Marlborough Bond Income Fund

Interim Report For the six month period ended 30th November 2016 (Unaudited) MARLBOROUGH BOND 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.

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 BOND INCOME FUND

CONTENTS PAGE

AUTHORISED INVESTMENT ADVISER’S REPORT 1

AUTHORISED STATUS AND GENERAL INFORMATION 3

DIRECTORS STATEMENT 4

FUND INFORMATION

Price and distribution record 5

Number of units in issue/Net asset value per unit 5

Ongoing charges 5

Synthetic risk and reward indicator 6

Portfolio statement 7

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 BOND INCOME FUND

AUTHORISED INVESTMENT ADVISER’S REPORT

For the six month period ended 30 November 2016

Percentage change and sector position to 30 November 2016

Six months 1 year 3 years 5 years Since launch * Marlborough Bond Income Fund 3.12% 6.16% 16.62% 38.37% 133.71% Quartile Ranking ** 3 3 3 2 2 * 9 September 1998 ** Based on ranking within The Investment Association’s £ Corporate Bond sector External Source of Economic Data: Morningstar (Class P Inc - bid to bid, net income reinvested)

The unit offer price of the class A units has hardly changed during the period under review, with an increase from 53.78p to 53.81p. There was, however, also income paid to unitholders relating to the period which amounted to 0.849381ppu net of tax.

The Bank of England base rate was reduced from 0.5% to 0.25% as one of the consequences of the vote for Brexit. The measures taken by the Bank of England together with the fall in sterling have kept the economy growing at a reasonable rate. However, uncertainties remain which are likely to keep interest rates low to the benefit of bond prices.

International factors are also likely to have an effect as 2017 looks like being the year when politics dominates the investment agenda more than in any year I can remember. The major factors here apart from the continuing uncertainty around Brexit are the forthcoming presidency of Donald Trump with its own uncertainties and various elections in Europe which could have a very destabilising effect. The result of all this is that there are a lot of unknowns to be borne in mind when considering investment strategy and it is hard to avoid the conclusion that a balanced approach is needed.

For the main global economies the main uncertainty seems to lie with the US where the stock markets have so far regarded the Trump Presidency as likely to lead to higher growth rates and higher inflation because of likely policies of tax cuts and infrastructure spending. Because of the time that will be taken for the expected changes to have effect and maybe also their relativity limited nature it is not at all clear whether the stock market move can be justified especially if the interest rate increases presently expected come into effect. The expected moves have also led to a higher US dollar and the combination of this and the increased cost of debts means that these factors could stifle the economy even before the policy benefits start to come. In the circumstances it is possible that bond yields may fall back later in the year rather than rising, in the UK as well as well as in the US.

Europe and the UK are meanwhile continuing with very low interest rates and other quantitative easing policies which will continue to support bond prices as long as US growth remains reasonably restrained.

So far as bond investments are concerned the expectation of low interest rates particularly applies for the investment grade bonds in which this Fund is mainly invested. The Fund also continues to hold some lower grade bonds where it is considered that any risk is already fully discounted in the price. We consider a balanced approach to be appropriate as a way of limiting risk and volatility.

Geoff Hitchin 12 January 2017

1 MARLBOROUGH BOND INCOME FUND

AUTHORISED INVESTMENT ADVISER’S REPORT (CONTINUED)

Distributions (pence per unit)

Year 2017 Year 2016 Year 2015 Year 2014 Class A Net income paid 31 January 0.420593 0.440292 0.460127 0.480482 Net income paid 30 April 0.465951 0.440791 0.454889 Net income paid 31 July 0.425286 0.464421 0.433086 Net income paid 31 October 0.428788 0.435494 0.469619 Class B Net income paid 31 January 0.458000 0.482000 0.506400 0.520400 Net income paid 30 April 0.512000 0.488400 0.494800 Net income paid 31 July 0.460400 0.511600 0.474400 Net income paid 31 October 0.463600 0.483600 0.512000 Class P Net income paid 31 January 0.462756 0.490743 0.516204 0.546643 Net income paid 30 April 0.515158 0.494589 0.509956 Net income paid 31 July 0.471018 0.521562 0.485025 Net income paid 31 October 0.474984 0.494534 0.524818

Portfolio Changes

For the six month period ended 30 November 2016

Purchases Cost (£) Sales Proceeds (£)

Thames Water Utilities 7.241% 09.04.58 142,610 William Hill 4.25% 05.06.20 127,063 Bayer 3.75% 01.07.74 126,983 Tullet Prebon 7.04% 06.07.16 120,000 William Hill 4.875% 07.09.23 125,563 International Personal Fin 6.125% 08.05.20 105,188 Lend Lease Europe Finance 6.125% 12.10.21 123,120 QBE Capital Funding 6.115% 24.05.42 96,982 Places for People Treasury 2.875% 17.08.26 121,044 Beazley Group 7.25% FRN 17.10.26 80,000 Direct Line Insurance Group FRN 27.04.42 120,850 PostNL 7.5% 14.08.18 78,062 Sky 4% 26.11.29 118,100 Santander UK 5.875% 14.08.31 117,130 RSA Insurance Group 9.375% 20.05.39 116,850 CRH Finance (UK) 4.125% 02.12.29 112,200 Stagecoach Group 4% 29.09.25 107,850 Asciano Finance 5% 19.09.23 105,900 Engie 4.625% Perp 103,000 Investec 4.5% 05.05.22 102,650 Yorkshire Water Services Fin 6% 24.04.25 101,980 Hiscox FRN 24.11.45 100,100 WPP Finance 2.875% 14.09.46 99,550 CS Group Funding Guernsey 2.75% 08.08.25 99,464 Henkel 0.875% 13.09.22 99,360 International Personal Fin 5.75% 07.04.21 96,690

Other purchases 100,829 Other sales 13,454

Total purchases for the period 2,341,823 Total sales for the period 620,749

2 MARLBOROUGH BOND 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 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 provide a high level of income with the potential for capital growth. It is intended that this objective will be achieved by investing in UK corporate bonds and preference shares, UK and other government securities, Eurobonds and other fixed and variable rate securities including, where appropriate and permitted by COLL, convertible securities.

The Fund may, in addition to its other investment powers, use cash and near cash (which includes money market instruments and deposits) and exchange traded and over the counter derivatives and forward currency contracts for hedging and investment purposes. Using these investment powers for investment purposes means, in particular, maintaining positions in these investments for the long term rather than just for tactical short-term purposes.

The Fund may also invest in other transferable securities and units/shares in collective investment schemes. Furthermore use may be made of stock lending and borrowing and other investment techniques permitted in COLL. The use of these investment powers is also limited to prevent the global exposure exceeding the total net value of the Fund's portfolio. A risk management process is in place to monitor the exposure.

The Fund's investment powers in relation to derivatives mean that for regulatory purposes it will be regarded as a high volatility fund. However, the use of derivative techniques will have the overall intention of reducing the volatility of returns, reflecting the investment policy for the Fund generally.

The Fund has been structured to concentrate on the generation of income as a higher priority than on capital growth. This may accordingly constrain capital growth.

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

The UK Government has changed the existing tax rules for interest paying funds so that interest distributions must be paid without deduction of 20% income tax, effective from 6 April 2017. Therefore, on Marlborough Bond Income Fund, the first interest distribution payment to be paid gross will be made on 30 April 2017 (for the distribution period from 1 December 2016 to 28 February 2017).

The prospectus has been updated to reflect these tax changes.

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.

3 MARLBOROUGH BOND INCOME FUND

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

WAYNE D GREEN JOINT MANAGING DIRECTOR

MARLBOROUGH FUND MANAGERS LTD 19 January 2017

4 MARLBOROUGH BOND INCOME FUND

FUND INFORMATION

Price and distribution record

Income units were first offered at 50p on 9 September 1998. 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 31 May 2014 53.42p 47.78p 1.861823p 31 May 2015 55.51p 49.87p 1.834958p 31 May 2016 54.24p 48.48p 1.767023p 31 May 2017* 56.26p 49.88p 0.849381p Class B 31 May 2014 53.72p 48.00p 2.022400p 31 May 2015 55.92p 50.10p 2.018400p 31 May 2016 54.67p 48.99p 1.938000p 31 May 2017* 56.98p 50.45p 0.921600p Class P 31 May 2014 51.71p 48.13p 2.093790p 31 May 2015 53.85p 50.06p 2.057173p 31 May 2016 52.53p 49.07p 1.971453p 31 May 2017* 54.91p 50.53p 0.937740p * six month period to 30 November 2016

Number of units in issue/Net asset value per unit

Net asset value Number of income Net asset value of scheme property units in issue per unit Class A 31 May 2014 £10,426,685 20,874,220 49.95p 31 May 2015 £8,649,356 16,886,215 51.22p 31 May 2016 £8,407,339 16,899,155 49.75p 30 November 2016 £11,477,751 22,752,602 50.45p Class B 31 May 2014 £1,004 2,000 50.20p 31 May 2015 £1,032 2,000 51.63p 31 May 2016 £1,006 2,000 50.30p 30 November 2016 £1,022 2,000 51.10p Class P 31 May 2014 £9,673,546 19,262,560 50.22p 31 May 2015 £10,747,896 20,793,283 51.69p 31 May 2016 £10,497,010 20,829,553 50.39p 30 November 2016 £10,385,121 20,284,720 51.20p

Ongoing charges

Class A Class B Class P 31 May 2016 1.61% 1.11% 0.86% 30 November 2016 1.61% 1.11% 0.86%

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.

5 MARLBOROUGH BOND INCOME 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

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 3 because it has experienced low to moderate volatility historically.

6 MARLBOROUGH BOND INCOME FUND

Portfolio statement as at 30 November 2016

Holding or Investment Bid Percentage of nominal value value total net assets as at 30 Nov 16 £% STERLING (82.53%, May 2016 - 86.23%) 32,000 A2D Funding 4.75% 18.10.22 35,021 0.16 120,000 A2D Funding II 4.5% 30.09.26 129,697 0.59 100,000 ABP Finance 6.25% 14.12.26 126,335 0.58 160,000 Aegon 6.625% 16.12.39 233,088 1.07 150,000 Ahold Finance USA 6.5% 14.03.17 152,325 0.70 110,000 América Móvil 6.375% 06.09.73 113,930 0.52 110,000 Amgen 5.5% 07.12.26 135,942 0.62 200,000 Amlin 6.5% 19.12.26 199,786 0.91 110,000 AMP Group Finance Services 6.875% 23.08.22 116,255 0.53 199,000 Anheuser-Busch 9.75% 30.07.24 305,955 1.40 100,000 AP Moller-Maersk 4% 04.04.25 104,712 0.48 100,000 Asciano Finance 5% 19.09.23 109,642 0.50 230,000 Aviva 6.125% 14.11.36 241,737 1.11 180,000 AXA 5.453% Perp 181,350 0.83 250,000 B.A.T. International Finance 7.25% 12.03.24 330,950 1.51 145,000 Bank of Ireland 13.375% Perp 281,300 1.29 110,000 Barclays Bank 14% Step-Up Perp 134,083 0.61 100,000 BG Energy Capital 6.5% 30.11.72 103,972 0.48 50,000 Brit Insurance Holdings 6.625% 09.12.30 49,642 0.23 160,000 British Telecommunications 8.625% 26.03.20 198,592 0.91 342,607 Broadgate Financing 4.949% 05.04.29 407,952 1.87 100,000 BUPA Finance 5% 25.04.23 104,658 0.48 100,000 Canary Wharf Finance II 5.952% 22.10.37 123,480 0.56 140,000 Chorus 6.75% 06.04.20 162,607 0.74 140,000 Close Brothers Group 6.5% 10.02.17 141,399 0.65 150,000 Clydesdale Bank 4.625% 08.06.26 181,619 0.83 100,000 CNP Assurances 7.375% 30.09.41 110,673 0.51 100,000 Cooperatieve Cent Rffisen BA/NL 4.625% 23.05.29 104,892 0.48 11,050 Co-operative Bank 11% 20.12.23 8,674 0.04 60,000 Coventry Building Society 12.125% PIBS 117,600 0.54 100,000 CRH Finance (UK) 4.125% 02.12.29 111,278 0.51 100,000 CS Group Funding Guernsey 2.75% 08.08.25 95,254 0.44 160,000 Deutsche Bahn Finance 3.125% 24.07.26 175,378 0.80 100,000 Digital Stout Holding 4.75% 13.10.23 110,755 0.51 100,000 Direct Line Insurance Group FRN 27.04.42 121,117 0.55 100,000 DONG Energy 4.875% 12.01.32 121,611 0.56 175,000 Dwr Cymru (Financing) 6.907% 31.03.21 217,799 1.00 100,000 EDF 5.5% 17.10.41 125,180 0.57 100,000 EDP Finance 8.625% 04.01.24 130,906 0.60 125,000 Enel 5.75% 22.06.37 157,179 0.72 100,000 Engie 4.625% Perp 102,496 0.47 120,000 Enterprise Inns 6.875% 15.02.21 129,352 0.59 100,000 ESB Finance 6.5% 05.03.20 116,741 0.53 100,000 F&C Finance 9% 20.12.16 100,356 0.46 160,000 Fidelity International 6.75% 19.10.20 185,277 0.85 100,000 Finmeccanica Finance 8% 16.12.19 116,871 0.53 100,000 FirstGroup 5.25% 29.11.22 114,757 0.52 100,000 Friends Life Holdings 8.25% 21.04.22 124,345 0.57 140,000 G4S 7.75% 13.05.19 159,389 0.73 100,000 Gaz Capital 5.338% 25.09.20 105,835 0.48 160,000 GlaxoSmithKline Capital 5.25% 19.12.33 217,714 1.00

7 MARLBOROUGH BOND INCOME FUND

Portfolio statement as at 30 November 2016

Holding or Investment Bid Percentage of nominal value value total net assets as at 30 Nov 16 £% STERLING (CONT'D) 140,000 Glencore Finance Europe 6% 03.04.22 156,173 0.71 140,000 Goldman Sachs Group 7.125% 07.08.25 185,731 0.85 100,000 Health Care REIT 4.5% 01.12.34 108,571 0.50 100,000 Henkel 0.875% 13.09.22 96,929 0.44 100,000 Hiscox FRN 24.11.45 104,789 0.48 250,000 Home Group 0% 11.05.27 136,100 0.62 130,000 HSBC Holdings 5.75% 20.12.27 145,341 0.66 280,000 Imperial Brands Finance 8.125% 15.03.24 384,661 1.76 160,000 Innogy Finance 5.625% 06.12.23 193,467 0.88 60,000 Intermediate Capital Group 5% 24.03.23 60,823 0.28 57,769 intu Debenture 5.562% 31.12.27 67,315 0.31 100,000 Investec 4.5% 05.05.22 102,307 0.47 120,000 IPIC 6.875% 14.03.26 162,755 0.74 150,000 Koninklijke KPN 6.875% 14.03.73 159,128 0.73 400,000 Lambay Capital Securities 6.25% Perp 1,876 0.01 100,000 Legal & General Group 5.375% 27.10.45 100,303 0.46 108,000 Lend Lease Europe Finance 6.125% 12.10.21 124,251 0.57 100,000 Liverpool Victoria Friendly Society 6.5% 22.05.43 95,830 0.44 140,000 London Power Networks 5.125% 31.03.23 166,320 0.76 160,000 London Stock Exchange Group 4.75% 02.11.21 179,091 0.82 100,000 Morrison (WM) Supermarkets 3.5% 27.07.26 101,408 0.46 200,000 Motability Operations Group 6.625% 10.12.19 233,964 1.07 100,000 Munich Re Finance FRN 26.05.42 114,647 0.52 65,000 National Westminster Bank 11.5% Perp 104,325 0.48 100,000 Next 3.625% 18.05.28 101,408 0.46 200,000 NGG Finance 5.625% 18.06.73 215,170 0.98 100,000 Northern Powergrid Holdings 7.25% 15.12.22 129,074 0.59 220,000 Novae Group 6.5% 27.04.17 223,461 1.02 180,000 Old Mutual 8% 03.06.21 200,930 0.92 100,000 Orange 5.75% Und Nts 103,616 0.47 50,000 Peel South East 10% 30.04.26 72,207 0.33 150,000 Petrobras Global Finance 6.625% 16.01.34 126,113 0.58 102,000 Phoenix Life 7.25% Perp 102,940 0.47 140,000 Phoenix Natural Gas Finance 5.5% 10.07.17 143,689 0.66 120,000 Places for People Treasury 2.875% 17.08.26 114,950 0.53 100,000 Porterbrook Rail Finance 4.625% 04.04.29 117,762 0.54 51,000 PostNL 7.5% 14.08.18 56,615 0.26 100,000 Provident Financial 6% 27.09.21 109,466 0.50 110,000 Prudential 5% 20.07.55 103,324 0.47 123,000 QBE Insurance Group 6.115% 24.05.42 128,829 0.59 100,000 RELX (Investments) 7% 11.12.17 106,159 0.49 130,000 RL Finance Bonds No.2 6.125% 30.11.43 135,725 0.62 140,000 Rothschild Continuation Finance CI 9% Perp 168,956 0.77 100,000 RSA Insurance Group 9.375% 20.05.39 116,066 0.53 100,000 RWE 7% Perp 102,055 0.47 140,000 RZD Capital 7.487% 25.03.31 152,754 0.70 100,000 Santander UK 5.875% 14.08.31 112,651 0.52 140,000 Scottish Amicable Finance 8.5% Und Sub Gtd Bds 147,476 0.67 100,000 Scottish Widows 5.5% 16.06.23 105,737 0.48 100,000 SEGRO 6% 30.09.19 113,247 0.52 100,000 Sky 4% 26.11.29 109,690 0.50

8 MARLBOROUGH BOND INCOME FUND

Portfolio statement as at 30 November 2016

Holding or Investment Bid Percentage of nominal value value total net assets as at 30 Nov 16 £% STERLING (CONT'D) 170,000 SMFG Preferred Capital GBP 2 10.231% Perp 265,217 1.21 100,000 Society of Lloyds 4.75% 30.10.24 104,708 0.48 200,000 Southern Water Services Finance 6.125% 31.03.19 223,318 1.02 100,000 Spain (Kingdom of) 5.25% 06.04.29 117,033 0.54 100,000 Spirit Issuer 6.582% 28.12.27 106,750 0.49 100,000 Stagecoach Group 4% 29.09.25 107,130 0.49 100,000 Standard Chartered 4.375% 18.01.38 106,140 0.49 250,000 Standard Life 6.75% Perp 276,625 1.27 250,000 Statoil 6.875% 11.03.31 365,867 1.67 100,000 TCNZ Finance 5.625% 14.05.18 104,784 0.48 100,000 Telefonica Europe 6.75% Und Bds 103,199 0.47 138,684 Telereal Securitisation 5.9478% 10.12.31 166,500 0.76 100,937 Tesco Property Finance 1 7.6227% 13.07.39 113,049 0.52 100,000 Textron 6.625% 07.04.20 112,442 0.51 130,000 Thames Water Utilities Cayman 7.241% 09.04.58 140,557 0.64 220,000 United Mexican States 5.625% 19.03.14 214,960 0.98 100,000 Vattenfall 6.875% 15.04.39 154,259 0.71 100,000 Wales & West Utilities Finance 6.25% 30.11.21 122,581 0.56 100,000 Western Power Distribution 3.625% 06.11.23 106,975 0.49 125,000 William Hill 4.875% 07.09.23 124,338 0.57 100,000 WPP Finance 2.875% 14.09.46 86,278 0.39 100,000 Yorkshire Power Finance 7.25% 04.08.28 143,894 0.66 100,000 Yorkshire Water Services Finance 6% 24.04.25 101,722 0.47 103,000 Yorkshire Water Services Odsal Finance 6.5876% 21.02.23 130,820 0.60 135,000 Zurich Finance UK 6.625% Perp 149,727 0.68 Total Sterling 18,042,506 82.53

EURO (1.04%, May 2016 - Nil) 150,000 Bayer 3.75% 01.07.74 128,859 0.59 130,000 International Personal Finance 5.75% 07.04.21 98,342 0.45 Total Euro 227,201 1.04

UNITED STATES DOLLAR (8.44%, May 2016 - 8.52%) 200,000 Aberdeen Asset Management 7% Perp 164,405 0.75 200,000 Allianz 5.5% Perp 160,543 0.73 155,217 Avangardco Investments Public 10% 29.10.18 34,897 0.16 200,000 Centrica 5.375% 16.10.43 169,263 0.77 100,000 CVS Health 6.125% 15.09.39 95,969 0.44 100,000 Discovery Communications 6.35% 01.06.40 83,428 0.38 120,000 Hutchison Whampoa International 12 6% Perp 97,434 0.45 170,000 Marks & Spencer 7.125% 01.12.37 157,656 0.72 175,000 Mitsui Sumitomo Insurance FRN 15.03.72 160,709 0.74 200,000 Reliance Industries 5.875% Perp 157,732 0.72 280,000 SSE 5.625% Perp 227,919 1.04 400,000 United Utilities 5.375% 01.02.19 336,811 1.54 Total United States Dollar 1,846,766 8.44

Portfolio of stock investments 20,116,473 92.01

9 MARLBOROUGH BOND INCOME FUND

Portfolio statement as at 30 November 2016

Holding or Investment Bid Percentage of nominal value value total net assets as at 30 Nov 16 £%

Foreign Currency Hedges EUR€275,000 Sell Euro for Sterling - 09.01.17 10,366 0.05 USD$868,000 Sell USD for Sterling - 21.12.16 11,537 0.05 USD$1,180,000 Sell USD for Sterling - 01.02.17 (4,867) (0.02) Net value of all derivative positions 17,036 0.08

Portfolio of investments and derivative positions 20,133,509 92.09 Net current assets (excluding derivative positions) 1,730,385 7.91 Net assets 21,863,894 100.00

Portfolio split by investment grade as at 30 November 2016† Bid Percentage of value total net assets £%

Investments of investment grade 17,066,936 78.06 Investments below investment grade: BB+ 1,252,974 5.73 BB 499,591 2.29 BB- 129,352 0.59 B+ 126,113 0.58 Unrated 1,041,507 4.76 Portfolio of stock investments 20,116,473 92.01 Net value of all derivative positions 17,036 0.08 Net current assets (excluding derivative positions) 1,730,385 7.91 Net assets 21,863,894 100.00 †source Bloomberg (credit ratings issued by S & P, Moody and Fitch)

Portfolio transactions for the six months ended 30 November 2016 £

Total purchases, including transaction charges 2,341,823

Total sales proceeds, net of transaction charges 620,749

10 MARLBOROUGH BOND INCOME FUND

INTERIM FINANCIAL STATEMENTS (unaudited) For the six months ended 30 November 2016

Statement of total return 30 November 2016 30 November 2015 ££ ££

Income: Net capital gains/(losses) 250,340 (530,593) Revenue 514,826 493,969 Expenses (126,534) (112,457) Net revenue/(expense) before taxation 388,292 381,512

Taxation 0 0

Net revenue/(expense) after taxation 388,292 381,512

Total return before distributions 638,632 (149,081)

Distributions (446,098) (432,716)

Change in net assets attributable to unitholders from investment activities 192,534 (581,797)

Statement of change in net assets attributable to unitholders

30 November 2016 30 November 2015 ££ ££

Opening net assets attributable to unitholders * 18,905,355 19,398,284

Amounts receivable on issue of units 5,056,616 1,688,359 Amounts payable on cancellation of units (2,291,376) (1,643,423) Amounts payable on unit class conversions 225 (80) 2,765,465 44,856

Change in net assets attributable to unitholders from investment activities 192,534 (581,797) Unclaimed distributions 540 0

Closing net assets attributable to unitholders 21,863,894 * 18,861,343

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

11 MARLBOROUGH BOND INCOME FUND

INTERIM FINANCIAL STATEMENTS (unaudited) For the six months ended 30 November 2016

Balance sheet

30 November 2016 31 May 2016

££ Assets: Fixed Assets: Investments 20,116,473 17,912,367

Current Assets: Debtors 856,555 444,934 Cash and bank balances 1,359,979 951,210 Total assets 22,333,007 19,308,511

Liabilities: Creditors: Bank overdrafts 184,290 100,792 Distribution payable 231,099 210,701 Other creditors 53,724 91,663 Total liabilities 469,113 403,156

Net assets attributable to unitholders 21,863,894 18,905,355

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 31 May 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 (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.