Schroder Recovery Fund Interim Report and Accounts January 2021

Contents

1 Fund Information{ } 3 1 Fund Performance{ } 3 1 Review of Investment Activities{ } 4 1 Risk Profile{ } 5 Statement of the Manager’s Responsibilities 6 1 Portfolio Statement{ } 7 Financial Statements (unaudited) 8 Notes to the Accounts (unaudited) 9 1 General Information{ } 10

1 Collectively these comprise the Manager's report.

Schroder Recovery Fund Interim Report and Accounts 2 15 January 2021 Fund Information

Investment objective and policy The Schroder Recovery Fund (the ‘Fund’) aims to provide capital growth by investing in equity and equity related securities of UK companies that have suffered a severe setback in either share price or profitability. The Fund is actively managed and invests at least 80% of its assets in equity and equity related securities of UK companies. These are companies that are incorporated, headquartered or have their principal business activities in the UK. The Fund applies a disciplined value investment approach, seeking to invest in a select portfolio of companies that the Investment Manager believes are significantly undervalued relative to their long-term earnings potential. The Fund may also invest directly or indirectly in other securities (including in other asset classes), countries, regions, industries or currencies, collective investment schemes (including Schroder funds), warrants and money market instruments, and hold cash. The Fund may use derivatives with the aim of achieving investment gains, reducing risk or managing the Fund more efficiently (for more information please refer to section 6 of Appendix I of the Prospectus). Fund characteristics The Fund does not have a target benchmark. The Fund’s performance should be compared against the FTSE All Share (Gross Total Return) index and the Investment Association UK All Companies sector average return. The comparator benchmarks have been selected because the Investment Manager and the Manager believe that each of these benchmarks is a suitable comparison for performance purposes given the Fund’s investment objective and policy. Significant Event With effect from 1 December 2020, the Manager wishes to pass on some of the benefits of potential savings generated by significant growth in assets under management, by discounting the Annual Management Charge payable by investors in retail classes in the funds. The applicable discount is determined by the size of each fund and is capped at 0.05%. For more information on the discount please refer to the Prospectus. Total purchases and sales For the period For the year to 15.1.21 to 15.7.20 £000's £000's Total purchases 170,169 180,477 Total sales 267,184 268,298

Fund Performance{1}

Number of Net asset Net asset units in issue value per unit value per unit 15.1.21 15.1.21 15.7.20 A Accumulation units 141,905 20,537.60p 16,109.73p A Income units 16,432 11,077.84p 8,690.67p L Accumulation units 383,053,257 68.54p 53.54p L Income units 228,016,735 57.25p 44.73p S Income units 5,276,166 51.64p 40.28p Z Accumulation units 355,044,518 108.31p 84.64p Z Income units 77,635,036 86.52p 67.62p

Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. Exchange rate changes may cause the value of any overseas investments to rise or fall.

Schroder Recovery Fund Interim Report and Accounts 3 15 January 2021 Review of Investment Activities

From 15 July 2020 to 15 January 2021, the price of Z Accumulation units on Co-Fund Manager: 1 a dealing price basis rose 27.28%. In comparison, the FTSE All Share Index Kevin Murphy generated a total return of 10.96%2. The marked investment style rotation in latter part of the year was reflected in the share price performance of the stocks held, with the fund significantly outperforming both the broader market and the value indices. Bookmaker William Hill and Royal Mail were the leading contributors. Retailer Marks & Spencer, bank NatWest and power generator Drax also performed strongly. While there was some good news for our best performing stocks, the share price moves were far more dramatic than any news might suggest; in some cases they were up by more than 100% over the period. The lesson that we draw from this is when you have bought a business on Specialist Value UK equities fund manager with twenty years a cheap valuation, a little good news can go a long way. investment experience We took advantage of cheap valuations to initiate a number of new positions. These Previously a sector analyst for Pan European Construction included Airtel Africa, an operator of affordable and innovative mobile services in Africa, and Building Materials energy services group Hunting, property operator Land Securities and engineering group Senior. Investment career commenced at Schroders in 2000 It is reassuring to see the Fund perform exactly as they are designed to do and as promised Chartered Financial Analyst to our clients. The lesson to take from the last six months for true value-oriented portfolio Degree in Economics, Manchester University managers such as ourselves is the importance of sticking steadfastly to a value strategy. Our clients were exposed to the full benefit of the market rotation because, no matter what is happening in markets, we will always pursue a value strategy. On cyclically-adjusted Co-Fund Manager: valuation measures the UK is still among the cheapest developed markets in the world. Despite strong returns, valuations remain attractive. Today, the portfolio is comprised Nick Kirrage of companies that have both significant room to re-rate and also a high probability of considerable profit recoveries.

Co-manager of UK Income, UK Recovery, Global Recovery and Global Income strategies Founding member of the Global Value Team in 2013 Investment career commenced in 2001 within Schroders’ Pan European research team Previously analyst responsible for a number of sectors including Transport, Metals & Mining and Aerospace and Defence sectors CFA Charterholder Degree in Aeronautical Engineering, Bristol University

1 FTSE International Limited (“FTSE”) © FTSE. “FTSE®” is a trade mark of London Stock Exchange plc and The Financial Times Limited and is used by FTSE International Limited under licence. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent. 2 Source: Thomson Reuters Datastream. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. Exchange rate changes may cause the value of any overseas investments to rise or fall.

Schroder Recovery Fund Interim Report and Accounts 4 15 January 2021 Risk Profile

Risk and reward indicator Lower risk Higher risk Potentially lower reward Potentially higher reward

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

Schroder Recovery Fund Interim Report and Accounts 5 15 January 2021 Statement of the Manager’s Responsibilities

The Financial Conduct Authority’s Collective Investment Schemes sourcebook requires the Manager to prepare accounts for each annual and half yearly accounting period, in accordance with United Kingdom Generally Accepted Accounting Practice, which give a true and fair view of the financial position of the Fund and of its net revenue and the net capital gains on the property of the Fund for the period. In preparing the accounts the Manager is required to: ¯¯ select suitable accounting policies and then apply them consistently; ¯¯ comply with the disclosure requirements of the Statement of Recommended Practice for UK Authorised Funds issued by the Investment Management Association (now the Investment Association) in May 2014; ¯¯ follow generally accepted accounting principles and applicable accounting standards; ¯¯ prepare the accounts on the basis that the Fund will continue in operation unless it is inappropriate to do so; ¯¯ keep proper accounting records which enable it to demonstrate that the accounts as prepared comply with the above requirements; ¯¯ make judgements and estimates that are prudent and reasonable. The Manager is responsible for the management of the Fund in accordance with its Trust Deed, the Prospectus and the Collective Investment Schemes sourcebook, and for taking reasonable steps for the prevention and detection of fraud, error and non-compliance with law or regulations. The Manager's report and accounts for the period ended 15 January 2021 were signed on 10 March 2021 on behalf of the Manager by:

P. Chislett P. Truscott Directors

Schroder Recovery Fund Interim Report and Accounts 6 15 January 2021 Portfolio Statement

Holding at Market Value % of net Holding at Market Value % of net 15.1.21 £000's assets 15.1.21 £000’s assets Equities 90.47% (93.74%) WPP 2,093,507 17,041 1.94

Oil & Gas 14.90% (9.52%) 171,825 19.56 BP 12,142,868 36,720 4.18 Telecommunications 3.49% (2.31%) Eni 2,796,673 22,003 2.50 Airtel Africa 4,483,375 3,528 0.40 Hunting 9,121,318 19,647 2.24 BT Group 19,287,692 27,148 3.09 John Wood Group 5,809,153 19,635 2.23 30,676 3.49 Petrofac 9,968,401 12,037 1.37 Utilities 4.28% (4.35%) Royal Dutch Shell B 1,470,676 20,881 2.38 Centrica 39,922,906 20,201 2.30 130,923 14.90 Drax Group 4,493,911 17,391 1.98 Basic Materials 9.06% (12.90%) 37,592 4.28 Anglo American 629,284 16,761 1.91 Financials 22.53% (24.78%) Ferrexpo 6,087,794 20,126 2.29 Aviva 4,911,442 17,112 1.95 Sibanye Stillwater 5,453,869 16,537 1.88 Barclays 20,662,057 30,745 3.50 South32 17,606,622 26,167 2.98 HSBC Holdings 4,151,667 16,742 1.90 79,591 9.06 Land Securities Group REIT 1,697,558 11,163 1.27 Industrials 8.48% (7.53%) Lloyds Banking Capita 34,781,088 12,886 1.47 Group 46,923,036 16,864 1.92 Ibstock 6,361,835 12,660 1.44 M&G 10,642,313 20,891 2.38 Mitie Group 18,269,455 7,701 0.88 Natwest Group 18,181,584 28,809 3.28 Rolls-Royce Provident Financial 6,234,533 17,207 1.96 Holdings 8,701,585 9,211 1.05 Standard Chartered 5,255,635 25,726 2.93 Royal Mail 7,465,172 28,845 3.28 TP ICAP 5,559,026 12,641 1.44 Senior 3,380,004 3,201 0.36 197,900 22.53 74,504 8.48 Technology 2.15% (2.18%) Consumer Goods 2.55% (3.15%) HP 522,372 9,670 1.10 Asian Citrus Holdings 39,524,122 564 0.06 Intel 213,919 9,230 1.05 Imperial Brands 1,337,735 21,859 2.49 18,900 2.15 22,423 2.55 Equities total 794,765 90.47 Health Care 3.47% (6.81%) Collective Investment Schemes 3.18% (3.28%) GlaxoSmithKline 1,363,580 19,276 2.20 Global Equity Funds 3.18% (3.28%) Sanofi 153,701 11,155 1.27 Schroder Global 30,431 3.47 Recovery Fund - Class L Consumer Services 19.56% (20.21%) Accumulation GBP^† 17,849,723 14,160 1.61 Firstgroup 16,094,090 12,038 1.37 Schroder ISF Global ITV 19,551,749 21,370 2.43 Recovery - Class I J Sainsbury 11,634,206 27,678 3.15 Accumulation USD^† 116,606 13,811 1.57 Marks & Spencer 27,971 3.18 Group 17,236,638 24,062 2.74 Collective Investment Schemes Pearson 3,544,798 24,027 2.73 total 27,971 3.18 Reach 4,631,988 8,838 1.01 Portfolio of investments 822,736 93.65 Tesco 8,314,780 20,080 2.29 Wm Morrison Net other assets 55,751 6.35 Supermarkets 9,143,068 16,691 1.90 Net assets attributable to unitholders 878,487 100.00

The comparative percentage figures in brackets are as at 15 July 2020. Unless otherwise stated, all securities are admitted to official stock exchange listings or are permitted collective investment schemes. ^ Unlisted, suspended or delisted security. † A related party to the Fund.

Schroder Recovery Fund Interim Report and Accounts 7 15 January 2021 Statement of Total Return (unaudited) For the six months ended 15 January 2021

15.1.21 15.1.20 £000's £000's £000's £000's Income Net capital gains – 181,082 – 18,032 Revenue 9,906 – 24,342 – Expenses (3,463) – (5,015) – Net revenue before taxation 6,443 – 19,327 – Taxation (496) – (431) – Net revenue after taxation 5,947 18,896 Total return before distributions 187,029 36,928 Distributions (317) (156) Change in net assets attributable to unitholders from investment activities 186,712 36,772

Statement of Change in Net Assets Attributable to Unitholders (unaudited) For the six months ended 15 January 2021 15.1.21 15.1.20 £000's £000's £000's £000's Opening net assets attributable to unitholders 761,333^ 1,148,435 Amounts receivable on issue of units 91,344 – 58,429 – Amounts payable on cancellation of units (161,052) – (91,713) – (69,708) (33,284) Dilution adjustment 150 – Change in net assets attributable to unitholders from investment activities 186,712 36,772 Unclaimed distributions – 52 Closing net assets attributable to unitholders 878,487 1,151,975^ ^ The opening net assets attributable to unitholders for the current period do not equal the closing net assets attributable to unitholders for the comparative period as they are not consecutive periods.

Balance Sheet (unaudited) As at 15 January 2021

15.1.21 15.7.20 £000's £000's Assets Investments 822,736 738,614 Current assets Debtors 21,142 12,260 Cash and bank balances 37,283 21,736 Total assets 881,161 772,610 – – Liabilities – – Creditors Distributions payable – (5,386) Other creditors (2,674) (5,891) Total liabilities (2,674) (11,277) – – Net assets attributable to unitholders 878,487 761,333

Schroder Recovery Fund Interim Report and Accounts 8 15 January 2021 Notes to the Accounts (unaudited)

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 Statement of Recommended Practice for UK Authorised Funds issued by the Investment Management Association in May 2014 and in accordance with United Kingdom Generally Accepted Accounting Practice, including Financial Reporting Standard 102 (The Financial Reporting Standard Applicable in the UK and Republic of Ireland (FRS 102)). Accounting Policies The accounting policies applied are consistent with those of the annual accounts for the year ended 15 July 2020 and are described in those annual accounts.

Schroder Recovery Fund Interim Report and Accounts 9 15 January 2021 General Information

Manager Registrar Schroder Unit Trusts Limited Schroder Unit Trusts Limited 1 London Wall Place 1 London Wall Place London EC2Y 5AU London EC2Y 5AU Authorised and regulated by the Financial Conduct Authority Authorised and regulated by the Financial Conduct Authority The Manager is responsible for maintaining the register for each Investment Adviser Fund. It has delegated certain registrar functions to HSBC Bank Plc, Schroder Investment Management Limited 8 Canada Square, London, E14 8HQ. 1 London Wall Place London EC2Y 5AU Administration Details Authorised and regulated by the Financial Conduct Authority Schroders Investor Services PO BOX 1402 Trustee Sunderland J.P. Morgan Europe Limited SR43 4AF Chaseside Bournemouth BH7 7DA Independent Auditors Authorised by the Prudential Regulation Authority and regulated PricewaterhouseCoopers LLP by the Financial Conduct Authority and Prudential Regulation Authority Atria One 144 Morrison Street Edinburgh EH3 8EX

Authorisation The Fund is an authorised unit trust and is constituted pursuant to the Collective Investment Schemes sourcebook and is structured as a trust. The Fund is a UCITS scheme for the purpose of the categorisation of the Collective Investment Schemes sourcebook. Value Assessment A statement on the Assessment of Value is published on the Global Fund Centre in the Fund Literature section at www.Schroders.com within 4 months of the annual 'reference date' 31 December. Other information The Prospectus, the Key Investor Information Document and details of investment charges and costs are available on request or can be downloaded from our website www.schroders.com.

Schroder Recovery Fund Interim Report and Accounts 10 15 January 2021

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