The Marlborough No 2 OEIC

Interim Report For the six month period ended 31st January 2017 (Unaudited)

THE MARLBOROUGH NO 2 OEIC

Registered Office

Marlborough House 59 Chorley New Road Bolton BL1 4QP

Authorised Corporate Director and Registrar

Marlborough Fund Managers Ltd Marlborough House 59 Chorley New Road Bolton BL1 4QP

Investor Support: (0808) 145 2500 (FREEPHONE)

Authorised and regulated by the Financial Conduct Authority.

Depositary

HSBC Bank plc 8 Canada Square London E14 5HQ

Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

Investment Advisers

Marlborough Far East Growth Fund Marlborough Fund Managers Ltd Marlborough House 59 Chorley New Road Bolton BL1 4QP

Marlborough Multi Cap Income Fund and Marlborough Nano-Cap Growth Fund Hargreave Hale Limited Talisman House Boardmans Way Blackpool Lancashire FY4 5FY

Authorised and regulated by the Financial Conduct Authority.

Auditor

Barlow Andrews LLP Carlyle House 78 Chorley New Road Bolton BL1 4BY

Directors of Marlborough Fund Managers Ltd Andrew Staley Chairman Nicholas F J Cooling Deputy Chairman Allan Hamer Joint Managing Director Wayne D Green Joint Managing Director Dom M Clarke Finance Director Geoffrey Hitchin Investment Director Keith Ounsworth Director – Sales Helen Derbyshire Director – Compliance & Risk John R Heap Director – Strategic Development (resigned 9 February 2017) B John Leyland Director (resigned 9 February 2017) Helen Derbyshire Director – Compliance & Risk THE MARLBOROUGH NO 2 OEIC

CONTENTS PAGE

AUTHORISED STATUS AND GENERAL INFORMATION 1

AUTHORISED CORPORATE DIRECTOR'S STATEMENT 2

ACCOUNTING POLICIES 2

MARLBOROUGH FAR EAST GROWTH FUND

AUTHORISED INVESTMENT ADVISER’S REPORT 3

FUND INFORMATION 6

Price and distribution record Number of shares in issue/Net asset value per unit Ongoing charges Synthetic risk and reward indicator Portfolio statement Portfolio transactions

INTERIM FINANCIAL STATEMENTS 10

Statement of total return Statement of change in net assets attributable to shareholders Balance sheet

MARLBOROUGH MULTI CAP INCOME FUND

AUTHORISED INVESTMENT ADVISER’S REPORT 12

FUND INFORMATION 14

Price and distribution record Number of shares in issue/Net asset value per unit Ongoing charges Synthetic risk and reward indicator Portfolio statement Portfolio transactions

INTERIM FINANCIAL STATEMENTS 21

Statement of total return Statement of change in net assets attributable to shareholders Balance sheet

MARLBOROUGH NANO-CAP GROWTH FUND

AUTHORISED INVESTMENT ADVISER’S REPORT 23

FUND INFORMATION 25

Price and distribution record Number of shares in issue/Net asset value per unit Ongoing charges Synthetic risk and reward indicator Portfolio statement Portfolio transactions

INTERIM FINANCIAL STATEMENTS 32

Statement of total return Statement of change in net assets attributable to shareholders Balance sheet

THE MARLBOROUGH NO 2 OEIC

AUTHORISED STATUS AND GENERAL INFORMATION

Authorised Status

The Marlborough No 2 OEIC is an investment company with variable capital incorporated under the Open Ended Investment Company (OEIC) Regulations 2001. It is a UCITS scheme as defined in the Collective Investment Schemes Sourcebook (COLL) and is an umbrella company for the purposes of the OEIC Regulations. The Company is incorporated in England and Wales with the registration number IC000415 and is authorised and regulated by the Financial Conduct Authority with effect from 21 October 2005. The shareholders are not liable for the debts of the Company.

The sub-Funds of the Company are segregated by law under the Protected Cell Regime. In the event that one sub-fund in the Company is unable to meet its liabilities, the assets of another sub-fund within the Company will not be used to settle these liabilities.

The Company currently has three sub-Funds, the Marlborough Far East Growth Fund, Marlborough Multi Cap Income Fund and Marlborough Nano-Cap Growth Fund.

Investment Objectives

Marlborough Far East Growth Fund

The investment objective of the Marlborough Far East Growth Fund is to provide long term capital growth from an actively managed portfolio of securities.

The Fund will invest primarily in securities in the Pacific Basin region, excluding Japan, in order to achieve long term capital growth.

Marlborough Multi Cap Income Fund

The investment objective of the Marlborough Multi Cap Income Fund is to seek to generate an attractive and growing level of dividend income in addition to long term capital growth by investing in a diversified portfolio of equities predominantly listed in the UK.

The Fund will aim to achieve its objective by investing primarily in the shares of small to medium capitalisation companies where both capital and dividend growth are anticipated. From time to time the Fund may also hold the shares of large capitalisation companies as well as cash and money market instruments.

The Fund may also invest in other transferable securities including, but not limited to, warrants and government and public securities, and units in collective investment schemes, near cash and deposits. The Fund may enter into derivatives and forward transactions for the purposes of efficient portfolio management (including hedging), and may borrow and enter into stock lending arrangements.

It is intended that the Fund will be managed so that it is eligible for quotation within The Investment Association's UK Equity Income sector.

Marlborough Nano-Cap Growth Fund

The investment objective of the Marlborough Nano-Cap Growth Fund is to seek to provide capital growth in excess of that achieved by the FTSE SmallCap Index (excluding investment companies) over the long term.

The Fund will aim to achieve its investment objective by investing primarily in the shares of small, UK listed equities having a market capitalisation of £100 million or less at the time of investment. The Fund will be actively managed.

The Fund may also invest in other transferable securities including, but not limited to, warrants and government and public securities, money market instruments, units/shares in collective investment schemes, cash and near cash, and deposits. The Fund is permitted to invest in derivatives and forward transactions for the purposes of efficient portfolio management (including hedging), and may borrow and enter into stock lending arrangements in accordance with the Regulations.

The Fund will invest in very small companies which will have wider bid/offer spreads and may be more volatile than larger companies. This may impact on short term performance. Any investment in this Fund should be considered as long term (i.e. over 10 years).

1 THE MARLBOROUGH NO 2 OEIC

AUTHORISED STATUS AND GENERAL INFORMATION (CONTINUED)

Rights and Terms attaching to each Share Class

Each share of each class represents a proportional entitlement to the assets of the scheme. The allocation of income and taxation and the rights of each share in the event the scheme is wound up are on the same proportional basis.

Change in Prospectus

No changes have been made since the last report.

Up to date key investor information document, prospectus and reports and accounts for any fund can be requested by the investor at any time.

Cross Holdings

No sub-funds had holdings in any other sub-funds of the Company at the end of the period.

AUTHORISED CORPORATE DIRECTOR’S STATEMENT

This report has been prepared in accordance with the requirements of the Collective Investment Schemes Sourcebook as issued and amended by the Financial Conduct Authority.

ALLAN HAMER JOINT MANAGING DIRECTOR

G R HITCHIN INVESTMENT DIRECTOR

MARLBOROUGH FUND MANAGERS LTD 14 March 2017

ACCOUNTING POLICIES

Basis for preparation

The interim financial statements have been prepared in compliance with FRS102 and in accordance with the Statement of Recommended Practice for UK Authorised Funds issued by The Investment Association in May 2014 (SORP 2014).

The financial statements are prepared in sterling, which is the functional currency of the Fund. Monetary amounts in these financial statements are rounded to the nearest pound.

The financial statements have been prepared on the historical cost convention, modified to include the revaluation of investments and certain financial instruments at fair value.

Accounting policies

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

2 THE MARLBOROUGH NO 2 OEIC MARLBOROUGH FAR EAST GROWTH FUND

AUTHORISED INVESTMENT ADVISER’S REPORT

For the six month period ended 31 January 2017

Percentage change and sector position to 31 January 2017

Six months 1 year 3 years 5 years Marlborough Far East Growth Fund 18.49% 47.37% 61.83% 47.33% Quartile Ranking* 1 1 1 4 *Based on ranking within The Investment Association’s Asia Pacific ex Japan sector Launched 31 October 2005 External Source of Economic Data: Morningstar (Class P - mid to mid, net income reinvested) Class P shares first priced on 2 January 2013. In the period to that date, the past performance information for the Class A shares has been used.

In the half year to 31 January 2017, the Fund grew very rapidly, rising 18.49% and far outpacing the MSCI Asia ex Japan Index in Sterling, which rose by 9.9%. In Sterling terms, North Asian markets led throughout the period, with MSCI China up over 14%, closely followed by Taiwan (+12%) and Korea (+10%). ASEAN markets remained relatively weak throughout this period, with Malaysia (- 3%) and Indonesia (+0.1%) the poorest and India was also barely changed, adding just +1.1%. This has been a momentous six months, which has encompassed both the UK’s now notorious referendum and the election of Donald Trump to the US Presidency as well as the US Fed raising rates for only the second time in eight years.

Whilst these events are regarded in the West as “extraordinary”, they remain well within the bounds of political normality in the Emerging World. In this period alone, Asia has seen “once-in-a-lifetime” political events in almost every country. In Thailand, King Bhumipol, who had reigned for over 70 years and brought peace and prosperity to the nation, died and although the market was not the best, it still added over 6% in this period. In Korea, even though President Park has been impeached following allegations of inappropriate involvement with a shaman, the market has been one of the best in the region, advancing over 10% in Sterling terms. Meanwhile, over in the Philippines, the nation elected a populist President described by many as the “Trump of Asia”, which led to heavy fund outflows, taking the stock market down over 10% and making the currency one of only two in the region to depreciate over the last six months. Like Donald Trump, President Roderigo Duterte is a volatile and unknown quantity, yet within a few months, he had negotiated a pivot towards China and a rapprochement in the South China Sea. The Peso was not the poorest currency this period. That wooden spoon goes to the Malaysian Ringgit, as the 1MDB scandal refused to lie down and it even fell by over 3% against Sterling, despite the strong rise of oil prices after the Autumn OPEC meeting.

Politics aside, China has been encouraging its citizens and corporates to repay their overseas obligations for around two years now, but in the run-up to the Fed’s decision to raise rates, it intensified this programme. As a wave of companies refinanced from Dollar to onshore Renminbi debt, the Chinese currency was pushed lower, leading many to speculate that this may be creating financial distress in China. Few also added into the equation the fact that companies borrowing onshore do so at substantially cheaper rates than in US Dollars once the currency volatility has been included and so were surprised by better cashflow and margins than had been forecast. This in turn led to a slew of upgrades, which has helped to make MSCI China the best performing part of the region.

One of the least loved sectors globally throughout the QE period has been banks and financials and with the shift to a new rate cycle in the US, these stocks have finally started to perform. As 70% of the HSCEI index of H shares is financial stocks, it is unsurprising that this has been the strongest of all the Chinese indices this period and it was further boosted by the new Shenzhen-Hong Kong Connect, which allows Mainland investors to buy into the much cheaper siblings of mainland stocks. This – along with strong results and a very positive outlook – helped Geely Auto, a Chinese car maker and one of our largest holdings, to almost double over the period, rising 90% in Sterling terms, with our holding in ASM Pacific (+75%) not far behind. ASM Pacific is one of the world’s best manufacturers of semiconductor equipment, with dominant market share and proprietary technology and stands to be one of the foremost beneficiaries of the shift to the “Internet of Things”, in which all gadgets will eventually have chips. That same trend powered our holding in SK Hynix to return 60% in the last six months, as years of patience and market consolidation finally paid off and it started to raise semiconductor prices.

During the course of the last half year, it has also become apparent that inflation has returned, led by physical commodities, especially those in the food segment. In the sugar industry, years of surplus have turned to deficit across India and South East Asia, even before the disruption to demand in India caused by demonetisation. At the start of the period last year, we bought a Thai sugar company, Khon Kaen Sugar, which trades, refines and sells sugar as well as generating electricity from the waste products. As inventories waned, its shares jumped over 79%. We have started to take profit on all of the strongest performers this period, rotating them back into other attractive holdings.

3 THE MARLBOROUGH NO 2 OEIC MARLBOROUGH FAR EAST GROWTH FUND

AUTHORISED INVESTMENT ADVISER’S REPORT (CONTINUED)

Across Asia, we are seeing a similar situation to that described for sugar above in an increasing number of sectors. Years of oversupply are turning to equilibrium or deficit as capacity has been cut and industries have consolidated. Now we are seeing deficits starting to push up prices in semiconductors, milk, pork, paper, coal, and the balance is heading that way in steel, textiles, solar, bulk shipping and many others. Oil and gas might be the exception. Although exploration all but halted in 2014 inventories have only risen and shale producers are stubbornly reluctant to cut. Asian consumers have enjoyed real wage increases for many years, so companies trying to raise prices receive little push-back. As central banks remain reluctant to raise rapidly ahead of the Fed, we expect inflation to continue to rise steadily, driven by these fundamentals. The traditional way to play this is to seek companies who can pass through these costs to customers and we are certainly doing this. However, the strongest theme in our portfolio for the coming year is cost reduction. We are holding and adding companies whose nature and products help to save their customers money, by whatever means. This is a wide theme and we are finding multiple opportunities within it, whether automation, professional services, financial restructuring, energy reduction or more integrated technology. We could worry about politics, but political upheaval is the stuff of life in the Emerging world. As the Western world begins to feel inflation bite, we believe that Asia, with its outsourcers, robotics, software and cheaper goods of all types stands well placed to benefit.

Sally Macdonald Marlborough Fund Managers Ltd 15 February 2017

Distributions (pence per share)

Year 2017 Year 2016 Year 2015 Year 2014 Class A Income Net income paid 31 March 0.0000 0.9217 0.8770 1.1354 Net income paid 30 September 3.9215 2.1060 2.1042 Class A Accumulation Net income paid 31 March 0.0000 1.0603 0.9876 1.2523 Net income paid 30 September 4.5263 2.3840 2.3391 Class B Income Net income paid 31 March 0.4622 1.4360 1.3158 1.5763 Net income paid 30 September 4.4674 2.5815 3.0350 Class B Accumulation Net income paid 31 March 0.5056 1.5276 0.0000 1.7118 Net income paid 30 September 4.6726 0.0000 3.3313 Class P Income Net income paid 31 March 0.7043 1.5143 1.4970 1.7277 Net income paid 30 September 4.5396 2.7674 2.6629 Class P Accumulation Net income paid 31 March 0.7791 1.6221 1.5632 1.7538 Net income paid 30 September 4.9133 2.9153 2.7355

4 THE MARLBOROUGH NO 2 OEIC MARLBOROUGH FAR EAST GROWTH FUND

AUTHORISED INVESTMENT ADVISER’S REPORT (CONTINUED)

Material Portfolio Changes

For the six month period ended 31 January 2017

Purchases Cost (£) Sales Proceeds (£)

POSCO 631,687 China Vanke 'H' 626,933 Fubon Financial Holding 598,732 Greatview Aseptic Packaging 521,587 Pacific Basin Shipping 571,229 Nexteer Automotive Group 513,258 Longfor Properties 507,728 Samsung Electronics 427,974 Greatview Aseptic Packaging 262,807 Geely Automobile Holdings 285,175 Tung Thih Electronic 250,553 Sunny Optical Technology Group 238,501 Bank of China 'H' 247,769 Tiphone Mobile Indonesia 222,470 Bank Rakyat Indonesia (Persero) 220,488 Hyundai Motor Com Stk KRW 218,929 ICICI Bank ADR 138,111 Semen Indonesia (Persero) 191,336 Haitong International Securities Group 127,587 Sands China 189,762 PICC Property and Casualty 'H' 125,314 Yes Bank 173,181 Chow Sang Sang Holdings 75,565 Khon Kaen Sugar Industry (Foreign) 160,516 Taiwan Hon Chuan Enterprise 73,556 Taiwan Semiconductor Manufacturing 137,481 Hon Hai Precision Industry 126,228 Tencent Holdings 41,334 Gamuda Warrants 17,660

Other purchases 3,628

Total purchases for the period 3,834,754 Total sales for the period 4,092,325

5 THE MARLBOROUGH NO 2 OEIC MARLBOROUGH FAR EAST GROWTH FUND

FUND INFORMATION

Price and distribution record

Class A and Class B Income and accumulation shares were first offered at 100p on 31 October 2005. On 31 December 2012 Class P shares became available for purchase.

Financial year to Highest price Lowest price Net income per share

Class A Income 31 July 2014 163.66p 141.65p 3.2396p 31 July 2015 191.78p 156.52p 2.9830p 31 July 2016 186.95p 136.89p 4.8432p 31 July 2017* 215.11p 179.60p 0.0000p Class A Accumulation 31 July 2014 181.93p 157.47p 3.5914p 31 July 2015 217.10p 176.26p 3.3716p 31 July 2016 215.70p 156.97p 5.5866p 31 July 2017* 253.47p 211.65p 0.0000p Class B Income 31 July 2014 169.36p 145.85p 4.6113p 31 July 2015 197.90p 161.36p 3.8973p 31 July 2016 193.22p 141.21p 5.9034p 31 July 2017* 222.36p 185.22p 0.4622p Class B Accumulation 31 July 2014 185.88p 160.08p 5.0431p 31 July 2015 221.18p 180.34p 0.0000p 31 July 2016 215.81p 157.82p 6.2002p 31 July 2017* 254.20p 211.78p 0.5056p Class P Income 31 July 2014 164.27p 141.72p 4.3906p 31 July 2015 192.14p 156.86p 4.2644p 31 July 2016 187.75p 137.10p 6.0539p 31 July 2017* 216.12p 179.82p 0.7043p Class P Accumulation 31 July 2014 168.75p 145.58p 4.4893p 31 July 2015 202.42p 163.79p 4.4785p 31 July 2016 203.22p 146.89p 6.5354p 31 July 2017* 239.65p 199.43p 0.7791p * six month period to 31 January 2017

6 THE MARLBOROUGH NO 2 OEIC MARLBOROUGH FAR EAST GROWTH FUND

FUND INFORMATION (CONTINUED)

Number of units in issue/Net asset value per unit

Net asset value Number of shares Net asset value of scheme property in issue per share Class A Income 31 July 2014 £7,780,660 4,833,843 160.96p 31 July 2015 £6,438,841 3,976,509 161.92p 31 July 2016 £3,102,564 1,713,074 181.11p 31 January 2017 £3,373,310 1,576,428 213.98p Class A Accumulation 31 July 2014 £5,381,896 2,968,985 181.27p 31 July 2015 £4,854,691 2,614,570 185.68p 31 July 2016 £4,903,976 2,297,120 213.48p 31 January 2017 £7,645,036 3,032,071 252.14p Class B Income 31 July 2014 £924 558 165.71p 31 July 2015 £931 558 166.98p 31 July 2016 £1,042 558 186.80p 31 January 2017 £998 452 220.71p Class B Accumulation 31 July 2014 £39,245 21,189 185.22p 31 July 2015 - - - 31 July 2016 £1,136 532 213.52p 31 January 2017 £1,000 396 252.81p Class P Income 31 July 2014 £610,067 378,885 161.02p 31 July 2015 £1,192,775 735,997 162.06p 31 July 2016 £4,541,460 2,504,782 181.31p 31 January 2017 £5,441,789 2,538,781 214.35p Class P Accumulation 31 July 2014 £4,807,617 2,859,276 168.14p 31 July 2015 £4,880,308 2,810,531 173.64p 31 July 2016 £9,943,463 4,943,615 201.14p 31 January 2017 £10,062,375 4,219,723 238.46p

Ongoing charges

Class A Class B Class P 31 July 2016 2.22% 1.72% 1.47% 31 January 2017 2.10% 1.60% 1.35%

The ongoing charge figure is based on expenses for the year. This figure may vary from year to year. It excludes:  Performance fees  Portfolio transaction costs, except in the case of an entry/exit charge paid by the Fund when buying or selling units in another collective investment scheme.

Synthetic risk and reward indicator

Lower risk Higher risk

Typically lower rewards Typically higher rewards

1 2 3 4 5 6 7

The risk and reward indicator above aims to provide you with an indication of the overall risk and reward profile of the Fund. It is calculated based on the volatility of the Fund using weekly historic returns over the last five years. If five years data is not available for a fund, the returns of a representative portfolio are used.

This Fund has been measured as 6 because it has experienced high volatility historically.

7 THE MARLBOROUGH NO 2 OEIC MARLBOROUGH FAR EAST GROWTH FUND

Portfolio statement as at 31 January 2017

Holding or Investment Bid Percentage of nominal value value total net assets as at 31 Jan 17 £% CHINA/HONG KONG (42.40%, July 2016 - 41.45%) 4,800 Alibaba Group Holding 388,984 1.47 96,100 ASM Pacific Technology 938,857 3.54 2,106,000 Bank of China 'H' 771,144 2.91 1,123,000 China Construction Bank 'H' 673,723 2.54 243,000 China Life Insurance 'H' 541,661 2.04 26,000 China Mobile 236,259 0.89 333,000 Chow Sang Sang Holdings 509,088 1.92 1,404,000 Country Garden Holdings 647,703 2.44 36,305 db X-trackers Harvest CSI300 Index '1D' ETF 289,286 1.09 565,000 Geely Automobile Holdings 539,416 2.03 1,178,000 Haitong International Securities Group 532,477 2.01 1,380,000 Industrial & Commercial Bank of China 'H' 682,309 2.57 124,250 Johnson Electric Holdings 265,394 1.00 480,000 Longfor Properties 557,068 2.10 4,000,000 Pacific Basin Shipping 599,932 2.26 1,158,000 PetroChina 'H' 745,028 2.81 394,170 PICC Property and Casualty 'H' 481,920 1.82 145,600 Sands China 519,582 1.96 86,900 Sunny Optical Technology Group 410,781 1.55 23,400 Tencent Holdings 494,733 1.87 940,000 Wasion Group Holdings 418,090 1.58 Total China/Hong Kong 11,243,435 42.40

INDIA (8.73%, July 2016 - 9.44%) 59,600 ICICI Bank ADR 377,342 1.42 11,700 Infosys ADR 129,656 0.49 11,942 Lyxor MSCI India 'C' ETF 146,339 0.55 60,510 NIIT Technologies 292,409 1.10 118,666 Oil India 462,419 1.74 220,000 Power Grid Corporation of India 539,376 2.03 22,400 Yes Bank 370,231 1.40 Total India 2,317,772 8.73

INDONESIA (2.74%, July 2016 - 4.09%) 613,300 Astra International 293,014 1.10 325,000 Bank Rakyat Indonesia (Persero) 229,005 0.86 379,100 Semen Indonesia (Persero) 205,612 0.78 Total Indonesia 727,631 2.74

MALAYSIA (3.36%, July 2016 - 4.26%) 566,000 Alliance Financial Group 385,533 1.45 580,000 Gamuda 505,395 1.91 Total Malaysia 890,928 3.36

SINGAPORE (5.90%, July 2016 - 6.35%) 1,299,700 Bumitama Agri 589,415 2.22 27,600 DBS Group Holdings 296,644 1.12 14,000 Jardine Cycle & Carriage 328,085 1.24 160,600 Singapore Telecommunications 351,415 1.32 Total Singapore 1,565,559 5.90

8 THE MARLBOROUGH NO 2 OEIC MARLBOROUGH FAR EAST GROWTH FUND

Portfolio statement as at 31 January 2017

Holding or Investment Bid Percentage of nominal value value total net assets as at 31 Jan 17 £% SOUTH KOREA (15.33%, July 2016 - 15.55%) 43,680 Huvitz 384,577 1.45 6,795 Hyundai Motor Co, 2nd Pref 449,048 1.69 38,700 Industrial Bank of Korea 339,395 1.28 37,060 Korea Reinsurance 277,668 1.05 4,000 POSCO 748,549 2.82 442 Samsung Electronics 602,199 2.27 4,940 Samsung Life Insurance 378,653 1.43 23,885 SK Hynix 885,708 3.34 Total South Korea 4,065,797 15.33

TAIWAN (16.46%, July 2016 - 13.94%) 162,586 ADLINK Technology 298,397 1.13 536,000 Compal Electronics 258,624 0.98 510,000 CTCI 637,063 2.40 944,469 E. Sun Financial Holding 446,043 1.68 530,000 Fubon Financial Holding 686,465 2.59 105,515 Hon Hai Precision Industry 226,064 0.85 130,000 Kinsus Interconnect Technology 238,259 0.90 250,000 SerComm 510,024 1.92 314,000 Taiwan Hon Chuan Enterprise 428,400 1.62 80,000 Taiwan Semiconductor Manufacturing 379,862 1.43 34,000 Tung Thih Electronic 255,434 0.96 Total Taiwan 4,364,635 16.46

THAILAND (2.26%, July 2016 - 2.48%) 1,260,000 Khon Kaen Sugar Industry (Foreign) 194,012 0.73 263,700 PTT Global Chemical (Foreign) 406,039 1.53 Total Thailand 600,051 2.26

Portfolio of investments 25,775,808 97.18 Net current assets 748,700 2.82 Net assets 26,524,508 100.00

The investments of the Fund have been valued at their fair value at 12 noon on 31 January 2017. Fair value is normally the bid value of each security by reference to quoted prices from reputable sources; that is the market price. If the authorised corporate director (ACD) believes that the quoted price is unreliable, or if no price exists, a valuation technique is used whereby fair value is the ACD's best estimate of a fair and reasonable value for that investment. The fair value excludes any element of accrued interest.

Portfolio transactions for the six months ended 31 January 2017 £

Total purchases, including transaction charges 3,834,754

Total sales proceeds, net of transaction charges 4,092,325

9 THE MARLBOROUGH NO 2 OEIC MARLBOROUGH FAR EAST GROWTH FUND

INTERIM FINANCIAL STATEMENTS (unaudited) For the six months ended 31 January 2017

Statement of total return 31 January 2017 31 January 2016 £££ £

Income: Net capital gains/(losses) 4,069,384 (1,357,853) Revenue 224,223 250,393 Expenses (156,157) (119,140) Net revenue/(expense) before taxation 68,066 131,253

Taxation (16,629) (2,323)

Net revenue/(expense) after taxation 51,437 128,930

Total return before distributions 4,120,821 (1,228,923)

Distributions (54,587) (128,930)

Change in net assets attributable to shareholders from investment activities 4,066,234 (1,357,853)

Statement of change in net assets attributable to shareholders

31 January 2017 31 January 2016 £££ £

Opening net assets attributable to shareholders * 22,493,642 17,367,547

Amounts receivable on issue of shares 980,337 684,725 Amounts payable on cancellation of shares (1,053,171) (841,527) Amounts payable on share class conversions 3,485 (2,546) (69,349) (159,348)

Change in net assets attributable to shareholders from investment activities 4,066,234 (1,357,853)

Retained distribution on accumulation shares 32,876 75,562

Unclaimed distributions 1,105 0

Closing net assets attributable to shareholders 26,524,508 * 15,925,908

* These figures are not the same as the comparatives are taken from the preceding interim period and not the last final accounts.

10 THE MARLBOROUGH NO 2 OEIC MARLBOROUGH FAR EAST GROWTH FUND

INTERIM FINANCIAL STATEMENTS (unaudited) as at 31 January 2017

Balance sheet

31 January 2017 31 July 2016

££ Assets: Fixed Assets: Investment assets 25,775,808 21,944,665

Current Assets: Debtors 98,176 180,303 Cash and bank balances 1,041,088 706,436 Total assets 26,915,072 22,831,404

Liabilities: Creditors: Bank overdrafts 14,917 99,608 Distribution payable on income shares 17,883 180,913 Other creditors 357,764 57,242 Total liabilities 390,564 337,763

Net assets attributable to shareholders 26,524,508 22,493,641

11 THE MARLBOROUGH NO 2 OEIC MARLBOROUGH MULTI CAP INCOME FUND

AUTHORISED INVESTMENT ADVISER’S REPORT

For the six month period ended 31 January 2017

Percentage change and sector position to 31 January 2017

Six months 1 year 3 years 5 years Since launch* Marlborough Multi Cap Income Fund 6.41% 3.51% 16.95% 100.28% 94.67% Quartile Ranking** 2 4 4 1 1 * Launched 13 June 2011 ** Based on ranking within The Investment Association UK Equity Income sector External Source of Economic Data: Morningstar (Class P Acc - mid to mid) Class P shares first priced on 2 January 2013. In the period to that date, the past performance information for the Class A shares has been used.

The price of the Fund at the end of July 2016 was 149.14p (Class P accumulation shares). The Fund’s benchmark, the FTSE All Share Index, was 3653.83 at that time. Since then, the benchmark has risen to 3858.26 (31 January 2017); an increase of 5.59%. In comparison, the Fund price increased to 185.56p (Class P accumulation shares), up 6.41% over the same period.

Since inception to end of January 2017, the Fund is up 94.67% (based on the Class P accumulation shares) compared with the FTSE All Share Index up 24.59% over the same period (from 3096.72 to 3858.26).

The dividend on Class P income shares for the six months to 31 January 2017 is 3.2645p, due to be paid at the end of March. There are slight variations in income distribution across the range of share classes but we focus on the ‘P’ income share class, the most common held by investors. Please see the table below. Siddarth Chand Lall

Following the shock EU referendum result the value of sterling depreciated in the second half of the year, falling 16% against the US dollar and 11% against the Euro (from 23 June 2016 to 31January 2017). Companies with foreign earnings received a translational benefit and this was reflected in the relative outperformance of the FTSE 100, which generates a higher proportion of revenues overseas. In contrast, the Fund retains its bias towards small and mid-cap companies and this led to a difficult period. Novae fell 25% after it warned that elevated levels of large risk and catastrophe losses had continued into Q4. Laird also profit warned, falling 48%, due to delayed volumes and a more dynamic pricing environment (we have now exited this position). Carillion fell 19% over the period despite in-line trading and has recently signed an extension to its framework agreement with Openreach. We were also not helped by some underperformers within our large cap exposure. BT fell 15% before we exited the position in November (it has since profit warned due a write-down taken on the Italian business and a deteriorating outlook for the UK public sector). National Grid corrected 16% during the period over fears (not too dissimilar to BT) that the regulator would enforce a break-up of the company. However, BEIS and Ofgem have now proposed that the electricity System Operator will be incorporated into a separate independent company, but will remain wholly owned by National Grid. They have also agreed to sell a 61% equity interest in their UK gas distribution business. Following completion, they intend to return £4bn of net proceeds to shareholders and expect at least 75% to be in the form of a special dividend.

The Fund value (based on the bid value of investments) at the end of January 2016 was £1.43bn. As of the end of January 2017, the Fund value was £1.49bn. The fund experienced total net outflows of £12.2m.

After a difficult 2016, we are more positive on the outlook for UK mid and small-caps this year. In August, post the EU referendum, GDP growth forecasts were initially downgraded to 0.8%. However, The Bank of England is now forecasting 2% growth for 2017. With a new US President in office (very much an unknown quantity), expected interest rate rises from the US Federal Reserve and elections looming in France and Germany, one could argue that the UK may be relatively better positioned. Mean reversion can lead to a recovery in the pound against both the Euro and USD and so it is possible that the market will rotate back to favour smaller domestic companies, generally with less foreign earnings exposure.

We continue to believe that there are many well managed small and mid-cap companies capable of growing both earnings and dividends. We have seen this recently as XP Power announced their total dividend is not expected to be less than 70p per share, an increase of 6% year-on-year. Capital & Regional issued a trading statement in which they expect the increase in the final dividend to be at the top end of their 5-8% per annum target, reflecting positive operating performance. RPC, one of our largest holdings, reported strong half-year results, which saw free cash flow more than double and a 35% increase in the interim dividend. This follows the acquisition of British Polythene Industries, which completed in August 2016. It remains to be seen whether 2017 turns out to be the year when it was right to “BUY BRITISH”.

12 THE MARLBOROUGH NO 2 OEIC MARLBOROUGH MULTI CAP INCOME FUND

AUTHORISED INVESTMENT ADVISER’S REPORT (CONTINUED)

Distributions (pence per share)

Year 2017 Year 2016 Year 2015 Year 2014 Class A Income Net income paid 31 March 3.1746 3.3319 3.0929 2.7848 Net income paid 30 September 3.7323 3.9444 3.6446 Class A Accumulation Net income paid 31 March 3.9975 3.9995 3.5489 3.0581 Net income paid 30 September 4.5789 4.6200 4.0777 Class B Income Net income paid 31 March 3.2476 3.3919 3.1352 2.9879 Net income paid 30 September 3.8100 4.0088 3.6880 Class B Accumulation Net income paid 31 March 3.9012 3.8847 3.4327 3.1273 Net income paid 30 September 4.4594 4.4803 3.9375 Class P Income Net income paid 31 March 3.2645 3.4012 3.1351 2.7867 Net income paid 30 September 3.8259 4.0148 3.6908 Class P Accumulation Net income paid 31 March 3.9173 3.8909 3.4288 2.9170 Net income paid 30 September 4.4732 4.4818 3.9358

Hargreave Hale Ltd 7 February 2017

This report contains FTSE data. Source: FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies 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 conse

Material Portfolio Changes

For the six month period ended 31 January 2017

Major Purchases Cost (£) Major Sales Proceeds (£)

WHSmith 18,005,340 Laird 22,472,205 GlaxoSmithKline 12,647,626 UK Mail Group 19,140,000 TP ICAP 12,268,305 BT Group 15,672,862 Marston's 11,092,808 Novae Group 14,950,658 TalkTalk Telecom Group 9,139,973 RPC Group 12,179,360 National Grid 8,585,730 Go-Ahead Group 12,163,722 Phoenix Group Holdings Full Paid Rights 7,112,000 Card Factory 10,363,982 DFS Furniture 6,918,996 Alternative Networks 10,211,379 Paragon Group of Companies 6,673,013 Galliford Try 10,194,253 Pennon Group 5,970,336 The Berkeley Group Holdings 9,829,733 Direct Line Insurance Group 5,809,574 Tate & Lyle 9,389,430 SSE 5,354,320 Babcock International Group 8,637,793 Royal Dutch Shell 'B' 5,247,552 McCarthy & Stone 6,782,469 Premier Asset Management Group 5,220,668 Booker Group 6,336,499 Compass Group 5,063,025 Berendsen 5,289,449 Redde 4,649,004 IG Group Holdings 5,288,886 IG Group Holdings 4,463,290 Playtech 5,073,025 Ashmore Group 4,440,964 Old Mutual 4,128,344 Close Brothers Group 4,362,911 Keller Group 3,758,849 Hastings Group Holdings 4,360,849 Mortgage Advice Bureau Holdings 3,713,043

Other purchases 122,169,631 Other sales 72,603,719

Total purchases for the period 269,555,915 Total sales for the period 268,179,660

13 THE MARLBOROUGH NO 2 OEIC MARLBOROUGH MULTI CAP INCOME FUND

FUND INFORMATION

Price and distribution record

Class A shares (Income and Accumulation) were launched at 100p on 13 June 2011. Class B shares became available for purchase on 3 November 2011 and were first issued on 2 December 2011. On 31 December 2012 Class P shares became available for purchase.

Financial year to Highest price Lowest price Net income per share

Class A Income 31 July 2014 154.31p 129.62p 6.4294p 31 July 2015 165.08p 133.02p 7.0373p 31 July 2016 161.89p 133.44p 7.0642p 31 July 2017* 152.67p 141.16p 3.1746p Class A Accumulation 31 July 2014 172.65p 142.34p 7.1358p 31 July 2015 193.35p 152.63p 8.1689p 31 July 2016 194.32p 163.71p 8.5784p 31 July 2017* 192.25p 177.76p 3.9975p Class B Income 31 July 2014 155.92p 130.75p 6.6759p 31 July 2015 167.91p 134.81p 7.1440p 31 July 2016 164.94p 136.29p 7.2019p 31 July 2017* 156.12p 144.23p 3.2476p Class B Accumulation 31 July 2014 166.47p 136.85p 7.0648p 31 July 2015 187.66p 147.60p 7.9130p 31 July 2016 188.91p 159.52p 8.3441p 31 July 2017* 187.55p 173.27p 3.9012p Class P Income 31 July 2014 155.63p 130.15p 6.4775p 31 July 2015 168.24p 134.79p 7.1499p 31 July 2016 165.46p 136.89p 7.2271p 31 July 2017* 156.91p 144.90p 3.2645p Class P Accumulation 31 July 2014 165.96p 136.23p 6.8528p 31 July 2015 187.81p 147.42p 7.9106p 31 July 2016 189.28p 160.06p 8.3641p 31 July 2017* 188.29p 173.88p 3.9173p * six month period to 31 January 2017

14 THE MARLBOROUGH NO 2 OEIC MARLBOROUGH MULTI CAP INCOME FUND

FUND INFORMATION (CONTINUED)

Number of units in issue/Net asset value per unit

Net asset value Number of shares Net asset value of scheme property in issue per share Class A Income 31 July 2014 £344,170,386 242,393,331 141.99p 31 July 2015 £101,794,803 64,342,905 158.21p 31 July 2016 £83,849,723 59,540,942 140.83p 31 January 2017 £86,243,482 58,958,247 146.28p Class A Accumulation 31 July 2014 £226,327,464 138,901,583 162.94p 31 July 2015 £161,722,115 85,151,849 189.92p 31 July 2016 £121,959,342 68,764,807 177.36p 31 January 2017 £114,551,185 60,867,017 188.20p Class B Income 31 July 2014 £6,574,078 4,572,675 143.77p 31 July 2015 £6,553,209 4,071,553 160.95p 31 July 2016 £6,156,230 4,278,605 143.88p 31 January 2017 £6,365,395 4,248,394 149.83p Class B Accumulation 31 July 2014 £1,089,084 691,790 157.43p 31 July 2015 £832,857 451,755 184.36p 31 July 2016 £1,688,922 976,993 172.87p 31 January 2017 £1,824,266 992,017 183.89p Class P Income 31 July 2014 £186,588,731 129,897,072 143.64p 31 July 2015 £618,593,214 383,554,656 161.28p 31 July 2016 £744,561,041 515,115,324 144.54p 31 January 2017 £812,063,670 538,838,895 150.71p Class P Accumulation 31 July 2014 £193,780,128 123,337,142 157.11p 31 July 2015 £395,409,625 214,289,244 184.52p 31 July 2016 £471,772,298 271,956,366 173.47p 31 January 2017 £469,315,819 254,003,034 184.77p

Ongoing charges

Class A Class B Class P 31 July 2016 1.55% 1.05% 0.80% 31 January 2017 1.55% 1.05% 0.80%

Synthetic risk and reward indicator

Lower risk Higher risk

Typically lower rewards Typically higher rewards

1 2 3 4 5 6 7

This Fund has been measured as 5 because it has experienced significant volatility historically.

15 THE MARLBOROUGH NO 2 OEIC MARLBOROUGH MULTI CAP INCOME FUND

Portfolio statement as at 31 January 2017

Holding or Investment Bid Percentage of nominal value value total net assets as at 31 Jan 17 £% BANKS (0.26%, July 2016 - Nil) 6,000,000 Lloyds Banking Group 3,927,600 0.26 Total Banks 3,927,600 0.26

CHEMICALS (0.67%, July 2016 - 0.65%) 525,000 Victrex 10,038,000 0.67 Total Chemicals 10,038,000 0.67

CONSTRUCTION & MATERIALS (4.02%, July 2016 - 3.71%) 300,000 Alumasc Group 516,000 0.03 7,300,000 Boot (Henry) 14,855,500 1.00 5,550,000 Epwin Group 5,605,500 0.38 3,700,000 Eurocell 6,290,000 0.42 5,700,000 Ibstock 10,636,200 0.71 4,250,000 Norcros 7,150,625 0.48 1,534,202 Polypipe Group 5,171,795 0.35 3,221,129 Tyman 8,600,414 0.58 900,000 Van Elle Holdings 990,000 0.07 Total Construction & Materials 59,816,034 4.02

ELECTRICITY (2.34%, July 2016 - 2.12%) 2,350,000 SSE 34,874,000 2.34 Total Electricity 34,874,000 2.34

ELECTRONIC & ELECTRICAL EQUIPMENT (1.73%, July 2016 - 1.54%) 899,000 Solid State 4,135,400 0.28 1,200,000 XP Power 21,660,000 1.45 Total Electronic & Electrical Equipment 25,795,400 1.73

EQUITY INVESTMENT INSTRUMENTS (0.21%, July 2016 - 0.17%) 2,600,000 Funding Circle SME Income Fund 2,684,500 0.18 40,000 Honeycomb Investment Trust 416,400 0.03 Total Equity Investment Instruments 3,100,900 0.21

FINANCIAL SERVICES (13.71%, July 2016 - 10.21%) 1,400,000 Ashmore Group 4,344,200 0.29 5,112,862 Cenkos Securities 4,448,190 0.30 1,675,000 Close Brothers Group 24,371,250 1.64 4,300,000 Intermediate Capital Group 30,207,500 2.03 1,130,000 John Laing Group 2,965,120 0.20 870,000 Liontrust Asset Management 3,393,000 0.23 2,700,000 Mortgage Advice Bureau Holdings 9,787,500 0.66 2,150,000 Numis Corporation 5,595,375 0.38 4,700,000 OneSavings Bank 15,768,500 1.06 6,150,000 Paragon Group of Companies 24,802,950 1.66 9,100,000 Polar Capital Holdings 33,738,250 2.26 3,959,090 Premier Asset Management Group 5,899,044 0.40 13,000,000 Redde 21,580,000 1.45 1,595,000 River and Mercantile Group 3,859,900 0.26 69,340 S & U 1,408,295 0.09 2,600,000 TP ICAP 11,973,000 0.80 Total Financial Services 204,142,074 13.71

16 THE MARLBOROUGH NO 2 OEIC MARLBOROUGH MULTI CAP INCOME FUND

Portfolio statement as at 31 January 2017

Holding or Investment Bid Percentage of nominal value value total net assets as at 31 Jan 17 £% FIXED LINE TELECOMMUNICATIONS (4.99%, July 2016 - 6.71%) 435,532 Adept Telecom 1,175,936 0.08 23,767,000 KCOM Group 21,152,630 1.42 1,700,000 Manx Telecom 3,332,000 0.22 8,500,000 TalkTalk Telecom Group 13,098,500 0.88 2,944,008 Telecom Plus 35,593,057 2.39 Total Fixed Line Telecommunication 74,352,123 4.99

FOOD & DRUG RETAILERS (1.71%, July 2016 - 1.64%) 1,750,000 Booker Group 3,577,000 0.24 4,200,000 Conviviality 10,594,500 0.71 1,175,000 Greggs 11,397,500 0.76 Total Food & Drug Retailers 25,569,000 1.71

FOOD PRODUCERS (2.74%, July 2016 - 3.72%) 5,000,000 Dairy Crest Group 29,550,000 1.98 1,700,000 Tate & Lyle 11,364,500 0.76 Total Food Producers 40,914,500 2.74

GAS, WATER & MULTIUTILITIES (3.67%, July 2016 - 3.08%) 3,451,000 Fulcrum Utility Services 2,001,580 0.13 2,150,000 National Grid 19,816,550 1.33 4,150,000 Pennon Group 32,971,750 2.21 Total Gas, Water & Multiutilities 54,789,880 3.67

GENERAL INDUSTRIALS (4.52%, July 2016 - 4.65%) 10,000,000 Macfarlane Group 6,000,000 0.40 3,000,000 RPC Group 32,340,000 2.17 6,500,000 Smith (DS) 29,035,500 1.95 Total General Industrials 67,375,500 4.52

GENERAL RETAILERS (6.19%, July 2016 - 5.65%) 666,250 Bonmarché Holdings 519,675 0.03 9,713,200 DFS Furniture 21,733,285 1.46 2,750,000 Inchcape 19,703,750 1.32 9,350,000 Moss Bros Group 9,256,500 0.62 24,160,623 Pendragon 8,395,816 0.56 726,750 Safestyle UK 2,071,238 0.14 1,200,000 Saga 2,209,200 0.15 1,750,000 WHSmith 28,472,500 1.91 Total General Retailers 92,361,964 6.19

HOUSEHOLD GOODS & HOME CONSTRUCTION (4.31%, July 2016 - 5.08%) 1,165,000 Accrol Group Holdings 1,665,950 0.11 755,000 Churchill China 6,795,000 0.46 2,500,000 Crest Nicholson Holdings 12,637,500 0.85 1,950,000 Galliford Try 26,227,500 1.76 1,822,500 Headlam Group 9,795,938 0.66 593,148 Portmeirion Group 5,688,289 0.38 20,000 Reckitt Benckiser Group 1,363,800 0.09 Total Household Goods & Home Construction 64,173,977 4.31

17 THE MARLBOROUGH NO 2 OEIC MARLBOROUGH MULTI CAP INCOME FUND

Portfolio statement as at 31 January 2017

Holding or Investment Bid Percentage of nominal value value total net assets as at 31 Jan 17 £% INDUSTRIAL ENGINEERING (1.78%, July 2016 - 1.69%) 2,050,000 Hill & Smith Holdings 24,354,000 1.63 694,156 Somero Enterprises 1,749,273 0.12 10,000 Spirax-Sarco Engineering 433,900 0.03 Total Industrial Engineering 26,537,173 1.78

INDUSTRIAL TRANSPORTATION (0.82%, July 2016 - 1.90%) 925,000 Braemar Shipping Services 2,266,250 0.15 1,800,000 Royal Mail 7,365,600 0.49 1,100,000 Wincanton 2,717,000 0.18 Total Industrial Transportation 12,348,850 0.82

LEISURE GOODS (0.80%, July 2016 - 0.66%) 7,750,000 Photo-Me International 11,915,625 0.80 Total Leisure Goods 11,915,625 0.80

LIFE INSURANCE (2.96%, July 2016 - 2.55%) 4,366,667 Chesnara 15,294,251 1.03 3,800,000 Phoenix Group Holdings 28,823,000 1.93 Total Life Insurance 44,117,251 2.96

MEDIA (2.85%, July 2016 - 2.81%) 215,000 Euromoney Institutional Investor 2,380,050 0.16 2,437,500 Informa 15,916,875 1.07 500,000 Moneysupermarket.com Group 1,654,000 0.11 5,306,750 Tarsus Group 14,341,492 0.96 1,150,000 UBM 8,124,750 0.55 Total Media 42,417,167 2.85

MINING (1.74%, July 2016 - 1.05%) 1,358,329 Anglo Pacific Group 1,765,828 0.12 9,150,000 Central Asia Metals 21,433,875 1.44 17,000,000 Pan African Resources 2,635,000 0.18 Total Mining 25,834,703 1.74

NONLIFE INSURANCE (2.48%, July 2016 - 2.91%) 175,000 Admiral Group 3,127,250 0.21 2,100,000 Direct Line Insurance Group 7,478,100 0.50 9,500,000 Hastings Group Holdings 21,327,500 1.43 550,000 Novae Group 3,418,250 0.23 500,000 Personal Group Holdings 1,625,000 0.11 Total Nonlife Insurance 36,976,100 2.48

OIL & GAS PRODUCERS (1.36%, July 2016 - 0.71%) 700,000 BP 3,340,750 0.22 750,000 Royal Dutch Shell 'B' 17,062,500 1.14 Total Oil & Gas Producers 20,403,250 1.36

OIL EQUIPMENT & SERVICES (Nil, July 2016 - 0.15%) Total Oil Equipment & Services 0 0.00

18 THE MARLBOROUGH NO 2 OEIC MARLBOROUGH MULTI CAP INCOME FUND

Portfolio statement as at 31 January 2017

Holding or Investment Bid Percentage of nominal value value total net assets as at 31 Jan 17 £% PERSONAL GOODS (0.67%, July 2016 - 0.33%) 200,270 Ted Baker 5,631,592 0.38 120,000 Unilever 3,902,400 0.26 275,000 Warpaint London 404,250 0.03 Total Personal Goods 9,938,242 0.67

PHARMACEUTICALS & BIOTECHNOLOGY (0.83%, July 2016 - Nil) 810,000 GlaxoSmithKline 12,429,450 0.83 Total Pharmaceuticals & Biotechnology 12,429,450 0.83

REAL ESTATE INVESTMENT & SERVICES (0.36%, July 2016 - 0.46%) 3,618,758 Belvoir Lettings 3,908,259 0.26 1,526,793 M Winkworth 1,450,453 0.10 Total Real Estate Investment & Services 5,358,712 0.36

REAL ESTATE INVESTMENT TRUSTS (6.64%, July 2016 - 6.62%) 3,100,000 Big Yellow Group 20,940,500 1.41 28,500,000 Capital & Regional 15,603,750 1.05 900,000 Custodian REIT 981,000 0.07 3,000,000 Empiric Student Property 3,247,500 0.22 13,200,000 LondonMetric Property 19,324,800 1.30 1,550,000 McKay Securities 2,960,500 0.20 3,032,581 Mucklow (A & J) Group 13,904,384 0.93 5,439,730 Safestore Holdings 19,920,291 1.34 238,814 Workspace Group 1,789,911 0.12 Total Real Estate Investment Trusts 98,672,636 6.64

SOFTWARE & COMPUTER SERVICES (1.41%, July 2016 - 1.45%) 1,510,000 Computacenter 12,004,500 0.81 50,000 EMIS Group 440,250 0.03 300,000 FDM Group Holdings 1,789,500 0.12 6,544,550 Netcall 3,795,839 0.25 3,875,000 Sanderson Group 2,906,250 0.20 Total Software & Computer Services 20,936,339 1.41

SUPPORT SERVICES (12.81%, July 2016 - 13.55%) 7,113,500 Acal 16,627,806 1.12 1,150,000 Atkins (WS) 16,893,500 1.13 700,000 Babcock International Group 6,268,500 0.42 6,200,000 BCA Marketplace 11,609,500 0.78 9,800,000 Carillion 21,138,600 1.42 22,025,000 Connect Group 30,394,500 2.04 62,500 Diploma 633,750 0.04 7,360,000 Harvey Nash Group 4,526,400 0.30 1,000,000 Hays 1,539,000 0.10 19,356,485 Hogg Robinson Group 13,597,931 0.91 1,311,710 Maintel Holdings 12,133,318 0.81 2,300,000 Midwich Group 6,463,000 0.43 4,732,500 Renew Holdings 20,515,388 1.38 860,000 Ricardo 8,213,000 0.55 3,900,000 RPS Group 8,765,250 0.59 326,400 Sanne Group 2,008,992 0.13

19 THE MARLBOROUGH NO 2 OEIC MARLBOROUGH MULTI CAP INCOME FUND

Portfolio statement as at 31 January 2017

Holding or Investment Bid Percentage of nominal value value total net assets as at 31 Jan 17 £% SUPPORT SERVICES (continued) 2,980,042 Utilitywise 5,215,073 0.35 2,575,000 Waterman Group 2,060,000 0.14 50,000 Wolseley 2,487,000 0.17 Total Support Services 191,090,508 12.81

TECHNOLOGY HARDWARE & EQUIPMENT (Nil, July 2016 - 1.68%) Total Technology Hardware & Equipment 0 0.00

TRAVEL & LEISURE (8.38%, July 2016 - 9.09%) 4,250,000 Cineworld Group 26,052,500 1.75 1,460,000 Compass Group 20,702,800 1.39 3,500,000 Greene King 23,852,500 1.60 300,000 GVC Holdings 1,804,500 0.12 24,300,000 Marston's 32,173,200 2.16 1,560,000 PPHE Hotel Group 11,466,000 0.77 2,693,833 Restauraunt Group 7,812,116 0.52 500,000 Revolution Bars Group 995,000 0.07 Total Travel & Leisure 124,858,616 8.38

OVERSEAS SECURITIES (2.03%, July 2016 - 1.90%) 2,433,000 Origin Enterprises 13,012,940 0.87 2,175,000 Princess Private Equity Holding 17,261,905 1.16 Total Overseas Securities 30,274,845 2.03

Portfolio of investments 1,475,340,419 98.99 Net current assets on capital account 15,023,398 1.01 Net assets 1,490,363,817 100.00

Portfolio transactions for the six months ended 31 January 2017 £

Total purchases, including transaction charges 269,555,915

Total sales proceeds, net of transaction charges 268,179,660

20 THE MARLBOROUGH NO 2 OEIC MARLBOROUGH MULTI CAP INCOME FUND

INTERIM FINANCIAL STATEMENTS (unaudited) For the six months ended 31 January 2017

Statement of total return 31 January 2017 31 January 2016 ££££

Income: Net capital gains/(losses) 66,344,576 (73,522,997) Revenue 32,417,386 29,980,923 Expenses (6,694,014) (6,508,433) Net revenue/(expense) before taxation 25,723,372 23,472,490

Taxation (3,888) (36,013)

Net revenue/(expense) after taxation 25,719,484 23,436,477

Total return before distributions 92,064,060 (50,086,520)

Distributions (31,879,111) (29,354,244)

Change in net assets attributable to unitholders from investment activities 60,184,949 (79,440,764)

Statement of change in net assets attributable to shareholders

31 January 2017 31 January 2016 ££££

Opening net assets attributable to shareholders * 1,429,987,556 1,284,905,823

Amounts receivable on issue of shares 39,847,369 201,709,887 Amounts payable on cancellation of shares (52,078,092) (3,996,776) Amounts payable on share class conversions 83 285 (12,230,640) 197,713,396

Change in net assets attributable to shareholders from investment activities 60,184,949 (79,440,764)

Retained distribution on accumulation shares 12,421,952 13,797,552

Closing net assets attributable to shareholders 1,490,363,817 * 1,416,976,007

* These figures are not the same as the comparatives are taken from the preceding interim period and not the last final accounts.

21 THE MARLBOROUGH NO 2 OEIC MARLBOROUGH MULTI CAP INCOME FUND

INTERIM FINANCIAL STATEMENTS (unaudited) as at 31 January 2017

Balance sheet

31 January 2017 31 July 2016

££ Assets: Fixed Assets: Investment assets 1,475,340,419 1,407,615,821

Current Assets: Debtors 12,508,633 12,035,438 Cash and bank balances 33,446,657 36,514,130 Total assets 1,521,295,709 1,456,165,389

Liabilities: Creditors: Bank overdrafts 0 432,698 Distribution payable on income shares 19,600,202 22,093,295 Other creditors 11,331,690 3,651,840 Total liabilities 30,931,892 26,177,833

Net assets attributable to shareholders 1,490,363,817 1,429,987,556

22 THE MARLBOROUGH NO 2 OEIC MARLBOROUGH NANO-CAP GROWTH FUND

AUTHORISED INVESTMENT ADVISER’S REPORT

For the six month period ended 31 January 2017

Percentage change and sector position to 31 January 2017

6 months 1 year 3 year Since launch* Marlborough Nano-Cap Growth Fund 20.58% 25.12% 28.88% 34.52% Quartile Ranking** 1 1 2 3 *Launched 14 October 2013 **Based on ranking within The Investment Association’s UK Smaller Companies sector External Source of Economic Data: Morningstar (Class P Acc - bid to bid) Class P shares first priced on 2 January 2013. In the period to that date, the past performance information for the Class A shares has been used.

The six months to January 2017 saw an exceptionally strong performance from the Nanocap fund, with the P shares rising +20.6% to 127.8p. Small-caps were very much in vogue over the period with the AIM market rising +17%: some way ahead of the FTSE 100 & FTSE 250 who posted returns of +5.6% and +5% respectively. The FTSE Small-Cap Ex IT was in the middle of the range, up 9.9%. This strong performance placed the Fund 4th out of 48 within the IA UK Smaller Companies where the average performance across all the small-cap funds was +14.63%.

Giles Hargreave Guy Feld David Walton Our number of holdings rose slight from 149 to 156 with our top 10 positions accounting for 19.8% of the portfolio, compared to the 21.3% at the beginning of August. We had 90 winners in the period and 51 losers where the average return per stock was 22.9%, with an average weight of 0.6%, highlighting our commitment in running a diversified portfolio. The excellent performance of EVR holdings, up 1,042.9% does skew this to the upside. Therefore, excluding this the average return per holding was still a very good 15.6%. On a weighted average this rises to 26.2% emphasising the value in running your winners.

Top performers this month were the aforementioned EVR Holdings, Blue Prism, Cap-XX and Marlowe all up in excess of 120%. However, this is to name but a few with some of our larger positions such as Victoria Carpets, Gresham Tech, a data integrity software provider, Somero who provide surface levelling machinery and Proactis, a software provider specialising in spend control, all up over 40%.

Of the 51 losers, the most meaningful detractor was Crawshaw. The butcher company, who were rolling out their stores nationwide, changed the nature of their offering which alienated part of its customer base. This led to a severe decline in like-for-like sales growth which resulted in the stock falling. -76.7%. Other poor performers include Synairgen, down 37.4% after some inconclusive clinical trial data and 1Spatial who issued a significant profit warning leading the shares down 63.9%.

New additions to the portfolio include Premier Vets, who design and process animal healthcare plans, Carclo, a specialist in technical plastics to the automotive and medical industries and James Cropper, the high-end paper manufacturer; all of which have performed well. We also took part in a number of new issues such as WarPaint, Filta, CREO Medical and Van Elle, with Warpaint and Filta performing particularly well.

We took small profits in Johnson Service Group, Blue Prism and Proactis as their performance had led to oversized positions. Exits include K3 Business and Tax Systems after a number of poor updates, whilst we received the proceeds from the takeovers of Cyprotex, IBEX and Sierra Rutile. The Fund ended the period with £2.1m in cash.

Hargreave Hale Ltd 3 March 2017

23 THE MARLBOROUGH NO 2 OEIC MARLBOROUGH NANO-CAP GROWTH FUND

AUTHORISED INVESTMENT ADVISER’S REPORT (CONTINUED)

Distributions (pence per share) Year 2017 Year 2016 Year 2015 Year 2014 Class A Accumulation Net income paid 31 March 0.0000 0.0000 0.0000 0.0000 Net income paid 30 September 0.0000 0.0000 0.0000 Class B Accumulation Net income paid 31 March 0.0000 0.0410 0.0560 0.0000 Net income paid 30 September 0.2759 0.0690 0.0000 Class P Accumulation Net income paid 31 March 0.0866 0.1714 0.1870 0.0000 Net income paid 30 September 0.4022 0.2021 0.0697

Material Portfolio Changes

For the six month period ended 31 January 2017

Major purchases Cost (£) Major sales Proceeds (£)

CAP-XX 1,277,787 Keywords Studios 2,001,783 Marlowe 1,075,621 K3 Business Technology Group 1,616,553 ULS Technology 1,075,557 Cyprotex 1,120,000 Future 1,016,458 Hotel Chocolat Group 958,715 Trinity Exploration & Production 974,966 IBEX Global Solutions 896,000 Warpaint London 974,626 Minds + Machines Group 853,179 Peninsula Minerals 957,903 Johnson Service Group 800,184 Carclo 900,000 ServicePower Technologies 780,000 Amino Technologies 842,521 Blue Prism Group 768,176 RedstoneConnect 768,915 PROACTIS Holdings 750,291 Van Elle Holdings 743,872 Sierra Rutile 738,000 Stride Gaming 684,509 Peninsula Minerals 715,297 Cropper (James) 607,317 EVR Holdings 692,994 Condor Gold 554,234 Tax Systems 634,242 Beximco Pharmaceuticals 'Reg S' 509,167 Cello Group 626,322 Horizonte Minerals 500,000 Next Fifteen Communications Group 507,471 Creo Medical Group 499,999 Tracsis 503,363 EVR Holdings 477,494 H&T Group 464,301 SigmaRoc 450,000 Creston 405,878 Autins Group 436,380 MXC Capital 382,089

Other purchases 7,506,601 Other sales 7,275,376

Total purchases for the period 22,833,927 Total sales for the period 23,490,214

24 THE MARLBOROUGH NO 2 OEIC MARLBOROUGH NANO-CAP GROWTH FUND

FUND INFORMATION

Price and distribution record

Accumulation shares were launched at 100p on 14 October 2013.

Financial year to Highest price Lowest price Net income per share

Class A Accumulation 31 July 2014 117.93p 94.99p 0.0000p 31 July 2015 114.72p 93.82p 0.0000p 31 July 2016 118.19p 96.84p 0.0000p 31 July 2017* 137.07p 104.08p 0.0000p Class B Accumulation 31 July 2014 118.18p 95.00p 0.0000p 31 July 2015 115.23p 94.29p 0.1250p 31 July 2016 119.73p 98.19p 0.3169p 31 July 2017* 139.42p 105.59p 0.0000p Class P Accumulation 31 July 2014 118.31p 94.99p 0.0697p 31 July 2015 115.47p 94.53p 0.3891p 31 July 2016 120.49p 98.84p 0.5736p 31 July 2017* 140.48p 106.31p 0.0866p * six month period to 31 January 2017

Number of units in issue/Net asset value per unit

Net asset value Number of shares Net asset value of scheme property in issue per share Class A Accumulation 31 July 2014 £31,747,545 31,478,381 100.86p 31 July 2015 £17,567,254 17,216,475 102.04p 31 July 2016 £15,288,706 14,707,030 103.96p 31 January 2017 £17,179,943 13,757,623 124.88p Class B Accumulation 31 July 2014 £1,012 1,000 101.25p 31 July 2015 £1,029 1,000 102.96p 31 July 2016 £1,054 1,000 105.40p 31 January 2017 £1,025 806 127.12p Class P Accumulation 31 July 2014 £63,181,675 62,287,496 101.44p 31 July 2015 £76,828,525 74,296,082 103.41p 31 July 2016 £79,430,581 74,807,556 106.18p 31 January 2017 £96,794,664 75,596,537 128.04p

Ongoing charges

Class A Class B Class P 31 July 2016 1.56% 1.06% 0.81% 31 January 2017 1.56% 1.06% 0.81%

25 THE MARLBOROUGH NO 2 OEIC MARLBOROUGH NANO-CAP GROWTH FUND

FUND INFORMATION (CONTINUED)

Synthetic risk and reward indicator

Lower risk Higher risk

Typically lower rewards Typically higher rewards

1 2 3 4 5 6 7

This Fund has been measured as 4 because it has experienced moderate volatility historically.

26 THE MARLBOROUGH NO 2 OEIC MARLBOROUGH NANO-CAP GROWTH FUND

Portfolio statement as at 31 January 2017

Holding or Investment Bid Percentage of nominal value value total net assets as at 31 Jan 17 £% ALTERNATIVE ENERGY (0.47%, July 2016 - 0.87%) 847,000 Ilika 398,090 0.35 775,000 ITM Power 135,625 0.12 Total Alternative Energy 533,715 0.47

AUTOMOBILES & PARTS (1.19%, July 2016 - 1.28%) 259,750 Autins Group 563,658 0.49 3,812,500 Surface Transforms 800,625 0.70 Total Automobiles & Parts 1,364,283 1.19

CHEMICALS (2.78%, July 2016 - 1.73%) 750,000 Carclo 975,000 0.86 2,290,000 HaloSource 28,625 0.03 50,000,000 Hardide 475,000 0.42 646,250 Haydale Graphene Industries 1,143,862 1.00 1,175,000 Plant Impact 540,500 0.47 Total Chemicals 3,162,987 2.78

CONSTRUCTION & MATERIALS (0.98%, July 2016 - Nil) 1,125,000 SigmaRoc 472,500 0.41 590,000 Van Elle Holdings 649,000 0.57 Total Construction & Materials 1,121,500 0.98

ELECTRONIC & ELECTRICAL EQUIPMENT (4.21%, July 2016 - 2.74%) 222,387 365agile Group 6,672 0.01 3,200,291 APC Technology Group 184,017 0.16 18,750,000 CAP-XX 2,203,125 1.93 1,137,500 Flowgroup 73,938 0.07 240,000 Solid State 1,104,000 0.97 1,400,280 Stadium Group 1,218,244 1.07 Total Electronic & Electrical Equipment 4,789,996 4.21

FINANCIAL SERVICES (2.45%, July 2016 - 4.59%) 330,975 Curtis Banks Group 761,243 0.67 1,772,500 Impax Asset Management Group 1,223,025 1.07 1,000,000 Sigma Capital Group 750,000 0.66 7,692,307 YOLO Leisure and Technology 61,538 0.05 Total Financial Services 2,795,806 2.45

FIXED LINE TELECOMMUNICATIONS (1.61%, July 2016 - 1.93%) 600,000 AdEPT Telecom 1,620,000 1.42 422,600 CityFibre Infrastructure Holdings 215,526 0.19 Total Fixed Line Telecommunications 1,835,526 1.61

FOOD & DRUG RETAILERS (0.41%, July 2016 - 2.45%) 2,600,000 Crawshaw Group 468,000 0.41 Total Food & Drug Retailers 468,000 0.41

FOOD PRODUCERS (2.16%, July 2016 - 3.19%) 1,100,000 Finsbury Food Group 1,122,000 0.98 150,000 Hotel Chocolat Group 384,000 0.34 1,160,000 Science in Sport 962,800 0.84 Total Food Producers 2,468,800 2.16

27 THE MARLBOROUGH NO 2 OEIC MARLBOROUGH NANO-CAP GROWTH FUND

Portfolio statement as at 31 January 2017

Holding or Investment Bid Percentage of nominal value value total net assets as at 31 Jan 17 £% FORESTRY & PAPER (0.58%, July 2016 - Nil) 47,000 Cropper (James) 662,700 0.58 Total Forestry & Paper 662,700 0.58

GENERAL INDUSTRIALS (Nil, July 2016 - 0.26%) Total General Industrials 0 0.00

GENERAL RETAILERS (3.30%, July 2016 - 4.78%) 1,822,500 Cambria Automobiles 1,093,500 0.96 1,250,000 Moss Bros Group 1,237,500 1.09 500,000 Safestyle UK 1,425,000 1.25 Total General Retailers 3,756,000 3.30

HEALTH CARE EQUIPMENT & SERVICES (1.24%, July 2016 - 0.78%) 657,894 Creo Medical Group 618,420 0.54 1,300,000 Kromek Group 305,500 0.27 14,500,000 Surgical Innovations Group 493,000 0.43 Total Health Care Equipment & Services 1,416,920 1.24

HOUSEHOLD GOODS & HOME CONSTRUCTION (2.94%, July 2016 - 2.61%) 100,000 Churchill China 900,000 0.79 2,500,000 Havelock Europa 237,500 0.21 500,000 Victoria 2,210,000 1.94 Total Household Goods & Home Construction 3,347,500 2.94

INDUSTRIAL ENGINEERING (3.69%, July 2016 - 2.91%) 110,670 AB Dynamics 603,152 0.53 1,800,000 Severfield 1,435,500 1.26 800,000 Somero Enterprises 2,016,000 1.77 2,475,000 TP Group 148,500 0.13 Total Industrial Engineering 4,203,152 3.69

INDUSTRIAL TRANSPORTATION (0.66%, July 2016 - 0.88%) 350,000 Gama Aviation 752,500 0.66 Total Industrial Transportation 752,500 0.66

LEISURE GOODS (1.88%, July 2016 - 1.57%) 1,142,857 Fishing Republic 411,429 0.36 620,000 Frontier Developments 1,736,000 1.52 Total Leisure Goods 2,147,429 1.88

MEDIA (6.68%, July 2016 - 8.20%) 5,750,000 Be Heard Group 218,500 0.19 1,000,000 Ebiquity 1,000,000 0.88 8,000,000 Future 980,000 0.86 2,000,000 Gfinity 320,000 0.28 153,238,100 MediaZest 137,914 0.12 10,000,000 Mirada 225,000 0.20 850,000 Next Fifteen Communications Group 2,966,500 2.60 7,000,000 One Media iP Group 210,000 0.18 250,000 TLA Worldwide 55,000 0.05 1,533,000 ULS Technology 1,510,005 1.32 Total Media 7,622,919 6.68

28 THE MARLBOROUGH NO 2 OEIC MARLBOROUGH NANO-CAP GROWTH FUND

Portfolio statement as at 31 January 2017

Holding or Investment Bid Percentage of nominal value value total net assets as at 31 Jan 17 £% MINING (3.72%, July 2016 - 3.28%) 10,000,000 Avesoro Resources 190,000 0.17 900,000 Condor Gold 585,000 0.51 7,000,000 Goldplat 367,500 0.32 25,000,000 Horizonte Minerals 600,000 0.53 1,750,000 Serabi Gold 78,750 0.07 19,250,000 Shanta Gold 1,828,750 1.60 6,250,000 Sylvania Platinum 593,750 0.52 Total Mining 4,243,750 3.72

MOBILE TELECOMMUNICATIONS (2.62%, July 2016 - 0.09%) 26,125,000 EVR Holdings 2,612,500 2.29 10,000,000 Mobile Streams 375,000 0.33 Total Mobile Telecommunications 2,987,500 2.62

NONEQUITY INVESTMENT INSTRUMENTS (0.82%, July 2016 - 0.45%) 833,333 Derriston Capital 112,500 0.10 200,000 Dorcaster 325,000 0.29 255,000 Premier Veterinary Group 489,600 0.43 Total Nonequity Investment Instruments 927,100 0.82

NONLIFE INSURANCE (Nil, July 2016 - 0.05%) Total Nonlife Insurance 0 0.00

OIL & GAS PRODUCERS (2.00%, July 2016 - 0.78%) 1,600,000 Egdon Resources 184,000 0.16 6,524,367 Europa Oil & Gas Holdings 293,597 0.26 19,130,000 Trinity Exploration & Production 1,532,313 1.34 835,000 Victoria Oil & Gas 277,637 0.24 Total Oil & Gas Producers 2,287,547 2.00

PERSONAL GOODS (1.70%, July 2016 - 0.17%) 12,602,589 Bagir Group 472,597 0.41 1,000,000 Warpaint London 1,470,000 1.29 Total Personal Goods 1,942,597 1.70

PHARMACEUTICALS & BIOTECHNOLOGY (2.76%, July 2016 - 4.01%) 925,000 Beximco Pharmaceuticals 'Reg S' 573,500 0.50 505,000 Ergomed 974,650 0.86 400,000 Horizon Discovery Group 696,000 0.61 3,125,000 Premaitha Health 250,000 0.22 7,458,333 ReNeuron Group 179,000 0.16 125,000 Summit Therapeutics 206,250 0.18 1,425,212 Synairgen 256,538 0.23 Total Pharmaceuticals & Biotechnology 3,135,938 2.76

REAL ESTATE INVESTMENT & SERVICES (3.09%, July 2016 - 2.89%) 1,318,608 HML Holdings 527,443 0.46 967,000 MartinCo 1,237,760 1.09 500,000 Palace Capital 1,750,000 1.54 Total Real Estate Investment & Services 3,515,203 3.09

SOFTWARE & COMPUTER SERVICES (18.48%, July 2016 - 20.52%) 1,049,038 ATTRAQT Group 508,783 0.45 200,000 Blue Prism Group 900,000 0.79

29 THE MARLBOROUGH NO 2 OEIC MARLBOROUGH NANO-CAP GROWTH FUND

Portfolio statement as at 31 January 2017

Holding or Investment Bid Percentage of nominal value value total net assets as at 31 Jan 17 £% SOFTWARE & COMPUTER SERVICES (continued) 1,290,000 Castleton Technology 722,400 0.63 1,200,000 ClearStar 240,000 0.21 100,000 CloudCall Group 70,000 0.06 1,500,000 D4t4 Solutions 2,460,000 2.16 510,000 Defenx 545,700 0.48 200,000 Eagle Eye Solutions Group 290,000 0.25 650,000 Eckoh 250,250 0.22 260,000 Escher Group Holdings 390,000 0.34 10,312,174 eServGlobal 773,413 0.68 4,106,060 EU-Supply 533,788 0.47 1,100,000 Gresham Technologies 1,650,000 1.45 10,250,180 Guscio 205,004 0.18 2,750,000 Ideagen 1,897,500 1.66 12,000,000 Imaginatik 270,000 0.24 400,114 Instem 908,259 0.80 525,000 Kalibrate Technologies 283,500 0.25 20,000,000 Nasstar 1,700,000 1.49 1,102,305 Pennant International Group 914,913 0.80 1,500,000 PROACTIS Holdings 2,355,000 2.07 50,000,000 RedstoneConnect 750,000 0.66 350,000 Sanderson Group 262,500 0.23 4,500,000 Satellite Solutions Worldwide Group 382,500 0.34 757,471 SysGroup 386,310 0.34 728,571 Tekcapital 284,143 0.25 1,200,000 Tern 105,000 0.09 200,000 Tracsis 1,016,000 0.89 Total Software & Computer Services 21,054,963 18.48

SUPPORT SERVICES (13.89%, July 2016 - 16.29%) 11,000,000 1Spatial 165,000 0.14 3,000,000 Augean 1,515,000 1.33 365,000 Bilby 200,750 0.18 1,150,000 Empresaria Group 1,357,000 1.19 350,000 Filta Group Holdings 451,500 0.40 3,123,860 Frontier IP Group 1,405,737 1.23 306,500 Harvey Nash Group 188,497 0.17 10,000,000 Inspired Energy 1,300,000 1.14 858,890 Johnson Service Group 968,398 0.85 4,775,000 Kennedy Ventures 441,687 0.39 275,000 Keywords Studios 1,496,000 1.31 155,980 Latham (James) 1,240,041 1.09 87,142 Maintel Holdings 806,063 0.71 441,640 Marlowe 1,634,068 1.43 6,000,000 Redhall Group 645,000 0.57 2,750,000 Spectra Systems 1,017,500 0.89 350,000 Synectics 630,000 0.55 2,500,000 Westminster Group 362,500 0.32 Total Support Services 15,824,741 13.89

TECHNOLOGY HARDWARE & EQUIPMENT (4.62%, July 2016 - 3.45%) 1,700,000 Amino Technologies 3,060,000 2.68 6,850,000 BATM Advanced Communications 1,250,125 1.10 685,625 Frontier Smart Technologies Group 534,788 0.47 2,400,000 Vislink 420,000 0.37 Total Technology Hardware & Equipment 5,264,913 4.62

30 THE MARLBOROUGH NO 2 OEIC MARLBOROUGH NANO-CAP GROWTH FUND

Portfolio statement as at 31 January 2017

Holding or Investment Bid Percentage of nominal value value total net assets as at 31 Jan 17 £% TRAVEL & LEISURE (5.79%, July 2016 - 5.40%) 800,000 Comptoir Group 488,000 0.43 925,458 CORETX Holdings 273,010 0.24 3,500,000 DP Poland 2,021,250 1.77 500,000 easyHotel 440,000 0.39 810,435 Everyman Media Group 932,000 0.82 725,807 Rotala 377,420 0.33 450,000 Snoozebox Holdings 1,350 0.00 300,000 Stride Gaming 681,000 0.60 1,000,000 The Brighton Pier Group 1,050,000 0.92 1,678,500 The Fulham Shore 335,700 0.29 Total Travel & Leisure 6,599,730 5.79

OVERSEAS SECURITIES (0.54%, July 2016 - Nil) 1,488,396 Peninsula Minerals 619,161 0.54 Total Overseas Securities 619,161 0.54

UNQUOTED (0.91%, July 2016 - 0.36%) 613,450 APC Technology Group Warrants 0 0.00 2,500,000 EVR Holdings Warrants 222,500 0.20 4,376,470 EVR Holdings Warrants 356,682 0.31 1,500,000 Gable Holdings 0 0.00 630,119 Guscio Warrants 0 0.00 43,333 Kromek Warrants 0 0.00 800,000 Mar City 104,000 0.09 5,942 My 1st Years 249,980 0.22 6,925,000 Phorm 0 0.00 560,000 Pure Wafer 44,800 0.04 400,000 Tern Warrants 23,000 0.02 1,250,000 Westminster Group Warrants 31,250 0.03 1,923,076 YOLO Leisure and Technology Warrants 0 0.00 Total Unquoted 1,032,212 0.91

Portfolio of investments 111,885,088 98.17 Net current assets on capital account 2,090,544 1.83 Net assets 113,975,632 100.00

All holdings of warrants have been valued at the exercise price less the price of the underlying ordinary shares. Gable and Phorm are delisted and are valued by the fund manager at zero. Mar City is delisted and valued at the best estimate of the fund manager. My 1st Years is being valued at cost until the shares are listed. Pure Wafer is in liquidation and is being valued by the fund manager at the expected liquidation proceeds.

Portfolio transactions for the six months ended 31 January 2017 £

Total purchases, including transaction charges 22,833,927

Total sales proceeds, net of transaction charges 23,490,214

31 THE MARLBOROUGH NO 2 OEIC MARLBOROUGH NANO-CAP GROWTH FUND

INTERIM FINANCIAL STATEMENTS (unaudited) For the six months ended 31 January 2017

Statement of total return 31 January 2017 31 January 2016 ££££

Income: Net capital gains/(losses) 19,229,073 (1,203,351) Revenue 499,805 552,387 Expenses (481,775) (463,068) Net revenue/(expense) before taxation 18,030 89,319

Taxation (2,439) (1,459)

Net revenue/(expense) after taxation 15,591 87,860

Total return before distributions 19,244,664 (1,115,491)

Distributions (15,591) (87,860)

Change in net assets attributable to shareholders from investment activities 19,229,073 (1,203,351)

Statement of change in net assets attributable to shareholders

31 January 2017 31 January 2016 ££££

Opening net assets attributable to shareholders * 94,720,341 94,396,808

Amounts receivable on issue of shares 1,774,778 1,396,404 Amounts payable on cancellation of shares (1,764,570) (1,024,386) Amounts payable on share class conversions (1,212) (1,650) 8,996 370,368

Change in net assets attributable to shareholders from investment activities 19,229,073 (1,203,351)

Retained distribution on accumulation shares 17,222 90,256

Closing net assets attributable to shareholders 113,975,632 * 93,654,081

* These figures are not the same as the comparatives are taken from the preceding interim period and not the last final accounts.

32 THE MARLBOROUGH NO 2 OEIC MARLBOROUGH NANO-CAP GROWTH FUND

INTERIM FINANCIAL STATEMENTS (unaudited) as at 31 January 2017

Balance sheet

31 January 2017 31 July 2016

££ Assets: Fixed Assets: Investment assets 111,885,088 93,310,996

Current Assets: Debtors 543,090 169,949 Cash and bank balances 1,640,473 1,355,332 Total assets 114,068,651 94,836,277

Liabilities: Creditors: Other creditors (93,019) (115,936) Total liabilities (93,019) (115,936)

Net assets attributable to shareholders 113,975,632 94,720,341

33 Marlborough Fund Managers Ltd Marlborough House 59 Chorley New Road Bolton BL1 4QP

Investor Support: (0808) 145 2500 (FREEPHONE) Dealing: (0808) 145 2501 (FREEPHONE) Fax: (01204) 533 045 Email: [email protected] Website: www.marlboroughfunds.com

Marlborough Fund Managers Ltd Registered in England No. 2061177 Authorised and regulated by the Financial Conduct Authority and a member of The Investment Association.