MARLBOROUgH BOND INCOME FUND

INTERIM REPORT AND UNAUDITED FINANCIAL STATEMENTS

For the six month period ended 30th November 2017 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 Limited

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 Helen Derbyshire Director – Compliance & Risk Guy Sears Non-Executive Director 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 4

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

Ongoing charges 5

Synthetic risk and reward indicator 5

PORTFOLIO STATEMENT 6

PORTFOLIO SPLIT BY INVESTMENT GRADE 9

PORTFOLIO TRANSACTIONS 9

UNAUDITED INTERIM FINANCIAL STATEMENTS

STATEMENT OF TOTAL RETURN 10

STATEMENT OF CHANGE IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERS 10

BALANCE SHEET 11

NOTES TO THE INTERIM FINANCIAL STATEMENTS 11 MARLBOROUGH BOND INCOME FUND

AUTHORISED INVESTMENT ADVISER’S REPORT for the six month period ended 30 November 2017

Percentage change and sector position to 30 November 2017

Six months 1 year 3 years 5 years Since launch * Marlborough Bond Income Fund 0.79% 5.79% 14.11% 28.50% 147.68% Quartile Ranking ** 1 2 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). Class P units first priced on 2 January 2013. In the period to that date, the past performance information for the Class A units has been used.

The unit offer price of the Class A units has fallen during the period under review from 55.60p to 54.84p. There was also income paid to Class A unitholders relating to the period which amounted to 0.823345ppu net of tax and providing a small positive performance overall.

The Bank of England base rate was increased from 0.25% to 0.5% during the period which mainly reflected an increase in the rate of consumer price inflation to 2.8% for the year to November. This rate reflects the increases in prices following the fall in the pound after the Brexit vote. This rate has increased further since and may stay at an elevated rate for some time. Nevertheless the rate can be expected to reduce again in a few months’ time.

For bonds in the UK there has been relatively little change with prices rising on reports of relatively weak consumer spending and falling on news about the inflation rate or interest rate increases.

Going forward the year-on-year decline of real disposable income is ominous, pointing to a contraction of household spending. Successive years of tepid wage gains and rising imported goods inflation more recently have put strain on the average consumer. Though not alarming, there is evidence showing that drawing down on savings and increasing unsecured borrowing (inclusive of credit cards) have been households’ response to maintain levels of consumption.

Recall that household expenditure accounts for 60% of GDP so it may not be a coincidence that the rate of increase has been falling since early 2015, from 3.3% to 1.5% most recently. As for the largest ticket items (homes and cars) volume indicators also show a decline starting in 2015, with a much bigger deceleration of late. These developments in the economy, though troubling for the future level of growth, should be helpful to bonds as interest rates are likely to remain low.

The falling rate of GDP growth suggests the prospects of a conventional tightening cycle in the UK are negligible and the contribution of consumption towards growth will keep facing headwinds. Note how recent survey data point to a sharp contraction in retail sales volume whose impact may be spreading to the corporate sector. So far, there has been no real impact on external trade, but a fall in domestic demand is sure to ripple through to corporates and impact business optimism. It is likely that a combined deterioration of business and household sentiment would start to drag bond yields lower irrespective of the Bank of England’s actions because of the potential for a policy mistake.

The international situation is on the whole supportive of continuing low bond yields because of significantly lower inflation in the major developed economies and the high worldwide debt levels which will inhibit the extent to which interest rates can be increased without stifling economic growth. According to the Institute for International Finance global debt reached a record $233 trillion in the third quarter of 2017 which is 318% of gross domestic product. These figures which cover household, government, corporate and financial debt show a considerable increase from the levels at the start of the financial crisis in 2007 which was of course set off by the high debt levels in the US economy at that time. The risks that this gives rise to is already reflected in the US Treasury and other yield curves becoming very flat, a sign that the markets consider that interest rates cannot rise much.

Overall therefore we have confidence in the future for bond yields and the Bond Income Fund.

Geoff Hitchin 16 January 2018

1 MARLBOROUGH BOND INCOME FUND

AUTHORISED INVESTMENT ADVISER’S REPORT for the six month period ended 30 November 2017

Distributions (pence per unit)

Year 2018 Year 2017 Year 2016 Year 2015 Class A Net income paid 31 January 0.392940 0.420593 0.440292 0.460127 Net income paid 30 April 0.464041 0.465951 0.440791 Net income paid 31 July 0.443089 0.425286 0.464421 Net income paid 31 October 0.430405 0.428788 0.435494 Class B Net income paid 31 January 0.442103 0.458000 0.482000 0.506400 Net income paid 30 April 0.517000 0.512000 0.488400 Net income paid 31 July 0.504909 0.460400 0.511600 Net income paid 31 October 0.514294 0.463600 0.483600 Class P Net income paid 31 January 0.449537 0.462756 0.490743 0.516204 Net income paid 30 April 0.519042 0.515158 0.494589 Net income paid 31 July 0.499036 0.471018 0.521562 Net income paid 31 October 0.489536 0.474984 0.494534

Material portfolio changes

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

B.A.T Capital 2.125% 15.08.25 329,469 B.A.T. International Finance 7.25% 12.03.24 329,125 NEX Group 5.5% 31.07.18 268,950 Provident Financial 7% 04.10.17 280,000 American International Group 5% 26.04.23 235,900 SSE 5.625% Perp 210,353 Danske Bank 5.375% 29.09.21 228,580 Northumbrian Water Finance 5.125% 23.01.42 207,525 Kraft Heinz Foods 4.125% 01.07.27 224,900 AT&T 5.2% 18.11.33 173,222 Heathrow Funding 6% 20.03.20 221,400 Phoenix Natural Gas Finance 5.5% 10.07.17 140,000 Northumbrian Water Finance 2.375% 05.10.27 220,440 BG Energy Capital 6.5% 30.11.72 100,000 Walgreens Boots Alliance 3.6% 20.11.25 219,820 intu Debenture 5.562% 31.12.27 66,936 AT&T 3.55% 14.09.37 219,592 Networks 5.125% 31.03.23 216,347 AA BondCo 4.2487% 31.07.20 211,860 Tullett Prebon Group Holdings 5.25% 11.06.19 210,210 Coventry Building Society 1.875% 24.10.23 199,682 Korea Development Bank 1.75% 15.12.22 199,130 Bank of Nova Scotia 1.25% 08.06.22 198,750 Go-Ahead Group 2.5% 06.07.24 198,660 Citigroup 5.15% 21.05.26 198,480 Total 3.369% Perp 194,306 Bank of Scotland 9.375% 15.05.21 187,800 Great Rolling Stock 6.25% 27.07.20 182,880

Other purchases 2,312,074 Other sales 18,560

Total purchases for the period 6,679,230 Total sales for the period 1,525,721

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.

Investment objective

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.

Changes in prospectus

No changes have been made since the last report.

Up to date key investor information documents, the full prospectus and reports and accounts for any fund within the manager’s range, can be requested 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

G R HITCHIN INVESTMENT DIRECTOR

MARLBOROUGH FUND MANAGERS LTD 18 January 2018

FUND INFORMATION

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.

Price and distribution record

Financial year to Highest price Lowest price Net income per unit

Class A Income 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 1.756511p 31 May 2018* 55.63p 51.45p 0.823345p Class B Income 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 1.943509p 31 May 2018* 56.61p 52.31p 0.956397p Class P Income 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 1.955818p 31 May 2018* 54.51p 52.48p 0.939073p * six month period to 30 November 2017.

4 MARLBOROUGH BOND INCOME FUND

FUND INFORMATION

Number of units in issue/Net asset value per unit

Net asset value of Number of Net asset value scheme property units in issue per unit Class A Income 31 May 2015 £8,649,356 16,886,215 51.22p 31 May 2016 £8,407,339 16,899,155 49.75p 31 May 2017 £16,465,698 31,611,579 52.09p 30 November 2017 £22,069,288 42,880,192 51.47p Class B Income 31 May 2015 £1,032 2,000 51.63p 31 May 2016 £1,006 2,000 50.30p 31 May 2017 £1,006 1,903 52.86p 30 November 2017 £987 1,886 52.32p Class P Income 31 May 2015 £10,747,896 20,793,283 51.69p 31 May 2016 £10,497,010 20,829,553 50.39p 31 May 2017 £10,788,957 20,370,791 52.96p 30 November 2017 £9,915,642 18,911,832 52.43p

Ongoing charges

Class A Class B Class P 31 May 2017 1.60% 1.10% 0.85% 30 November 2017 1.60% 1.10% 0.85%

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

Synthetic Risk and Reward Indicator

Lower risk Higher risk

Typically lower rewards Typically higher rewards

1 2 3 4 5 6 7

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

This Fund has been measured as 3 because it has experienced low to moderate volatility historically.

5 MARLBOROUGH BOND INCOME FUND

PORTFOLIO STATEMENT as at 30 November 2017

Holding or Bid Percentage of nominal value value total net assets £% STERLING (87.17%, May 2017 - 84.78%) 32,000 A2D Funding 4.75% 18.10.22 35,012 0.11 120,000 A2D Funding II 4.5% 30.09.26 132,038 0.41 200,000 AA BondCo 4.2487% 31.07.20 211,034 0.66 100,000 ABP Finance 6.25% 14.12.26 126,120 0.39 160,000 Aegon 6.625% 16.12.39 242,515 0.76 110,000 América Móvil 6.375% 06.09.73 121,825 0.38 200,000 American International Group 5% 26.04.23 229,232 0.72 110,000 Amgen 5.5% 07.12.26 136,836 0.43 110,000 AMP Group Finance Services 6.875% 23.08.22 121,563 0.38 150,000 Anglian Water Services Financing 2.625% 15.06.27 146,589 0.46 199,000 Anheuser-Busch InBev 9.75% 30.07.24 293,225 0.92 100,000 AP Moller-Maersk 4% 04.04.25 106,857 0.33 100,000 Asciano Finance 5% 19.09.23 111,760 0.35 220,000 AT&T 3.55% 14.09.37 215,827 0.67 230,000 Aviva 6.125% 14.11.36 275,347 0.86 280,000 AXA 5.453% Perp 319,178 1.00 330,000 B.A.T Capital 2.125% 15.08.25 323,162 1.01 150,000 Bank of America 8.125% 02.06.28 214,608 0.67 145,000 Bank of Ireland 13.375% Perp 326,250 1.02 200,000 Bank of Nova Scotia 1.25% 08.06.22 197,612 0.62 150,000 Bank of Scotland 9.375% 15.05.21 187,084 0.58 110,000 Barclays Bank 14% Step-Up Perp 129,099 0.40 100,000 Barclays Bank 6.75% 16.01.23 100,665 0.31 60,000 Beazley Ireland Holdings 5.375% 25.09.19 61,800 0.19 210,000 BHP Billiton Finance FRN 22.10.77 244,912 0.77 125,000 Birmingham Airport Finance 6.25% 22.02.21 141,820 0.44 50,000 Brit Insurance Holdings 6.625% 09.12.30 53,824 0.17 160,000 British Telecommunications 8.625% 26.03.20 186,459 0.58 323,497 Broadgate Financing 4.949% 05.04.31 382,393 1.20 150,000 BUPA Finance 5% 08.12.26 171,188 0.53 100,000 Canary Wharf Finance II 5.952% 22.01.35 141,560 0.44 140,000 Chorus 6.75% 06.04.20 156,332 0.49 70,000 Citigroup 5.125% 12.12.18 72,743 0.23 160,000 Citigroup 5.15% 21.05.26 192,702 0.60 100,000 Close Brothers Group 4.25% 24.01.27 105,475 0.33 150,000 Clydesdale Bank 4.625% 08.06.26 182,450 0.57 100,000 CNP Assurances 7.375% 30.09.41 118,482 0.37 200,000 Coöperatieve Rabobank 4.625% 23.05.29 228,786 0.72 200,000 Coventry Building Society 1.875% 24.10.23 197,490 0.62 60,000 Coventry Building Society 12.125% PIBS 131,400 0.41 150,000 CPUK Finance 2.666% 28.02.20 153,813 0.48 100,000 Credit Suisse Group Funding Guernsey 2.75% 08.08.25 101,526 0.32 100,000 Credit Suisse Group Funding Guernsey 3% 27.05.22 104,600 0.33 200,000 CRH Finance (UK) 4.125% 02.12.29 225,874 0.71 240,000 Daily Mail & General Trust 5.75% 07.12.18 250,049 0.78 220,000 Danske Bank 5.375% 29.09.21 227,627 0.71 160,000 Deutsche Bahn Finance 3.125% 24.07.26 176,323 0.55 150,000 Deutsche Telekom International Finance 2.25% 13.04.29 144,506 0.45 100,000 Digital Stout Holding 4.75% 13.10.23 112,066 0.35 100,000 Direct Line Insurance Group FRN 27.04.42 130,409 0.41 100,000 Discovery Communications 2.5% 20.09.24 97,706 0.31 175,000 Dwr Cymru (Financing) 6.907% 31.03.21 207,637 0.65 100,000 EDP Finance 8.625% 04.01.24 134,025 0.42 120,000 Ei Group 6.875% 15.02.21 132,931 0.42 100,000 Électricité de France 5.5% 17.10.41 126,011 0.39 175,000 Enel 5.75% 22.06.37 232,508 0.73 200,000 Engie 4.625% Perp 206,596 0.65

6 MARLBOROUGH BOND INCOME FUND

PORTFOLIO STATEMENT as at 30 November 2017

Holding or Bid Percentage of nominal value value total net assets £% STERLING (continued) 150,000 ENW Finance 6.125% 21.07.21 174,374 0.55 100,000 ESB Finance 6.5% 05.03.20 111,662 0.35 160,000 FCE Bank 2.727% 03.06.22 164,883 0.52 210,000 Fidelity International 6.75% 19.10.20 238,029 0.74 100,000 FirstGroup 5.25% 29.11.22 114,169 0.36 100,000 FirstGroup 6.125% 18.01.19 105,247 0.33 100,000 Friends Life Holdings 8.25% 21.04.22 127,454 0.40 140,000 G4S 7.75% 13.05.19 152,684 0.48 100,000 Gazprom 4.25% 06.04.24 103,827 0.32 150,000 GKN Holdings 6.75% 28.10.19 165,059 0.52 160,000 GlaxoSmithKline Capital 5.25% 19.12.33 215,904 0.67 140,000 Finance Europe 5.5% 03.04.22 161,283 0.50 50,000 Glencore Finance Europe 6.5% 27.02.19 53,163 0.17 200,000 Go-Ahead Group 2.5% 06.07.24 197,342 0.62 165,000 Goldman Sachs Group 6.875% 18.01.38 237,686 0.74 160,000 Great Rolling Stock 6.25% 27.07.20 179,147 0.56 100,000 Hammerson 7.25% 21.04.28 137,714 0.43 200,000 Heathrow Funding 6% 20.03.20 220,604 0.69 100,000 Henkel 0.875% 13.09.22 98,124 0.31 100,000 Hiscox FRN 24.11.45 115,876 0.36 250,000 Home Group 0% 11.05.27 157,500 0.49 200,000 HSBC Holdings 5.75% 20.12.27 245,894 0.77 100,000 Iberdrola Finanzas 6% 01.07.22 118,869 0.37 280,000 Imperial Brands Finance 8.125% 15.03.24 372,137 1.16 100,000 ING Bank 6.875% 29.05.23 102,724 0.32 160,000 innogy Finance 5.625% 06.12.23 192,658 0.60 60,000 Intermediate Capital Group 5% 24.03.23 63,914 0.20 100,000 Intermediate Capital Group 7% 21.12.18 103,469 0.32 100,000 Investec 4.5% 05.05.22 107,382 0.34 120,000 IPIC GMTN 6.875% 14.03.26 161,634 0.51 150,000 Koninklijke KPN 6.875% 14.03.73 165,000 0.52 200,000 Korea Development Bank 1.75% 15.12.22 199,984 0.62 200,000 Kraft Heinz Foods 4.125% 01.07.27 218,916 0.68 400,000 Lambay Capital Securities 6.25% Perp 6,000 0.02 200,000 Legal & General Group 5.375% 27.10.45 224,840 0.70 108,000 Lendlease Europe Finance 6.125% 12.10.21 123,884 0.39 100,000 Leonardo 8% 16.12.19 113,204 0.35 210,000 Liverpool Victoria Friendly Society 6.5% 22.05.43 236,076 0.74 324,000 London Power Networks 5.125% 31.03.23 376,436 1.18 210,000 London Stock Exchange Group 4.75% 02.11.21 234,436 0.73 150,000 McDonald's 5.875% 23.04.32 200,715 0.63 220,000 Mexico (United Mexican States) 5.625% 19.03.14 237,690 0.74 150,000 Mitchells & Butlers Finance 6.469% 15.09.30 184,935 0.58 200,000 Morrison (WM) Supermarkets 3.5% 27.07.26 212,610 0.66 77,000 Motability Operations Group 6.625% 10.12.19 85,432 0.27 100,000 Munich Re FRN 26.05.42 119,486 0.37 150,000 National Australia Bank 7.125% 12.06.23 154,550 0.48 125,000 National Grid 1.25% RPI Linked 06.10.21 155,500 0.49 65,000 National Westminster Bank 11.5% Perp 108,225 0.34 260,000 NEX Group 5.5% 31.07.18 264,854 0.83 100,000 Next 3.625% 18.05.28 102,145 0.32 200,000 NGG Finance 5.625% 18.06.73 226,224 0.71 200,000 Holdings 7.25% 15.12.22 251,882 0.79 220,000 Northumbrian Water Finance 2.375% 05.10.27 217,921 0.68 180,000 Old Mutual 8% 03.06.21 208,402 0.65 300,000 Orange 5.75% Und Nts 333,720 1.04 100,000 Orsted 4.875% 12.01.32 123,168 0.38

7 MARLBOROUGH BOND INCOME FUND

PORTFOLIO STATEMENT as at 30 November 2017

Holding or Bid Percentage of nominal value value total net assets £% STERLING (continued) 50,000 Peel South East 10% 30.04.26 71,612 0.22 150,000 Petrobras Global Finance 6.625% 16.01.34 161,379 0.50 102,000 Phoenix Life 7.25% Perp 112,833 0.35 220,000 Places for People Treasury 2.875% 17.08.26 212,885 0.67 100,000 Porterbrook Rail Finance 4.625% 04.04.29 116,214 0.36 100,000 Porterbrook Rail Finance 5.5% 20.04.19 105,560 0.33 51,000 PostNL 7.5% 14.08.18 53,231 0.17 150,000 Proctor & Gamble 1.375% 03.05.25 145,955 0.46 100,000 Provident Financial 6% 27.09.21 95,583 0.30 110,000 Prudential 5% 20.07.55 120,910 0.38 123,000 QBE Insurance Group 6.115% 24.05.42 138,242 0.43 100,000 RELX Investments 7% 11.12.17 100,119 0.31 230,000 RL Finance Bonds No. 2 6.125% 30.11.43 262,349 0.82 140,000 Rothschild Continuation Finance CI 9% Perp 178,504 0.56 200,000 RSA Insurance Group 9.375% 20.05.39 223,726 0.70 100,000 RWE 7% Perp 105,900 0.33 140,000 RZD Capital 7.487% 25.03.31 175,923 0.55 100,000 Santander UK 5.875% 14.08.31 120,706 0.38 140,000 Scottish Amicable Finance 8.5% Und Sub Gtd Bds 145,548 0.45 100,000 Scottish Widows 5.5% 16.06.23 112,924 0.35 100,000 SEGRO 6% 30.09.19 108,367 0.34 100,000 Severn Trent Utilities Finance 1.625% 04.12.22 99,549 0.31 100,000 Severn Trent Utilities Finance 4.875% 24.01.42 131,630 0.41 200,000 Sky 4% 26.11.29 219,432 0.69 170,000 SMFG Preferred Capital GBP 2 10.231% Perp 271,847 0.85 100,000 Society of Lloyds 4.75% 30.10.24 111,407 0.35 200,000 Southern Water Services Finance 6.125% 31.03.19 212,896 0.67 100,000 Spain (Kingdom of) 5.25% 06.04.29 117,968 0.37 180,000 Spark Finance 5.625% 14.05.18 182,929 0.57 100,000 Spirit Issuer 6.582% 28.12.27 104,970 0.33 100,000 SSE 3.625% 16.09.77 103,219 0.32 100,000 Stagecoach Group 4% 29.09.25 107,223 0.34 100,000 Standard Chartered 4.375% 18.01.38 112,535 0.35 250,000 Standard Life 6.75% Perp 313,727 0.98 250,000 Statoil 6.875% 11.03.31 369,202 1.15 150,000 Telefónica Emisiones 5.375% 02.02.26 178,288 0.56 100,000 Telefónica Europe 6.75% Und Bds 110,312 0.34 132,820 Telereal Securitisation 5.9478% 10.12.33 163,912 0.51 99,205 Tesco Property Finance 1 7.6227% 13.07.39 135,652 0.42 100,000 Textron 6.625% 07.04.20 109,440 0.34 150,000 Thames Water Utilities Cayman Finance 4.375% 03.07.34 175,080 0.55 200,000 Tullett Prebon Group Holdings 5.25% 11.06.19 207,858 0.65 100,000 Vattenfall 6.875% 15.04.39 158,592 0.50 135,000 Volkswagen Financial Services 2.25% 12.04.25 133,385 0.42 100,000 Wales & West Utilities Finance 6.25% 30.11.21 118,530 0.37 200,000 Walgreens Boots Alliance 3.6% 20.11.25 215,424 0.67 200,000 Welltower 4.5% 01.12.34 226,178 0.71 140,000 Western Power Distribution (South West) 2.375% 16.05.29 136,938 0.43 200,000 Western Power Distribution 3.625% 06.11.23 213,638 0.67 125,000 William Hill 4.875% 07.09.23 131,986 0.41 100,000 WPP Finance 2.875% 14.09.46 85,492 0.27 100,000 Yorkshire Power Finance 7.25% 04.08.28 143,414 0.45 103,000 Yorkshire Water Services Odsal Finance 6.5876% 21.02.23 126,718 0.40 135,000 Zurich Finance (UK) 6.625% Perp 159,798 0.50 Total Sterling 27,881,747 87.17

8 MARLBOROUGH BOND INCOME FUND

PORTFOLIO STATEMENT as at 30 November 2017

Holding or Bid Percentage of nominal value value total net assets £% EURO (2.52%, May 2017 - 2.09%) 150,000 Bayer 3.75% 01.07.74 144,102 0.45 200,000 Crédit Agricole Assurances 4.75% 27.09.48 209,351 0.65 130,000 International Personal Finance 5.75% 07.04.21 108,488 0.34 150,000 NN Group 4.625% 13.01.48 153,526 0.48 200,000 Total 3.369% Perp 191,335 0.60 Total Euro 806,802 2.52

UNITED STATES DOLLAR (4.45%, May 2017 - 6.30%) 200,000 Aberdeen Asset Management 7% Perp 150,664 0.47 200,000 Allianz 5.5% Perp 151,779 0.47 163,074 Avangardco Investments Public 10% 29.10.18 26,571 0.08 200,000 5.375% 16.10.43 167,544 0.52 100,000 CVS Health 6.125% 15.09.39 91,822 0.29 100,000 Discovery Communications 6.35% 01.06.40 85,166 0.27 170,000 Marks & Spencer 7.125% 01.12.37 147,089 0.46 175,000 Mitsui Sumitomo Insurance FRN 15.03.72 147,989 0.46 200,000 Reliance Industries 5.875% Perp 149,548 0.47 400,000 5.375% 01.02.19 307,597 0.96 Total United States Dollar 1,425,769 4.45

Portfolio of stock investments 30,114,318 94.14

Foreign Currency Hedges Counterparty EUR€816,000 Sell Euro for Sterling - 16.01.18 HSBC 10,082 0.03 USD$780,000 Sell USD for Sterling - 18.12.17 HSBC 4,944 0.02 USD$868,000 Sell USD for Sterling - 10.01.18 HSBC 15,617 0.05 Net value of all derivative positions 30,643 0.10

Portfolio of investments and derivative positions 30,144,961 94.24 Net current assets (excluding derivative positions) 1,840,956 5.76 Total net assets 31,985,917 100.00

PORTFOLIO SPLIT BY INVESTMENT GRADE † Bid Percentage of value total net assets £%

Investments of investment grade 26,858,701 83.97 Investments below investment grade: BB+ 1,326,789 4.14 BB 508,224 1.59 BB- 294,310 0.92 Unrated 1,126,294 3.52 Portfolio of stock investments 30,114,318 94.14 Net value of all derivative positions 30,643 0.10 Net current assets (excluding derivative positions) 1,840,956 5.76 Net assets 31,985,917 100.00 †source Bloomberg

PORTFOLIO TRANSACTIONS £ for the six month period ended 30 November 2017

Total purchases costs, including transaction charges 6,679,230

Total sales proceeds, net of transaction charges 1,525,721

9 MARLBOROUGH BOND INCOME FUND

STATEMENT OF TOTAL RETURN for the six month period ended 30 November 2017

30 November 2017 30 November 2016 ££££

Income: Net capital gains/(losses) (290,490) 250,340 Revenue 584,352 514,826 Expenses (193,013) (126,534) Net revenue/(expense) before taxation 391,339 388,292

Taxation 0 0

Net revenue/(expense) after taxation 391,339 388,292

Total return before distributions 100,849 638,632

Distributions (481,476) (446,098)

Change in net assets attributable to unitholders from investment activities (380,627) 192,534

STATEMENT OF CHANGE IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERS for the six month period ended 30 November 2017

30 November 2017 30 November 2016 ££££

Opening net assets attributable to unitholders * 27,255,661 18,905,355

Amounts receivable on issue of units 6,322,619 5,056,616 Amounts payable on cancellation of units (1,212,514) (2,291,376) Amounts payable on unit class conversions 184 225 5,110,289 2,765,465

Change in net assets attributable to unitholders from investment activities (380,627) 192,534 Unclaimed distributions 594 540

Closing net assets attributable to unitholders 31,985,917 * 21,863,894

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

10 MARLBOROUGH BOND INCOME FUND

BALANCE SHEET as at 30 November 2017

30 November 2017 31 May 2017

££ Assets: Fixed Assets: Investment assets 30,144,961 25,423,974

Current Assets: Debtors 749,772 539,166 Cash and bank balances 1,876,615 1,654,626 Total assets 32,771,348 27,617,766

Liabilities: Investment liabilities 0 21,787

Creditors: Bank overdrafts 134,715 36,362 Distribution payable 253,518 241,735 Other creditors 397,198 62,221 Total liabilities 785,431 362,105

Net assets attributable to unitholders 31,985,917 27,255,661

NOTES TO THE INTERIM FINANCIAL STATEMENTS for the six month period ended 30 November 2017

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 2017 and are described in those annual financial statements.

11 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 533045

Email: [email protected] Website: www.marlboroughfunds.com

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