MI Thornbridge Investment Funds
Annual Report 30 June 2018 MI Thornbridge Investment Funds
Contents Page
Directory* ...... 1 Statement of the Authorised Corporate Directors Responsibilities ...... 2 Certification of Annual Report by the Authorised Corporate Director ...... 2 Statement of the Depositary’s Responsibilities ...... 3 Independent Auditor’s Report to the Shareholders of the Fund ...... 4 MI Thornbridge Investments Funds - Global Opportunities Fund Investment Objective and Policy* ...... 6 Investment Manager’s Report* ...... 6 Portfolio Statement* ...... 8 Comparative Tables* ...... 14 Statement of Total Return ...... 18 Statement of Change in Net Assets Attributable to Shareholders ...... 18 Balance Sheet ...... 19 Notes to the Financial Statements ...... 20 Distribution Tables ...... 34 General Information* ...... 35
* These collectively comprise the Authorised Corporate Director’s Report. MI Thornbridge Investment Funds
Directory
Authorised Corporate Director (ACD) & Registrar Maitland Institutional Services Ltd Springfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PW Telephone: 01245 398950 Fax: 01245 398951 Website: www.maitlandgroup.com (Authorised and regulated by the Financial Conduct Authority)
Customer Service Centre Springfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PW Telephone: 0345 305 4216 Fax: 0845 280 2423 E-mail: [email protected] (Authorised and regulated by the Financial Conduct Authority)
Directors of the Authorised Corporate Director R. Ackermann J. Clark (appointed 21 December 2017) P.J. Foley-Brickley S. Georgala D. Jones G. Kok (appointed 30 November 2017) R.W. Leedham (retired 19 December 2017)
Investment Manager Thornbridge Investment Management LLP 13 Austin Friars, London EC2N 2HE (Authorised and regulated by the Financial Conduct Authority)
Depositary Northern Trust Global Services Plc 50 Bank Street, Canary Wharf, London E14 5NT (Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority)
Independent Auditor KPMG LLP, Statutory Auditor Chartered Accountants 15 Canada Square, Canary Wharf, London E14 5GL
MI Thornbridge Investment Funds 1 MI Thornbridge Investment Funds
Statement of the Authorised Corporate Director’s Responsibilities
The Collective Investment Schemes sourcebook published by the FCA, (‘the COLL Rules’) requires the Authorised Corporate Director (‘ACD’) to prepare financial statements for each annual accounting period which give a true and fair view of the financial position of the Company and of the net income and net gains or losses on the property of the Company for the period. In preparing the financial statements the ACD is responsible for: • selecting suitable accounting policies and then apply them consistently; • making judgements and estimates that are reasonable and prudent; • following UK accounting standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland; • complying with the disclosure requirements of the Statement of Recommended Practice for UK Authorised Funds issued by the Investment Management Association in May 2014; • keeping proper accounting records which enable it to demonstrate that the financial statements as prepared comply with the above requirements; • assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; • using the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so; • such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; and • taking reasonable steps for the prevention and detection of fraud and irregularities. The ACD is responsible for the management of the Company in accordance with its Instrument of Incorporation, the Prospectus and the COLL Rules.
Certification of the Annual Report by the Authorised Corporate Director In accordance with the requirements of the Regulations and COLL Sourcebook, we hereby certify the Report on behalf of the Company, Maitland Institutional Services Ltd.
R. Ackermann D. Jones Director Maitland Institutional Services Ltd 14 September 2018
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Statement of the Depositary’s Responsibilities in Respect of the Scheme and Report of the Depositary to the Shareholders of the MI Thornbridge Global Opportunities Fund of the MI Thornbridge Investment Funds (“the Company”) for the Year Ended 30 June 2018.
The Depositary must ensure that the Company is managed in accordance with the Financial Conduct Authority’s Collective Investment Schemes Sourcebook, the Open-Ended Investment Companies Regulations 2001 (SI 2001/1228), as amended, the Financial Services and Markets Act 2000, as amended, (together “the Regulations”), the Company’s Instrument of Incorporation and Prospectus (together “the Scheme documents”) as detailed below. The Depositary must in the context of its role act honestly, fairly, professionally, independently and in the interests of the Company and its investors. The Depositary is responsible for the safekeeping of all custodial assets and maintaining a record of all other assets of the Company in accordance with the Regulations. The Depositary must ensure that • the Company’s cash flows are properly monitored and that cash of the Company is booked into the cash accounts in accordance with the Regulations; • the sale, issue, repurchase, redemption and cancellation of shares are carried out in accordance with the Regulations; • the value of shares of the Company are calculated in accordance with the Regulations; • any consideration relating to transactions in the Company’s assets is remitted to the Company within the usual time limits; • the Company’s income is applied in accordance with the Regulations; and • the instructions of the Authorised Fund Manager (“the AFM”), which is the UCITS Management Company, are carried out (unless they conflict with the Regulations). The Depositary also has a duty to take reasonable care to ensure that Company is managed in accordance with the Regulations and Scheme documents in relation to the investment and borrowing powers applicable to the Company. Having carried out such procedures as we consider necessary to discharge our responsibilities as depositary of the Company, it is our opinion, based on the information available to us and the explanations provided, that in all material respects the Company, acting through the AFM: (i) has carried out the issue, sale, redemption and cancellation, and calculation of the price of the Company’s shares and the application of the Company’s income in accordance with the Regulations and the Scheme documents of the Company; and (ii) has observed the investment and borrowing powers and restrictions applicable to the Company.
Northern Trust Global Services Limited UK Trustee and Depositary Services 14 September 2018
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Independent Auditor’s Report to the Shareholders of MI Thornbridge Investment Fund (‘the Company’)
Opinion We have audited the financial statements of the Company for the year ended 30 June 2018 which comprise the Statement of Total Return, the Statement of Change in Net Assets Attributable to Shareholders, the Balance Sheet, the Related Notes and Distribution Tables and the accounting policies set out on pages 20 to 33. In our opinion the financial statements: • give a true and fair view, in accordance with UK accounting standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland, of the financial position of each of the Sub-funds as at 30 June 2018 and of the net revenue of revenue and the net capital gains on the property of each of the Sub-funds for the year then ended; and • have been properly prepared in accordance with the Instrument of Incorporation, the Statement of Recommended Practice relating to Authorised Funds, and the COLL Rules. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of the Company in accordance with, UK ethical requirements including the FRC Ethical Standard. We have received all the information and explanations which we consider necessary for the purposes of our audit and we believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion. Going concern We are required to report to you if we have concluded that the use of the going concern basis of accounting is inappropriate or there is an undisclosed material uncertainty that may cast significant doubt over the use of that basis for a period of at least twelve months from the date of approval of the financial statements. We have nothing to report in these respects. Other information The Authorised Corporate Director is responsible for the other information, which comprises the Authorised Corporate Director’s Report. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work: • we have not identified material misstatements in the other information; and • in our opinion the information given in the Authorised Corporate Director’s Report is consistent with the financial statements. Matters on which we are required to report by exception We have nothing to report in respect of the following matters where under the COLL Rules we are required to report to you if, in our opinion: • proper accounting records for the Company have not been kept; or • the financial statements are not in agreement with the accounting records.
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Independent Auditor’s Report to the Shareholders of MI Thornbridge Investment Fund (‘the Company’) continued Authorised Corporate Director’s responsibilities As explained more fully in their statement set out on page 2 the Authorised Corporate Director is responsible for: the preparation of financial statements which give a true and fair view; such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the Company and its Sub-fund’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the Company or its Sub-funds or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities. The purpose of our audit work and to whom we owe our responsibilities This report is made solely to the Company’s Shareholders, as a body, in accordance with Rule 4.5.12 of the Collective Investment Schemes sourcebook (‘the COLL Rules’) issued by the Financial Conduct Authority under the Open-Ended Investment Companies Regulations 2001. Our audit work has been undertaken so that we might state to the Company’s shareholders those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s shareholders as a body, for our audit work, for this report, or for the opinions we have formed.
Ravi Lamba for and on behalf of KPMG LLP, Statutory Auditor Chartered Accountants 15 Canada Square, London E14 5GL 14 September 2018
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Investment Objective and Policy The investment objective of the MI Thornbridge Global Opportunities Fund is to seek capital and income growth from investments identified across global equity and/or bond markets. The manager may also choose to hold Government securities, collective investment schemes, cash and money market instruments as appropriate in achieving the overall objective of the Sub-fund.
Investment Manager’s Report for the year ended 30 June 2018 The Sub-fund rose by 10.58% based on A Accumulation quoted price in the year to June 2018, a good return absolutely and against benchmark. The strength of the Technology sector is well documented, and we are engaged, but, relevant we believe, the much more basic commodity markets were also firm. One or two good markets could be explained by specific events but in fact several commodity markets were good; wood, oil, cocoa, fish, grains and copper among them. The only thing connecting all of those is underlying demand and that implies the global economic recovery is durable. Interestingly, perhaps, gold, the last redoubt of the pessimist, is not particularly strong which suggests that inflation is not seen as a material threat, nor that geo politics are. This suggests that global capital and labour supply are not challenged by the rate of growth being seen which implies in turn a flattish yield curve with a rising front end perhaps more likely than a rising tail end, particularly if productivity (capital investment) picks up. The swing factor is going to be the size of the global middle class. Alibaba recently declared that its fintech arm, Ant Financial*, had reached 622m users. The wealth management arm has assets under management of $345bn. That makes it the world’s largest consumer wealth platform. And we are probably at the millennial moment now. If millennials can be defined as the 22-37 age group then in US at least they will overtake, in numbers, the prior baby boomer generation next year and so become a core focus for consumer businesses. There are now around 2bn millennials worldwide and those in Asia vastly outnumber those in the West. China and India each have around 400m, more than the entire US population. So if capital is drawn to the area of greatest return the implication is that investors need to remain focused on supplying demand from Asia. Asian markets themselves were overshadowed by the fabulously strong US economy which continues to create more jobs that required to keep up with population growth, which is at last enabling wages to rise. The European one is not too shabby either with nominal wages finally rising – up 2% over the past year to March 2018. Both a strong dollar and weak dumped emerging market currencies add to an attractive brew that should stimulate export flows from East to West. The bulk of exports flow in that direction anyway which is why in our view, the high tariff nations are likely to sue for peace with the Trump administration so that everyone can get back to business. In 2017 the US imported goods from China worth $505.5bn. Trade the other way amounted to $130bn. Even if they don’t the consequences of higher tariffs are not obvious. So far they are being applied to fairly low value parts of the economic value food chain and even for China the relevance of exported goods to the economy has fallen as it has become more sophisticated. Its current account surplus, which measures trade in goods and services, amounted to 1.3% of GDP last year. Internal consumer spending is where the margin is for China Inc. and accounts for nearly 80% of GDP. Significant Portfolio Changes for the year from 1 July 2017 to 30 June 2018 Top 10 purchases since 1 July 2017 Cost £ Fortis Healthcare 1,435,896 Reckitt Benckiser 1,167,140 Blue Prism 941,737 Vopak 841,785 Leroy Seafood 840,717 Olam International 806,185 Lippo Karawaci 740,917 Glencore 647,551 UAC of Nigeria 560,138 Medigene 531,813 8,513,879
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Investment Manager’s Report continued
Top 10 Sales since 1 July 2017 Proceeds £ Fortis Healthcare 1,514,376 Reckitt Benckiser 1,082,437 China Aviation Oil Singapore 858,487 Lippo Karawaci 789,367 Blue Prism 706,040 Gerresheimer 703,746 Novo Nordisk 658,194 Time Warner 650,835 Lectra 624,956 Cellavision 603,892 8,192,330
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Portfolio Statement as at 30 June 2018 Market % of total value net assets Holding Security £ 2018 EUROPE 45.37% (53.50%) United Kingdom 15.28% (14.27%) 24,000 Abcam* 320,160 0.46 16,700 Anglo American 282,931 0.41 78,200 BBA Aviation 266,349 0.39 41,250 Beazley 241,519 0.35 15,000 Blue Prism* 272,400 0.39 22,500 Consort Medical 268,200 0.39 7,000 Craneware* 144,900 0.21 15,398 Croda International 739,412 1.07 6,850 Dechra Pharmaceuticals 190,430 0.28 14,250 Diageo 387,885 0.56 70,000 Ergomed* 122,500 0.18 9,700 Experian 181,827 0.26 9,900 Fevertree Drinks* 334,719 0.48 32,000 Glencore 115,840 0.17 24,445 Halma 334,897 0.48 14,500 Hill & Smith 214,455 0.31 15,000 Homeserve 134,850 0.20 24,000 Informa 200,352 0.29 3,000 InterContinental Hotels 141,600 0.20 24,000 Intermediate Capital 264,240 0.38 6,400 Intertek 365,824 0.53 41,000 Keywords Studios* 728,980 1.05 300,000 Longhorn Mining^ – 0.00 27,000 Oxford Biomedica 266,004 0.38 29,000 Pearson 256,650 0.37 4,965 Reckitt Benckiser 309,766 0.45 4,750 Renishaw 251,038 0.36 103,216 Segro 690,721 1.00 13,100 Smith & Nephew 183,138 0.26 65,400 Tarsus 186,390 0.27 76,000 Treatt 332,880 0.48 11,754 Unilever 492,728 0.71 113,000 Vinacapital Vietnam Opportunity 368,380 0.53 21,000 Wandisco* 231,000 0.33 3,250 Worldpay 200,038 0.29 8,500 XP Power 300,050 0.43 56,950 YouGov* 261,970 0.38 10,585,023 15.28 Europe ex UK 30.09% (39.23%) 33,360 AAK 401,359 0.58 2,650 Aeroports de Paris 453,696 0.66 23,794 AKVA 164,072 0.24 6,560 Amadeus 392,045 0.57 6,750 Ambu 172,251 0.25
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Portfolio Statement continued Market % of total value net assets Holding Security £ 2018 Europe ex UK (continued) 9,000 AMG 383,145 0.55 14,500 Amplifon 227,733 0.33 17,130 Amsterdam Commodities 354,476 0.51 1,600 ASML 240,113 0.35 11,200 Atlantia 250,584 0.36 225 Barry Callebut 305,000 0.44 4,800 Biesse 142,115 0.21 3,205 Biomerieux 218,523 0.32 27,500 Biotage 265,896 0.38 52,969 Bollore 186,619 0.27 6,400 Carl Zeiss Meditec 330,527 0.48 8,000 Cellavision 120,701 0.17 7,500 Cellectis 162,761 0.23 88 Chocoladefabriken Lindt & Sprungli 431,307 0.62 3,750 CHR Hansen 262,160 0.38 2,700 Coloplast 204,394 0.30 11,300 Compagnie Des Alpes 293,792 0.42 2,100 Dassault Systemes 222,758 0.32 2,250 DiaSorin 194,199 0.28 38,850 Dometic 289,459 0.42 10,000 Ebro Foods 176,689 0.26 24,500 Elekta 244,461 0.35 17,695 Epiroc Aktiebolag 140,080 0.20 3,050 Eramet 302,626 0.44 3,000 Essilor 320,746 0.46 7,880 Fraport 575,739 0.83 170 Givaudan 292,044 0.42 5,500 Grifols 125,389 0.18 4,900 H. Lundbeck 260,784 0.38 4,200 Hexagon 177,623 0.26 16,298 HMS Networks 210,849 0.30 5,743 I.M.A. Industria Macchine Automatic 378,871 0.55 245 Interroll 324,823 0.47 6,400 Isra Vision 296,569 0.43 2,209 Jungfraubahn 247,118 0.36 1,350 Kering 577,343 0.83 6,597 Lectra 114,812 0.17 52,600 Leroy Seafood 268,265 0.39 1,822 Lonza 366,235 0.53 1,490 L’Oreal 278,551 0.40 4,000 Moncler 137,885 0.20 1,453 MorphoSys 134,661 0.19 3,000 Nemetschek 273,523 0.38 4,380 Orpea 442,726 0.64 1,500 Partners 832,443 1.20 552 Puma 244,563 0.35 6,300 Recordati 189,758 0.27 2,965 Remy Cointreau 290,784 0.42
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Portfolio Statement continued Market % of total value net assets Holding Security £ 2018 Europe ex UK (continued) 3,100 Richemont 198,879 0.29 816 Robertet 363,693 0.53 1,265 Rockwool International 373,560 0.54 10,942 Rubis 517,684 0.75 1,900 Sartorius 215,237 0.31 1,440 Schindler 229,143 0.33 5,645 Schneider Electric 356,532 0.51 3,600 Sika 377,329 0.54 47,250 Svenska Cellulose 389,329 0.56 11,000 Swedish Orphan Biovitrum 181,657 0.26 1,835 Tecan 337,352 0.49 9,750 Total 450,166 0.65 1,500 UbiSoft Entertainment 124,637 0.18 9,100 Umicore 395,369 0.57 5,600 Vinci 407,768 0.59 3,700 Viscofan 190,759 0.28 12,100 Vopak 423,414 0.61 1,958 Wendel Investissement 204,319 0.30 1,700 Wirecard 207,389 0.30 20,839,861 30.09 NORTH AMERICA 30.64% (22.41%) Canada 1.26% (1.44%) 784,500 Alphamin Resources 128,740 0.19 247,700 Ivanhoe Mines 380,814 0.55 4,350 Methanex 231,539 0.33 5,000 Ritchie Bros Auctioneers 128,088 0.19 869,181 1.26 United States 29.38% (20.97%) 1,800 2U 113,797 0.16 550 Abiomed 170,399 0.25 4,142 Accenture 513,209 0.74 2,520 Adobe Systems 464,911 0.67 2,450 Alibaba 344,035 0.50 2,800 Align Technology 725,587 1.05 377 Alphabet 322,430 0.47 286 Amazon.com 367,994 0.53 5,404 American Tower 590,089 0.85 3,165 Apple 438,469 0.63 9,600 Archer-Daniels-Midland 333,233 0.48 7,000 Autolus Therapeutics 140,498 0.20 4,720 Automatic Data Processing 479,507 0.69 2,560 Avery Dennison 197,948 0.29 4,550 Baxter International 254,432 0.37 2,500 Cheniere Energy 123,362 0.18 4,615 Cintas 646,862 0.93
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Portfolio Statement continued Market % of total value net assets Holding Security £ 2018 United States (continued) 8,774 Colgate-Palmolive 430,692 0.62 4,500 Columbus McKinnon 147,751 0.21 1,462 Domino’s Pizza 312,454 0.45 36,000 DP World 613,497 0.89 2,600 Energizer 123,964 0.18 624 Equinix 203,170 0.29 6,599 Estee Lauder 713,080 1.03 1,850 Facebook 272,253 0.39 1,430 Fedex 245,926 0.36 27,000 Fitbit 133,538 0.19 2,600 FMC 175,677 0.25 2,600 Fortinet 122,901 0.18 2,535 Honeywell 276,579 0.40 1,600 IAC/InterActive 184,758 0.27 1,605 Illumina 339,514 0.49 2,136 Intuit 330,487 0.48 1,821 Intuitive Surgical 659,563 0.95 2,700 Lamb Watson 139,980 0.20 1,940 Littlefuse 335,220 0.48 6,100 Live Nation Entertainment 224,355 0.32 2,300 Lululemon Athletica 217,475 0.31 4,750 McCormick 417,617 0.60 4,200 Micron Technology 166,817 0.24 6,600 Microsoft 492,938 0.71 1,143 Netflix 338,762 0.49 10,000 Nightstar Therapeutics 121,185 0.17 5,925 Nike 357,573 0.52 2,690 NVidia 482,643 0.70 1,200 Palo Alto Networks 186,748 0.27 4,528 PayPal 285,576 0.41 937 Sherwin-Williams 289,247 0.42 3,250 Splunk 243,941 0.35 2,700 Square 126,053 0.18 1,500 Stryker 191,843 0.28 5,700 Teladoc 250,613 0.36 4,800 Textron 239,618 0.35 1,928 Thermo Fisher Scientific 302,481 0.44 2,670 TJX Companies 192,479 0.28 12,500 Twitter 413,448 0.60 1,550 UnitedHealth 288,023 0.42 1,650 Vail Resorts 342,660 0.50 4,135 VF 255,310 0.37 8,252 Visa 827,825 1.20 2,350 Vulcan Materials 229,714 0.33 4,000 Welltower 189,927 0.27 5,000 World Wrestling Entertainment 275,771 0.40 6,310 Zoetis 407,141 0.59 20,345,549 29.38
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Portfolio Statement continued Market % of total value net assets Holding Security £ 2018 ASIA PACIFIC 17.41% (18.85%) Australia 0.24% (0.27%) 125,000 Lynas 162,992 0.24 China 4.02% (2.57%) 170,000 China Mengniu Dairy 435,750 0.63 70,000 Haier Electronics 181,116 0.26 40,800 Ping An Insurance 284,198 0.41 433,000 SITC International 365,362 0.53 467,000 Soho China 168,170 0.24 7,625 Tencent 289,747 0.42 90,000 Tianneng Power International 105,831 0.15 186,000 Tingyi (Cayman Islands) 326,461 0.47 121,000 Vitasoy International 293,213 0.43 63,000 Wheelock 331,787 0.48 2,781,635 4.02 India 3.83% (6.32%) 96,069 Aegis Logistics 226,639 0.33 37,000 Biocon 253,417 0.37 2,900 Britannia Industries 199,209 0.29 49,192 Godrej Industries 339,178 0.49 29,000 Havells India 174,195 0.25 15,000 HDFC Bank 354,864 0.51 18,600 Jubilant Foodworks 285,084 0.41 20,100 Larsen & Toubro 283,333 0.41 69,937 Oberoi Realty 369,063 0.53 17,000 Titan 165,100 0.24 2,650,082 3.83 Indonesia 0.52% (1.23%) 7,550,000 Mitra Adiperkasa 357,163 0.52 Japan 4.65% (2.43%) 4,300 Asahi Intecc 123,056 0.18 11,600 Fuji Oil 314,515 0.45 10,300 Japan Airport Terminal 364,844 0.53 19,900 Japan Exchange 280,052 0.40 500 Keyence 213,625 0.31 6,600 M3 199,258 0.29 2,000 Nidec 227,164 0.33 15,000 Outsourcing 210,889 0.30 1,900 Shimano 210,869 0.30 11,700 Shiseido 703,658 1.02 4,300 Start Today 117,764 0.17 6,500 Yamaha 255,577 0.37 3,221,271 4.65
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Portfolio Statement continued Market % of total value net assets Holding Security £ 2018 Malaysia 0.48% (0.00%) 110,000 IHH Healthcare 124,578 0.18 91,400 Top Glove 206,341 0.30 330,919 0.48 Philippines 0.00% (0.40%) Singapore 3.07% (4.36%) 17,000 Haw Par 126,730 0.18 558,800 Mapletree Logistics 378,700 0.55 454,000 Olam International 539,696 0.78 369,000 Parkway Life Real Estate 557,538 0.80 100,000 SATS 277,191 0.40 58,500 UOL 247,622 0.36 2,127,477 3.07 Thailand 0.60% (0.47%) 290,000 Airports of Thailand 416,038 0.60 United Arab Emirates 0.00% (0.80%) MIDDLE EAST AND AFRICA 2.88% (1.64%) Africa 2.88% (1.64%) 1,515,000 Centum Investment 414,488 0.60 18,750 Clicks 202,237 0.29 75,000 FAN Milk 162,476 0.23 2,285,400 Kenolkobil 308,348 0.45 860 Naspers 164,960 0.24 26,700,028 Nigerian Aviation Handling 223,772 0.32 90,543 Sanlam Africa Core Real Estate Investment^ 233,850 0.34 10,076,418 UAC of Nigeria 287,130 0.41 1,997,261 2.88
Investment assets 66,684,452 96.30 Net other assets 2,565,534 3.70 Net assets 69,249,986 100.00
All investments are ordinary shares or stock units on a regulated securities market unless otherwise stated. The percentages in brackets show the equivalent % holdings as at 30.06.17. * Quoted on the Alternative Investment Market (AIM). ^ These are delisted/liquidated securities and have been valued at the Manager’s best assessment of its fair value.
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Comparative Tables Change in net assets per share A Income^^ 30.06.16 p Opening net asset value per share 109.75 Return before operating charges^ -109.23 Operating Charges 0.00 Return after operating charges^ -109.23 Distributions on income shares -0.52 Closing net asset value per share 0.00 ^After direct transaction costs of -0.38 Performance Return after charges -99.52% Other Information Closing net asset value 0 Closing number of shares 0 Operating Charges 0.00% Direct transaction costs 0.42% Prices Highest share price 119.42 Lowest share price 102.47 ^^ A Income class was disinvested on 29 April 2016. Return after charges at date of disinvestment was 5.97%.
A Accumulation 30.06.18 30.06.17 30.06.16 p p p Opening net asset value per share 371.34 309.77 265.30 Return before operating charges^ 46.45 68.31 49.36 Operating charges -7.51 -6.74 -4.89 Return after operating charges^ 38.94 61.57 44.47 Distributions -4.97 -4.45 -4.20 Retained distributions on accumulation shares 4.97 4.45 4.20 Closing net asset value per share 410.28 371.34 309.77 ^After direct transaction costs of -1.26 -1.20 -1.11 Performance Return after charges 10.49% 19.88% 16.76% Other Information Closing net asset value £2,955,250 £3,159,408 £3,177,568 Closing number of shares 720,307 850,820 1,025,796 Operating charges 1.90% 1.97% 1.80% Ongoing operating charges* 1.90% 1.90% 1.80% Direct transaction costs 0.32% 0.35% 0.41% Prices Highest share price 421.29 387.26 305.33 Lowest share price 370.81 313.35 247.71
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Comparative Tables continued Change in net assets per share (continued) B Income** 30.06.16 p Opening net asset value per share 110.80 Return before operating charges^ -110.80 Operating Charges 0.00 Return after operating charges^ -110.80 Distributions on income shares 0 Closing net asset value per share 0 ^After direct transaction costs of -0.38 Performance Return after charges -100.00% Other Information Closing net asset value 0 Closing number of shares 0 Operating Charges 0.00% Direct transaction costs 0.42% Prices Highest share price 162.24 Lowest share price 113.13 ** B Income class was disinvested on 31 July 2015. Return after charges at date of disinvestment was 2.96%.
B Accumulation** 30.06.16 p Opening net asset value per share 119.20 Return before operating charges^ -119.20 Operating Charges 0.00 Return after operating charges^ -119.20 Closing net asset value per share 0.00 Retained distributions on accumulation shares 0.00 ^After direct transaction costs of -0.51 Performance Return after charges -100.00% Other Information Closing net asset value 0 Closing number of shares 0 Operating Charges 0.00% Direct transaction costs 0.42% Prices Highest share price 122.56 Lowest share price 121.59 ** B Accumulation class was disinvested on 31 July 2015. Return after charges at date of disinvestment was 2.82%.
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Comparative Tables continued Change in net assets per share (continued) C Income 30.06.18 30.06.17 30.06.16 p p p Opening net asset value per share 345.24 289.46 249.58 Return before operating charges^ 43.31 63.85 46.52 Operating charges -4.23 -3.90 -2.69 Return after operating charges^ 39.08 59.95 43.83 Distributions -4.63 -4.17 -3.95 Closing net asset value per share 379.69 345.24 289.46 ^After direct transaction costs of -1.18 -1.12 -1.05 Performance Return after charges 11.32% 20.71% 17.56% Other Information Closing net asset value £2,116,905 £2,157,108 £1,758,291 Closing number of shares 557,529 624,814 607,438 Operating charges 1.15% 1.22% 1.05% Ongoing operating charges* 1.15% 1.15% 1.05% Direct transaction costs 0.32% 0.35% 0.41% Prices Highest share price 392.72 363.16 288.03 Lowest share price 344.80 292.80 233.28
C Accumulation 30.06.18 30.06.17 30.06.16 p p p Opening net asset value per share 391.76 324.38 275.84 Return before operating charges^ 49.18 71.76 51.51 Operating charges -4.81 -4.38 -2.97 Return after operating charges^ 44.37 67.38 48.54 Distributions -5.27 -4.68 -4.39 Retained distributions on accumulation shares 5.27 4.68 4.39 Closing net asset value per share 436.13 391.76 324.38 ^After direct transaction costs of -1.34 -1.26 -1.16 Performance Return after charges 11.33% 20.77% 17.60% Other Information Closing net asset value £64,177,831 £60,138,836 £51,613,699 Closing number of shares 14,715,211 15,351,057 15,911,515 Operating charges 1.15% 1.22% 1.05% Ongoing operating charges* 1.15% 1.15% 1.05% Direct transaction costs 0.32% 0.35% 0.41% Prices Highest share price 447.67 408.47 319.72 Lowest share price 391.24 328.12 189.20
*The ACD believes that this ongoing operating charge is representative of charges going forward. Operating charges include indirect costs incurred in the maintenance and running of the Sub-fund, as disclosed (but not limited to) the detailed expenses within the Statement of Total Return. The figures used within this table have been calculated against the average Net Asset Value for the accounting year. The return after charges is calculated as the closing net asset value per share plus the distributions on income shares minus the opening net asset value per share as a % of the opening net asset value per share.
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Comparative Tables continued Change in net assets per share (continued) Direct transaction costs include fees, commissions, transfer taxes and duties in the purchasing and selling of investments, which are offset (where applicable) against any dilution levies charged within the accounting year. The figures used within the table have been calculated against the average Net Asset Value for the accounting year.
Risk and reward profile The Risk and Reward Indicator table demonstrates where the Sub-fund ranks in terms of its potential risk and reward. The higher the rank the greater the potential reward but the greater the risk of losing money. It is based on past data, may change over time and may not be a reliable indication of the future risk profile of the Sub-fund. The shaded area in the table below shows the Sub-fund’s ranking on the Risk and Reward Indicator. Typically lower rewards, Typically higher rewards, lower risk higher risk
1 2 3 4 5 6 7
The Sub-fund is ranked 5 because funds of this type have experienced medium to high rises and falls in value in the past. Please note that even the lowest risk class can lose you money and that extreme market circumstances can mean you suffer severe losses in all cases. The indicator does not take into account the following risks of investing in this Sub-fund: • Investing overseas can bring additional returns and spread risk to different markets. There are risks, however, that changes in currency exchange rates may cause the value of your investment to decrease and increase. • Emerging markets or less developed countries may face more political, economic or structural challenges than developed countries. This means your money is at greater risk. • In difficult market conditions, the value of some investments may be less predictable than normal and the Sub-fund may not be able to buy and sell these investments at the best time or at a fair price. This could affect the Sub-fund’s performance, potentially reducing your returns. • The level of targeted income is not guaranteed and may not be achieved. • For further risk information please see the prospectus.
Risk warning An investment in an Open Ended Investment Company should be regarded as a medium to long-term investment. Investors should be aware that the price of shares and the revenue from them can fall as well as rise and investors may not receive back the full amount invested. Past performance is not a guide to future performance. Investments denominated in currencies other than the base currency are subject to fluctuation in exchange rates, which can be favourable or unfavourable.
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Statement of Total Return for the year ended 30 June 2018 30.06.18 30.06.17 Note £ £ £ £ Income Net capital gains 2 6,942,805 11,170,943 Revenue 3 1,136,401 1,098,554 Expenses 4 (755,347) (722,598) Interest payable and similar charges 4 (567) (523) Net revenue before taxation 380,487 375,433 Taxation 5 (60,920) (65,645) Net revenue after taxation 319,567 309,788 Total return before distributions 7,262,372 11,480,731 Distributions 6 (856,037) (791,869) Change in net assets attributable to Shareholders from investment activities 6,406,335 10,688,862
Statement of Change in Net Assets Attributable to Shareholders for the year ended 30 June 2018 30.06.18 30.06.17 £ £ £ £ Opening net assets attributable to Shareholders 65,455,352 56,549,559 Amounts receivable on issue of shares 2,756,321 4,050,415 Less: Amounts payable on cancellation of shares (6,188,298) (6,594,000) (3,431,977) (2,543,585) Change in net assets attributable to Shareholders from investment activities (see Statement of Total Return above) 6,406,335 10,688,862 Retained distributions on accumulation shares 820,276 760,516 Closing net assets attributable to Shareholders 69,249,986 65,455,352 The notes on pages 20 to 33 form an integral part of these Financial Statements.
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Balance Sheet as at 30 June 2018 30.06.18 30.06.17 Note £ £ £ £ ASSETS Fixed Assets Investments 66,684,452 63,098,005 Current Assets Debtors 7 419,110 1,199,622 Cash and bank balances 9 2,837,658 2,088,133 Total current assets 3,256,768 3,287,755 Total assets 69,941,220 66,385,760
LIABILITIES Investment liabilities – – Creditors Bank overdrafts 9 (240,031) – Distribution payable (16,201) (19,137) Other creditors 8 (435,002) (911,271) Total creditors (691,234) (930,408) Total liabilities (691,234) (930,408) Net assets attributable to Shareholders 69,249,986 65,455,352
The notes on pages 20 to 33 form an integral part of these Financial Statements.
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Notes to the Financial Statements for the year ended 30 June 2018
1. Accounting Policies (a) Basis of accounting The financial statements have been prepared under the historical cost basis, as modified by the revaluation of investments and in accordance with FRS 102 and the Statement of Recommended Practice (“SORP”) for Financial Statements of UK Authorised Funds issued by the Investment Association (IA) in May 2014. The financial statements have been prepared on the going concern basis. The authorised Status and head office of the Sub-fund can be found within the general information starting on page 35. The Certification of the Annual Report by the Authorised Corporate Director can be found on page 2. (b) Recognition of revenue Revenue is included in the Statement of Total Return on the following basis: Dividends on quoted equities and preference shares are recognised when the securities are quoted ex-dividend. Interest on bank and short-term deposits is recognised on an earned basis. All revenue includes withholding taxes but excludes irrecoverable tax credits. (c) Treatment of stock and special dividends The ordinary element of stocks received in lieu of cash dividends is credited to capital in the first instance followed by a transfer to revenue of the cash equivalent being offered and this forms part of the distributable revenue. Special dividends are reviewed on a case by case basis in determining whether the dividend is to be treated as revenue or capital. Amounts recognised as revenue will form part of the distributable revenue. The tax accounting treatment follows the treatment of the principal amount. (d) Treatment of expenses All expenses, except for those relating to the purchase and sale of investments and stamp duty reserve tax, are charged against revenue for the year on an accruals basis. (e) Allocation of revenue and expenses to multiple share classes Any revenue or expense not directly attributable to a particular Sub-fund will normally be allocated pro-rata to the net assets of the relevant share classes and Sub-funds on the day that the revenue or expense is recognised. With the exception of the Investment Manager’s fee which is directly attributable to individual share classes, all revenue and expenses are apportioned to the Sub-fund’s share classes pro-rata to the value of the net assets of the relevant share class on the day that the revenue or expense is recognised. (f) Taxation Corporation tax is provided at 20% on revenue, after deduction of expenses. Deferred tax is provided using the liability method on all timing differences arising on the treatment of certain items for taxation and accounting purposes, calculated at the rate at which it is anticipated the timing differences will reverse. Deferred tax assets are recognised only when, on the basis of available evidence, it is more likely than not that there will be taxable profits in the future against which the deferred tax asset can be offset. Stamp duty reserve tax suffered on surrender of shares is deducted from capital. (g) Distribution policy The net revenue after taxation as disclosed in the financial statements, after adjustment for items of a capital nature, is distributable to Shareholders as dividend distributions. Any revenue deficit is funded from capital. At the year end, there were no items of a capital nature. Interim distributions may be made at the Investment Manager’s discretion and the balance of revenue is distributed in accordance with the regulations.
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Notes to the Financial Statements continued
1. Accounting Policies (continued) (g) Distribution policy (continued) For the purpose of enhancing revenue entitlement, the annual management fee payable to the Investment Manager is allocated to capital. This will reduce the capital growth of the Sub-fund. All other expenses (except for those relating to the purchase and sale of investments and stamp duty reserve tax), are charged against revenue for the year. Distributions not claimed within a six year period will be forfeited and added back to the capital of the Sub-fund. (h) Basis of valuation of investments Listed investments are valued at close of business bid prices on the last business day of the accounting year excluding any accrued interest in the case of fixed and floating rate interest securities. Unlisted or suspended investments are valued by the Investment Manager taking into account where appropriate, latest dealing prices, valuations from reliable sources, financial performance and other relevant factors. The fair value of open forward foreign currency contracts is calculated with reference to the changes in the spot rate, changes in interest rate differential and the reduced term left to maturity. Market value is defined by the SORP as fair value, which generally is the bid value of each security. Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset as follows: • Level 1: Unadjusted quoted price in an active market for identical instrument. • Level 2: Valuation techniques using observable inputs other than quoted prices within Level 1. • Level 3: Valuation techniques using unobservable inputs. (i) Exchange rates Transactions in foreign currencies are recorded in sterling at the rate ruling at the date of the transactions. Assets and liabilities expressed in foreign currencies at the end of the accounting period are translated into sterling at the closing exchange rates ruling on that date. (j) Dilution levy The Authorised Corporate Director may require a dilution levy on the purchase and redemption of shares if, in its opinion, the existing shareholders (for purchases) or remaining Shareholders (for redemptions) might otherwise be adversely affected. For example, the dilution levy may be charged in the following circumstances: where the scheme property is in continual decline; on a Sub-fund experiencing large levels of net sales relative to its size; on ‘large deals’ (typically being a purchase of redemption of Shares to a size exceeding 5% of the Net Asset Value of the Company; in any case where the Authorised Corporate Director is of the opinion that the interests of remaining shareholders require the imposition of a dilution levy.
2. Net Capital Gains 30.06.18 30.06.17 £ £ Non-derivative securities 7,040,884 11,290,641 Currency losses (43,969) (69,392) Transaction charges (54,110) (50,306) Net capital gains 6,942,805 11,170,943
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Notes to the Financial Statements continued
3. Revenue 30.06.18 30.06.17 £ £ UK dividends: Ordinary 160,334 179,271 Overseas dividends 899,637 853,946 Property income distributions 76,390 66,164 Bank interest 40 (827) Total revenue 1,136,401 1,098,554
4. Expenses 30.06.18 30.06.17 £ £ Payable to the Authorised Corporate Director (ACD), associates of the ACD and agents of either of them: Administration fee 102,058 93,286 Registration fees 46,636 45,184 148,694 138,470
Payable to the Investment Manager, associates of the Investment Manager and agents of either of them: Investment Manager’s fee 536,465 482,087
Payable to the Depositary associates of the Depositary and agents of either of them: Depositary’s fee (including VAT) 24,508 25,934 Safe custody and other bank charges 18,792 17,085 43,300 43,019
Other expenses: Audit fee (including VAT) 7,200 7,200 Audit fee (including VAT): taxation services 1,500 1,500 FCA fee 155 200 Legal fees 14,315 47,277 Printing costs 3,718 2,845 26,888 59,022
Expenses 755,347 722,598 Interest payable and similar charges 567 523 Total 755,914 723,121
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Notes to the Financial Statements continued
5. Taxation 30.06.18 30.06.17 £ £ a) Analysis of charge in the year: Overseas tax 60,920 65,645 Total tax charge (note 5b) 60,920 65,645
b) Factors affecting taxation charge for the year: Net revenue before taxation 380,487 375,433 Corporation tax at 20% 76,097 75,087 Effects of: UK dividends (32,067) (35,854) Movement in income accruals – 2,354 Less offsettable tax on overseas REITS (589) (515) Movement in surplus management expenses 136,486 129,717 Overseas tax expensed 60,920 65,645 Non-taxable overseas earnings (179,927) (170,789) Current tax charge (note 5a) 60,920 65,645
c) Deferred tax At the year end there is a potential deferred tax asset of £1,288,249 (2017: £1,151,763) in relation to surplus management expenses. It is unlikely that the Sub-fund will generate sufficient taxable profits in the future to utilise these expenses and therefore no deferred tax asset has been recognised in the year.
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Notes to the Financial Statements continued
6. Distributions The distributions take account of revenue received on the issue of shares and revenue deducted on the cancellation of shares, and comprise: 30.06.18 30.06.17 £ £ Interim distribution 31.12.17 320,752 210,800 Final distribution 30.06.18 526,101 575,860 846,853 786,660 Revenue deducted on cancellation of Shares 15,765 15,042 Revenue received on issue of Shares (6,581) (9,833) Distributions 856,037 791,869
Reconciliation of net revenue after taxation to net distributions: Net revenue after taxation per Statement of Total Return 319,567 309,788 Expenses allocated to capital 536,465 482,087 Undistributed revenue brought forward 13 7 Undistributed revenue carried forward (8) (13) Distributions 856,037 791,869
7. Debtors 30.06.18 30.06.17 £ £ Amounts receivable on issues 4,968 66,370 Currency deals outstanding – 474,065 Sales awaiting settlement 240,031 497,372 Accrued income: Dividends receivable 77,863 76,018 Return of capital repayment 547 – Overseas tax recoverable 95,701 85,375 UK income tax recoverable – 422 Total debtors 419,110 1,199,622
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Notes to the Financial Statements continued
8. Other Creditors 30.06.18 30.06.17 £ £ Amounts payable on cancellations 112,569 14,243 Currency deals outstanding – 482,025 Purchases awaiting settlement 229,717 323,517 Accrued expenses: Amounts payable to the Authorised Corporate Director (ACD), associates of the ACD and agents of either of them: Administration fee 8,577 8,272 Registration fees 3,965 3,555 12,542 11,827
Amounts payable to the Investment Manager, associates of the Investment Manager and agents of either of them: Investment Manager’s fee 45,196 43,452
Amounts payable to the Depositary associates of the Depositary and agents of either of them: Depositary’s fee (including VAT) 4,134 5,790 Safe custody and other bank charges 3,115 4,218 7,249 10,008
Other expenses: Audit fee (including VAT) 7,200 7,200 Audit fee (including VAT): taxation services 4,500 3,000 Legal fees 14,429 14,399 Printing costs 1,600 1,600 27,729 26,199
Total other creditors 435,002 911,271
9. Cash and Bank Balances 30.06.18 30.06.17 £ £ Cash and bank balances 2,837,658 2,088,133 Overdraft positions (240,031) – Cash and bank balances 2,597,627 2,088,133
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Notes to the Financial Statements continued
10.Related Party Transactions Authorised Corporate Director and other fees payable to Maitland Institutional Services Ltd (the ACD) are disclosed in note 4 and amounts due at the year end are shown in note 8. Fees payable to Thornbridge Investment Management (the Investment Manager) are disclosed in note 4 and amounts due at the year end are shown in note 8. Amounts receivable on issue and payable on cancellation of shares and dilution levy are disclosed in the Statement of Change in Net Assets Attributable to Shareholders and in note 6, amounts due at the year end are shown in notes 7 and 8.
11.Contingent Liabilities and Outstanding Commitments There were no contingent liabilities or outstanding commitments at the balance sheet date (2017: none).
12.Risk Management Policies and Disclosures In pursuing its investment objectives, the Sub-fund may hold a number of financial instruments. These financial instruments comprise securities and other investments, cash balances, debtors and creditors that arise directly from the Sub-fund’s operations, for example, in respect of sales and purchases awaiting settlement, amounts receivable for creations and payable for redemptions and debtors for accrued revenue. In doing so, the ACD accepts market price risk, interest rate risk and currency risk in relation to the investment portfolio and foreign cash positions. The Sub-fund may also enter into a range of derivative transactions whose purpose is efficient portfolio management. In addition the Fund only executes derivative contracts where both the derivative instrument and the counterparty have been approved by the ACD. The risks arising from financial instruments and the ACD’s policies for the monitoring and managing of these risks are stated below in accordance with the Risk Management Policy of the ACD. These policies have been consistent for both years through which these financial statements relate. Market price risk Market price risk arises mainly from uncertainty about future prices of financial instruments held. It represents the potential loss the Sub-fund might suffer through holding market positions in the face of price movements. This means the value of an investor’s holding may go down as well as up and an investor may not recover the amount invested. Investors should consider the degree of exposure of the Sub-fund in the context of all their investments. The Sub-fund’s investment portfolio is exposed to market price fluctuations, which are monitored by the Company as per the policies as set out in the Prospectus. The investment guidelines and investment and borrowing powers set out in the Instrument of Incorporation, the Prospectus and in the Financial Conduct Authority’s Collective Investment Schemes Sourcebook describe the nature of the market risk to which the Sub-fund will be exposed. At the balance sheet date, if the price of the investments held by the Sub-fund increased or decreased by 10%, with all other variables held constant, the net assets attributable to Shareholders would increase or decrease by approximately £6,668,445 (2017 £6,309,801).
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Notes to the Financial Statements continued
12.Risk Management Policies and Disclosures (continued) Currency risk Although the Sub-fund’s capital and income are denominated in sterling, a proportion of the Sub-fund’s investments may have currency exposure and, as a result, the income and capital value of the Sub-fund are affected by currency movements. Currency risk is the risk that the value of the Sub-fund’s investments will fluctuate as a result of changes in currency exchange rates. For Sub-funds where a proportion of the net assets of the Sub-fund is denominated in currencies other than sterling, the balance sheet can be affected by movements in exchange rates. The ACD monitors the currency exposure of the Sub-fund and may seek to manage exposure to currency movements by using forward exchange contracts or by hedging the sterling value of investments that are priced in other currencies. The table below details the currency risk profile at the balance sheet date. 30.06.18
Currency Total £ Australian dollar 162,992 Canadian dollar 869,884 Danish krone 1,284,474 Euro 12,816,535 Ghanaian cedi 162,476 Hong Kong dollar 2,794,596 Indian rupee 2,652,242 Indonesian rupiah 402,751 Japanese yen 3,223,712 Kenyan shilling 731,608 Malaysian ringgit 331,539 Nigerian naira 510,902 Norwegian krone 440,541 Pound sterling 12,988,290 Singapore dollar 2,131,621 South African rand 368,055 Swedish krona 2,424,118 Swiss franc 3,946,447 Thai baht 416,038 United States dollar 20,591,165 69,249,986
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Notes to the Financial Statements continued
12.Risk Management Policies and Disclosures (continued) Currency risk (continued) 30.06.17
Currency Total £ Australian dollar 179,312 Canadian dollar 945,044 Danish krone 1,878,834 Euro 16,793,337 Hong Kong dollar 1,684,155 Indian rupee 4,141,357 Indonesian rupiah 1,374,861 Japanese yen 1,594,201 Kenyan shilling 453,348 Malaysian ringgit 3,305 Nigerian naira 102,009 Norwegian krone 270,490 Philippine peso 259,625 Pound sterling 10,636,121 Singapore dollar 2,864,424 South African rand 279,523 Swedish krona 1,115,176 Swiss franc 5,155,445 Thai baht 310,535 United States dollar 15,414,250 65,455,352
At the balance sheet date, if the value of sterling increased or decreased by 10%, with all other variables held constant, then the net assets attributable to Shareholders would increase or decrease by approximately £5,626,170 (2017 £5,481,923).
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Notes to the Financial Statements continued
12.Risk Management Policies and Disclosures (continued) Interest rate risk Interest rate risk, being the risk that the value of investments will fluctuate as a result of interest rate changes. The majority of the Sub-fund’s assets comprise equity shares which neither pay interest nor have a maturity date. Interest receivable on bank deposits or payable on bank overdraft positions will be affected by fluctuations in interest rates. The table below details the interest rate risk profile at the balance sheet date: 30.06.18 Floating Financial rate assets financial not carrying Currency assets interest^ Total £ £ £ Australian dollar – 162,992 162,992 Canadian dollar – 869,884 869,884 Danish krone – 1,284,474 1,284,474 Euro – 12,816,535 12,816,535 Ghanaian cedi – 162,476 162,476 Hong Kong dollar – 2,794,596 2,794,596 Indian rupee – 2,652,242 2,652,242 Indonesian rupiah 45,588 357,163 402,751 Japanese yen – 3,223,712 3,223,712 Kenyan stirling – 731,608 731,608 Malaysian ringgit – 331,539 331,539 Nigerian naira – 510,902 510,902 Norwegian krone – 440,541 440,541 Pound sterling 2,638,418 10,603,840 13,242,258 Singapore dollar – 2,131,621 2,131,621 South African rand 153,652 368,056 521,707 Swedish krona – 2,424,118 2,424,118 Swiss franc – 3,990,030 3,990,030 Thai baht – 416,038 416,038 United States dollar – 20,831,195 20,831,195 2,837,658 67,103,562 69,941,220
Floating Financial rate liabilities financial not carrying Currency liabilities interest Total £ £ £ Pound sterling – 253,968 253,968 South African rand – 153,652 153,652 Swiss franc – 43,583 43,583 United States dollar 240,031 – 240,031 240,031 451,203 691,234
^ Comprises of equity shares which receive dividend revenue and debtors, and non interest-bearing balance sheet debtors.
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Notes to the Financial Statements continued
12.Risk Management Policies and Disclosures (continued) Interest rate risk (continued) 30.06.17 Floating Financial rate assets financial not carrying Currency assets interest^ Total £ £ £ Australian dollar – 179,312 179,312 Canadian dollar – 945,044 945,044 Danish krone – 1,878,834 1,878,834 Euro – 16,793,337 16,793,337 Hong Kong dollar – 1,684,155 1,684,155 Indian rupee – 4,141,357 4,141,357 Indonesian rupiah 571,069 1,084,661 1,655,730 Japanese yen – 1,594,201 1,594,201 Kenyan shilling – 453,348 453,348 Malaysian ringgit – 3,305 3,305 Nigerian naira – 102,009 102,009 Norwegian krone – 270,490 270,490 Philippine peso – 259,625 259,625 Pound sterling 1,508,451 9,583,920 11,092,371 Singapore dollar 8,613 2,855,811 2,864,424 South African rand – 279,523 279,523 Swedish krona – 1,115,176 1,115,176 Swiss franc – 5,155,445 5,155,445 Thai baht – 353,183 353,183 United States dollar – 15,564,891 15,564,891 2,088,133 64,297,627 66,385,760
Floating Financial rate liabilities financial not carrying Currency liabilities interest Total £ £ £ Indonesian rupiah – 280,869 280,869 Pound sterling – 456,250 456,250 Thai baht – 42,648 42,648 United States dollar – 150,641 150,641 – 930,408 930,408
^ Comprises of equity shares which receive dividend revenue and debtors, and non interest-bearing balance sheet debtors. Floating rate interest-bearing assets at the balance sheet date consist of bank balances, on which interest is calculated at a variable rate by reference to sterling bank deposit rates or the international equivalent; and floating rate notes, on which interest is calculated at a variable rate by reference to the London Interbank Offered Rate (LIBOR) or the Euro Interbank Offered Rate (EURIBOR).
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Notes to the Financial Statements continued
12.Risk Management Policies and Disclosures (continued) Credit risk Credit risk arises from the possibility that the issuer of a security will be unable to pay interest and principal in a timely manner. Adhering to investment guidelines and avoiding excessive exposure to one particular issuer can limit credit risk. There are no net borrowings or unlisted securities and the ACD considers that the Sub-fund has little exposure to credit risk. Liquidity risk Liquidity risk is the risk that a Sub-fund cannot raise sufficient cash to meet its liabilities when due. One of the key factors influencing this will be the ability to sell investments at, or close to, the fair value without a significant loss being realised. Under normal circumstances, a Sub-fund will remain close to fully invested. However, where circumstances require: either because a view of illiquid securities markets or high levels of redemptions in the Sub-fund, the Sub-fund may hold cash and/or more liquid assets. Temporary higher liquidity levels may also arise during the carrying out of a change in asset allocation policy, or following a large issue of shares. The ACD manages the Sub-fund’s cash to ensure they can meet their liabilities. In addition the ACD monitors market liquidity of all securities, seeking to ensure the Sub-fund maintains sufficient liquidity to meet known and potential redemption activity. The Sub-funds cash balances are monitored daily by the ACD and the Investment Manager. All of the Sub-funds financial liabilities are payable on demand or in less than one year. Counterparty risk The risk that the counterparty will not deliver the investments for a purchase or the cash for a sale after the Sub-fund has fulfilled its responsibilities which could result in the fund suffering a loss. The Investment Manager minimises the risk by conducting trades through only the most reputable counterparties. Derivatives The Sub-fund may enter into derivative contracts for Efficient Portfolio Management (EPM) purposes. The purposes of EPM must be to achieve reduction of risk, the reduction of cost, or the generation of additional income or capital with an acceptably low level of risk and the use of these instruments must not cause the Sub-fund to stray from its investment objectives. Any EPM transaction must be economically appropriate and the exposure fully covered. The ACD monitors the use of derivatives to ensure EPM rules are satisfied. In the opinion of the ACD there is no sophisticated derivative use within the Sub-fund and accordingly a sensitivity analysis is not presented. Fair value of financial assets and liabilities Investments disclosed as at the balance sheet date are at fair value. Current assets and liabilities disclosed in the balance sheet are at amortised cost which is approximate to fair value.
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Notes to the Financial Statements continued
13.Portfolio Transaction Costs 30.06.18 Purchases Analysis Net before of purchases purchase Commissions transaction cost paid Taxes cost £ £ % £ % £ Equities 74,590,972 61,458 0.08 78,861 0.11 74,450,653 Total purchases after commissions and tax 74,590,972 Sales Analysis Net before of sales sale Commissions Taxes transaction proceeds paid cost £ £ % £ % £ Equities 78,016,645 59,017 0.08 22,889 0.03 78,098,551 Total sales after commissions and tax 78,016,645 Commission as a % of average net assets 0.17% Taxes as a % of average net assets 0.15%
30.06.17 Purchases Analysis Net before of purchases purchase Commissions transaction cost paid Taxes cost £ £ % £ % £ Equities 72,405,871 62,622 0.09% 71,467 0.10% 72,271,782 Total purchases after commissions and tax 72,405,871 Sales Analysis Net before of sales sale Commissions Taxes transaction proceeds paid cost £ £ % £ % £ Equities 76,137,172 60,557 0.08% 21,017 0.03% 76,218,746 Total sales after commissions and tax 76,137,172 Commission as a % of average net assets 0.20% Taxes as a % of average net assets 0.15%
Commissions and taxes as a % of the average net assets form part of the direct transactions costs stated within the comparative tables on pages 14 to 16. The direct transaction costs within the comparative tables may differ due to the effect of dilution levies charged (where applicable).
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Notes to the Financial Statements continued
14.Portfolio Dealing Spread The average portfolio dealing spread at 30 June 2018 is 0.35% (2017: 0.27%).
15.Fair Value Disclosure Valuation technique 30.06.18 30.06.17 Assets Liabilities Assets Liabilities £ £ £ £ Level 1^ 66,450,602 – 62,854,745 – Level 2^^ – – – – Level 3^^^ 233,850 – 243,260 – 66,684,452 – 63,098,005 –
^ Level 1: Unadjusted quoted price in an active market for an identical instrument. ^^ Level 2: Valuation techniques using observable inputs other than quoted prices within Level 1. ^^^ Level 3: Valuation techniques using unobservable inputs. A reconciliation of fair value measurements in Level 3 is set out in the following table: 30.06.18 30.06.17 Opening Balance 243,260 338,656 Purchases – – Total gains or losses included in the net capital gains/(losses) in the Statement of Total Return: - on assets sold – – - on assets held at year end (9,410) (95,396) Closing Balance 233,850 243,260
16.Shareholders Funds A C C Accumulation Income Accumulation Opening number of shares 850,820 624,814 15,351,057 Shares issued 20,717 40,489 602,658 Shares cancelled (151,230) (107,774) (1,238,504) Closing number of shares 720,307 557,529 14,715,211
MI Thornbridge Investment Funds - Global Opportunities Fund 33 MI Thornbridge Investment Funds - Global Opportunities Fund
Distribution Tables for the year ended 30 June 2018 Income Share Distributions Share Distribution Shares Net Equalisation Distribution Distribution class revenue paid/payable paid 2018 2017 p p p p C Interim Group 1 1.7252 – 1.7252 1.1025 Group 2 0.8419 0.8833 1.7252 1.1025 Final Group 1 2.9059 – 2.9059 3.0629 Group 2 2.1274 0.7785 2.9059 3.0629
Accumulation Share Distribution Share Distribution Shares Net Equalisation Amount Amount class revenue reinvested reinvested 2018 2017 p p p p A Interim Group 1 1.8523 – 1.8523 1.1783 Group 2 0.8813 0.9710 1.8523 1.1783 Final Group 1 3.1200 – 3.1200 3.2695 Group 2 2.7092 0.4108 3.1200 3.2695 C Interim Group 1 1.9578 – 1.9578 1.2358 Group 2 0.9788 0.9790 1.9578 1.2358 Final Group 1 3.3124 – 3.3124 3.4454 Group 2 2.2731 1.0393 3.3124 3.4454
Interim period: 01.07.17 - 31.12.17 Final period: 01.01.18 - 30.06.18
Group 1: Shares purchased prior to a distribution period Group 2: Shares purchased during a distribution period
Equalisation Equalisation applies only to shares purchased during the distribution period (Group 2 shares). It represents accrued revenue included in the purchase price of the shares. After averaging, it is returned with the distribution as a capital repayment. It is not liable to income tax but must be deducted from the cost of the shares for capital gains tax purposes.
34 MI Thornbridge Investment Funds - Global Opportunities Fund MI Thornbridge Investment Funds
General Information
Authorised Status MI Thornbridge Investment Funds - Global Opportunities Fund (the “Company”) is structured as an Investment Company with Variable Capital (“ICVC”), under regulation 12 (Authorisation) of the OEIC Regulations (Open-Ended Investment Companies Regulations 2001 (SI 2001/1228)). The Company does not intend to have an interest in immovable property. The Company is authorised and regulated in the UK by the Financial Conduct Authority (“FCA”‘) as a UCITS Retail Scheme and “Umbrella Company” under the COLL Sourcebook. The Company was incorporated in England and Wales on 24 May 2001 under registration number IC000109. The Shareholders are not liable for the debts of the Company. The Company currently has 1 Sub-fund, which is detailed below: MI Thornbridge Global Opportunities Fund Head Office Springfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PW Address for Service The Head Office is the address in the United Kingdom for service on the Company of notices or other documents required or authorised to be served on it. Base Currency The base currency of the Company is Pounds Sterling. Share Capital The minimum share capital of the Company is £1 and the maximum is £100,000,000,000. Shares in the Company have no par value. The share capital of the Company at all times equals the sum of the net asset value of the Sub-funds. Classes of Shares The Instrument of Incorporation allows each Sub-fund to issue different classes of shares in respect of any Sub-fund. The Sub-fund currently has the following classes of shares available for investment:
Share Class Sub-fund A Acc C Acc C Inc MI Thornbridge Global Opportunities Fund ✔ ✔ ✔
The Company may issue both Income and Accumulation Shares. Holders of Income shares are entitled to be paid the revenue attributable to such shares in respect of each annual accounting period in the currency of the relevant share class. Holders of Accumulation shares are not entitled to be paid the revenue attributable to such shares, but that revenue is retained and accumulated for the benefit of Shareholders and is reflected in the price of shares. Valuation point The scheme property of the Company and each Sub-fund will normally be valued at 12:00 on each dealing day for the purpose of calculating the price at which shares in the Company may be issued, sold, repurchased or redeemed. For the purpose of the pricing of shares, a business day is defined as a day on which the dealing office of the ACD is open for the buying and selling of shares. The ACD may at any time during a business day carry out an additional valuation of the property of the Sub-fund if the ACD considers it desirable to do so, with the Depositary’s approval.
MI Thornbridge Investment Funds 35 MI Thornbridge Investment Funds
General Information continued
Buying, Redeeming and Switching of Shares The ACD will accept orders for the purchase and sale and switching of shares on normal business days between 08:30 and 16:30. Instructions to buy or sell shares may either be in writing to: Springfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PW Or by telephone to: 0345 305 4216 The ACD has the right to establish facilities for recording telephone calls made or received on this telephone line. A contract note giving details of the shares purchased will be issued no later than the next business day after the business day on which an application to purchase shares is received and instrumented by the ACD. Certificates will not be issued in respect of shares. Ownership of shares will be evidenced by an entry on the register of Shareholders. Pricing Basis There is a single price for buying, selling and switching shares in a Sub-fund which represents the Net Asset Value of the Sub-fund concerned. The share price is calculated on a forward pricing basis, that is at the next Valuation Point after the purchase or redemption is deemed to be accepted by the ACD. The prices of shares are published daily on www.maitlandgroup.com. Neither the ACD nor the Company can be held responsible for any errors in the publication of the prices. The shares in the Company will be issued and redeemed on a forward pricing basis which means that the price will not necessarily be the same as the published price. Other Information The Instrument of Incorporation, Prospectus, Key Investor Information Document and the most recent interim and annual reports may be inspected at the office of the Company which is also the Head Office of the Company. Copies may be obtained free of charge upon application. They are also available from the website of the ACD, the details of which are given in the directory of this report. Shareholders who have complaints about the operation of the Company should in the first instance contact the ACD, or, following that, may make their complaint direct to the Financial Ombudsman Service, Exchange Tower, London E14 9SR. Remuneration of the Authorised Corporate Director Its purpose is to ensure that the remuneration of the staff of the ACD is consistent with and promotes sound and effective risk management, does not encourage risk-taking which is inconsistent with the risk profiles, rules or instruments of incorporation of itself and the UCITS it manages (including the Company) and does not impair the ACD’s compliance with its duty to act in the best interests of the UCITS it manages. Further information is available in the ACD’s Remuneration Policy document which can be obtained from www.maitlandgroup.com. A paper copy of the remuneration policy is available on request from the registered office of the Authorised Corporate Director free of charge.
30.06.18 Number of Total Remuneration Fixed Beneficiaries Paid Remuneration Total remuneration paid by the ACD during the year 74 £102,058 £102,058 Remuneration paid to employees of the ACD who have material impact on the risk profile of the Fund 6 £21,871 £21,871
The table has been calculated based on the total remuneration paid to the ACD as ACD fees in the period contained within these accounts. The total remuneration has been apportioned between the code staff and general staff by way of a percentage based assessment. The management has reviewed the general principles of the remuneration policy and its application in the last year which has resulted in no material changes to the policy.
36 MI Thornbridge Investment Funds MI Thornbridge Investment Funds
General Information continued
Risk warning An investment in an Investment Company with Variable Capital should be regarded as a medium to long-term investment. Investors should be aware that the price of shares and the revenue from them can fall as well as rise and investors may not receive back the full amount invested. Past performance is not a guide to future performance. Investments denominated in currencies other than the base currency are subject to fluctuation in exchange rates, which can be favourable or unfavourable.
MI Thornbridge Investment Funds 37 Registered in England No 6252939. Authorised and regulated by the Financial Conduct Authority.