MARLBOROUgH BALANCED FUNDfunds.marlboroughfunds.com/uploads/documents/Marlborough...MARLBOROUGH BALANCED FUND COMPARATIVE TABLE Class P accumulation units Period to Year to Year to

INTERIM REPORT AND UNAUDITED FINANCIAL STATEMENTS

for the six month period ended 31 August 2019

MARLBOROUgHBALANCED FUND

MARLBOROUGH BALANCED FUND Authorised Fund Manager and Registrar Marlborough Fund Managers Ltd Marlborough House 59 Chorley New Road Bolton BL1 4QP Investor Support: (0808) 145 2500 (FREEPHONE) Authorised and regulated by the Financial Conduct Authority. Trustee HSBC Bank plc 8 Canada Square London E14 5HQ Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Investment Adviser Marlborough Investment Management Ltd PO Box 1852 Lichfield Staffordshire WS13 8XU Authorised and regulated by the Financial Conduct Authority. Auditor Barlow Andrews LLP Carlyle House 78 Chorley New Road Bolton BL1 4BY Directors of Marlborough Fund Managers Ltd Andrew Staley Chairman Nicholas F J Cooling Deputy Chairman Allan Hamer Joint Managing Director Wayne D Green Joint Managing Director Dom Clarke Finance Director Geoffrey Hitchin Investment Director Helen Derbyshire Director – Compliance & Risk Richard Goodall Director – Strategy & Business Development Guy Sears Non-Executive Director David Kiddie Non-Executive Director Sarah Peaston Non-Executive Director (appointed 1 October 2019)

MARLBOROUGH BALANCED FUND

CONTENTS PAGE

AUTHORISED INVESTMENT ADVISER’S REPORT 1

AUTHORISED STATUS AND GENERAL INFORMATION 3

DIRECTORS’ STATEMENT 4

COMPARATIVE TABLE 5

SYNTHETIC RISK & REWARD INDICATOR 7

PORTFOLIO STATEMENT 8

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 BALANCED FUND AUTHORISED INVESTMENT ADVISER’S REPORT for the six month period ended 31 August 2019 Percentage change and sector position from launch to 31 August 2019

Six months 1 year 3 years 5 years Since launch* Marlborough Balanced Fund 8.92% 2.79% 21.63% 42.61% 354.21% IA Mixed Investment 40-85% Shares 7.12% 2.96% 19.70% 37.04% 412.15% Quartile Ranking** 2 2 2 2 3

* Launched 01.03.1993. ** Based on ranking within The Investment Association’s Mixed Investment 40-85% Shares sector. External Source of Economic Data: Morningstar (Class P Acc - bid to bid). 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.

Over the past six months the P series accumulation unit bid price of the Marlborough Balanced Fund has increased by 8.92% compared to an increase of 7.12% by the IA Mixed Investment 40-85% Shares sector which is the Fund’s primary benchmark. This places the Fund in the second quartile of its peer group, 50th out of 159 funds. Over the past twelve months the P series accumulation unit bid price of the Marlborough Balanced fund has increased by 2.79% compared to an increase of 2.96% by the IA Mixed Investment 40-85% Shares sector. This places the Fund in the second quartile of its peer group, 73rd out of 158 funds. The Fund is also second quartile (above average) over three and five years. Over the six months we sold our leveraged ETF’s 3x Short Euro Long USD Dollar position following a reduced level of confidence in this trade and possible signs of a trend reversal.

Later in the period we reduced our overweight positions in the US, the UK, and Japan. The UK was reduced by trimming the Man GLG UK Income and Unicorn UK Income positions, with Artemis US Extended Alpha sold in anticipation of a pending fund manager change, whilst in Japan Man GLG Japan Core Alpha was reduced to halve the fund’s overweight towards the region. As things stand there is a general slowdown in the global economy brought about in part by a Global Trade War, a slowdown in the Chinese Economy, and broader geo-political tensions. The US and China are actively seeking a full or partial resolution to their dispute focussing on a fairer trade environment, the end to forced transfer of Intellectual Property, and a more market focussed approach to currency exchange rates. Alongside this the Chinese are seeking to stimulate their economy to place it on a stronger growth trajectory, and independent central banks are looking to reduce interest rates further and potentially recommence various forms of Quantitative Easing. As a generality there are a number of clouds on the horizon, but governments and independent central banks are entirely focussed on providing resolutions which will stave off a general recession. Whilst markets may be in for some volatility the positive yield available from equities relative to that available from bonds and cash in many areas are likely to prove supportive for markets. Nicholas F J Cooling BA (Hons) Deputy Chairman 15 October 2019

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MARLBOROUGH BALANCED FUND AUTHORISED INVESTMENT ADVISER’S REPORT for the six month period ended 31 August 2019 Distributions (pence per unit)

Year 2018 Year 2017 Year 2016 Year 2015 Class A Net income paid 30 April 0.7213 1.5428 0.9992 0.0712 Class B Net income paid 30 April 1.8622 2.4719 1.8152 0.8966 Class P Net income paid 30 April 2.2437 2.8891 2.2200 1.1994 Class I Net income paid 30 April 3.8559 4.2110 3.4200 1.0100

Portfolio changes There were no purchases during the period.

Sales Proceeds

Artemis US Extended Alpha 'I' GBP 1,215,718 Unicorn UK Growth 'B' 838,700 ETFS 3x Short EUR Long USD 790,885 Man GLG UK Income 'C' 541,100 Man GLG Japan CoreAlpha 'C' 516,200 Marlborough Emerging Markets 'P' 293,855 EEA Life Settlements Sterling Run-Off Cell 181,033

Total sales for the period 4,377,491

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MARLBOROUGH BALANCED FUND AUTHORISED STATUS AND GENERAL INFORMATION Authorised status Marlborough Balanced Fund (the Fund) is an authorised unit trust scheme within the meaning of the Financial Services and Markets Act 2000 and is a non-UCITS scheme operating under the Collective Investment Schemes Sourcebook (COLL) and the Investment Fund Sourcebook (FUND) as issued by the Financial Conduct Authority. Investment objective The investment objective of the Fund is to provide medium to long term capital growth on a medium risk basis. It is intended that this objective will be achieved by the Fund investing primarily in a diversified portfolio of units/shares of collective investment schemes, (including, but not restricted to, Exchange Traded Funds, collective investment schemes which themselves invest in property and/or the shares of property companies, and index-linked collective investment schemes), and transferable securities (including, but not restricted to, shares in investment companies including investment trusts which themselves invest in equities, property and/or the shares of property investment companies, and equity linked transferable securities and fixed interest investments), on a global basis. The Fund is also permitted to invest in money market instruments, government and public securities, cash and near cash, warrants and deposits as permitted for non-UCITS retail Schemes in accordance with COLL. The Fund may only invest in derivatives and forward transactions for the purposes of hedging. The Fund will be managed so it is eligible for inclusion in the IA Mixed Investment 40-85% Shares sector. Changes in prospectus With effect from 1 April 2019 the Fund has changed from a dual priced unit trust to a single priced unit trust and is operating a ‘swinging’ single price mechanism. Also, on that date, the initial service charge that applied to class P units was removed. An initial service charge will still be applied to class A and class B units. Details of these charges can be found in the Prospectus. Up to date Key Investor Information Documents, Prospectus and Long Reports and Financial Statements for any fund within the manager’s range can be requested by the investor at any time. Leverage In accordance with the Alternative Investment Fund Managers Directive (AIFMD) we are required to disclose the ‘leverage’ of the Fund. Leverage is defined as any method by which the Fund increases its exposure through borrowing or the use of derivatives. ‘Exposure’ is defined in two ways: ‘gross method; and ‘commitment method’. The Fund must not exceed maximum exposures under both methods. ‘Gross method’ exposure is calculated as the sum of all positions of the Fund (both positive and negative), that is, all eligible assets, liabilities and derivatives, including derivatives held for risk reduction purposes. ‘Commitment method’ is also calculated as the sum of all positions of the Fund (both positive and negative), but after netting off any derivative and security positions as specified by AIFMD rules. Therefore, the total amount of leverage calculated as at 31 August 2019 is as follows: Gross method: 90.30% Commitment method: 90.30% The maximum level of leverage which may be employed on behalf of the Fund when calculated in accordance with the gross method is 160%. The maximum level of leverage which may be employed on behalf of the Fund when calculated in accordance with the commitment method is 110%.

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MARLBOROUGH BALANCED 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 24 October 2019

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MARLBOROUGH BALANCED FUND COMPARATIVE TABLE Accumulation units were first offered at 50p on 1 March 1993. On 31 December 2012, the existing units were reclassified as Class A units and Class B and P units became available for purchase. On 1 October 2014, Class I units became available for purchase.

Class A accumulation units Period to Year to Year to Year to Change in net assets per unit 31.08.2019 28.02.2019 28.02.2018 28.02.2017

pence pence pence pence Opening net asset value per unit 190.36 197.32 186.40 154.48 Return before operating charges* 18.58 (2.30) 15.52 36.09 Operating charges (2.37) (4.66) (4.60) (4.17) Return after operating charges* 16.21 (6.96) 10.92 31.92 Distributions on accumulation units 0.00 (0.52) (0.72) (1.54) Retained distributions on accumulation units 0.00 0.52 0.72 1.54 Closing net asset value per unit 206.57 190.36 197.32 186.40

* after direct transaction costs of: 0.00 0.01 0.01 0.00

Performance Return after charges 8.52% -3.53% 5.86% 20.66%

Other information Closing net asset value £61,842,058 £59,529,237 £72,365,671 £74,848,263 Closing number of units 29,937,678 31,271,259 36,674,381 40,155,633 Operating charges 2.35%A 2.38% 2.38% 2.45% Direct transaction costs 0.00%A 0.01% 0.00% 0.00%

Prices Highest unit price 211.97p 214.74p 213.26p 196.78p Lowest unit price 190.77p 182.66p 184.90p 153.45p

Class B accumulation units Period to Year to Year to Year to Change in net assets per unit 31.08.2019 28.02.2019 28.02.2018 28.02.2017




Other information Closing net asset value £116,883 £91,665 £2,339 £2,275 Closing number of units 54,667 46,640 1,154 1,195 Operating charges 1.85%A 1.88% 1.88% 1.95% Direct transaction costs 0.00%A 0.01% 0.00% 0.00%


A These figures have been annualised.

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MARLBOROUGH BALANCED FUND COMPARATIVE TABLE

Class P accumulation units Period to Year to Year to Year to Change in net assets per unit 31.08.2019 28.02.2019 28.02.2018 28.02.2017




Other information Closing net asset value £6,500,615 £5,938,523 £3,928,485 £3,065,683 Closing number of units 2,999,769 2,984,921 1,919,384 1,597,544 Operating charges 1.60%A 1.63% 1.63% 1.70% Direct transaction costs 0.00%A 0.01% 0.00% 0.00%


Class I accumulation units Period to Year to Year to Year to Change in net assets per unit 31.08.2019 28.02.2019 28.02.2018 28.02.2017

Pence pence pence pence Opening net asset value per unit 203.72 207.95 193.42 157.91 Return before operating charges* 19.31 (2.40) 16.30 37.23 Operating charges (0.93) (1.83) (1.77) (1.72) Return after operating charges* 18.38 (4.23) 14.53 35.51 Distributions on accumulation units 0.00 (3.71) (3.86) (4.21) Retained distributions on accumulation units 0.00 3.71 3.86 4.21 Closing net asset value per unit 222.10 203.72 207.95 193.42



Other information Closing net asset value £2,221 £993 £984 £1,013 Closing number of units 1,000 487 473 524 Operating charges 0.85%A 0.88% 0.88% 0.95% Direct transaction costs 0.00%A 0.01% 0.00% 0.00%


A These figures have been annualised. Operating charges are the same as the ongoing charges and are the total expenses paid by each unit class in the period. Direct transaction costs are the total charges for the period, included in the purchase and sale of investments in the portfolio of the Fund. These amounts are expressed as a percentage of the average net asset value over the period and the average units in issue for the pence per unit figures.

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MARLBOROUGH BALANCED FUND SYNTHETIC RISK AND REWARD INDICATOR Lower risk Higher risk Typically lower rewards Typically higher rewards

The synthetic 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. The Fund has been measured as 4 because it has experienced moderate volatility historically. During the period the synthetic risk and reward indicator has remained unchanged.

1 2 3 4 5 6 7

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PORTFOLIO STATEMENTas at 31 August 2019

Holding or Bid Percentage ofnominal value value total net assets

£ %UK FIXED INTEREST (8.80%, February 2019 - 8.80%)

11,225,930 Marlborough Bond Income 'P' 6,026,079 8.80Total UK Fixed Interest 6,026,079 8.80

INTERNATIONAL FIXED INTEREST (4.76%, February 2019 - 4.83%)4,385,690 Marlborough High Yield Fixed Interest 'P' 3,259,445 4.76

Total International Fixed Interest 3,259,445 4.76

UNITED KINGDOM (26.36%, February 2019 - 27.24%)961,450 Franklin UK Equity Income 'W' 1,999,240 2.92

1,599,022 LF Lindsell Train UK Equity 7,784,037 11.37505,090 Man GLG UK Income 'C' 1,369,299 2.00

1,252,177 Marlborough Multi Cap Income 'P' 2,592,256 3.791,041,912 Marlborough UK Multi-Cap Growth 'P' 3,539,376 5.17

132,678 Unicorn UK Growth 'B' 761,251 1.11Total United Kingdom 18,045,459 26.36

UNITED STATES (19.32%, February 2019 - 18.87%)460,999 Artemis US Smaller Companies 'I' GBP 1,168,772 1.71

62,257 Fidelity American Special Situations 'W' 1,018,525 1.491,811,633 Marlborough US Multi-Cap Income 'P' 11,041,542 16.12

Total United States 13,228,839 19.32

JAPAN (5.07%, February 2019 - 5.69%)28,956 Atlantis Japan Opportunities GBP 1,388,887 2.03

501,274 JPM Japan 'C' Net 1,390,535 2.03400,442 Man GLG Japan CoreAlpha 'C' 689,962 1.01

Total Japan 3,469,384 5.07

EUROPE (10.56%, February 2019 - 10.28%)456,725 Man GLG Continental European Growth 'C' 2,677,320 3.91495,595 Marlborough European Multi-Cap 'P' 2,314,034 3.38929,516 Schroder European Alpha Income 'Z' GBP 2,236,415 3.27

Total Europe 7,227,769 10.56

FAR EAST (5.46%, February 2019 - 5.51%)1,400,943 Marlborough Far East Growth 'P' 3,737,436 5.46

Total Far East 3,737,436 5.46

EMERGING MARKETS (6.17%, February 2019 - 6.76%)1,337,355 Marlborough Emerging Markets 'P' 4,222,296 6.17

Total Emerging Markets 4,222,296 6.17

SPECIALIST (4.01%, February 2019 - 4.30%)10,535 EEA Life Settlements Sterling Run-Off Cell * 825,073 1.21

294,528 JPM Natural Resources 'C' Net 1,919,144 2.80Total Specialist 2,744,217 4.01

Portfolio of investments 61,960,924 90.51Net current assets 6,500,853 9.49Total net assets 68,461,777 100.00

EEA Life Settlements is an illiquid stock and is priced using information supplied by the company on a monthly basis.

All investments are units/shares in unit trusts and ICVCs which are authorised or 'recognised' by the FCA with the exception of* which are unregulated ICVCs.

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PORTFOLIO TRANSACTIONSfor the six month period ended 31 August 2019 £

Total purchases cost, including transaction charges 0

Total sales proceeds, net of transaction charges 4,377,491

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STATEMENT OF TOTAL RETURNfor the six month period ended 31 August 2019

31 August 2019 31 August 2018£ £ £ £

Income:Net capital gains/(losses) 5,470,514 1,783,732Revenue 619,074 659,583

Expenses (514,223) (565,026)Net revenue/(expense) before taxation 104,851 94,557

Taxation 0 0

Net revenue/(expense) after taxation 104,851 94,557

Total return before distributions 5,575,365 1,878,289

Distributions (2,939) (513)

Change in net assets attributable to unitholders frominvestment activities 5,572,426 1,877,776

STATEMENT OF CHANGE IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERSfor the six month period ended 31 August 2019

31 August 2019 31 August 2018£ £ £ £

Opening net assets attributable to unitholders * 65,560,418 76,297,479

Amounts receivable on issue of units 590,066 2,268,993Amounts payable on cancellation of units (3,260,653) (7,291,642)Amounts payable on unit class conversions (480) (2,266)

(2,671,067) (5,024,915)

Change in net assets attributable to unitholders frominvestment activities 5,572,426 1,877,776

Closing net assets attributable to unitholders 68,461,777 * 73,150,340

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

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BALANCE SHEETas at 31 August 2019

31 August 2019 28 February 2019

£ £Assets:Fixed Assets:Investment assets 61,960,924 60,496,264

Current Assets:Debtors 40,115 18,916Cash and bank balances 6,814,177 5,397,494Total assets 68,815,216 65,912,674

Liabilities:Creditors:Bank overdrafts 101,584 0Other creditors 251,855 352,256Total liabilities 353,439 352,256

Net assets attributable to unitholders 68,461,777 65,560,418

NOTES TO THE INTERIM FINANCIAL STATEMENTSfor the six month period ended 31 August 2019

Basis for preparation

Accounting policies

The investments of the Fund have been valued at their fair value at 12 noon on 30 August 2019.

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

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

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

The accounting policies applied are consistent with those of the annual financial statements for the year ended 28 February2019 and are described in those annual financial statements.

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Marlborough Fund Managers LtdMarlborough 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]: www.marlboroughfunds.com

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