ASCI.L Regulatory News (ASCI)

Aberdeen Smaller Companies Income Trust PLC

Half Yearly Financial Report for the six months to 30 June 2021

OBJECTIVE

The objective of the Company is to provide a high and growing dividend and capital growth from a portfolio invested principally in the ordinary shares of smaller UK companies and UK fixed income securities.

BENCHMARK

Numis Smaller Companies ex Investment Trusts Index - effective from 1 January 2020;

FTSE Small Cap ex Investment Trusts Index (total return) - up to 31 December 2019

MANAGEMENT

The Company's alternative investment fund manager is Aberdeen Standard Fund Managers Limited ("ASFML" or "the Manager") (authorised and regulated by the Financial Conduct Authority). The Company's portfolio is managed on a day-to-day basis by Aberdeen Asset Managers Limited ("AAML" or "the Investment Manager") by way of a delegation agreement in place between ASFML and AAML.

HIGHLIGHTS

PERFORMANCE (TOTAL RETURN)

CHAIRMAN'S STATEMENT

Performance

I am pleased to report that your Company has delivered out-performance relative to its benchmark, the Numis Smaller Companies ex Investment Trusts Index in the six month period to the end of June 2021, with a net asset value ("NAV") total return of +20.1% versus a benchmark return of +17.4%.

The Company still also continues to display strong out-performance over 3 and 5 year periods. Over 1 year, however, the Company has under-performed its benchmark. This was driven largely by the sharp market rotation we saw, particularly during the months of November 2020 through to February 2021, which didn't favour the Manager's focus on long term quality and growth characteristics.

The Company's share price over the period has increased by 8.6%, and since the half year end has continued to climb, illustrating a return of investor optimism towards UK equities, particularly since March 2021, when signs of economic recovery became evident and the UK demonstrated a leading position in the COVID-19 vaccine rollout.

We are disappointed to see, however, that the Company's discount has widened, from -10.3% at the start of the year, to -17.9%, at the period end. This is something that the Board continue to monitor.

Company Gearing and Debt

The Company renewed its £5million revolving credit facility for a 1 year period in April 2021 and also has a 5 year £5million fixed rate loan facility expiring in 2023, of which a total of £7million is currently drawn down. Portfolio gearing stood at 2.5% at the end of June 2021, compared with 7.0% at the end of December 2020. The lower gearing percentage was not as a result of a reduction in the amount drawn down under the facility; it was reflective of a temporarily larger cash position held by the Manager at the period end, which had arisen due to the timing of trade settlements.

Dividend

For the first and second quarters of this year, the Board announced dividends of 2.15p each per Ordinary share (2020 - 2.06p each), an increase on last year's equivalent figures of 4.4%. This compares to an increase in the CPI for the first six months of this year of 1.9%.

Following a period of dividend cuts and cancellations in 2020, the companies in which the Company invests have predominantly returned to paying dividends in 2021, with some having boosted recent dividends to compensate for the lack of payments made last year. More information on this can be found in the Investment Manager's review.

We've been pleased with the recovery in portfolio income since the onset of the pandemic, and are well on the pathway to 2019 levels. The dividend growth outlook across the holdings is being supported by the earnings growth that companies are demonstrating. The Company's remaining revenue reserves, are also available to be utilised, as necessary, to support resilient income to our shareholders.

In the meantime, the Company continues to maintain a good level of revenue reserves which has demonstrated that, in times of lower income levels, the Company can continue to provide an attractive return to shareholders.

The Manager

In July 2021, Standard Life Aberdeen plc changed its name to abrdn plc as part of a rebranding exercise. We expect the Company's Manager, Investment Manager and Company Secretary (Aberdeen Standard Fund Managers Limited, Aberdeen Asset Managers Limited and Aberdeen Asset Management PLC respectively) to also be renamed in the coming months.

Company Change of Name

The Board is supportive of the Manager's rebranding exercise and is currently considering options for the Company to change its name, to align itself to the new brand. We will keep shareholders informed via the Company's website and Stock Exchange announcements.

Board & AGM

During the first half of the year, Barry Rose retired from the Board and after a formal search process, Christopher Metcalfe was appointed as an independent Non-Executive Director in his place. It has been a privilege to experience Barry's acute forensic questioning and thinking and we believe that Christopher's extensive investment experience will be equally valuable.

Disappointingly, we were unable once again this year to welcome shareholders at our AGM, due to COVID-19. Your Manager's presentation, which would have been delivered at the meeting, has been uploaded to the Company's website, www.aberdeensmallercompanies.co.uk. I do recommend that you watch it.

Outlook

Your Manager and the Board view the outlook for the remainder of the Company's financial year with optimism. With smaller companies and mid-cap companies having a tendency to be at the forefront of market recovery, we have seen the companies in which the Company invests strongly driving earnings upgrades.

The Company has also seen good performance in recent months, and the value rally initiated by the vaccine announcement in November 2020, which ran through to February 2021, looks to be largely behind us.

Your Manager continues to engage with companies in order to identify the quality growth momentum businesses it likes to invest in, and we look forward to the next reporting period with confidence.

Balance sheets in the companies in which we invest are strong and dividend growth is now coming through, which we are hopeful will ensure a more steady level of income growth across the portfolio in the future.

Robert Lister,

Chairman

13 September 2021

OTHER MATTERS

Principal Risks and Uncertainties

There are a number of risks which, if realised, could have a material adverse effect on the Company and its financial condition, performance and prospects. The Board has identified the principal risks and uncertainties facing the Company together with a description of the mitigating actions it has taken. These can be summarised under the following headings:

- Investment and Market

- Investment Portfolio Management

- Gearing

- Income and Dividend

- Operational

Details of these risks are provided in detail on pages 21 to 23 of the 2020 Annual Report.

In addition to these risks, there are also a large number of international political and economic uncertainties which could have an impact on the performance of global markets. The outbreak of the COVID-19 virus has resulted in business disruption and stockmarket volatility across the world. The extent of the effect of the virus, including its long term impact, remains uncertain. The Manager has undertaken a detailed review of the investee companies in the Company's portfolio to assess the impact of COVID-19 on their operations such as employee absence, reduced demand, reduced turnover and supply chain breakdowns and will continue to review carefully the composition of the Company's portfolio and will be pro-active where necessary. In addition the Manager implemented extensive business continuity procedures and contingency arrangements to ensure that is is to continue to service its clients, including investment trusts.

The Board will continue to monitor developments as they occur.

In all other respects, the Company's principal risks and uncertainties have not changed materially since the year end, nor are they expected to change in the second half of the financial year ended 31 December 2021.

Going Concern

In accordance with the Financial Reporting Council's Guidance on Risk Management, Internal Control and Related Financial and Business Reporting issued in September 2014, the Directors have undertaken a rigorous review and consider both that there are no material uncertainties and that the adoption of the going concern basis of accounting is appropriate. The Company's assets consist principally of equity shares in companies listed on the London Stock Exchange and in most circumstances are realisable within a short timescale.

The Directors have a reasonable expectation that the Company has adequate financial resources to continue in operational existence for the foreseeable future and at least twelve months from the date of approval of this Half Yearly Report. Given that the Company's portfolio comprises primarily "Level One" assets (listed on a recognisable exchange and realisable within a short timescale), and the Company's relatively low level of gearing, the Directors believe that adopting a going concern basis of accounting remains appropriate.

Directors' Responsibility Statement

The Directors are responsible for preparing the Half Yearly Financial Report in accordance with applicable law and regulations. The Directors confirm that to the best of their knowledge:

- the condensed set of Financial Statements has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting'

- the Interim Board Report includes a fair review of the information required by rule 4.2.7R of the Disclosure Guidance and Transparency Rules (being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of Financial Statements and a description of the principal risks and uncertainties for the remaining six months of the financial year)

- the Interim Board Report includes a fair review of the information required by 4.2.8R (being related party transactions that have taken place during the first six months of the financial year and that have materially affected the financial position of the Company during that period; and any changes in the related party transactions described in the last Annual Report that could do so).

The Half Yearly Financial Report for the six months to 30 June 2021 comprises the Interim Board Report and a condensed set of financial statements.

For and on behalf of the Board

Robert Lister,

Chairman

13 September 2021

INVESTMENT MANAGER'S REVIEW

The Company delivered a NAV total return of 20.1%, outperforming the Numis Smaller Companies ex-Investment Trusts Index return of 17.4% for the six month period to 30 June 2021. We were pleased to see the stronger performance in the second quarter reverse the underperformance in the first quarter; this delivered outperformance against the benchmark over the half year period.

Equity markets

The global economy started to recover from the effects of the pandemic in the first half of 2021. Despite a rise in COVID-19 cases in India and renewed outbreaks in many other geographies, vaccination programmes across the world gathered pace, leading to the progressive scaling back of restrictions. The recovery has been further fuelled by very supportive monetary and fiscal policy. Huge stimulus packages have continued to be announced, central banks have kept rates on hold and further support has been provided through bond buying programmes.

The recovery has been evident in the improvement in economic data and rise in corporate profitability. Despite economic growth falling by 1.5% in the first quarter, primarily due to lockdowns, the Bank of England raised its 2021 GDP growth forecast to 7.25% and noted that rising inflation numbers were most likely temporary. The earnings season saw investor focus shift to corporate earnings announcements, which were generally better than expected. While some travel related areas remain challenged, the acceleration in worldwide vaccine rollouts has allowed businesses to reopen and the economic recovery to broaden-out. UK markets in general have performed less well than most other markets, particularly the technology heavy Nasdaq index in the USA, as well as most European and Far East markets, where COVID-19 was tackled in a more robust fashion, and economies made a quicker recovery. Mergers & Acquisition activity continues to feature heavily in the UK market: this is driven by private equity funds and opportunist buyers taking advantage of the valuation-gap versus other markets, as well as the improving prospects of many businesses in a period of economic recovery.

The new issues market continues to be buoyant. As smaller companies investors, it has been pleasing to see the UK market hosting vibrant new growth businesses. We have enjoyed meeting prospective listed businesses but have remained selective and true to our Quality Growth and Momentum (QGM) investment process, with an income bias. We did not take part in any IPOs during the period as we were not comfortable that any provided both the quality growth aspects and the prospect of a growing dividend in the near term. More recently, we took part in the IPO of Seraphine, the maternity wear specialist, which we expect to yield around 1% and grow the dividend in line with expected earnings.

Performance

The NAV portfolio return for the Company for the six month period to 30 June 2021 was 20.1%, versus a benchmark return of 17.4%.

We have always been clear that the portfolio is positioned to deliver outperformance over the cycle and that there will be periods when we will underperform. The team has run the QGM investment process for over 20 years and, over that time, has seen that, during the periods of sharp recovery that typically follow a crisis in the market, our strategy temporarily underperforms. This is usually due to investors focusing on companies that have been particularly hard-hit during that downturn and these stocks do not normally meet our investment criteria.

A recovery rally is one of the most challenging environments for the relative performance of our investment process. Thankfully they occur only rarely and typically during rising markets, which generally favour smaller companies. In these environments our absolute performance remains attractive for investors; this was seen in Q1 2021, whilst the Company's performance might lag relative to benchmark. We are long-term investors and do not consider it appropriate to switch into cyclical recovery stocks for a short period. We prefer to stick to our process in all macro environments. This is evidenced by the contrast in the Company's performance between Q1 and Q2.

The first quarter was characterised by underperformance relative to the benchmark, given the strong value rally that we saw in January and February. It favoured cyclical recovery stocks and produced a challenging environment for our QGM focus.

In the second quarter we strongly outperformed the benchmark, with reporting season driving a market focus back onto company fundamentals and less on macro factors; reporting season showed strong and resilient earnings growth profiles across the portfolio, supporting earnings upgrades for many holdings.

Over the first half of the year, this mixture of two very different market periods has delivered outperformance that we are pleased with.

Asset Managers Liontrust and Tatton Asset Management were top contributors in the period with both companies reporting good growth (both in terms of Assets under Management ("AUM") and revenue). It was impressive to see Liontrust grow AUM aggressively against the backdrop of the pandemic, thanks to net inflows, positive performance and bedding in its recent acquisition of Architas. The business is highly cash generative and ended the year with substantial cash on the balance sheet. The full year dividend came in materially ahead of estimates, leading to a 42% increase in the full year pay-out. Liontrust will not continue to build cash on the balance sheet without clear purpose and will likely distribute in line with earnings. Management have delivered exceptional growth and there is still much to be optimistic about. There is opportunity across the fund range with continuing growth from flows and performance, and potential in recent acquisitions; set against compelling market dynamics.

The discretionary fund manager Tatton Asset Management is a similar story of momentum in flows, alongside good performance. Management navigated challenges posed by COVID-19 successfully and the final results showed impressive growth and strong operating margins. Funds under Management ("FUM") is growing very strongly and management gave the market an idea of their ambition by increasing their target for FUM materially from the current £9billion to £15billion over the next three years. The outlook for this business is attractive, with scope to double its size in the medium term and build on already high margins.

DiscoverIE was also a positive contributor in the period. The business has evolved from a distributor of electronic components to an international designer, manufacturer and supplier of customised, differentiated electronics. The strategy is to focus on generating organic growth in four target markets that are underpinned by structural shifts; namely Renewable Energy, Transportation, Industrial & Connectivity and Medical. Such focus on markets with long term thematic growth drivers is key to growth and reduces cyclicality. Organic growth is supplemented by acquisitions to broaden the product portfolio and geographical reach. We had plenty of evidence that DiscoverIE could outperform in an upcycle and its 2021 results illustrated that the business model is equally effective in a downturn. This gave the market confidence in the strength and resilience of the model and management execution. DiscoverIE issued an impressive full year trading update evidencing strong momentum, impressive cash generation and a positive outlook. The company also enhanced its Environmental, Social and Governance ("ESG") credentials by targeting a 50% reduction in carbon emissions over five years through a combination of: buying electricity from renewable sources where possible; implementing energy reduction measures; and installing renewable energy electricity sources on site. We continue to believe in the growth prospects and its target markets, particularly renewables given the increasing desire to switch to more sustainable energy sources. The strength of the end markets and order book should sustain the momentum, together with a healthy pipeline of acquisitions and the balance sheet firepower to match.

Morgan Sindall added value with profits ahead of expectations and upgraded earnings guidance for the year. The UK construction business is benefiting from structural growth in infrastructure; this is driven by increased investment and increased demand to help companies adapt offices to future ways of working. We remain confident in the growth potential on offer alongside the attractive approximate 4.2% yield.

Telecom Plus is a UK based multi-utility supplier. Trading as 'Utility Warehouse' it supplies gas, electricity, landline, broadband and mobile services to residences and businesses. Telecom Plus was a detractor from performance in the period, given home visits are the primary recruitment method and COVID-19 restrictions held back progress. Upon the full lifting of restrictions the business could see a material boost given the societal changes that are occurring. In particular, the shift to flexi/home-working is an ideal scenario for the company as it will provide more opportunity for partners to build their businesses; and customers will be more focused on their home services. In addition, the changes to the energy market mean that Telecom Plus can be very competitive on price. Furthermore, Ofgem is consulting on proposals to limit the level of consumer credit balances to ensure that those paying by direct debit do not overpay, which Ofgem estimates could result in cash being returned to customers if introduced in 2022. This could severely impact the business models of many of the company's competitors. The restrictions have been a headwind but investors have been paid to wait for the growth given the c.4.5% yield.

Games Workshop ("Games") is the designer, manufacturer and distributor of the two most popular miniature war games in the world, Warhammer 40k and Age of Sigmar. It's unusual that Games appears as a detractor to performance for the portfolio. Long-term, the company has been a strong positive contributor, and provides attractive and growing income. The shares climbed to an all-time high in the prior period, following a number of positive updates and despite COVID-19 disruption. The shares then drifted in the value rally at the beginning of the year. We were encouraged by the trading update in May 2021 which demonstrated another period of strong performance with profits ahead of expectations, despite currency headwinds and supply chain bottlenecks. The company's dividend policy is to return 'truly surplus capital'. To do this, the board of Games review the cash level regularly and return funds in excess of the level necessary for investment, running a sensible buffer so that the company does not require any bank borrowings. The board of Games announced a 50p dividend on the back of strong cash generation. Post COVID-19 the story has accelerated and management are investing for growth by expanding manufacturing and distribution capacity both in the UK and the USA. The outlook for the company is strong with a compelling product line-up and a healthy pipeline of licenced products to be released over the next few months. We still have strong conviction in the story and view Games as an asset of rare quality with standout returns and profitability metrics.

Assura owns primary healthcare properties in the UK comprising local GP surgeries, and larger primary care centres. The portfolio is split across a variety of sizes and locations. Assura's rental income is underpinned by a strong covenant, with the UK government (NHS) indirectly funding 84% of rental income. Assura invests in purpose-built, modern facilities let to primary care providers, easing the burden of national health requirements on hospitals and other advanced facilities. The NHS has made this central to its policy, creating a stable operating environment with steady demand and growing interest from both occupiers and investors. Assura was a detractor from performance given that the fears around the challenges presented by lockdowns meant surgeries had to operate on a remote basis. The property stocks have also lagged the recovery trade; however, the business has been resilient and has continued to receive rents in line with usual patterns. A solid cash flow and balance sheet also allowed continued expansion. Assura released strong FY 2021 results in May 2021 despite the adverse market conditions and the portfolio remains in a healthy position with 100% rent received during the financial year. We maintain that primary care remains a focus area for the NHS in order to facilitate both cost savings and improved patient outcomes, and we expect demand for modern, fit-for-purpose medical buildings to remain well supported. Assura's scale means there are greater avenues to growth and, given the challenges facing healthcare due to COVID-19, the company is well placed to support this.

Portfolio activity

As ever, our QGM with an income bias investment process has driven stock selection. During the first half of 2021 we added new positions in Mortgage Advice Bureau, CMC Markets, Synthomer and Robert Walters and exited positions in 4imprint and James Fisher.

Mortgage Advice Bureau is one of the UK's leading consumer intermediary brands and specialist appointed representative networks for mortgage intermediaries. The fast growing platform model allows customers to choose how and when they want to research, receive advice and transact. Technology is at the heart of both face-to-face and telephone advice: helping to provide greater speed, ease, and convenience; and, by doing so, delivering an increasingly more compelling customer proposition. It has demonstrated resilience in poor market environments since flotation in 2014; and we believe the momentum is set to build sharply while it converts a strong pipeline of advisers and when a number of long standing technology initiatives come to fruition. Management's lead generation tool, network management and adviser productivity agendas have the potential to be transformational to market share gains. The shares yield 2.8% with a strong dividend growth forecast. Management targets a pay-out ratio of 75% of adjusted earnings. The company's capital distribution capacity is underpinned by strong cash conversion and significant and growing capital surplus to regulatory requirements.

Synthomer is a specialist chemical company and one of the world's leading suppliers of aqueous polymers. It produces innovative formulations to support customers in a range of industries: from construction through paints and coatings, to healthcare. Synthomer works closely with its customers and targets a number one or two position in its core markets. Management's understanding of customer product and process requirements combined with their technology and process know-how are the key to the company's success. The strategy is to establish Synthomer as a growing global speciality chemical business through both organic growth (supported by investment in innovation) and inorganic growth. This high quality business offers strong earnings growth and strong cash returns to support the dividend yield of approximately 3%.

CMC Markets is primarily a provider of leveraged financial products (contracts for difference ("CFDs") and spread betting) to the retail market; other revenue streams come from stockbroking and white label contracts. There is a focus on diversifying the business beyond the leveraged product offering. Management recently announced they would launch a share dealing platform in the UK, to further diversify, and their ambitions are significant. Management have an unwavering strategic focus on high quality clients and we have seen record trading performance in the first half of the year. Profitability has been driven by increased client trading in the period as a result of higher market volatility and an increased client base. The company continues to deliver on strategic initiatives and maintain a healthy pipeline of projects that create new revenue streams through further product, channel and geographic diversification. These initiatives are all supported by technology and, through wider application, they can extend the offer and deliver further profitable growth. The CEO owns 60% of the company and is well aligned with investors. The shares yield approximately 4% and the dividend policy is to pay out 50% of profit after tax. After the period-end there were downgrades to earnings due to reduced client activity over July and August. Management view the reduction to client income as temporary and we are satisfied that the quantum of the downgrade to the current year's guidance is cautious, assuming that client activity remains subdued for the remainder of the financial year. In fact, since client numbers have been retained, we would expect a fast rebound when market volatility returns. In our view, this update emphasises the volatility in CMC's earning profile and should sharpen management's focus on the launch of the UK investment platform, to improve quality of earnings.

Having sold Robert Walters in the prior period due to lack of visibility in the shape or speed of their post COVID-19 recovery, we have now added a new position in view of momentum returning in the professional recruitment consultancy. We believe momentum is more than just a temporary flushing of pent-up demand, rather the start of something more sustained, as technology and flexible working changes longer-term dynamics. The global business historically has always gained share after a downturn. With the shares yielding over 3%, we believe the company's prospects now look promising.

We exited positions in James Fisher as the balance sheet remains troubled and we also exited 4imprint, where visibility of recovery remains low. We are not yet sure whether the lasting implications of COVID-19 will result in structural problems for the business.

ESG

Through the 'Quality' aspects of our QGM process, we have embedded an ESG focus for many years. Without impacting the long term stability and strength of our matrix driven investment process we have, in recent years, built comprehensive ESG more formally into our thinking. ESG is embedded in all of our research and investment decisions. We have a well-resourced ESG investment team, with whom we work closely. We also have a dedicated smaller companies on desk ESG analyst, Tzoulianna Leventi. When analysing the ESG credentials of a business, we are looking for both risks and opportunities. Many companies are keen to engage with us as a long-term shareholder, especially where we can use our in-house ESG expertise to help provide them with advice. The scale of our AUM in UK smaller companies delivers excellent engagement opportunities with management teams and our ability to help those companies to improve both their ESG qualities and how they demonstrate them to the market. It is beneficial for us to help a company improve its ESG credentials as it may lead to a higher stock rating. It can also reduce the risk of that investment. ESG is at the core of our process, and fits strongly within the 'Quality' aspect of our QGM investment style.

Through the period, we engaged with companies on ESG matters during company meetings, as well as some specific ESG engagements. One of these was DiscoverIE.

Together with our dedicated on desk ESG analyst we held an ESG specific meeting with DiscoverIE to learn more about the initiatives the company is undertaking. The company performed a materiality assessment to identify the most relevant ESG issues pertaining to its business and ascertain the appropriate targets for improvements. A materiality assessment has been undertaken and a number of issues were identified across the company; these have been prioritised for improvement. As referenced above, the company disclosed to the market the intention to reduce carbon emissions by 50% over five years. It also intends to improve ESG specific reporting and this will be showcased with improved disclosure around governance and ESG aspects and initiatives in its upcoming annual report. In conclusion, we consider DiscoverIE to have a clear ESG strategy and we will continue to engage with it as it makes progress.

Fixed Income

Corporate bonds continued to perform well during the period despite some volatility in government bond markets. Inflation prints continue to exceed expectations and are causing some change in the rhetoric heard from central banks with regard to monetary policy. In the UK, interest rate increases are now being priced -in for 2022, although the government bond market remains sanguine. Excessive demand continues to be the driver of fixed income markets with central banks and investors continuing to take down supply. Meanwhile credit quality has been stable and even improving in certain sectors as have earnings. The financial sector continues to benefit from improvements in the economy.

Bonds within the portfolio performed well with spreads tightening modestly. Slightly longer maturities, such as the HSBC 6.5% 2024 bond, produced a positive total return despite the small back up in government bond yields; while the bond issued with the UK's Heathrow Airport generated a return of 0.8%, despite the challenging operating environment. The utility issuers generated some attractive returns over the period and the bond issued by Close Brothers redeemed on schedule in June 2021 and will be replaced as and when attractive opportunities emerge.

Outlook

Overall, it feels like the recovery rally phase has been sharp but short term, with earnings season having reversed that focus. Under-performance has taken place into rising markets thus absolute returns were attractive over the period. In a recovery phase, with more of a stock specific focus, we can look forward to sustained strong performance from small and mid-sized companies and more robust relative performance from our process. This is typical of the first half of an economic cycle. While we are positive for the outlook for the holdings in the portfolio, inflation remains the biggest issue. We are seeing supply chain dislocation and a return to labour shortages and wage inflation, not seen for a very long time. We suspect the supply and demand mis-match will be temporary and whilst we are keeping a watchful eye, we would argue that the companies we invest in are also ready and well-placed, with plenty of levers to pull. If markets suffer inflation, we expect the high quality, defensive characteristics of our process to cushion the blow somewhat.

Longer term, we remain confident about the outlook and the long-term discipline that our investment process provides. Small- and mid-cap companies tend to lead a market recovery, and this gives us a supportive environment over the coming periods. While a value rally may re-emerge, we believe it is over for now. When we look at value shares, many of these businesses fundamentally have uncertain outlooks and challenged balance sheets. We also believe that they are already pricing-in recovery to their earnings, which may not transpire.

The global economy will likely experience a period of growth above trend as it rebounds out of the COVID-19 crisis; however, investor attention will increasingly turn to trying to ascertain a sustainable level of growth over the longer term. We have been pleased with the earnings momentum and good results across the portfolio, with earnings upgrades consistent across the holdings, and we are confident that this will continue through the remainder of this year.

Aberdeen Asset Managers Limited

13 September 2021

Distribution of Assets and Liabilities

As at 30 June 2021

Condensed Statement of Comprehensive Income

Condensed Statement of Comprehensive Income

(Continued)

Condensed Balance Sheet

Condensed Statement of Changes in Equity

Condensed Cash Flow Statement

NOTES TO THE ACCOUNTS

Please note that past performance is not necessarily a guide to the future and that the value of investments and the income from them may fall as well as rise. Investors may not get back the amount they originally invested

Investment Portfolio - Equity

As at 30 June 2021