Marlborough Extra Income Fund
Interim Report For the six month period ended 20th October 2016 (Unaudited) MARLBOROUGH EXTRA INCOME FUND
Authorised Fund Manager 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
Trustee
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 Adviser
Hargreave Hale Ltd 9-11 Neptune Court Hallam Way Whitehills Business Park Blackpool Lancashire FY4 5LZ
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 John R Heap Director – Strategic Development B John Leyland Director Helen Derbyshire Director – Compliance & Risk
MARLBOROUGH EXTRA INCOME FUND
CONTENTS PAGE
AUTHORISED INVESTMENT ADVISER’S REPORT 1
AUTHORISED STATUS AND GENERAL INFORMATION 3
DIRECTORS’ STATEMENT 3
FUND INFORMATION
Price and distribution record 4
Number of units in issue/Net asset value per unit 4
Ongoing charges 4
Synthetic risk and reward indicator 5
Portfolio statement 6
Portfolio split by investment grade 10
Portfolio transactions 10
INTERIM FINANCIAL STATEMENTS
Statement of total return 11
Statement of change in net assets attributable to unitholders 11
Balance sheet 12
Notes to the interim financial statements 12 MARLBOROUGH EXTRA INCOME FUND
AUTHORISED INVESTMENT ADVISER'S REPORT
For the six month period ended 20 October 2016
Percentage change and sector position to 20 October 2016
Six months 1 year 3 years 5 years Since March 09** Marlborough Extra Income Fund 5.24% 7.62% 20.34% 69.89% 126.91% Quartile Ranking* 4 4 3 2 2 * Based on ranking within The Investment Association’s UK Equity & Bond Income sector ** Nigel Beidas appointed fund manager Fund launched 12 July 1995 External Source of Economic Data: Morningstar (Class P - bid to bid, net income reinvested)
On a total return basis, the FTSE All-Share Index was up 11.3% over the period under review. International equity markets benefitted generally from continued monetary accommodation which both underpinned economic growth and attracted yield driven investors. In the UK, the FTSE 100 outperformed its mid- and smaller-cap brethren. This was primarily a result of the UK’s decision to exit the European Union, an outcome which is seen as potentially negative for domestic activity and which resulted in a significant depreciation of the £ exchange rate. Both factors are seen as relatively favourable for larger companies which are more exposed to overseas markets and which will benefit from the weakness of the domestic currency. In fixed interest markets, the yield on the 10-year Gilt fell from 1.7% to 1.1% providing a strong capital return for sovereign bonds and domestic bonds that are priced off the risk free rate. The fall in yield was primarily a function of perceived economic weakness within the UK economy following the Brexit vote, an outcome which resulted in the Bank of England further cutting domestic interest rates to stimulate growth.
The Fund has endured a relatively difficult 6 months with a return of 5.24% being below the median return of 8.56% from the IA UK Equity & Bond sector. The essential problem was a degree of under-performance against the UK equity market. The Fund was underweight in commodities which have seen significant year-to-date performance whilst exposure to domestic stocks such as Lloyds Banking Group was detrimental given the Brexit vote and the expectation this would be negative for UK economic performance. On the positive side, the Fund benefitted from its position in Tate & Lyle, a group who continue to make great strides in developing the value add of its business portfolio and in RPC, a significant contributor to performance given the group’s consistent acquisition strategy and resilient UK/European demand for plastic packaging. We continue to believe that the Fund benefits from having a wide spread of investments, including medium sized companies which have the ability to provide above average dividend growth. This has been borne out by the longer term record of the Fund, which remains above average.
Fund activity during the period has been relatively light although advantage was taken of Brexit induced weakness in domestic names such as Crest Nicholson, ITV and St James Place Capital which fell to attractive levels following the EU vote. A new holding was commenced in Ibstock who remain key beneficiaries of housing demand and command significant market share exposure. CRH was bought to reflect the group’s ability to consolidate key heavy side building markets and to reflect its attractive positioning in key US and European infrastructure markets. During the period, a decision was taken to sell our holding in the steel consumables business Vesuvius due its cyclical and commodity end market exposure whilst GKN was disposed of given the maturity of global auto cycles and its debilitating pension deficit, a financial situation likely to constrain prospective dividend growth.
Looking forward, global growth remains anaemic compared to previous periods and continues to be supported by historically low interest rates. Recent political developments, particularly in both the US and the UK, represent a protest vote against inequality and current economic policies. With key elections in Germany and France next year, it appears probable that geo-political developments may continue to shape markets for some time to come. It would be our view that underlying economic growth will remain sub-par relative to recent history but is unlikely to fall into recession territory given significant policy support and a growing reform agenda. We feel that a multi asset fund such as Extra Income continues to provide the stability of fixed exposure aligned to an equity portfolio that can seek out quality companies offering investors an attractive combination of long term dividend and capital growth.
Nigel Beidas - Investment Adviser Matthew Rainbird - Assistant Investment Adviser 17 November 2016
This report contains FTSE data. Source: FTSE International Limited (“FTSE”) © FTSE 2016. “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 consent.
1 MARLBOROUGH EXTRA INCOME FUND
AUTHORISED INVESTMENT ADVISER'S REPORT (CONTINUED)
Distributions (pence per unit)
Year 2016 Year 2015 Year 2014 Year 2013 Class A Income Net income paid 20 March 0.8511 0.7221 0.7578 0.7785 Net income paid 20 June 0.7493 0.9646 0.7901 0.7294 Net income paid 20 September 0.9642 0.9702 1.0389 1.0562 Net income paid 20 December 0.7904 0.8144 0.8231 0.7115 Class B Income Net income paid 20 March 0.8676 0.7323 0.7647 0.7793 Net income paid 20 June 0.7648 0.9796 0.7984 0.7314 Net income paid 20 September 0.9909 0.9865 1.0507 1.0607 Net income paid 20 December 0.8092 0.8292 0.8337 0.7167 Class P Income Net income paid 20 March 0.8740 0.7360 0.7666 0.7796 Net income paid 20 June 0.7711 0.9871 0.8010 0.7252 Net income paid 20 September 0.9937 0.9926 1.0575 1.0551 Net income paid 20 December 0.8159 0.8348 0.8373 0.7190
Material Portfolio Changes
For the six month period ended 20 October 2016
Major Purchases Cost (£) Major Sales Proceeds (£)
Wolseley 768,516 UK Treasury 3.25% 22.01.44 686,821 Unilever 598,624 Crest Nicholson Holdings 637,233 Associated British Foods 569,545 Next 526,429 3i Group 543,930 GKN 507,259 Equiniti Group 526,240 HSBC Holdings 450,545 Severn Trent 516,171 Greene King 442,615 CRH 514,719 St. James's Place 392,193 Crest Nicholson Holdings 480,458 Vesuvius 389,304 Victrex 475,029 Legal & General Group 383,252 Tesco 5.5% 13.01.33 461,246 British Land Company 372,109 Provident Financial 5.125% 09.10.23 434,392 Connect Group 361,888 Tritax Big Box REIT 431,000 Aviva 361,759 Cisco Systems 420,704 Inmarsat 356,395 Places for People Treasury 2.875% 17.08.26 405,221 Booker Group 351,929 Imperial Brands 404,431 Morgan Sindall Group 345,548 Diageo 396,238 Dixons Carphone 342,123 Johnson & Johnson 395,774 European Assest Trust 340,553 Phoenix Group 393,876 Centrica 337,190 GlaxoSmithKline 389,468 Investec Non-Cum Ptg Prf 333,450 St. James's Place 382,676 Melrose Industries NP 332,992
Other purchases 5,750,475 Other sales 3,960,327
Total purchases for the period 15,258,733 Total sales for the period 12,211,914
2 MARLBOROUGH EXTRA INCOME FUND
AUTHORISED STATUS AND GENERAL INFORMATION
Authorised Status
The Fund is an authorised unit trust scheme within the meaning of the Financial Services and Markets Act 2000 and is a UCITS scheme operating under the Collective Investment Schemes Sourcebook (COLL) as issued by the Financial Conduct Authority.
Nature and Objectives of the Fund
The investment objective of the Fund is to achieve a higher yield with the prospect of receiving increasing income and growth in the value of the units by purchasing high yielding shares, corporate loan stocks and preference shares. The Fund is permitted to invest in derivatives and forward transactions for the purposes of hedging only.
Rights and Terms Attaching to Each Unit Class
Each unit of each class represents a proportional entitlement to the assets of the Fund. The allocation of income and taxation and the rights of each unit in the event the Fund 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 documents, prospectus and manager’s reports and accounts for any fund within the manager’s range, can be requested by the investor at any time.
DIRECTORS’ 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 2 December 2016
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FUND INFORMATION
Price and distribution record
Units were first offered at 50p on 12 July 1995. On 31 December 2012 the existing units were reclassified as Class A units and Class B and P units became available for purchase.
Financial year to Highest price Lowest price Net income per unit
Class A 20 April 2014 85.73p 71.66p 3.3156p 20 April 2015 88.79p 74.72p 3.5487p 20 April 2016 88.35p 72.29p 3.3850p 20 April 2017* 88.36p 74.78p 1.7546p Class B 20 April 2014 86.57p 72.16p 3.3405p 20 April 2015 90.21p 75.73p 3.5963p 20 April 2016 89.83p 73.77p 3.4481p 20 April 2017* 90.42p 76.44p 1.8001p Class P 20 April 2014 83.50p 72.62p 3.3417p 20 April 2015 87.29p 76.41p 3.6179p 20 April 2016 86.94p 74.73p 3.4725p 20 April 2017* 87.79p 77.51p 1.8096p * six months up to 20 October 2016
Number of units in issue/Net asset value per unit
Net asset value Number of units Net asset value of scheme property in issue per unit Class A 20 April 2014 £31,325,452 40,237,638 77.85p 20 April 2015 £31,050,703 37,845,803 82.05p 20 April 2016 £26,409,527 33,974,663 77.73p 20 October 2016 £26,886,229 33,544,903 80.15p Class B 20 April 2014 £220,824 280,541 78.71p 20 April 2015 £176,225 211,372 83.37p 20 April 2016 £780,574 983,110 79.40p 20 October 2016 £466,830 569,057 82.04p Class P 20 April 2014 £8,764,518 11,096,331 78.99p 20 April 2015 £16,621,612 19,819,295 83.87p 20 April 2016 £23,355,802 29,169,777 80.07p 20 October 2016 £26,809,863 32,375,375 82.81p
Ongoing charges Class A Class B Class P 20 April 2016 1.65% 1.15% 0.90% 20 October 2016 1.63% 1.13% 0.88%
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.
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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
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 4 because it has experienced moderate volatility historically.
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Portfolio statement as at 20 October 2016
Holding or Bid Percentage of nominal value value total net assets as at 20 Oct 16 £% LOAN STOCKS (23.34%, 20 Apr 2016 - 22.96%) 279,000 A2D Funding 4.75% 18.10.22 304,808 0.56 300,000 Admiral Group 5.5% 25.07.24 310,140 0.57 300,000 Aviva 6.125% Perp 316,380 0.58 475,000 Beazley Ireland Holdings 5.375% 25.09.19 494,713 0.91 250,000 Birmingham Airport Finance 6.25% 22.02.21 294,815 0.54 500,000 Brit Insurance Holdings 6.625% 09.12.30 497,190 0.92 350,000 Bupa Finance 6.125% Perp 381,500 0.71 325,000 Burford Capital 6.125% 26.10.24 346,288 0.64 300,000 Centrica 5.25% 10.04.75 307,104 0.57 370,000 Close Brothers Group 6.5% 10.02.17 375,650 0.69 260,000 Cooperatieve Rabobank 5.25% 14.09.27 298,376 0.55 350,000 Coventry Building Society 6.375% Perp 331,275 0.61 325,000 Debenhams 5.25% 15.07.21 326,950 0.60 300,000 esure Group 6.75% 19.12.24 295,275 0.55 250,000 Fidelity International 6.75% 19.10.20 290,532 0.54 300,000 Friends Life Holdings 8.25% 21.04.22 374,340 0.69 79,194 GLH Hotels 7.875% 20.06.22 87,113 0.16 350,000 ICAP 5.5% 31.07.18 368,571 0.68 300,000 Legal & General Group 5.375% 27.10.45 309,375 0.57 449,000 Lloyds Banking Group 7.625% Perp 463,727 0.86 400,000 LV Friendly Society 6.5% 22.05.43 388,120 0.72 260,000 Pennon Group 6.75% Perp 271,638 0.50 350,000 PGH Capital 6.625% 18.12.25 364,913 0.67 400,000 Places for People Treasury 2.875% 17.08.26 391,724 0.72 400,000 Provident Financial 5.125% 09.10.23 429,216 0.79 425,000 Provident Financial 7% 04.10.17 442,000 0.82 195,000 Provident Financial 8% 23.10.19 222,433 0.41 233,000 Rothschilds Cont Finance 9% Perp Sub Gtd Nts 284,656 0.53 400,000 Sainsbury (J) 6.5% Perp 425,160 0.79 445,000 Scottish Widows 5.5% 16.06.23 473,048 0.87 300,000 Society of Lloyds 4.75% 30.10.24 321,993 0.60 355,000 St Modwen Properties 6.25% 07.11.19 376,115 0.70 300,000 Stagecoach Group 4% 29.09.25 329,040 0.61 190,000 Standard Life 6.546% Perp 202,122 0.37 500,000 Tesco 5.5% 13.01.33 515,530 0.95 300,000 Thames Water (Kemble) Finance 5.875% 15.07.22 320,370 0.59 78,500 Yorkshire Building Society 13.5% 01.04.25 * 109,900 0.20 Total Loan Stocks 12,642,100 23.34
PREFERENCE SHARES (4.67%, 20 Apr 2016 - 4.77%) 330,000 Aviva 8.75% Cum Irrd Pref 486,750 0.90 355,000 Ecclesiastical Insurance Office 8.625% Non-Cum Irrd Pref 489,900 0.90 350,000 General Accident 8.875% Cum Irrd Pref 514,500 0.95 453,500 Lloyds Banking Group 9.25% Non-Cum Irrd Pref 655,307 1.21 300,000 Standard Chartered 8.25% Non-Cum Irrd Pref 382,500 0.71 Total Preference Shares 2,528,957 4.67
CONVERTIBLE PREFERENCE SHARES (0.72%, 20 Apr 2016 - 1.30%) 332,000 Balfour Beatty 10.75p Cum Cnv Red Pref 388,440 0.72 Total Convertible Preference Shares 388,440 0.72
6 MARLBOROUGH EXTRA INCOME FUND
Portfolio statement as at 20 October 2016
Holding or Bid Percentage of nominal value value total net assets as at 20 Oct 16 £% AEROSPACE & DEFENCE (Nil, 20 Apr 2016 - 0.59%) Total Aerospace & Defence 0 0.00
AUTOMOBILES & PARTS (Nil, 20 Apr 2016 - 0.91%) Total Automobiles & Parts 0 0.00
BANKS (0.87%, 20 Apr 2016 - 1.98%) 850,000 Lloyds Banking Group 472,770 0.87 Total Banks 472,770 0.87
BEVERAGES (1.29%, 20 Apr 2016 - 0.84%) 32,000 Diageo 697,600 1.29 Total Beverages 697,600 1.29
CHEMICALS (2.14%, 20 Apr 2016 - 0.98%) 17,000 Johnson Matthey 589,730 1.09 32,000 Victrex 570,560 1.05 Total Chemicals 1,160,290 2.14
CONSTRUCTION & MATERIALS (3.23%, 20 Apr 2016 - 1.97%) 20,000 CRH 538,000 0.99 210,000 Ibstock 346,080 0.64 47,600 Keller Group 308,448 0.57 315,000 Melrose Industries 555,187 1.03 Total Construction & Materials 1,747,715 3.23
EQUITY INVESTMENT INSTRUMENTS (0.85%, 20 Apr 2016 - 1.39%) 435,000 The Renewables Infrastructure Group 459,795 0.85 Total Equity Investment Instruments 459,795 0.85
FINANCIAL SERVICES (3.09%, 20 Apr 2016 - 2.02%) 85,000 3i Group 561,000 1.04 42,000 Close Brothers Group 560,280 1.03 117,000 ICAP 554,112 1.02 Total Financial Services 1,675,392 3.09
FIXED LINE TELECOMMUNICATIONS (1.30%, 20 Apr 2016 - 1.39%) 186,000 BT Group 703,266 1.30 Total Fixed Line Telecommunications 703,266 1.30
FOOD & DRUG RETAILERS (0.93%, 20 Apr 2016 - 1.67%) 250,000 Conviviality 501,875 0.93 Total Food & Drug Retailers 501,875 0.93
FOOD PRODUCERS (2.89%, 20 Apr 2016 - 1.32%) 23,000 Associated British Foods 575,000 1.06 50,000 Dairy Crest Group 321,250 0.59 85,000 Tate & Lyle 669,375 1.24 Total Food Producers 1,565,625 2.89
7 MARLBOROUGH EXTRA INCOME FUND
Portfolio statement as at 20 October 2016
Holding or Bid Percentage of nominal value value total net assets as at 20 Oct 16 £% GAS, WATER & MULTIUTILITIES (5.90%, 20 Apr 2016 - 4.25%) 7,054 Dee Valley Group 87,470 0.16 98,000 National Grid 1,045,660 1.93 40,000 Pennon Group 339,800 0.63 44,700 Severn Trent 1,055,814 1.95 70,000 United Utilities Group 667,100 1.23 Total Gas, Water & Multiutilities 3,195,844 5.90
GENERAL INDUSTRIALS (3.76%, 20 Apr 2016 - 4.11%) 88,000 RPC Group 856,240 1.58 137,000 Smith (DS) 555,398 1.03 43,500 Smiths Group 625,530 1.15 Total General Industrials 2,037,168 3.76
GENERAL RETAILERS (Nil, 20 Apr 2016 - 2.21%) Total General Retailers 0 0.00
HOUSEHOLD GOODS & HOME CONSTRUCTION (2.86%, 20 Apr 2016 - 3.20%) 105,000 Crest Nicholson Holdings 443,415 0.82 31,350 Galliford Try 420,090 0.78 9,500 Reckitt Benckiser Group 680,010 1.26 Total Household Goods & Home Construction 1,543,515 2.86
INDUSTRIAL ENGINEERING (Nil, 20 Apr 2016 - 0.69%) Total Industrial Engineering 0 0.00
INDUSTRIAL TRANSPORTATION (1.98%, 20 Apr 2016 - 2.49%) 62,000 Doric Nimrod Air Two Pref 132,370 0.24 143,300 Doric Nimrod Air Three Pref 145,450 0.27 160,000 Royal Mail 793,600 1.47 Total Industrial Transportation 1,071,420 1.98
LIFE INSURANCE (1.78%, 20 Apr 2016 - 3.36%) 45,000 Phoenix Group Holdings 402,750 0.74 40,350 Prudential 564,295 1.04 Total Life Insurance 967,045 1.78
MEDIA (3.02%, 20 Apr 2016 - 2.41%) 87,000 Informa 579,420 1.07 21,750 Informa NP 48,774 0.09 200,000 ITV 347,800 0.64 37,000 WPP 659,340 1.22 Total Media 1,635,334 3.02
MINING (1.07%, 20 Apr 2016 - 1.04%) 22,000 Rio Tinto 577,940 1.07 Total Mining 577,940 1.07
MOBILE TELECOMMUNICATIONS (2.07%, 20 Apr 2016 - 2.90%) 500,000 Vodafone Group 1,120,250 2.07 Total Mobile Telecommunications 1,120,250 2.07
8 MARLBOROUGH EXTRA INCOME FUND
Portfolio statement as at 20 October 2016
Holding or Bid Percentage of nominal value value total net assets as at 20 Oct 16 £% NONLIFE INSURANCE (2.79%, 20 Apr 2016 - 2.28%) 158,000 Beazley 595,186 1.10 158,666 Direct Line Insurance Group 565,962 1.05 120,000 esure Group 348,960 0.64 Total Nonlife Insurance 1,510,108 2.79
OIL & GAS PRODUCERS (2.78%, 20 Apr 2016 - 2.68%) 69,000 Royal Dutch Shell 'B' 1,504,545 2.78 Total Oil & Gas Producers 1,504,545 2.78
PERSONAL GOODS (2.35%, 20 Apr 2016 - 1.31%) 36,500 Unilever 1,274,215 2.35 Total Personal Goods 1,274,215 2.35
PHARMACEUTICALS & BIOTECHNOLOGY (3.74%, 20 Apr 2016 - 2.98%) 19,800 AstraZeneca 981,684 1.81 63,000 GlaxoSmithKline 1,046,115 1.93 Total Pharmaceuticals & Biotechnology 2,027,799 3.74
REAL ESTATE INVESTMENT TRUSTS (2.18%, 20 Apr 2016 - 1.90%) 55,000 British Land Company 332,475 0.61 140,000 Newriver REIT 425,600 0.79 305,453 Tritax Big Box REIT 423,969 0.78 Total Real Estate Investment Trusts 1,182,044 2.18
SUPPORT SERVICES (5.95%, 20 Apr 2016 - 4.62%) 150,000 Carillion 375,150 0.69 300,000 Equiniti Group 601,500 1.11 67,429 Maintel Holdings 573,146 1.06 170,000 RPS Group 279,650 0.52 172,500 RWS Holdings 509,737 0.94 20,000 Wolseley 883,600 1.63 Total Support Services 3,222,783 5.95
TECHNOLOGY HARDWARE & EQUIPMENT (0.53%, 20 Apr 2016 - 0.98%) 170,000 Laird 285,260 0.53 Total Technology Hardware & Equipment 285,260 0.53
TOBACCO (3.00%, 20 Apr 2016 - 2.09%) 13,000 British American Tobacco 624,975 1.15 26,000 Imperial Brands 1,001,260 1.85 Total Tobacco 1,626,235 3.00
TRAVEL & LEISURE (1.46%, 20 Apr 2016 - 2.80%) 9,600 InterContinental Hotels Group 310,656 0.57 137,000 National Express Group 480,596 0.89 Total Travel & Leisure 791,252 1.46
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Portfolio statement as at 20 October 2016
Holding or Bid Percentage of nominal value value total net assets as at 20 Oct 16 £% OVERSEAS SECURITIES (6.69%, 20 Apr 2016 - 4.19%) 13,490 Altria Group 681,156 1.26 6,000 Bayer 485,403 0.90 20,000 Cisco Systems 494,903 0.91 21,000 Deutsche Post 527,279 0.97 4,200 Johnson & Johnson 392,562 0.72 21,000 Pfizer 558,356 1.03 11,900 Verizon Communications 488,967 0.90 Total Overseas Securities 3,628,626 6.69
UNQUOTED SECURITIES (0.08%, 20 Apr 2016 - 0.09%) 13,253 Govett Strategic Investment Trust 0 0.00 25,000 Rothschild Cont Cum 2nd Pref * 44,250 0.08 Total Unquoted Securities 44,250 0.08
Portfolio of investments 53,789,458 99.31 Net current assets on capital account 373,464 0.69 Net assets 54,162,922 100.00
* unapproved security
The investments of the Fund have been valued at their fair value at 12 noon on 20 October 2016. 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 fund manager believes that the quoted price is unreliable, or if no price exists, a valuation technique is used whereby fair value is the authorised fund manager's best estimate of a fair and reasonable value for that investment. The fair value excludes any element of accrued interest. Govett Strategic is delisted and deemed to be valueless by the fund manager.
Portfolio split by investment grade† Bid Percentage of Value total net assets £%
Investments of investment grade 7,606,100 14.04 Investments below investment grade: BB+ 846,805 1.57 BB- 790,677 1.46 B+ 320,370 0.59 Unrated 3,078,148 5.68 Total Fixed Interest 12,642,100 23.34 Equities 38,185,711 70.50 Preference Shares 2,961,647 5.47 Portfolio of investments 53,789,458 99.31 Net current assets on capital account 373,464 0.69 Net assets 54,162,922 100.00 †source Bloomberg (credit ratings issued by S & P, Moody and Fitch)
Portfolio transactions for the six months ended 20 October 2016 £
Total purchases, including transaction charges 15,258,733
Total sales proceeds, net of transaction charges 12,211,914
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INTERIM FINANCIAL STATEMENTS (unaudited) For the six months ended 20 October 2016
Statement of total return 20 October 2016 20 October 2015 ££££
Income: Net capital gains/(losses) 1,896,010 (2,146,902) Revenue 1,263,841 1,148,703 Expenses (330,525) (323,606) Net revenue/(expense) before taxation 933,316 825,097
Taxation (13,994) (8,911)
Net revenue/(expense) after taxation 919,322 816,186
Total return before distributions 2,815,332 (1,330,716)
Distributions (1,159,217) (1,048,827)
Change in net assets attributable to unitholders from investment activities 1,656,115 (2,379,543)
Statement of change in net assets attributable to unitholders
20 October 2016 20 October 2015 ££££
Opening net assets attributable to unitholders * 50,525,033 47,848,540
Amounts receivable on issue of units 2,900,066 3,208,257 Amounts payable on cancellation of units (918,293) (1,547,324) Amounts payable on unit class conversions 15 1,981,774 1,660,938
Change in net assets attributable to unitholders from investment activities 1,656,115 (2,379,543)
Closing net assets attributable to unitholders 54,162,922 * 47,129,935
* These figures are not the same as the comparatives are taken from the preceding interim period and not the last final accounts.
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INTERIM FINANCIAL STATEMENTS (unaudited) as at 20 October 2016
Balance sheet
20 October 2016 20 April 2016
££ Assets: Fixed Assets: Investments 53,789,458 48,864,301
Current Assets: Debtors 594,168 624,725 Cash and bank balances 414,049 1,604,057 Total assets 54,797,675 51,093,083
Liabilities: Creditors: Distribution payable 533,931 487,062 Other creditors 100,822 60,118 Total liabilities 634,753 547,180
Net assets attributable to unitholders 54,162,922 50,545,903
Notes to the interim financial statements
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.
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 20 April 2016 and are described in those annual financial statements.
12 Marlborough Fund Managers Ltd Marlborough House 59 Chorley New Road Bolton BL1 4QP
Investor Support: 0808 145 2500 Dealing: 0808 145 2501 Fax: 01204 533045
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