith 1,030,000 4,878 1.62 Essentra 800,000 4,504 1.50 Forterra 1,510,000 3,847 1.28 Melrose Industries 2,230,000 5,401 1.80 Rentokil Initial 2,300,000 6,284 2.09 38,182 12.71

Consumer Goods 7.73% (31.12.16 – 6.39%) GKN 1,400,000 4,561 1.52 Reckitt Benckiser Group 165,000 12,840 4.27 SuperGroup 390,000 5,819 1.94 23,220 7.73

Health Care 11.38% (31.12.16 – 11.00%) GlaxoSmithKline 950,000 15,528 5.17 Indivior 700,000 2,189 0.73 Shire 224,749 9,524 3.17 Smith & Nephew 525,000 6,956 2.31 34,197 11.38

20 Schroder UK Opportunities Fund

Portfolio Statement (continued)

Holding at Market Value % of net 30.6.17 £000’s assets Consumer Services 15.36% (31.12.16 – 21.02%) Carnival 154,000 7,823 2.60 Dixons Carphone 2,075,000 5,885 1.96 easyJet 300,000 4,074 1.35 EI Group 2,880,000 3,693 1.23 ITV 4,390,814 7,965 2.65 Moneysupermarket.com Group 1,000,000 3,536 1.18 RELX 445,000 7,387 2.46 Wm Morrison Supermarkets 2,403,916 5,789 1.93 46,152 15.36

Telecommunications 1.73% (31.12.16 – 4.08%) TalkTalk Telecom Group 468,636 845 0.28 Vodafone Group 2,000,000 4,354 1.45 5,199 1.73

Financials 32.57% (31.12.16 – 30.22%) Aberdeen Asset Management 1,120,000 3,382 1.13 Barclays 4,500,000 9,121 3.04 Direct Line Insurance Group 1,500,000 5,331 1.78 FFI Holdings 795,203 1,233 0.41 Hiscox 640,000 8,102 2.70 Jupiter Fund Management 1,000,000 5,040 1.68 Lloyds Banking Group 18,400,000 12,172 4.05 Man Group 2,610,000 4,038 1.34 NEX Group 738,571 4,609 1.53 Prudential 900,000 15,844 5.27 RSA Insurance Group 600,000 3,693 1.23 Secure Trust Bank 140,000 2,765 0.92 St James’s Place 370,000 4,366 1.45 Standard Chartered 1,523,874 11,844 3.94 TP ICAP 1,350,000 6,302 2.10 97,842 32.57

21 Schroder UK Opportunities Fund

Portfolio Statement (continued)

Holding at Market Value % of net 30.6.17 £000’s assets Technology 4.04% (31.12.16 – 3.88%) Sage Group 955,000 6,571 2.19 Sophos Group 1,252,818 5,551 1.85 12,122 4.04

Portfolio of investments 300,246 99.94 Net other assets 178 0.06 Net assets attributable to shareholders 300,424 100.00

Unless otherwise stated the above securities are ordinary shares or common stock and admitted to official stock exchange listings.

22 Schroder UK Opportunities Fund

Summary of Portfolio Transactions

Cost Largest purchases For the six months ended 30 June 2017 £000’s Barclays 10,447 Babcock International Group 5,889 Rio Tinto 5,553 DS Smith 4,721 EI Group 3,935 Cobham 3,239 Aberdeen Asset Management 3,146 Forterra 3,079 Balfour Beatty 2,964 Jupiter Fund Management 2,836

Proceeds Largest sales For the six months ended 30 June 2017 £000’s Aviva 15,158 Vodafone Group 11,225 Melrose Industries 10,307 Merlin Entertainments 8,239 Booker Group 6,823 Intermediate Capital Group 6,320 RSA Insurance Group 6,296 RELX 5,949 Lloyds Banking Group 5,875 Carnival 5,777

23 Schroder UK Opportunities Fund

Statement of Total Return (unaudited)

For the six months ended 30 June 2017 30.6.17 30.6.16 £000’s £000’s £000’s £000’s Income Net capital gains/(losses) 22,299 (20,764) Revenue 6,564 9,124 Expenses (1,829) (2,332) Net revenue before taxation 4,735 6,792 Taxation 0 0 Net revenue after taxation 4,735 6,792 Total return before distributions 27,034 (13,972) Distributions (4,735) (6,711) Change in net assets attributable to shareholders from investment activities 22,299 (20,683) Statement of Change in Net Assets Attributable to Shareholders (unaudited) For the six months ended 30 June 2017 30.6.17 30.6.16 £000’s £000’s £000’s £000’s Opening net assets attributable to shareholders 361,153 1 504,789 Amounts receivable on issue of shares 823 1,983 Amounts payable on cancellation of shares (87,165) (93,291) (86,342) (91,308) Dilution adjustment 0 11 Change in net assets attributable to shareholders from investment activities 22,299 (20,683) Retained distribution on Accumulation shares 3,314 5,083 Unclaimed distributions 0 1 Closing net assets attributable to shareholders 300,424 397,893 1

1 The Opening net assets attributable to shareholders for the current period do not equal the Closing net assets attributable to shareholders for the comparative period as they are not consecutive periods.

24 Schroder UK Opportunities Fund

Balance Sheet (unaudited)

As at 30 June 2017 30.6.17 31.12.16 £000’s £000’s Assets Investments 300,246 349,051 Current assets Debtors 2,114 888 Cash and bank balances 4,025 13,314 Total assets 306,385 363,253

Liabilities Creditors Distribution payable (807) (555) Other creditors (5,154) (1,545) Total liabilities (5,961) (2,100)

Net assets attributable to shareholders 300,424 361,153

25 Schroder UK Opportunities Fund

Notes to the Accounts (unaudited)

Accounting policies The applicable accounting policies adopted by Schroder UK Opportunities Fund are disclosed on page 11.

26 Schroder UK Opportunities Fund

Distribution Table (unaudited)

Interim distribution Group 1 Shares purchased prior to 1 January 2017 Group 2 Shares purchased on or after 1 January 2017 for the six Net Distribution Distribution months ended revenue Equalisation payable paid 2017 2017 31.8.17 31.8.16 30 June 2017 p per share p per share p per share p per share A Accumulation shares Group 1 4.5493 – 4.5493 4.3254 Group 2 2.8124 1.7369 4.5493 4.3254 C Income shares Group 1 4.3173 – 4.3173 4.1422 Group 2 2.0740 2.2433 4.3173 4.1422 C Accumulation shares Group 1 6.1567 – 6.1567 5.7759 Group 2 1.2576 4.8991 6.1567 5.7759 D Income shares Group 1 0.7824 – 0.7824 0.7562 Group 2 0.7612 0.0212 0.7824 0.7562 D Accumulation shares Group 1 0.8535 – 0.8535 0.7854 Group 2 0.6823 0.1712 0.8535 0.7854 S Income shares Group 1 0.8292 – 0.8292 0.7820 Group 2 0.8292 0.0000 0.8292 0.7820 Z Income shares Group 1 6.2893 – 6.2893 5.9921 Group 2 5.0414 1.2479 6.2893 5.9921 Z Accumulation shares Group 1 7.0989 – 7.0989 6.6053 Group 2 4.2479 2.8510 7.0989 6.6053

Corporate Corporate shareholders receive the dividend distribution payments as detailed shareholders below: 100.00% of the total distribution is received as franked investment income.

Equalisation Equalisation applies to shares purchased during the distribution period (Group 2 shares). It is the average amount of revenue included in the purchase price of Group 2 shares and is refunded to the holders of these shares as a return of capital.

Being capital it is not liable to income tax but must be deducted from the cost of shares for capital gains tax purposes.

27 Schroder UK Dynamic Smaller Companies Fund

Schroder UK Dynamic Smaller Companies Fund

Fund Information

Investment objective The fund’s investment objective is to achieve long term capital growth by investing primarily in UK smaller companies. The fund will invest at least 80% and policy of its assets in UK listed companies that form the bottom 10% by market capitalisation. The fund may also invest in companies which are headquartered or have significant activities in the UK which are quoted on a stock exchange outside the UK.

The ACD seeks to invest in high quality smaller companies that are capable of producing shareholder value through above average growth in earnings and dividends over the medium to long term. The fund should benefit from holding a broadly spread portfolio of such companies which will dilute the specific risk inherent in smaller company investment. The fund will usually maintain a portfolio predominantly invested in equities. It is the intention of the ACD that transactions in derivative instruments may be entered into for efficient portfolio management purposes. Any transaction in derivatives would be undertaken on a covered basis. The borrowing powers permitted by the FCA Rules may be utilised from time to time.

Financial Dealing price 30.6.17 30.12.16 % change A Accumulation shares 423.30p 354.00p 19.58 highlights C Income shares 410.20p 343.20p 19.52 C Accumulation shares 460.70p 384.30p 19.88 S Income shares 72.17p 60.38p 19.53 S Accumulation shares 75.73p 62.98p 20.24 Z Income shares 469.60p 392.90p 19.52 Z Accumulation shares 489.30p 407.60p 20.04 31.8.17 31.8.16 Interim distribution per Z Income share 1.8555p 1.4029p

28 Schroder UK Dynamic Smaller Companies Fund

Fund Information (continued)

Fund information Launch date 2 July 1999 Launch price 59.98p per C Income share 59.98p per C Accumulation share 59.98p per Z Accumulation share Launch date 25 February 2002 Launch price 72.11p per A Accumulation share Launch date 1 December 2011 Launch price 169.96p per Z Income share Launch date 1 November 2013 Launch price 50.00p per S Income share Launch date 20 March 2015 Launch price 50.00p per S Accumulation share

Interim Final Accounting dates 30 June 31 December Revenue allocation dates 31 August 28 February

For the period For the year Ongoing charges to 30.6.17 to 31.12.16 figure A Accumulation shares 1.67% 1 1.67% C Income shares 1.17% 1 1.17% C Accumulation shares 1.17% 1 1.17% S Income shares 0.54% 1 0.54% S Accumulation shares 0.54% 1 0.54% Z Income shares 0.92% 1 0.92% Z Accumulation shares 0.92% 1 0.92%

1 The Ongoing charges figure is annualised based on the fees incurred during the accounting period.

For the period For the year Total purchases to 30.6.17 to 31.12.16 and sales £000’s £000’s Total purchases 275,665 96,751 Total sales 354,495 188,140

29 Schroder UK Dynamic Smaller Companies Fund

Review of Investment Activities

From 30 December 2016 to 30 June 2017, the price of Z Accumulation shares on a dealing price to dealing price basis rose 20.04%. In comparison, the FTSE 1 SmallCap ex Investment Trust Index generated a total return of 8.82% 2.

Small cap equities performed very well over the period with growth very much in fashion as the broader economic outlook has faltered somewhat. Solid market gains have been achieved despite the additional uncertainty emanating from the Co-Fund Manager: political sphere (both at home and abroad) and central banks over the future Paul Marriage path of monetary policy. We remain cautious on some areas of high growth Paul joined Schroders in July 2013 where valuations now seems extreme but the breadth of our portfolio has served following the acquisition of Cazenove us well and hopefully reduces risk. We significantly outperformed our benchmark. Capital Producer of premium drink mixers Fevertree Drinks and manufacturer of Paul is manager of the Schroder UK fragrances and flavours for the consumer goods industries Treatt continued to Dynamic Smaller Companies Fund perform very well. Both continued to adeptly manage earnings forecasts, ensuring good market reactions to trading updates. The results of both companies further Prior to this Paul was Head of UK underlined the potential for Fevertree Drinks and Treatt to become global leaders Small Cap investments at Insight in their chosen fields. Data replication software provider WANdisco was another Investment and an analyst at GH Asset top contributor as it continued to recover on the back of improved cashflow Management management and after winning significant contracts with greater frequency. Paul graduated from University Meanwhile, high end cinema operator Everyman Media Group and construction College, Oxford with a degree in and development company Watkin Jones performed well following robust results. Modern History

On the negative side, leisure operator Revolution Bars Group and surveillance He is a member of ASIP and has technology group Digital Barriers performed poorly on the back of profit 18 years’ investment experience warnings. And, despite the appointment of a replacement heavyweight CFO, Xaar continued to drift lower. The bears latched onto outlook comments in the final results regarding deteriorating revenue visibility going forwards. We continue to believe that Xaar is one of the UK’s most exciting technology companies.

The fortunes of this fund have been my life for the last 11 and a half years, half of which time I have managed the portfolio with John Warren. Having been working closely with your new manager, Luke Biermann for several weeks we have been Co-Fund Manager: really impressed with his approach and as one of you – an investor – we can look John Warren forward with confidence. John joined Schroders in July 2013 1 FTSE International Limited (“FTSE”) © FTSE. “FTSE®” is a trade mark of London Stock Exchange plc and The following the acquisition of Cazenove 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 Capital 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. John is a member of the pan-European

2 Source: Thomson Reuters Datastream. equity team He has over 15 years’ investment Please remember that past performance is not a guide to future performance experience, having previously been at and it might not be repeated. The value of investments and the revenue from UBS and Investec Bank 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 John graduated from Loughborough investments and you may lose money. University with a degree in Economics and Accountancy. He holds the ACA and SFA 30 Schroder UK Dynamic Smaller Companies Fund

Risk Profile

Risk and reward Lower risk Highe r risk Potentially lower reward Potentially higher reward indicator

1 2 3 4 55 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 in assets which are exposed to currencies other than sterling. Exchange rates may cause the value of overseas investments and the revenue from them to rise or fall.

The fund invests predominantly 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 a smaller number of stocks. This carries more risk than funds spread across a larger number of companies.

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.

The fund may use derivatives for specific investment purposes. This involves a higher degree of risk and may lead to a higher volatility in the share prices of the fund.

For these reasons, the purchase of shares should not normally be regarded as a short term investment.

31 Schroder UK Dynamic Smaller Companies Fund

Net Asset Value and Comparative Tables

A Accumulation Share price range Financial year to 31 December shares C Income shares Highest Lowest Highest Lowest dealing dealing dealing dealing p p p p 2014 332.86 263.60 321.68 254.70 2015 329.40 281.30 318.30 271.90 2016 355.30 281.70 344.50 273.30 Financial period to 30 June 2017 431.60 354.70 417.90 342.90

C Accumulation Financial year to 31 December shares S Income shares Highest Lowest Highest Lowest dealing dealing dealing dealing p p p p 2014 356.18 283.00 56.49 44.74 2015 355.00 302.60 56.16 47.75 2016 385.70 305.10 60.60 48.09 Financial period to 30 June 2017 469.30 385.10 73.47 60.15

S Accumulation Financial year to 31 December shares Z Income shares Highest Lowest Highest Lowest dealing dealing dealing dealing p p p p 2014 ––367.94 291.40 2015 57.68 49.42 364.10 311.00 2016 63.21 49.84 394.30 312.90 Financial period to 30 June 2017 77.10 63.12 478.30 392.10

Financial year to 31 December Z Accumulation shares Highest Lowest dealing dealing p p 2014 375.09 298.50 2015 375.30 319.40 2016 409.10 323.20 Financial period to 30 June 2017 498.30 408.50

32 Schroder UK Dynamic Smaller Companies Fund

Net Asset Value and Comparative Tables (continued) A Accumulation shares C Income shares Net revenue Financial year to 31 December pence per share pence per share 2014 0.2416 1.3751 2015 Nil 1.0204 2016 0.3031 1.9008 Financial period to 30 June 2017 0.1692 1.1077

C Accumulation shares S Income shares Financial year to 31 December pence per share pence per share 2014 1.4775 0.5250 2015 1.1215 0.4859 2016 2.0662 0.6774 Financial period to 30 June 2017 1.2599 0.4005

S Accumulation shares Z Income shares Financial year to 31 December pence per share pence per share 2014 – 2.4207 2015 0.5028 1.9608 2016 0.7025 3.0654 Financial period to 30 June 2017 0.4211 1.8555

Z Accumulation shares Financial year to 31 December pence per share 2014 2.4570 2015 2.0391 2016 3.1865 Financial period to 30 June 2017 1.9393

33 Schroder UK Dynamic Smaller Companies Fund

Net Asset Value and Comparative Tables (continued) Net asset Net asset value Net asset value value per share Number of As at 31 December £000’s p shares in issue 2014 A Accumulation shares 241,434 279.78 86,295,778 C Income shares 56,482 270.24 20,900,698 C Accumulation shares 49,661 300.67 16,516,833 S Income shares 1 47.40 3,000 Z Income shares 47,792 308.94 15,469,725 Z Accumulation shares 240,821 317.31 75,894,913 2015 A Accumulation shares 131,683 313.86 41,955,513 C Income shares 57,467 303.69 18,923,068 C Accumulation shares 40,328 339.00 11,895,942 S Income shares 806 53.27 1,513,000 S Accumulation shares 1,794 55.21 3,249,018 Z Income shares 45,185 347.26 13,011,774 Z Accumulation shares 234,672 358.67 65,428,200 2016 A Accumulation shares 107,451 349.45 30,748,752 C Income shares 42,431 337.73 12,563,570 C Accumulation shares 30,767 379.33 8,110,982 S Income shares 8,861 59.24 14,956,566 S Accumulation shares 2,716 62.17 4,368,289 Z Income shares 39,521 386.19 10,233,718 Z Accumulation shares 225,114 402.34 55,950,645 2017 at 30 June A Accumulation shares 122,611 420.90 29,130,689 C Income shares 20,422 406.68 5,021,493 C Accumulation shares 15,912 458.01 3,474,180 S Income shares 1,160 71.35 1,626,333 S Accumulation shares 453 75.29 601,626 Z Income shares 37,840 465.06 8,136,449 Z Accumulation shares 264,719 486.43 54,420,729

34 Schroder UK Dynamic Smaller Companies Fund

Net Asset Value and Comparative Tables (continued) Net asset Net asset Fund performance value per share value per share pp as at 30.6.17 as at 31.12.16 % change A Accumulation shares 420.90 349.45 20.45 C Income shares 406.68 337.73 20.42 C Accumulation shares 458.01 379.33 20.74 S Income shares 71.35 59.24 20.44 S Accumulation shares 75.29 62.17 21.10 Z Income shares 465.06 386.19 20.42 Z Accumulation shares 486.43 402.34 20.90

35 Schroder UK Dynamic Smaller Companies Fund

Portfolio Statement

Holding at Market Value % of net 30.6.17 £000’s assets Basic Materials 2.30% (31.12.16 – 3.73%) Treatt 2,274,543 10,656 2.30 10,656 2.30

Industrials 24.87% (31.12.16 – 34.00%) Augean 13,580,500 8,352 1.80 Carillion 1,782,450 3,326 0.72 Digital Barriers 20,465,633 5,526 1.19 Eurocell 2,420,805 6,173 1.33 Gooch & Housego 590,930 8,243 1.78 Ibstock 214,361 526 0.11 Johnson Service Group 7,308,659 9,392 2.03 Midwich Group 2,410,705 7,859 1.70 Morgan Advanced Materials 120,646 342 0.08 Oxford Instruments 279,174 2,923 0.63 Polypipe Group 1,288,997 4,926 1.06 Renold 14,464,253 7,594 1.64 Robert Walters 1,423,625 5,976 1.29 Senior 1,506,974 3,529 0.76 Serco Group 3,464,349 3,980 0.86 Smart Metering Systems 1,225,854 6,466 1.40 Vp 1,715,648 14,755 3.19 Wincanton 4,691,041 11,681 2.52 Xaar 963,570 3,623 0.78 115,192 24.87

Consumer Goods 16.69% (31.12.16 – 19.86%) Crest Nicholson Holdings 875,091 4,577 0.99 Fevertree Drinks 201,941 3,437 0.74 IG Design Group 3,786,387 13,063 2.82 Jimmy Choo 3,625,895 7,524 1.62 Mar City 1 12,242,500 728 0.16 McBride 5,353,491 10,024 2.16 McBride Preference 1 32,230,403 32 0.01 McBride Preference B 1 244,433,562 245 0.05 Nichols 531,057 9,947 2.15 Telford Homes 1,446,203 5,633 1.22

36 Schroder UK Dynamic Smaller Companies Fund

Portfolio Statement (continued)

Holding at Market Value % of net 30.6.17 £000’s assets Consumer Goods (continued) Walker Greenbank 4,735,413 10,418 2.25 Watkin Jones 2,406,579 4,765 1.03 Wynnstay Group 1,212,279 6,910 1.49 77,303 16.69

Health Care 4.65% (31.12.16 – 2.26%) Clinigen Group 911,474 7,839 1.69 Medica Group 3,525,219 7,967 1.72 Spire Healthcare Group 1,770,031 5,726 1.24 21,532 4.65

Consumer Services 13.00% (31.12.16 – 14.14%) Dignity 197,343 4,906 1.06 EI Group 1,864,879 2,392 0.51 Elegant Hotels Group 5,136,586 4,623 1.00 Everyman Media Group 5,910,352 10,225 2.21 Hollywood Bowl Group 1,817,039 3,034 0.65 Marshall Motor Holdings 4,341,520 5,731 1.24 On the Beach Group 3,031,444 11,800 2.55 System1 Group 229,700 1,838 0.40 Thomas Cook Group 7,622,189 6,852 1.48 Topps Tiles 4,450,734 3,672 0.79 Young & Co’s Brewery A 129,251 1,662 0.36 Young & Co’s Brewery Non-Voting 338,741 3,472 0.75 60,207 13.00

Financials 13.64% (31.12.16 – 12.79%) Aldermore Group 1,688,807 3,665 0.79 Arrow Global Group 1,949,216 7,899 1.71 Brooks Macdonald Group 357,079 8,395 1.81 Mattioli Woods 1,281,090 9,993 2.16 Palace Capital Placing 563,349 2,084 0.45 Record 23,109,055 10,168 2.20 Savills 408,280 3,583 0.77 Secure Income REIT 3,444,844 11,867 2.56

37 Schroder UK Dynamic Smaller Companies Fund

Portfolio Statement (continued)

Holding at Market Value % of net 30.6.17 £000’s assets Financials (continued) Virgin Money Holdings UK 2,060,686 5,496 1.19 63,150 13.64

Technology 6.65% (31.12.16 – 11.62%) Blue Prism Group 359,491 2,768 0.60 CML Microsystems 1,081,753 5,084 1.10 Forbidden Technologies 14,615,000 658 0.14 Quixant 4,104,593 14,366 3.10 Servelec Group 884,445 2,585 0.56 WANdisco 907,285 5,307 1.15 30,768 6.65

Sterling Denominated Short Term Bonds 11.01% (31.12.16 – 0.00%) Treasury Bill 0% 3.7.17 £20,000,000 20,000 4.32 Treasury Bill 0% 17.7.17 £31,000,000 30,999 6.69 50,999 11.01

Cash Funds 7.89% (31.12.16 – 0.00%) Schroder Special Situations Fund SICAV Sterling Liquidity Plus I Accumulation 2 306,300 36,554 7.89 36,554 7.89

Portfolio of investments 466,361 100.70 Net other liabilities (3,244) (0.70) Net assets attributable to shareholders 463,117 100.00

Unless otherwise stated the above securities are ordinary shares or common stock and admitted to official stock exchange listings or collective investment schemes permitted under the FCA’s COLL. 1 Unlisted, suspended and delisted securities within the meaning of the FCA's COLL. 2 A related party to the fund.

38 Schroder UK Dynamic Smaller Companies Fund

Summary of Portfolio Transactions

Cost Largest purchases For the six months ended 30 June 2017 £000’s Schroder Special Situations Fund SICAV Sterling Liquidity Plus I Accumulation 1 73,256 Treasury Bill 0% 3.7.17 49,998 Treasury Bill 0% 17.7.17 30,997 Virgin Money Holdings UK 9,145 Thomas Cook Group 7,875 Spire Healthcare Group 7,608 Dignity 7,521 Aldermore Group 7,032 EI Group 6,801 Serco Group 6,344

Proceeds Largest sales For the six months ended 30 June 2017 £000’s Schroder Special Situations Fund SICAV Sterling Liquidity Plus I Accumulation 1 36,740 Treasury Bill 0% 3.7.17 29,999 Fevertree Drinks 22,671 Treatt 17,493 Arrow Global Group 13,572 Smart Metering Systems 11,186 Gooch & Housego 10,139 Victoria 9,200 On the Beach Group 9,141 Servelec Group 8,380

1 A related party to the fund.

39 Schroder UK Dynamic Smaller Companies Fund

Statement of Total Return (unaudited)

For the six months ended 30 June 2017 30.6.17 30.6.16 £000’s £000’s £000’s £000’s Income Net capital gains/(losses) 95,616 (42,510) Revenue 4,559 4,069 Expenses (2,952) (2,709) Net revenue before taxation 1,607 1,360 Taxation 0 0 Net revenue after taxation 1,607 1,360 Total return before distributions 97,223 (41,150) Distributions (1,608) (1,379) Change in net assets attributable to shareholders from investment activities 95,615 (42,529) Statement of Change in Net Assets Attributable to Shareholders (unaudited) For the six months ended 30 June 2017 30.6.17 30.6.16 £000’s £000’s £000’s £000’s Opening net assets attributable to shareholders 456,861 1 511,935 Amounts receivable on issue of shares 71,210 5,034 Amounts payable on cancellation of shares (163,349) (66,008) (92,139) (60,974) Dilution adjustment 1,629 84 Change in net assets attributable to shareholders from investment activities 95,615 (42,529) Retained distribution on Accumulation shares 1,151 1,009 Closing net assets attributable to shareholders 463,117 409,525 1

40 Schroder UK Dynamic Smaller Companies Fund

Balance Sheet (unaudited)

As at 30 June 2017 30.6.17 31.12.16 £000’s £000’s Assets Investments 466,361 449,569 Current assets Debtors 1,047 1,054 Cash and bank balances 11,611 7,311 Total assets 479,019 457,934

Liabilities Creditors Distribution payable (213) (357) Other creditors (15,689) (716) Total liabilities (15,902) (1,073)

Net assets attributable to shareholders 463,117 456,861

41 Schroder UK Dynamic Smaller Companies Fund

Notes to the Accounts (unaudited)

Accounting policies The applicable accounting policies adopted by Schroder UK Dynamic Smaller Companies are disclosed on page 11.

42 Schroder UK Dynamic Smaller Companies Fund

Distribution Table (unaudited)

Interim distribution Group 1 Shares purchased prior to 1 January 2017 Group 2 Shares purchased on or after 1 January 2017 for the six Net Distribution Distribution months ended revenue Equalisation payable paid 2017 2017 31.8.17 31.8.16 30 June 2017 p per share p per share p per share p per share A Accumulation shares Group 1 0.1692 – 0.1692 0.0349 Group 2 0.1636 0.0056 0.1692 0.0349 C Income shares Group 1 1.1077 – 1.1077 0.8437 Group 2 0.9404 0.1673 1.1077 0.8437 C Accumulation shares Group 1 1.2599 – 1.2599 0.8837 Group 2 1.1357 0.1242 1.2599 0.8837 S Income shares Group 1 0.4005 – 0.4005 0.3171 Group 2 0.2767 0.1238 0.4005 0.3171 S Accumulation shares Group 1 0.4211 – 0.4211 0.3267 Group 2 0.3116 0.1095 0.4211 0.3267 Z Income shares Group 1 1.8555 – 1.8555 1.4029 Group 2 1.5205 0.3350 1.8555 1.4029 Z Accumulation shares Group 1 1.9393 – 1.9393 1.4612 Group 2 1.5196 0.4197 1.9393 1.4612

Corporate Corporate shareholders receive the dividend distribution payments as detailed shareholders below: 100.00% of the total distribution is received as franked investment income.

Being capital it is not liable to income tax but must be deducted from the cost of shares for capital gains tax purposes.

Schroder UK Corporate Bond Fund

Fund Information

Investment objective The fund aims to achieve a high income return together with capital growth by investing primarily in fixed income instruments including bonds, notes of fixed and policy and variable interest, preference shares, convertible and other securities issued by government, quasi-government, supranational, bank and corporate entities, and derivative instruments.

The fund may use forward foreign exchange transactions, credit default swaps, interest rate and government bond futures, and other exchange traded and off exchange traded derivative contracts for the purposes of efficient portfolio management and/or meeting the investment objectives of the fund. Such derivative contracts have the potential to significantly increase the fund’s risk profile.

The ACD employs a risk management process that seeks to control the volatility of fund returns.

The fund’s net exposure to non-investment grade instruments, as determined by the ACD, may not exceed 20% of net asset value.

Financial Dealing price 30.6.17 30.12.16 % change A Income shares 63.21p 61.92p 2.08 highlights A Accumulation shares 72.04p 69.20p 4.10 C Income shares 62.53p 61.17p 2.22 C Accumulation shares 137.80p 132.20p 4.24 S Income shares 55.15p 53.83p 2.45 Z Income shares 121.40p 118.60p 2.36 Z Accumulation shares 146.00p 139.90p 4.36 1.3.17 to 29.2.16 to 31.8.17 31.8.16 Distributions per Z Income share 2.6092p 2.1861p

With effect from 6 April 2017, there is no longer a requirement to deduct income tax from interest distributions paid by UK Authorised Funds. Consequently, all distributions paid after this date are paid gross of tax.

44 Schroder UK Corporate Bond Fund

Fund Information (continued)

Fund information Launch date 11 August 1999 Launch price 57.66p per C Income share 57.66p per C Accumulation share Launch date 19 December 2000 Launch price 62.13p per Z Accumulation share Launch date 25 February 2002 Launch price 60.15p per A Income share Launch date 11 May 2012 Launch price 106.50p per Z Income share Launch date 1 October 2013 Launch price 58.13p per A Accumulation share Launch date 1 November 2013 Launch price 50.00p per S Income share

Quarterly Interim Quarterly Final Accounting dates 31 March 30 June 30 September 31 December Revenue allocation dates 31 May 31 August 30 November 28 February

Ongoing charges For the period For the year to 30.6.17 to 31.12.16 figure A Income shares 1.12% 1 1.13% A Accumulation shares 1.12% 1 1.13% C Income shares 0.87% 1 0.88% C Accumulation shares 0.87% 1 0.88% S Income shares 0.42% 1 0.43% Z Income shares 0.62% 1 0.63% Z Accumulation shares 0.62% 1 0.63%

1 The Ongoing charges figure is annualised based on the fees incurred during the accounting period.

For the period For the year Total purchases to 30.6.17 to 31.12.16 and sales £000’s £000’s Total purchases 98,755 73,196 Total sales 116,733 84,147

45 Schroder UK Corporate Bond Fund

Review of Investment Activities

From 30 December 2016 to 30 June 2017, the price of A Accumulation shares on a dealing price to dealing price basis rose 4.10%. In comparison, the Bank of America Merrill Lynch Sterling Corporate & Collateralised Index generated a total return of 2.66% 1.

1 Source: Thomson Reuters Datastream.

Conditions were positive for sterling corporate bonds over the period, following a volatile second half of 2016. Highly accommodative monetary policy measures, Co-Fund Manager: introduced post Brexit referendum, overall supportive economic conditions and Alix Stewart still moderate inflation provided the backdrop for bonds. Gains on UK credit Investment career started in 1994 would have been higher but for a sharp selloff in the final week of June, which Joined Schroders in August 2012 as a Credit saw the yield on the index rise 20 basis points. This sell off was drawn by Portfolio Manager perceived hawkish comments from the UK, US and European central banks. Prior to joining Schroders Alix worked for the following companies: 2011 – UBS Global AM, Head of UK Fixed The portfolio generated a positive return and outperformed the index amid robust Interest conditions for sterling investment grade. The fund increased exposure to 2009 – UBS Global AM, Fund Manager – UK subordinated insurance and senior banking over the period. Positioning in these Corporate Bonds sectors proved positive for performance. The period saw the rare occurrence of 2008 – UBS Global AM, Fund Manager – Global Corporate Bonds a sterling denominated issue from a Russian company in the energy sector, 2006 – SWIP, Fund Manager – High Alpha UK which was attractively valued and was added to the portfolio. The fund Retail Corporate Bonds maintained overweights in more defensive sectors namely telecommunications 2003 – Gartmore, Fund Manager – High Alpha and utilities, while staying underweight industrials. UK Retail Corporate Bonds 1999 – Standard Life Investments, Fund The UK faces significant political and economic challenges. A snap election in Manager – Corporate Bonds 1994 – Scottish Mutual (ANFIS) – Fund Manager, June saw the government lose its majority. Having hoped to strengthen its hand Corporate Bonds ahead of Brexit negotiations in actual fact the UK’s position now looks more 1991 – Scottish Mutual (ANFIS) – Actuarial uncertain. Initial stages of the negotiations have not been promising. The poor Trainee outlook for the consumer with anaemic real wage growth, inflation and high debt BSc (Hons) in Economics and Mathematics from University of Leeds is the other big challenge for the UK. This is likely to prevent a quick withdrawal of highly accommodative policy.

Jonathan Golan became a Co-Fund Manager for the fund with effect from 28 February 2017.

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 Co-Fund Manager: originally invested. Because of this, you are not certain to make a profit on your Jonathan Golan investments and you may lose money. 2013: Joined Schroders 2013: Grosvenor Fund Management, analysing real estate securities and conducting quantitative and economic research for the Global Real Estate Absolute Return Fund 2006-2011: Financial correspondent for two mass media platforms s in Israel, reporting on capital markets, macroeconomics, and financial legislation M.Sc. Financial Economics, University of Oxford, St. Hugh's College B.A Economics (Summa Cum Laude), Hebrew University of Jerusalem 46 Schroder UK Corporate Bond Fund

Risk Profile

Risk and reward Lower risk Highe r risk Potentially lower reward Potentially higher reward indicator

1 2 33 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 seeks to provide rewards whilst limiting price volatility.

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 in assets which are exposed to currencies other than sterling. Exchange rates may cause the value of overseas investments and the revenue from them to rise or fall.

More than 35% of the property of the fund may be invested in Government securities.

The fund invests in higher yielding bonds (non-investment grade). The risk of default is higher with non-investment grade bonds than with investment grade bonds. Higher yielding bonds may also have an increased potential to erode your capital sum than lower yielding bonds.

The fund will invest in a wide range of derivatives in order to meet its investment objectives. One of the aims of the ACD is to achieve volatility targets for the portfolio and in order to do this leverage will be used. The use of leverage can increase gains as well as losses and expose the fund to increased risk. Whilst it is intended that the additional risk that leverage exposes the fund to is controlled by value at risk methodology, there can be no guarantee that this risk control may be achieved especially under extreme or changing market conditions.

The fund uses derivatives for specific investment purposes. This involves a higher degree of risk and may lead to a higher volatility in the share prices of the fund. The ACD employs a risk management process to allow the ACD to measure derivative and forward positions and their contribution to the overall risk profile of the fund. As part of this risk management process, the ACD conducts daily value at risk analysis of the fund and performs both stress and back testing of the fund.

As a result of the expenses being charged wholly to capital, the distributable revenue of the fund may be higher, but the capital value of the fund may be eroded which may affect future performance.

For these reasons, the purchase of shares should not normally be regarded as a short term investment. 47 Schroder UK Corporate Bond Fund

Net Asset Value and Comparative Tables

Share price range Financial year to 31 December A Income shares A Accumulation shares Highest Lowest Highest Lowest dealing dealing dealing dealing pppp 2014 61.44 57.56 63.73 58.17 2015 63.46 57.85 66.37 62.24 2016 65.97 57.18 73.06 62.14 Financial period to 30 June 2017 64.27 60.62 73.25 68.39

Financial year to 31 December C Income shares C Accumulation shares Highest Lowest Highest Lowest dealing dealing dealing dealing pppp 2014 60.40 56.44 121.10 110.28 2015 62.40 56.99 126.20 118.50 2016 65.11 56.37 139.40 118.40 Financial period to 30 June 2017 63.57 59.90 140.10 130.60

Financial year to 31 December S Income shares Z Income shares Highest Lowest Highest Lowest dealing dealing dealing dealing pppp 2014 52.68 48.91 116.50 108.60 2015 54.44 49.89 120.40 110.20 2016 57.20 49.41 126.10 109.00 Financial period to 30 June 2017 56.06 52.73 123.40 116.10

Financial year to 31 December Z Accumulation shares Highest Lowest dealing dealing pp 2014 127.50 115.86 2015 132.90 125.00 2016 147.40 125.10 Financial period to 30 June 2017 148.40 138.30

48 Schroder UK Corporate Bond Fund

Net Asset Value and Comparative Tables (continued) A Income shares A Accumulation shares Net revenue Financial year to 31 December pence per share pence per share 2014 2.0358 2.0867 2015 2.2699 2.4077 2016 2.3076 2.5431 Financial period to 30 June 2017 1.3606 1.5433

C Income shares C Accumulation shares Financial year to 31 December pence per share pence per share 2014 1.9986 3.9577 2015 2.2345 4.5828 2016 2.2759 4.8501 Financial period to 30 June 2017 1.3452 2.9496

S Income shares Z Income shares Financial year to 31 December pence per share pence per share 2014 1.6938 3.8525 2015 1.9579 4.3234 2016 1.9985 4.4056 Financial period to 30 June 2017 1.1852 2.6092

Z Accumulation shares Financial year to 31 December pence per share 2014 4.1624 2015 4.8146 2016 5.1258 Financial period to 30 June 2017 3.1239

49 Schroder UK Corporate Bond Fund

Net Asset Value and Comparative Tables (continued) Net asset Net asset value Net asset value value per share Number of As at 31 December £000’s p shares in issue 2014 A Income shares 53,891 60.71 88,760,940 A Accumulation shares 55,538 63.50 87,465,988 C Income shares 66,006 59.68 110,591,961 C Accumulation shares 18,055 120.68 14,961,322 S Income shares 7,982 52.05 15,333,389 Z Income shares 61,066 115.13 53,042,753 Z Accumulation shares 44,756 127.09 35,215,588 2015 A Income shares 36,250 57.45 63,102,331 A Accumulation shares 41,008 62.42 65,694,652 C Income shares 46,407 56.61 81,972,002 C Accumulation shares 13,887 118.93 11,676,014 S Income shares 6,108 49.60 12,315,628 Z Income shares 66,820 109.47 61,039,508 Z Accumulation shares 23,866 125.57 19,006,481 2016 A Income shares 30,478 60.95 50,003,103 A Accumulation shares 38,690 68.76 56,264,990 C Income shares 42,119 60.22 69,943,338 C Accumulation shares 11,330 131.34 8,626,451 S Income shares 4,847 52.99 9,146,317 Z Income shares 76,126 116.73 65,213,672 Z Accumulation shares 41,849 139.02 30,103,783 2017 at 30 June A Income shares 26,246 62.22 42,182,607 A Accumulation shares 38,665 71.73 53,902,472 C Income shares 39,228 61.55 63,736,689 C Accumulation shares 10,384 137.18 7,569,666 S Income shares 5,719 54.29 10,535,821 Z Income shares 74,609 119.47 62,451,156 Z Accumulation shares 35,307 145.38 24,286,973

50 Schroder UK Corporate Bond Fund

Net Asset Value and Comparative Tables (continued) Net asset Net asset Fund performance value per share value per share pp as at 30.6.17 as at 31.12.16 % change A Income shares 62.22 60.95 2.08 A Accumulation shares 71.73 68.76 4.32 C Income shares 61.55 60.22 2.21 C Accumulation shares 137.18 131.34 4.45 S Income shares 54.29 52.99 2.45 Z Income shares 119.47 116.73 2.35 Z Accumulation shares 145.38 139.02 4.57

51 Schroder UK Corporate Bond Fund

Portfolio Statement

Holding at Market Value % of net 30.6.17 £000’s assets Euro Denominated Short Term Bonds 0.24% (31.12.16 – 1.01%) Islandsbanki 1.75% Notes 2020 €600,000 541 0.24 541 0.24

Euro Denominated Medium Term Bonds 4.03% (31.12.16 – 1.51%) Royal Bank of Scotland Group 2% Notes 2023 €2,150,000 1,949 0.85 Allied Irish Banks 4.125% Notes 2025 €500,000 467 0.20 Cellnex Telecom 2.875% Notes 2025 €200,000 182 0.08 MPT Operating Partnership 3.325% Bonds 2025 €1,845,000 1,653 0.72 Bankia 3.375% Bonds 2027 €1,900,000 1,697 0.74 Groupama 6% Bonds 2027 €100,000 104 0.04 Tauron Polska Energia 2.375% Bonds 2027 €1,117,000 982 0.42 Ziggo Secured Finance 4.25% Bonds 2027 €1,440,000 1,336 0.58 Petroleos Mexicanos 4.875% Notes 2028 €1,000,000 913 0.40 9,283 4.03

Euro Denominated Long Term Bonds 4.59% (31.12.16 – 1.70%) Republic of Argentine 7.82% Bonds 2033 €862,817 810 0.35 AT&T 3.15% Notes 2036 €1,855,000 1,602 0.69 UNIQA Insurance Group 6% Bonds 2046 €700,000 730 0.32 Tesco 5.125% Notes 2047 €630,000 583 0.25 Channel Link Enterprises Finance 2.706% Bonds 2050 €823,000 728 0.32 Repsol International Finance 4.5% Bonds 2075 €900,000 812 0.35 EnBW Energie Baden-Wuerttemberg 3.625% Notes 2076 €1,611,000 1,489 0.65 Centrica 3% Notes 2076 €200,000 180 0.08 Achmea 4.25% Perpetual Notes €2,097,000 1,776 0.77 Groupama 6.375% Perpetual Bonds €1,900,000 1,859 0.81 10,569 4.59

52 Schroder UK Corporate Bond Fund

Portfolio Statement (continued)

Holding at Market Value % of net 30.6.17 £000’s assets Euro Denominated Derivatives (0.16)% (31.12.16 – (0.47)%) Forward to buy €1,273,633 for £1,131,245 €1,273,633 (12) 0.00 Forward to sell €24,399,876 for £21,428,434 €(24,399,876) (22) (0.01) Euro-Bobl Futures September 2017 (36) 32 0.01 Adecco 2017 Credit Default Swap Buy Protection 1 €800,000 (3) 0.00 Metro 2017 Credit Default Swap Buy Protection 1 €2,000,000 (8) 0.00 Barclays Bank Telenor 2018 Credit Default Swap Buy Protection 1 €1,500,000 (9) 0.00 JPMorgan Telenor 2018 Credit Default Swap Buy Protection 1 €1,200,000 (7) 0.00 Credit Suisse Compagnie Financiere 2019 Credit Default Swap Buy Protection 1 €600,000 (11) 0.00 JPMorgan Compagnie Financiere 2019 Credit Default Swap Buy Protection 1 €760,000 (13) (0.01) Merrill Lynch Compagnie Financiere 2019 Credit Default Swap Buy Protection 1 €760,000 (13) (0.01) Air France 2021 Credit Default Swap Buy Protection 1 €760,000 (91) (0.04) BP 2021 Credit Default Swap Buy Protection 1 €970,000 (18) (0.01) ENI 2021 Credit Default Swap Buy Protection 1 €1,245,000 (20) (0.01) Royal Dutch Shell 2021 Credit Default Swap Buy Protection 1 €970,000 (22) (0.01) Standard Chartered Bank 2021 Credit Default Swap Buy Protection 1 €1,530,000 (14) (0.01) TOTAL 2021 Credit Default Swap Buy Protection 1 €970,000 (25) (0.01) Wendel 2021 Credit Default Swap Buy Protection 1 €1,250,000 (195) (0.08) Citigroup Standard Chartered Bank 2022 Credit Default Swap Buy Protection 1 €246,812 (2) 0.00 JPMorgan Standard Chartered Bank 2022 Credit Default Swap Buy Protection 1 €2,800,000 (20) (0.01)

53 Schroder UK Corporate Bond Fund

Portfolio Statement (continued)

Holding at Market Value % of net 30.6.17 £000’s assets Euro Denominated Derivatives (continued) Morgan Stanley Standard Chartered Bank 2022 Credit Default Swap Buy Protection 1 €269,396 (2) 0.00 SSE 2018 Credit Default Swap Sell Protection 1 €(225,000) 2 0.00 Heathrow Funding 2019 Credit Default Swap Sell Protection 1 €(5,000,000) 63 0.03 Koninklijke 2019 Credit Default Swap Sell Protection 1 €(2,750,000) 51 0.02 Iberdrola 2021 Credit Default Swap Sell Protection 1 €(484,147) 11 0.00 Imperial Brands 2021 Credit Default Swap Sell Protection 1 €(1,510,000) 29 0.01 Ladbrokes 2022 Credit Default Swap Sell Protection 1 €(800,000) (94) (0.04) Next 2022 Credit Default Swap Sell Protection 1 €(3,000,000) (48) (0.02) Morgan Stanley Interest Rate Swap 2024 Receive 0.251% Pay 0.338% 1 €3,100,000 33 0.02 Morgan Stanley Interest Rate Swap 2024 Receive 0.251% Pay 0.444% 1 €3,250,000 17 0.01 Morgan Stanley Interest Rate Swap 2036 Receive 0.259% Pay 1.32% 1 €1,950,000 32 0.01 (379) (0.16)

Sterling Denominated Short Term Bonds 6.81% (31.12.16 – 10.52%) Daily Mail & General Trust 5.75% Bonds 2018 £756,000 799 0.35 Heathrow Funding 6.25% Notes 2018 £150,000 159 0.07 Royal Bank of Scotland 6.625% Notes 2018 £750,000 798 0.35 Bank of America 5.5% Notes 2019 £900,000 992 0.43 Porterbrook Rail Finance 5.5% Notes 2019 £770,000 827 0.36 Eversholt Funding 5.831% Notes 2020 £1,100,000 1,258 0.55 Porterbrook Rail Finance 6.5% Notes 2020 £250,000 290 0.13 Santander UK 1.875% Notes 2020 £452,000 461 0.20

54 Schroder UK Corporate Bond Fund

Portfolio Statement (continued)

Holding at Market Value % of net 30.6.17 £000’s assets Sterling Denominated Short Term Bonds (continued) Annington Finance No 1 8% Bonds 2021 £745,301 860 0.37 Bank of America 6.125% Notes 2021 £1,150,000 1,362 0.59 Barclays Bank 10% Notes 2021 £755,000 967 0.42 FCA Bank 1.625% Notes 2021 £1,000,000 981 0.43 innogy Finance 6.5% Notes 2021 £200,000 237 0.10 Spirit Issuer 0.850% Notes 2021 £643,236 633 0.27 Credit Suisse Group Funding Guernsey 3% Bonds 2022 £1,150,000 1,212 0.53 Investec 4.5% Notes 2022 £1,990,000 2,142 0.93 Investec Bank 9.625% Notes 2022 £1,340,000 1,692 0.73 15,670 6.81

Sterling Denominated Medium Term Bonds 30.07% (31.12.16 – 33.88%) Annington Finance No 4 0% Bonds 2022 £1,200,000 1,135 0.49 HSBC Holdings 6.375% Notes 2022 £300,000 304 0.13 InterContinental Hotels Group 3.875% Notes 2022 £2,480,000 2,715 1.18 Skipton Building Society 1.75% Notes 2022 £1,036,000 1,026 0.45 Anglian Water Osprey Financing 5% Notes 2023 £600,000 644 0.28 Annington Finance No 4 0% Bonds 2023 £3,000,000 2,650 1.15 HSBC Bank 5% Notes 2023 £100,000 103 0.05 Ladbrokes Group Finance 5.125% Bonds 2023 £1,000,000 988 0.43 Lloyds Bank 9.625% Bonds 2023 £100,000 137 0.06 Marks & Spencer 3% Notes 2023 £1,550,000 1,576 0.69 National Express Group 2.5% Notes 2023 £1,100,000 1,114 0.48 Thames Water Utilities Cayman Finance 2.375% Notes 2023 £400,000 400 0.17 Travis Perkins 4.5% Bonds 2023 £700,000 721 0.31 William Hill 4.875% Bonds 2023 £565,000 579 0.25 Barclays 3.125% Notes 2024 £1,300,000 1,343 0.58 Gazprom 4.25% Bonds 2024 £1,700,000 1,752 0.76 Lloyds Bank 7.5% Notes 2024 £1,030,000 1,400 0.61 CYBG 3.125% Notes 2025 £2,117,000 2,091 0.91

55 Schroder UK Corporate Bond Fund

Portfolio Statement (continued)

Holding at Market Value % of net 30.6.17 £000’s assets Sterling Denominated Medium Term Bonds (continued) Digital Stout Holding 4.25% Notes 2025 £3,333,000 3,640 1.58 Lloyds Bank 5.125% Notes 2025 £990,000 1,240 0.54 Thames Water Utilities Cayman Finance 5.375% Notes 2025 £300,000 301 0.13 Anglian Water Services Financing 4.5% Notes 2026 £500,000 575 0.25 BUPA Finance 5% Notes 2026 £700,000 789 0.34 CYBG 5% Bonds 2026 £900,000 911 0.40 Goldman Sachs Group 4.25% Notes 2026 £1,650,000 1,854 0.81 Hammerson 6% Notes 2026 £950,000 1,193 0.52 Heathrow Funding 6.75% Notes 2026 £1,290,000 1,768 0.77 Koninklijke KPN 5% Notes 2026 £1,870,000 2,220 0.96 Santander UK 5.75% Notes 2026 £965,000 1,272 0.55 Severn Trent Utilities Finance 3.625% Notes 2026 £500,000 557 0.24 TSB Banking Group 5.75% Notes 2026 £1,770,000 1,916 0.83 Yorkshire Building Society 3.5% Notes 2026 £1,500,000 1,595 0.69 Barclays 3.25% Notes 2027 £1,500,000 1,524 0.66 Morgan Stanley 2.625% Notes 2027 £3,700,000 3,693 1.60 Scotland Gas Networks 3.25% Notes 2027 £1,080,000 1,169 0.51 Thames Water Utilities Cayman Finance 2.875% Notes 2027 £1,100,000 1,097 0.48 Bank of America 7% Notes 2028 £200,000 281 0.12 HSBC Holdings 2.625% Bonds 2028 £1,200,000 1,199 0.52 Rl Finance Bonds No 3 6.125% Bonds 2028 £541,000 610 0.27 Thames Water Utilities Cayman Finance 3.5% Bonds 2028 £500,000 555 0.24 UNITE USAF II 3.374% Notes 2028 £1,346,000 1,454 0.63 BPCE 5.25% Notes 2029 £1,000,000 1,161 0.50 Deutsche Telekom International Finance 2.25% Bonds 2029 £1,200,000 1,170 0.51 Lloyds Bank 6% Bonds 2029 £448,000 632 0.27 Southern Gas Networks 4.875% Notes 2029 £300,000 379 0.17 Student Finance 2.6663% Bonds 2029 £800,000 800 0.35

56 Schroder UK Corporate Bond Fund

Portfolio Statement (continued)

Holding at Market Value % of net 30.6.17 £000’s assets Sterling Denominated Medium Term Bonds (continued) Virgin Media Secured Finance 6.25% Notes 2029 £304,000 329 0.14 Heathrow Funding 7.075% Notes 2030 £100,000 144 0.06 innogy Finance 6.25% Notes 2030 £300,000 412 0.18 Mitchells & Butlers Finance 6.013% Bonds 2030 £1,878,831 2,229 0.97 South Eastern Power Networks 5.625% Notes 2030 £100,000 134 0.06 Thames Water Utilities Cayman Finance 5.75% Notes 2030 £1,150,000 1,336 0.58 UNITE USAF II 3.921% Bonds 2030 £750,000 849 0.37 Electricite de France 5.875% Notes 2031 £1,058,000 1,410 0.61 Greene King Finance 5.318% Bonds 2031 £215,156 255 0.11 GKN Holdings 3.375% Notes 2032 £500,000 499 0.22 LafargeHolcim Sterling Finance Netherlands 3% Notes 2032 £3,100,000 3,055 1.33 Southern Electric Power Distribution 5.5% Bonds 2032 £1,290,000 1,744 0.76 Thames Water Utilities Finance 6.5% Notes 2032 £400,000 588 0.26 69,217 30.07

Sterling Denominated Long Term Bonds 45.64% (31.12.16 – 44.01%) Arqiva Financing 4.882% Notes 2032 £1,200,000 1,361 0.59 Canary Wharf Finance II 6.455% Bonds 2033 £491,678 860 0.37 GlaxoSmithKline Capital 5.25% Notes 2033 £580,000 797 0.35 Heathrow Funding 6.45% Notes 2033 £69,000 100 0.04 Telereal Securitisation 4.09% Bonds 2033 £800,000 838 0.36 Telereal Securitisation 5.5534% Bonds 2033 £83,934 101 0.04 Telereal Securitisation 6.1645% Bonds 2033 £1,232,880 1,495 0.65 Greene King Finance 5.106% Bonds 2034 £186,000 220 0.10 innogy Finance 4.75% Notes 2034 £400,000 490 0.21

57 Schroder UK Corporate Bond Fund

Portfolio Statement (continued)

Holding at Market Value % of net 30.6.17 £000’s assets Sterling Denominated Long Term Bonds (continued) Petrobras Global Finance 6.625% Notes 2034 £1,600,000 1,554 0.68 Thames Water Utilities Cayman Finance 4.375% Notes 2034 £100,000 122 0.05 Treasury 4.5% Stock 2034 £180,000 254 0.11 Greene King Finance 4.0643% Bonds 2035 £574,902 628 0.27 Northern Electric Finance 5.125% Bonds 2035 £100,000 135 0.06 Northern Powergrid Yorkshire 5.125% Bonds 2035 £100,000 134 0.06 Verizon Communications 3.125% Bonds 2035 £800,000 770 0.33 White City Property Finance 5.1202% Notes 2035 £277,532 344 0.15 Eastern Power Networks 6.25% Notes 2036 £200,000 302 0.13 Longstone Finance 4.791% Bonds 2036 £164,692 191 0.08 Longstone Finance 4.896% Bonds 2036 £680,000 767 0.33 Spirit Issuer 4.25% Notes 2036 £1,786,000 1,815 0.79 Treasury 4.25% Stock 2036 £870,000 1,211 0.53 Anheuser-Busch InBev 2.85% Notes 2037 £4,100,000 4,012 1.74 AT&T 3.55% Bonds 2037 £991,000 962 0.42 Canary Wharf Finance II 5.952% Bonds 2037 £200,000 282 0.12 Electricite de France 5.5% Notes 2037 £200,000 258 0.11 Enel 5.75% Notes 2037 £700,000 942 0.41 Thames Water Utilities Finance 5.125% Notes 2037 £250,000 340 0.15 Cadent Finance 2.625% Notes 2038 £2,800,000 2,678 1.16 High Speed Rail Finance 1 4.375% Notes 2038 £1,310,000 1,644 0.71 Southern Water Services Finance 4.5% Notes 2038 £400,000 439 0.19 SSE 6.25% Notes 2038 £325,000 491 0.21 E.ON International Finance 6.75% Notes 2039 £2,050,000 3,178 1.38 Gatwick Funding 5.75% Notes 2039 £100,000 141 0.06 innogy Finance 6.125% Notes 2039 £1,850,000 2,715 1.18

58 Schroder UK Corporate Bond Fund

Portfolio Statement (continued)

Holding at Market Value % of net 30.6.17 £000’s assets Sterling Denominated Long Term Bonds (continued) Vattenfall 6.875% Notes 2039 £680,000 1,087 0.47 Aspire Defence Finance A 4.674% Bonds 2040 £930,138 1,147 0.50 Aspire Defence Finance B 4.674% Bonds 2040 £930,138 1,147 0.50 AT&T 7% Notes 2040 £2,650,000 3,884 1.69 DONG Energy 5.75% Notes 2040 £1,310,000 1,896 0.82 Enel Finance International 5.75% Notes 2040 £253,000 345 0.15 Lloyds Bank 6.5% Notes 2040 £95,000 152 0.07 Treasury 4.25% Stock 2040 £450,000 653 0.28 Western Power Distribution East Midlands 6.25% Notes 2040 £250,000 391 0.17 Western Power Distribution South West 5.75% Notes 2040 £550,000 808 0.35 Aviva 6.625% Notes 2041 £560,000 641 0.28 Electricite de France 5.5% Notes 2041 £2,400,000 3,134 1.36 Thames Water Utilities Cayman Finance 5.5% Notes 2041 £1,590,000 2,296 1.00 CPUK Finance 2.666% Notes 2042 £1,370,000 1,410 0.61 Severn Trent Utilities Finance 4.875% Notes 2042 £1,450,000 1,967 0.85 Tesco 4.875% Notes 2042 £2,358,000 2,305 1.00 AA Bond 4.2487% Notes 2043 £800,000 851 0.37 AA Bond 6.269% Notes 2043 £950,000 1,164 0.51 Gatwick Funding 6.5% Notes 2043 £150,000 237 0.10 Heathrow Funding 5.875% Notes 2043 £660,000 981 0.43 RL Finance Bonds No. 2 6.125% Bonds 2043 £1,980,000 2,200 0.96 Hiscox 6.125% Bonds 2045 £900,000 1,010 0.44 Cadent Finance 2.75% Notes 2046 £3,500,000 3,349 1.46 Heathrow Funding 4.625% Notes 2046 £370,000 485 0.21 Thames Water Utilities Cayman Finance 4.625% Notes 2046 £100,000 134 0.06 Treasury 1.5% Stock 2047 £1,300,000 1,193 0.52 Aviva 4.375% Notes 2049 £500,000 510 0.22 Channel Link Enterprises Finance 3.848% Bonds 2050 £1,054,000 1,101 0.48 Orange 5.375% Notes 2050 £2,200,000 3,182 1.38 AXA 5.625% Notes 2054 £3,514,000 4,035 1.75

59 Schroder UK Corporate Bond Fund

Portfolio Statement (continued)

Holding at Market Value % of net 30.6.17 £000’s assets Sterling Denominated Long Term Bonds (continued) Prudential 5% Notes 2055 £1,989,000 2,093 0.91 Dwr Cymru Financing 4.473% Notes 2057 £100,000 145 0.06 Tesco 5.2% Notes 2057 £700,000 685 0.30 American International Group 1.995% Bonds 2067 £100,000 96 0.04 NGG Finance 5.625% Bonds 2073 £1,724,000 1,953 0.85 Enel 7.75% Bonds 2075 £872,000 990 0.43 BHP Billiton Finance 6.5% Bonds 2077 £1,053,000 1,209 0.53 SSE 3.625% Bonds 2077 £1,100,000 1,110 0.48 Mexico Government International Bond 5.625% Notes 2114 £1,380,000 1,462 0.64 Assicurazioni Generali 6.269% Perpetual Notes £700,000 753 0.33 Aviva 6.125% Perpetual Notes £2,670,000 2,993 1.30 Bank of Scotland 7.281% Perpetual Bonds £2,610,000 3,259 1.42 Bank of Scotland Capital Funding 7.754% Perpetual Bonds £150,000 173 0.08 Barclays Bank 5.33% Perpetual Bonds £2,360,000 2,241 0.97 Barclays Bank 7.125% Perpetual Bonds £615,000 679 0.30 Electricite de France 6% Perpetual Notes £2,000,000 2,098 0.91 HBOS Capital Funding 6.461% Perpetual Notes £500,000 530 0.23 HSBC Bank Capital Funding Sterling 2 5.862% Perpetual Bonds £100,000 110 0.05 J Sainsbury 6.5% Perpetual Bonds £800,000 868 0.38 Orange 5.75% Perpetual Notes £1,437,000 1,589 0.69 SSE 3.875% Perpetual Bonds £1,700,000 1,744 0.76 Telefonica Europe 6.75% Perpetual Bonds £1,800,000 1,991 0.87 105,037 45.64

Sterling Denominated Derivatives (0.11)% (31.12.16 – 0.93%) Long Gilt Futures September 2017 169 (423) (0.18) Citigroup Interest Rate Swap 2034 receive 2.472% pay 0.48494% 1 £1,161,000 162 0.07 (261) (0.11)

60 Schroder UK Corporate Bond Fund

Portfolio Statement (continued)

Holding at Market Value % of net 30.6.17 £000’s assets US Dollar Denominated Short Term Bonds 0.14% (31.12.16 – 0.17%) Valeant Pharmaceuticals International 6.5% Notes 2022 US$400,000 324 0.14 324 0.14

US Dollar Denominated Medium Term Bonds 4.13% (31.12.16 – 1.54%) Credit Suisse Group 3.574% Notes 2023 US$1,840,000 1,450 0.63 Mylan 3.125% Notes 2023 US$2,200,000 1,686 0.73 UBS Group Funding Switzerland 3.491% Notes 2023 US$3,400,000 2,682 1.17 MPT Operating Partnership 5.25% Notes 2026 US$1,335,000 1,067 0.46 SFR Group 7.375% Notes 2026 US$2,600,000 2,159 0.94 Vale Overseas 6.25% Notes 2026 US$560,000 466 0.20 9,510 4.13

US Dollar Denominated Long Term Bonds 2.01% (31.12.16 – 2.04%) Petrobras Global Finance 7.25% Notes 2044 US$1,334,000 1,008 0.44 Republic of Argentine 7.625% Bonds 2046 US$150,000 118 0.05 Petroleos del Peru 5.625% Bonds 2047 US$200,000 156 0.07 Enel 8.75% Bonds 2073 US$410,000 374 0.16 Electricite de France 6% Bonds 2114 US$1,049,000 859 0.37 Friends Life Holdings 7.875% Perpetual Notes US$1,206,000 986 0.43 Royal Bank of Scotland Group 7% Perpetual Bonds US$1,300,000 1,136 0.49 4,637 2.01

US Dollar Denominated Derivatives (0.13)% (31.12.16 – (0.68)%) Forward to buy US$1,014,286 for £794,533 US$1,014,286 (13) (0.01) Forward to sell US$21,426,810 for £16,854,265 US$(21,426,810) 355 0.15

61 Schroder UK Corporate Bond Fund

Portfolio Statement (continued)

Holding at Market Value % of net 30.6.17 £000’s assets US Dollar Denominated Derivatives (continued) US 5 Year Bond Futures September 2017 (80) 18 0.01 Citigroup Japan 2017 Credit Default Swap Buy Protection 1 US$1,650,000 (6) 0.00 Credit Suisse Japan 2017 Credit Default Swap Buy Protection 1 US$750,000 (3) 0.00 BNP Paribas Lowe’s Companies 2018 Credit Default Swap Buy Protection 1 US$833,000 (5) 0.00 Campbell Soup 2018 Credit Default Swap Buy Protection 1 US$1,150,000 (6) 0.00 Johnson Controls 2018 Credit Default Swap Buy Protection 1 US$2,660,000 (24) (0.01) JPMorgan Lowe’s Companies 2018 Credit Default Swap Buy Protection 1 US$867,000 (5) 0.00 Newell Brands 2018 Credit Default Swap Buy Protection 1 US$1,170,000 (6) 0.00 Stanley Black & Decker 2018 Credit Default Swap Buy Protection 1 US$1,140,000 (6) 0.00 BNP Paribas Mondelez International 2020 Credit Default Swap Buy Protection 1 US$605,000 (11) (0.01) JPMorgan Mondelez International 2020 Credit Default Swap Buy Protection 1 US$620,000 (12) (0.01) CDX.NA.IG.27 2021 Credit Default Index Swap Buy Protection 1 US$10,450,000 (169) (0.08) CDX.NA.HY.28 2022 Credit Default Index Swap Buy Protection 1 US$7,320,000 (398) (0.17) (291) (0.13)

62 Schroder UK Corporate Bond Fund

Portfolio Statement (continued)

Market Value % of net £000’s assets Portfolio of investments 2 223,857 97.26 Net other assets 6,301 2.74 Net assets attributable to shareholders 230,158 100.00

Investment grade securities 186,940 81.21 Speculative grade securities 36,636 15.92 Unrated securities 1,212 0.53 Total of debt securities 224,788 97.66

Unless otherwise stated the above securities are admitted to official stock exchange listings or traded on a regulated market. 1 Over the counter derivative instruments not listed on recognised exchanges. 2 Including derivative liabilities.

63 Schroder UK Corporate Bond Fund

Summary of Portfolio Transactions

Cost Largest purchases For the six months ended 30 June 2017 £000’s Treasury 4.25% Stock 2036 7,847 Morgan Stanley 2.625% Notes 2027 4,665 Anheuser-Busch InBev 2.85% Notes 2037 4,052 LafargeHolcim Sterling Finance Netherlands 3% Notes 2032 3,112 AXA 5.625% Notes 2054 3,009 UBS Group Funding Switzerland 3.491% Notes 2023 2,772 Koninklijke KPN 5% Notes 2026 2,205 CYBG 3.125% Notes 2025 2,113 Goldman Sachs Group 4.25% Notes 2026 1,890 Royal Bank of Scotland Group 2% Notes 2023 1,846

Proceeds Largest sales For the six months ended 30 June 2017 £000’s Treasury 4.25% Stock 2036 6,668 Aviva 5.902% Perpetual Notes 2,587 Unique Pub Finance 7.395% Notes 2024 2,499 Koninklijke KPN 5.75% Notes 2029 2,204 J Sainsbury 1.25% Bonds 2019 2,111 Treasury 1.5% Stock 2026 2,101 Kelda Finance No 3 5.75% Notes 2020 2,058 Western Power Distribution West Midlands 5.75% Notes 2032 2,003 Nationwide Building Society 3.25% Notes 2028 1,992 Southern Gas Networks 6.375% Notes 2040 1,878

64 Schroder UK Corporate Bond Fund

Statement of Total Return (unaudited)

For the six months ended 30 June 2017 30.6.17 30.6.16 £000’s £000’s £000’s £000’s Income Net capital gains 6,950 13,225 Revenue 4,939 5,199 Expenses (989) (965) Net revenue before taxation 3,950 4,234 Taxation 0 0 Net revenue after taxation 3,950 4,234 Total return before distributions 10,900 17,459 Distributions (5,319) (5,707) Change in net assets attributable to shareholders from investment activities 5,581 11,752 Statement of Change in Net Assets Attributable to Shareholders (unaudited) For the six months ended 30 June 2017 30.6.17 30.6.16 £000’s £000’s £000’s £000’s Opening net assets attributable to shareholders 245,439 1 234,346 Amounts receivable on issue of shares 8,787 1,781 Amounts payable on cancellation of shares (31,660) (13,581) (22,873) (11,800) Dilution adjustment 75 0 Change in net assets attributable to shareholders from investment activities 5,581 11,752 Retained distribution on Accumulation shares 1,930 1,489 Unclaimed distributions 6 4 Closing net assets attributable to shareholders 230,158 235,791 1

65 Schroder UK Corporate Bond Fund

Balance Sheet (unaudited)

As at 30 June 2017 30.6. 17 31.12.16 £000’s £000’s Assets Investments 225,593 239,066 Current assets Debtors 4,693 4,665 Cash and bank balances 5,239 7,573 Total assets 235,525 251,304

Liabilities Investment liabilities (1,736) (3,043) Creditors Bank overdrafts 0 (243) Distribution payable (1,607) (2,237) Other creditors (2,024) (342) Total liabilities (5,367) (5,865)

Net assets attributable to shareholders 230,158 245,439

66 Schroder UK Corporate Bond Fund

Notes to the Accounts (unaudited)

Accounting policies The applicable accounting policies adopted by Schroder UK Corporate Bond Fund are disclosed on page 11.

67 Schroder UK Corporate Bond Fund

Securities Financing Transactions (unaudited) The fund has not engaged in Securities Financing Transactions (as defined in Article 3 of Regulation (EU) 2015/2365, securities financing transactions include repurchase transactions, securities or commodities lending and securities or commodities borrowing, buy-sell back transactions or sell-buy back transactions and margin lending transactions) or Total Return Swaps. Accordingly, disclosures required by Article 13 of the Regulation are not applicable for the accounting period ended 30 June 2017.

68 Schroder UK Corporate Bond Fund

Distribution Table (unaudited)

Quarterly distribution Group 1 Shares purchased prior to 1 January 2017 Group 2 Shares purchased on or after 1 January 2017 for the three Gross Income Net Distribution Distribution months ended revenue tax revenue Equalisation paid paid 2017 2017 2017 2017 31.5.17 31.5.16 31 March 2017 p per share 1 p per share 2 p per share p per share p per share p per share A Income shares Group 1 0.6432 0.0000 0.6432 – 0.6432 0.5617 Group 2 0.2592 0.0000 0.2592 0.3840 0.6432 0.5617 A Accumulation shares Group 1 0.7256 0.0000 0.7256 – 0.7256 0.6099 Group 2 0.3711 0.0000 0.3711 0.3545 0.7256 0.6099 C Income shares Group 1 0.6357 0.0000 0.6357 – 0.6357 0.5527 Group 2 0.3401 0.0000 0.3401 0.2956 0.6357 0.5527 C Accumulation shares Group 1 1.3863 0.0000 1.3863 – 1.3863 1.1611 Group 2 0.7293 0.0000 0.7293 0.6570 1.3863 1.1611 S Income shares Group 1 0.5597 0.0000 0.5597 – 0.5597 0.4846 Group 2 0.3946 0.0000 0.3946 0.1651 0.5597 0.4846 Z Income shares Group 1 1.2326 0.0000 1.2326 – 1.2326 1.0683 Group 2 0.5505 0.0000 0.5505 0.6821 1.2326 1.0683 Z Accumulation shares Group 1 1.4677 0.0000 1.4677 – 1.4677 1.2249 Group 2 0.6585 0.0000 0.6585 0.8092 1.4677 1.2249

1 With effect from 6 April 2017, there will no longer be a requirement to deduct income tax from interest distributions paid by UK Authorised Funds. Consequently, all distributions paid after this date will be paid gross of tax. 2 As the distributions are accounted for gross to shareholders, no income tax is deducted.

69 Schroder UK Corporate Bond Fund

Distribution Table (unaudited) (continued)

Interim distribution Group 1 Shares purchased prior to 1 April 2017 Group 2 Shares purchased on or after 1 April 2017 for the three Gross Income Net Distribution Distribution months ended revenue tax revenue Equalisation payable paid 2017 2017 2017 2017 31.8.17 31.8.16 30 June 2017 p per share 1 p per share 2 p per share p per share p per share p per share A Income shares Group 1 0.7174 0.0000 0.7174 – 0.7174 0.5855 Group 2 0.4394 0.0000 0.4394 0.2780 0.7174 0.5855 A Accumulation shares Group 1 0.8177 0.0000 0.8177 – 0.8177 0.6422 Group 2 0.4376 0.0000 0.4376 0.3801 0.8177 0.6422 C Income shares Group 1 0.7095 0.0000 0.7095 – 0.7095 0.5776 Group 2 0.3199 0.0000 0.3199 0.3896 0.7095 0.5776 C Accumulation shares Group 1 1.5633 0.0000 1.5633 – 1.5633 1.2247 Group 2 1.0208 0.0000 1.0208 0.5425 1.5633 1.2247 S Income shares Group 1 0.6255 0.0000 0.6255 – 0.6255 0.5068 Group 2 0.2835 0.0000 0.2835 0.3420 0.6255 0.5068 Z Income shares Group 1 1.3766 0.0000 1.3766 – 1.3766 1.1178 Group 2 0.6752 0.0000 0.6752 0.7014 1.3766 1.1178 Z Accumulation shares Group 1 1.6562 0.0000 1.6562 – 1.6562 1.2943 Group 2 0.9370 0.0000 0.9370 0.7192 1.6562 1.2943

Being capital it is not liable to income tax but must be deducted from the cost of shares for capital gains tax purposes.

Schroder European Opportunities Fund

Fund Information

Investment objective The fund’s investment objective is to achieve long term capital growth by investing in any or all European markets, excluding the UK, and any or all and policy economic sectors.

The fund aims to maximise the overall rate of return with capital growth as the primary goal. The ACD seeks to invest in a diversified list of companies. Industry groups exhibiting above average growth prospects, strong financial characteristics and proven management are emphasised. A stock selection process seeks to balance value and growth without imposing restrictions upon the size of market capitalisation. Additional diversification is provided by a flexible country allocation strategy.

Financial Dealing price 30.6.17 30.12.16 % change A Accumulation shares 751.40p 676.20p 11.12 highlights C Income shares 761.50p 696.10p 9.40 C Accumulation shares 806.50p 724.00p 11.40 L Income shares 69.80p 63.89p 9.25 L Accumulation shares 73.19p 65.60p 11.57 S Income shares 65.69p 60.21p 9.10 Z Income shares 745.70p 682.30p 9.29 Z Accumulation shares 847.70p 760.00p 11.54

71 Schroder European Opportunities Fund

Fund Information (continued)

Fund information Launch date 2 July 1999 Launch price 241.21p per C Accumulation share 241.21p per Z Accumulation share Launch date 25 February 2002 Launch price 217.60p per A Accumulation share Launch date 1 April 2010 Launch price 464.66p per Z Income share Launch date 8 May 2013 Launch price 518.17p per C Income share Launch date 1 October 2013 Launch price 50.00p per L Income share 50.00p per L Accumulation share Launch date 1 November 2013 Launch price 50.00p per S Income share

Interim Final Accounting dates 30 June 31 December Revenue allocation date 28 February

For the period For the year Ongoing charges to 30.6.17 to 31.12.16 figure A Accumulation shares 1.68% 1 1.68% C Income shares 1.18% 1 1.18% C Accumulation shares 1.18% 1 1.18% L Income shares 0.85% 1 0.85% L Accumulation shares 0.85% 1 0.85% S Income shares 0.55% 1 0.55% Z Income shares 0.93% 1 0.93% Z Accumulation shares 0.93% 1 0.93%

1 The Ongoing charges figure is annualised based on the fees incurred during the accounting period.

72 Schroder European Opportunities Fund

Fund Information (continued)

For the period For the year Total purchases to 30.6.17 to 31.12.16 and sales £000’s £000’s Total purchases 261,024 344,821 Total sales 291,565 454,522

73 Schroder European Opportunities Fund

Review of Investment Activities

From 30 December 2016 to 30 June 2017, the price of Z Accumulation shares on a dealing price to dealing price basis increased 11.54%. In comparison, the FTSE 1 World Europe ex UK Index generated a total return of 13.00% 2 in sterling terms.

European shares advanced in the first half of 2017, supported by improved economic data and receding political risk. The fund also posted a positive return but lagged the index. Fund Manager: The main negative for relative returns was the overweight in oil equipment and Steve Cordell services. Our holding in Petroleum Geo-Services detracted as rising US production put pressure on the oil price. French oil major TOTAL was also among the main detractors. Other negatives included supermarket group Steve Cordell joined Schroders in July Koninklijke Ahold Delhaize amid worries over the outlook for the US food retail 2013 following the acquisition of market. Our fixed line telecommunication exposure also weighed, with the Cazenove Capital position in Spain’s Telefonica detracting. Steve has 23 years’ investment experience and is a senior member of On the positive side, consumer cyclical stock NH Hotel Group was the leading the pan-European equity team at positive contributor. Technology hardware firm STMicroelectronics was another Schroders contributor, thanks to big upgrades to 2017 forecasts as they announced a major new product launch for mobile phones. We have now sold out of the stock Prior to this he worked at HSBC Asset as the strong performance means it reached our price target. Bank stock Intesa Management (Europe) Ltd Sanpaolo gained amid a more positive backdrop for Eurozone financials. Additionally, at the end of the period Intesa Sanpaolo clinched a clever deal to He graduated from Trinity College, take on the ‘good’ loan portfolios of two regional Italian lenders. Oxford with a First Class (Hons) in Modern Languages We have reduced our growth defensives recently, as the combination of high valuations and stalling earnings is making stocks vulnerable to rising bond yields. We have increased our exposure to the Eurozone as leading indicators remain firmer here compared to other regions. Recent activity includes adding to the existing position in Telecom Italia and initiating a holding in steel firm ArcelorMittal.

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: Thomson Reuters Datastream.

74 Schroder European Opportunities Fund

Risk Profile

Risk and reward Lower risk Highe r risk Potentially lower reward Potentially higher reward indicator

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 in assets which are exposed to currencies other than sterling. Exchange rates may cause the value of overseas investments and the revenue from them to rise or fall.

For these reasons, the purchase of shares should not normally be regarded as a short term investment.

75 Schroder European Opportunities Fund

Net Asset Value and Comparative Tables

A Accumulation Share price range Financial year to 31 December shares C Income shares Highest Lowest Highest Lowest dealing dealing dealing dealing p p p p 2014 606.00 502.60 628.00 521.80 2015 636.90 549.60 657.40 566.50 2016 679.70 525.50 699.10 538.60 Financial period to 30 June 2017 766.00 674.40 776.30 682.30

C Accumulation Financial year to 31 December shares L Income shares Highest Lowest Highest Lowest dealing dealing dealing dealing p p p p 2014 640.60 532.30 57.55 47.88 2015 676.10 582.70 60.20 51.84 2016 727.00 560.10 64.13 49.29 Financial period to 30 June 2017 822.10 722.60 71.16 62.47

L Accumulation Financial year to 31 December shares S Income shares Highest Lowest Highest Lowest dealing dealing dealing dealing p p p p 2014 57.56 47.89 54.11 45.04 2015 60.93 52.46 56.60 48.70 2016 65.84 50.61 60.39 46.33 Financial period to 30 June 2017 74.61 65.51 66.97 58.73

Financial year to 31 December Z Income shares Z Accumulation shares Highest Lowest Highest Lowest dealing dealing dealing dealing p p p p 2014 614.80 511.30 668.20 555.80 2015 643.20 554.00 706.80 608.70 2016 684.90 526.80 762.90 586.80 Financial period to 30 June 2017 760.20 667.60 864.20 758.90

76 Schroder European Opportunities Fund

Net Asset Value and Comparative Tables (continued) A Accumulation shares C Income shares Net revenue Financial year to 31 December pence per share pence per share 2014 1.7357 4.7969 2015 3.7074 6.9916 2016 9.0011 12.5387 Financial period to 30 June 2017 Nil Nil

C Accumulation shares L Income shares Financial year to 31 December pence per share pence per share 2014 4.8864 0.6278 2015 7.1625 0.8247 2016 12.9267 1.3328 Financial period to 30 June 2017 Nil Nil

L Accumulation shares S Income shares Financial year to 31 December pence per share pence per share 2014 0.6300 0.6889 2015 0.8379 0.9382 2016 1.3791 1.4200 Financial period to 30 June 2017 Nil Nil

Z Income shares Z Accumulation shares Financial year to 31 December pence per share pence per share 2014 6.1424 6.6809 2015 8.3575 9.1677 2016 13.7510 15.3708 Financial period to 30 June 2017 Nil Nil

77 Schroder European Opportunities Fund

Net Asset Value and Comparative Tables (continued) Net asset Net asset value Net asset value value per share Number of As at 31 December £000’s p shares in issue 2014 A Accumulation shares 276,038 555.14 49,724,443 C Income shares 7,657 572.11 1,338,463 C Accumulation shares 114,051 588.49 19,380,376 L Income shares 11,667 52.34 22,290,139 L Accumulation shares 36,895 52.98 69,642,433 S Income shares 15 49.17 29,643 Z Income shares 34,855 559.45 6,230,349 Z Accumulation shares 219,029 614.76 35,628,150 2015 A Accumulation shares 191,692 610.03 31,423,445 C Income shares 13,608 624.89 2,177,625 C Accumulation shares 92,925 649.93 14,297,667 L Income shares 12,660 57.18 22,141,855 L Accumulation shares 55,686 58.70 94,863,989 S Income shares 323 53.72 601,794 Z Income shares 29,912 611.10 4,894,647 Z Accumulation shares 202,511 680.66 29,752,317 2016 A Accumulation shares 163,245 673.81 24,227,078 C Income shares 14,425 681.10 2,117,901 C Accumulation shares 71,240 721.39 9,875,414 L Income shares 19,141 62.33 30,706,166 L Accumulation shares 51,485 65.37 78,766,107 S Income shares 5,249 58.57 8,960,721 Z Income shares 19,825 666.18 2,975,964 Z Accumulation shares 175,736 757.35 23,203,963 2017 at 30 June A Accumulation shares 166,131 743.47 22,345,529 C Income shares 15,351 753.45 2,037,370 C Accumulation shares 71,951 797.96 9,016,897 L Income shares 6,915 69.07 10,012,352 L Accumulation shares 53,793 72.42 74,278,331 S Income shares 5,721 65.00 8,801,383 Z Income shares 23,487 737.87 3,183,140 Z Accumulation shares 178,285 838.79 21,254,991

78 Schroder European Opportunities Fund

Net Asset Value and Comparative Tables (continued) Net asset Net asset Fund performance value per share value per share pp as at 30.6.17 as at 31.12.16 % change A Accumulation shares 743.47 673.81 10.34 C Income shares 753.45 681.10 10.62 C Accumulation shares 797.96 721.39 10.61 L Income shares 69.07 62.33 10.81 L Accumulation shares 72.42 65.37 10.78 S Income shares 65.00 58.57 10.98 Z Income shares 737.87 666.18 10.76 Z Accumulation shares 838.79 757.35 10.75

79 Schroder European Opportunities Fund

Portfolio Statement

Holding at Market Value % of net 30.6.17 £000’s assets Belgium 1.25% (31.12.16 – 2.53%) Ageas 211,003 6,533 1.25 6,533 1.25

Denmark 5.19% (31.12.16 – 4.27%) AP Moller – Maersk 5,454 8,418 1.61 Danske Bank 181,023 5,347 1.03 Novo Nordisk 404,000 13,307 2.55 27,072 5.19

France 20.14% (31.12.16 – 24.30%) AXA 827,501 17,402 3.34 Carrefour 353,200 6,869 1.32 Imerys 106,298 7,102 1.36 Legrand 188,660 10,140 1.94 Nexity 61,268 2,734 0.52 Orange 902,844 11,007 2.11 Pernod Ricard 133,301 13,724 2.63 TOTAL 395,610 15,036 2.88 Veolia Environnement 444,800 7,223 1.39 Vivendi 808,001 13,828 2.65 105,065 20.14

Germany 25.77% (31.12.16 – 15.36%) Allianz 151,102 22,860 4.38 Bayer 222,613 22,117 4.24 Beiersdorf 158,663 12,846 2.46 Continental 35,320 5,846 1.12 Deutsche Boerse 97,042 7,861 1.51 RWE 504,713 7,753 1.49 Siemens 122,694 12,971 2.49 thyssenkrupp 696,033 15,194 2.91 United Internet 302,880 12,780 2.45 Volkswagen 121,200 14,181 2.72 134,409 25.77

80 Schroder European Opportunities Fund

Portfolio Statement (continued)

Holding at Market Value % of net 30.6.17 £000’s assets Ireland 1.58% (31.12.16 – 1.61%) CRH 301,717 8,247 1.58 8,247 1.58

Italy 7.78% (31.12.16 – 4.52%) A2A 8,039,852 10,236 1.96 Anima Holding 731,754 4,032 0.78 Intesa Sanpaolo 5,656,004 13,776 2.64 Telecom Italia 17,669,254 12,528 2.40 40,572 7.78

Luxembourg 1.01% (31.12.16 – 0.00%) ArcelorMittal 302,666 5,278 1.01 5,278 1.01

Netherlands 11.24% (31.12.16 – 13.68%) ABN AMRO Group 655,736 13,320 2.55 ING Groep 757,371 10,042 1.93 Koninklijke Ahold Delhaize 508,152 7,469 1.43 Koninklijke Philips 319,920 8,735 1.67 RELX 504,349 7,971 1.53 SBM Offshore 902,412 11,113 2.13 58,650 11.24

Norway 0.69% (31.12.16 – 1.29%) Petroleum Geo-Services 2,683,592 3,576 0.69 3,576 0.69

Spain 10.76% (31.12.16 – 3.04%) Banco Santander 2,261,602 11,498 2.20 Gas Natural SDG 606,400 10,910 2.09 Merlin Properties Socimi 602,853 5,852 1.12 NH Hotel Group 3,258,425 15,064 2.89

81 Schroder European Opportunities Fund

Portfolio Statement (continued)

Holding at Market Value % of net 30.6.17 £000’s assets Spain (continued) Telefonica 1,616,001 12,824 2.46 56,148 10.76

Sweden 3.05% (31.12.16 – 7.13%) Essity 252,970 5,345 1.03 Nordea Bank 656,214 6,427 1.23 Svenska Cellulosa 252,970 1,468 0.28 Volvo 202,000 2,655 0.51 15,895 3.05

Switzerland 11.22% (31.12.16 – 19.99%) Basilea Pharmaceutica 83,178 5,386 1.03 Nestle 161,600 10,834 2.08 Novartis 310,411 19,913 3.82 Rieter Holding 30,624 5,382 1.03 Swatch Group 20,110 5,723 1.10 UBS Group 865,831 11,297 2.16 58,535 11.22

Portfolio of investments 519,980 99.68 Net other assets 1,654 0.32 Net assets attributable to shareholders 521,634 100.00

Unless otherwise stated the above securities are ordinary shares or common stock and admitted to official stock exchange listings.

82 Schroder European Opportunities Fund

Summary of Portfolio Transactions

Cost Largest purchases For the six months ended 30 June 2017 £000’s Bayer 19,845 Beiersdorf 16,511 Banco Santander 15,777 Roche Holding 15,536 Volkswagen 15,100 Telefonica 14,280 Novo Nordisk 13,674 United Internet 13,077 Nestle 12,906 Vivendi 12,447

Proceeds Largest sales For the six months ended 30 June 2017 £000’s Roche Holding 32,516 Nestle 26,648 Deutsche Telekom 16,306 STMicroelectronics 14,615 Swedish Match 13,999 TOTAL 13,346 Novartis 11,447 Zurich Insurance Group 11,169 AP Moller - Maersk 9,891 Legrand 8,297

83 Schroder European Opportunities Fund

Statement of Total Return (unaudited)

For the six months ended 30 June 2017 30.6.17 30.6.16 £000’s £000’s £000’s £000’s Income Net capital gains/(losses) 42,622 (21,848) Revenue 13,006 14,104 Expenses (3,240) (3,253) Net revenue before taxation 9,766 10,851 Taxation 826 (1,461) Net revenue after taxation 10,592 9,390 Total return before distributions 53,214 (12,458) Distributions (302) (532) Change in net assets attributable to shareholders from investment activities 52,912 (12,990)

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

For the six months ended 30 June 2017 30.6.17 30.6.16 £000’s £000’s £000’s £000’s Opening net assets attributable to shareholders 520,346 1 599,317 Amounts receivable on issue of shares 9,223 11,095 Amounts payable on cancellation of shares (60,847) (76,769) (51,624) (65,674) Dilution adjustment 0 10 Change in net assets attributable to shareholders from investment activities 52,912 (12,990) Closing net assets attributable to shareholders 521,634 520,663 1

84 Schroder European Opportunities Fund

Balance Sheet (unaudited)

As at 30 June 2017 30.6.17 31.12.16 £000’s £000’s Assets Investments 519,980 508,479 Current assets Debtors 4,256 2,695 Cash and bank balances 7,484 13,399 Total assets 531,720 524,573

Liabilities Creditors Distribution payable 0 (1,211) Other creditors (10,086) (3,016) Total liabilities (10,086) (4,227)

Net assets attributable to shareholders 521,634 520,346

85 Schroder European Opportunities Fund

Notes to the Accounts (unaudited)

Accounting policies The applicable accounting policies adopted by Schroder European Opportunities Fund are disclosed on page 11.

86 Schroder Core UK Equity Fund

Schroder Core UK Equity Fund

Fund Information

Investment objective The fund aims to achieve long term capital and income growth through investment primarily in the United Kingdom. Investments will be made and policy predominantly in UK equities, fixed interest and other securities.

Financial Dealing price 30.6.17 30.12.16 % change A Income shares 175.80p 170.90p 2.87 highlights A Accumulation shares 286.50p 273.90p 4.60 C Income shares 187.10p 181.60p 3.03 C Accumulation shares 304.30p 290.60p 4.71 S Income shares 49.87p 48.26p 3.34 Z Income shares 195.00p 188.90p 3.23 Z Accumulation shares 317.50p 302.70p 4.89 31.8.17 31.8.16 Interim distribution per C Income share 4.0232p 3.8093p

Fund information Launch date 31 December 2002 Launch price 100.00p per A Income share 100.00p per A Accumulation share 100.00p per C Income share 100.00p per C Accumulation share 100.00p per Z Income share 100.00p per Z Accumulation share Launch date 1 October 2013 Launch price 50.00p per L Income share 50.00p per L Accumulation share Launch date 1 November 2013 Launch price 50.00p per S Income share

L Income shares and L Accumulation shares were closed on 1 October 2015.

Interim Final Accounting dates 30 June 31 December Revenue allocation dates 31 August 28 February

87 Schroder Core UK Equity Fund

Fund Information (continued)

For the period For the year Ongoing charges to 30.6.17 to 31.12.16 figure A Income shares 1.43% 1 1.43% A Accumulation shares 1.43% 1 1.43% C Income shares 1.18% 1 1.18% C Accumulation shares 1.18% 1 1.18% S Income shares 0.55% 1 0.55% Z Income shares 0.80% 1 0.80% Z Accumulation shares 0.80% 1 0.80%

1 The Ongoing charges figure is annualised based on the fees incurred during the accounting period.

For the period For the year Total purchases to 30.6.17 to 31.12.16 and sales £000’s £000’s Total purchases 39,553 102,572 Total sales 45,488 139,138

88 Schroder Core UK Equity Fund

Review of Investment Activities

From 30 December 2016 to 30 June 2017, the price of Z Accumulation shares on a dealing price to dealing price basis rose 4.89%. In comparison, the FTSE 1 All Share Index generated a total return of 5.5% 2.

For the FTSE 1 All Share Index, the best performing sectors included personal goods and forestry while the weakest were oil equipment and fixed line telecommunications. For the fund, positive influences included overweight allocations in mobile telecommunications and healthcare equipment and Fund Manager: underweights in gas, water & multi-utilities and electricity. At the stock level, David Docherty overweights in Smurfit Kappa Group and Melrose Industries and underweights in Shire (sold out in the period) and Tesco (sold out in the period) proved positive. Negatives included overweights in fixed line telecommunications and oil & gas David Docherty joined Schroders in producers as well as underweights in travel & leisure and household goods. July 2013 following the acquisition of Overweights in BT Group, BP and underweights in HSBC Holdings and Unilever Cazenove Capital (sold out in the period) were also negative. He joined Cazenove Capital in 2000 Our investment process centres on identifying mispriced opportunities where we He is a member of the Pan-European see inflection points to deliver outperformance. This thinking drove purchases of equity team and manager of the BTG, Daily Mail & General Trust, Marks & Spencer Group, Provident Financial, Schroder Core UK Equity Fund Reckitt Benckiser Group, Rentokil Initial, J Sainsbury, Smiths Group and Spectris. These were financed by complete disposals of stocks where we viewed David joined Cazenove Capital from valuations as less compelling. These included Amec Foster Wheeler, BT Group, M&G Investment Management where Burberry Group, Moneysupermarket.com Group, Pets at Home Group, Sage he was a fund manager and chairman Group, Shire, Unilever, United Utilities Group and Virgin Money Holdings UK. of the UK model portfolio committee

We expect political factors to be important as investors calibrate the effect on Prior to this he was a fund manager at stocks and markets of changing perceptions about the UK government’s policy Gartmore Investment Management positions. As regards Brexit, we expect many twists and turns over the coming (1994–1997) and Lloyds Investment months. However, our sense is that the wider global backdrop will be a Management (1989–1994) potentially greater driver of UK equities. Asset markets have been driven up by a David graduated from Durham belief in a ‘Goldilocks’ global economy which has been ‘not too hot, not too cold’ University with a degree in History and with moderate growth, low inflation and supportive monetary policy. Any gained an MBA from Cranfield School challenge to these preconditions is likely to cause market volatility. Our approach of Management will be to respond pragmatically to any market turbulence in order to identify any mispriced stock opportunities which emerge. David has 27 years’ of

1 FTSE International Limited (“FTSE”) © FTSE. “FTSE®” is a trade mark of London Stock Exchange plc and The investment experience 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: Thomson Reuters Datastream.

89 Schroder Core UK Equity Fund

Risk Profile

Risk and reward Lower risk Highe r risk Potentially lower reward Potentially higher reward indicator

1 2 3 4 55 6 7

The risk and reward indicator changed from 6 to 5 with effect from 1 June 2017.