Interim Report and Financial Statements for MGTS AFH Tactical Core Fund

Transcription

1 Interim Report and Financial Statements for MGTS AFH Tactical Core Fund For the six months ended 31 August 2015 (Unaudited) HEAD OFFICE MARGETTS FUND MANAGEMENT LTD DEALING 1 SOVEREIGN COURT PO BOX GRAHAM STREET BRENTWOOD BIRMINGHAM VAT No. (GB) CM14 9ND B1 3JR Registered in England No TELEPHONE: Authorised and Regulated by TELEPHONE: FACSIMILE: the Financial Conduct Authority FACSIMILE:

2 ACD Margetts Fund Management Limited 1 Sovereign Court Graham Street Birmingham B1 3JR Tel: Fax: (Authorised and regulated by the Financial Conduct Authority) Directors of the ACD T J Ricketts T H Ricketts A J M Quy J E J Clay M D Jealous A S Weston G M W Oakley (non-exec) Depositary BNY Mellon Trust & Depositary (UK) Ltd The Bank of New York Mellon Centre 160 Queen Victoria Street London EC4V 4LA (Authorised and regulated by the Financial Conduct Authority) Administrator and Registrar The Bank of New York Mellon (International) Limited PO Box Edinburgh EH7 5NJ Tel: Fax: (Authorised and regulated by the Financial Conduct Authority) Auditors Shipleys LLP Chartered Accountants & Statutory Auditors 10 Orange Street Haymarket London WC2H 7DQ Investment Advisers AFH Wealth Management AFH House Buntsford Drive Stoke Heath Bromsgrove Worcestershire B60 4JE (AFH Wealth Management is a trading style of AFH Independent Financial Services Ltd, which is authorised and regulated by the Financial Conduct Authority)

3 Contents Investment Adviser s Report 1 Certification of Accounts by Directors of the ACD 2 Significant Purchases and Sales 3 Portfolio Statement 4 Net Asset Value per Share and Comparative Table 7 Financial Statements Statement of Total Return 10 Statement of Change in Net Assets Attributable to Shareholders 10 Balance Sheet 11 Notes to the Financial Statements 12 Distribution Table 19 General Information 20

4 Investment Adviser s Report For the period ended 31 August 2015 Investment Objective The objective of the Company is to provide capital growth over the longer term from a range of transferable securities, debt instruments and collective investment schemes (both regulated and unregulated). The Company will be actively managed on a medium risk basis and assets may be allocated to any geographical sector through an investment in collective investment schemes (either regulated or unregulated) or directly through investment in eligible markets. Investment Review MGTS AFH Tactical Core R -2.79% MGTS AFH Tactical Core -3.18% Benchmark: Composite Benchmark -3.50% 40% - IMA UK Gilt 30% - IMA UK All Companies 30% - IMA Global Source: FE Analytics. Performance growth in the period is bid to bid with income reinvested. The fund has returned -2.79% over the review period, compared to -3.50% for the fund s composite benchmark; an outperformance of 0.71%. (Source: FE Analytics). The period has been eventful and markets have been correspondingly volatile, with the UK election, the Greek crisis and a slowdown in China being noteworthy events. The UK general election in May brought about a majority Conservative government. The result was well received by equity markets and sterling appreciated following the result. With a Conservative victory, came the promise of a referendum on EU membership and a potential departure from the EU, which uncertainty will no doubt be a potential contributor to market volatility in the near term. The Greek crisis came to a head with a referendum in early July. It brought about the potential for a Greek exit of the European Union. However, whilst the vote was tantamount to a rejection of austerity conditions, subsequent compromises and concessions have seen an interim, workable consensus emerge and a restoration of liquidity to the Greek financial system. This has gone some way to placating markets in the near term. However, any euphoria was replaced by new found concerns over the strength and sustainability of the Chinese economy, and a realisation that global macro headwinds may be more significant than first thought. As Chinese markets tumbled, the Peoples Bank of China (PBOC) subsequently announced the unpegging of its currency against the US Dollar (USD) which caused the currency to devalue and see its biggest one-day loss in two decades. Further devaluation was seen over the following days and Chinese markets suffered further losses which in turn dragged world equity indices lower. August saw several markets, including the FTSE100, DAX and S&P500, fall by over 10%. Having bounced back to varying degrees, these markets remain well below recent highs. The fund has continued to remain significantly underweight in its benchmark allocation of UK Gilts, an area which has been the relative best performing IA sector of the composite benchmark. Given the likely negative real rates of return from this sector, we believe this market to remain uninvestable. Though the fund has remained underweight in Gilts, it has held a position in strategic bond funds, where we believe fund managers are able to position their fund with optimal duration characteristics in order to navigate the interest rate environment. We are still yet to see an interest rate rise and when rates do begin to rise we expect the moves to be gradual and incremental. In June 2015, the fund s cash position was increased significantly due to a number of potential risks that were becoming apparent in markets at that time. Fixed Interest exposure was reduced from highs of nearly 32%, to close to 12%. It seems that the decades long fixed interest bull market may be beginning to reverse and as investors rush for the door, liquidity may become an issue. 1

5 Investment Adviser s Report (continued) The IA Global sector has returned -6.53% over the period; which pulled performance lower. However, the fund s exposure to Europe has been a significant reason for the outperformance of our equity exposure, relative to the performance of the IA Global sector. In particular, the Consumer Goods industry has performed well, adding positive attribution. As the UK Consumer Price Index (CPI) hovers around 0%, it may be that monetary policy remains looser, for longer, and with the world s second largest economy stuttering, it is likely that markets will continue to remain volatile. Recent global headwinds have added an element of uncertainty as to when interest rates will finally begin to rise. AFH Wealth Management Investment Adviser 25 September 2015 Certification of Accounts by Directors of the ACD This report is signed in accordance with the requirements of the Collective Investment Schemes Sourcebook (COLL) as issued and amended by the Financial Conduct Authority. T J Ricketts Margetts Fund Management Ltd 20 October 2015 M D Jealous Authorised Status The MGTS AFH Tactical Core Fund is an open-ended investment company with variable capital incorporated in England and Wales under regulation number IC801 and authorised by the Financial Conduct Authority with effect from 10 November It is a Non-UCITS Retail Fund (NURS) as classified under the FCA s Collective Investment Schemes Sourcebook. Shareholders are not liable for the debts of the fund. 2

6 Significant purchases and sales For the period ended 31 August 2015 Total purchases for the period 151,678,243 Purchases Cost ( ) GOLDMAN SACHS GBP INSTL LIQUIDITY FUND 20,000,000 JUPITER STRATEGIC BOND I 16,500,000 BAILLIE GIFFORD CORPORATE BOND B 15,100,000 INVESCO GBP CORPORATE CLASS FUND 15,000,000 GOLDMAN SACHS STERLING LIQUID RESERVES ADMIN DIST 14,000,000 INVESCO STERLING LIQUIDITY SELECT CLASS FUND 10,000,000 ROYAL LONDON STERLING CREDIT Z FUND INCOME 9,200,000 L&G SHORT DATED STERLING CORPORATE BOND INDEX 8,900,000 ROYAL LONDON SHORT DUR CRDT Z GBP INC 5,800,000 L&G US INDEX C DIST 5,500,000 SVENSKA CELLULOSA AB-B SHS 4,092,531 WHITBREAD PLC 3,369,325 AMERICAN AIRLINES GROUP INC 3,176,498 LEGAL & GENERAL EUROPEAN INDEX TRUST C INC 3,000,000 Total sales for the period 122,641,266 Sales Proceeds ( ) TREASURY 4.75% 07/09/15 18,343,670 TREASURY 2% GILT 22JAN16 17,245,666 JUPITER STRATEGIC BOND I 16,262,075 GOLDMAN SACHS STERLING LIQUID RESERVES ADMIN DIST 14,000,000 INVESCO STERLING LIQUIDITY SELECT CLASS FUND 10,000,000 ROYAL LONDON STERLING CREDIT Z FUND INCOME 8,856,967 BAILLIE GIFFORD CORPORATE BOND B 6,000,000 FIDELITY STRATEGIC BOND Y NET 5,613,104 INVESCO PERPETUAL TACTICAL BOND Z GROSS 5,163,771 ROYAL DUTCH SHELL PLC 2,929,854 3

7 Portfolio statement As at 31 August 2015 Total Net Assets Holding Portfolio of Investments Value ( ) % % Chemicals 53,050 BASF 2,726, Total Chemicals 2,726, Consumer Discretionary 146,217 Imperial Tobacco Group 4,573, ,391 Nestle 4,439, ,050 TJX Companies Inc 2,887, Total Consumer Discretionary 7,327, Consumer Staples 79,462 Procter & Gamble 3,657, Total Consumer Staples 8,231, Energy 327,250 AMEC 2,662, Total Energy 2,662, Financials 918,493 Aviva 4,337, ,715 HSBC Holdings 4,407, Total Financials 8,744, Healthcare 98,337 AstraZeneca 3,988, ,911 Johnson & Johnson 4,094, ,520 Roche Holdings 3,939, ,500 Svenska Cellulosa 4,700, Total Healthcare 16,722, Home Construction 97,000 Berkeley Group Holdings 3,183, ,830,000 Taylor Wimpey 5,563, Total Home Construction 8,747, Hospitality 93,400 Whitbread 4,443, Total Hospitality 4,443, Industrials 50,823 Siemens 3,236, ,000 United Technologies Corporation 477, Total Industrials 3,713,

8 Portfolio statement (continued) Total Net Assets Holding Portfolio of Investments Value ( ) % % Technology 68,295 ASML Holdings 4,014, ,455 Intel Corporation 3,688, ,000 Microsoft Corporation 4,221, Total Technology 11,924, Telecoms 115,200 Altice 2,028, ,032,205 BT Group 4,383, ,889,184 Vodafone Group 4,178, ,764 Verizon Communications Inc 3,845, Total Telecoms 14,435, Travel & Leisure 116,500 American Airlines Group 2,956, ,520 Volkswagen 2,931, Total Travel & Leisure 5,888, Utilities 179,748 National Grid 1,537, Total Utilities 1,537, Bonds and Gilts 4,812,131 Baillie Gifford Corporate Bond B 8,738, L&G Short Dated Sterling Corporate Bond 17,203,850 Index Fund 8,832, ,453,849 Royal London Short Duration Credit Z GBP 4,507, Total Bonds and Gilts 22,078, Money Markets 20,000,000 Goldman Sachs GBP Inst Liquidity Fund 20,000, ,000,000 Invesco GBP Corporate Class Fund 15,000, Total Money Markets 35,000, UK 1,494,857 CF Miton UK Multi Cap Income Inst B 3,150, Total UK 3,150, UK Smaller Companies 217,630 Marlborough UK Micro Cap Growth P 1,053, Total UK Smaller Companies 1,053,

9 Portfolio statement (continued) Total Net Assets Holding Portfolio of Investments Value ( ) % % 3,020, , ,151 Global Standard Life Investments Global Absolute Return Strategies Inst 2,520, Total Global 2,520, Europe ishares Euro Stoxx Banks UCITS ETF 1,491, Legal & General European Index Trust C Inc 972, Total Europe 2,463, US 1,965,357 L&G US Index C Dist 5,139, Total US 5,139, Japan 5,760,870 L&G Japan Index C 2,584, Total Japan 2,584, Portfolio of Investments 156,044, Net Current Assets 13,883, Net Assets 184,978, The investments have been valued in accordance with note 1(b). 6

10 Net Asset Value per Share and Comparative Tables Accumulation share class Change in net assets per share 31/08/ /02/ /02/ /02/2013 Opening net asset value per share Return before operating charges * Operating charges Return after operating charges Distribution on income shares Closing NAV per share Retained distribution on acc shares * After direct transaction costs of Performance Return after charges -3.18% 3.74% 7.47% 9.91% Other Information Closing net asset value ( ) 12,629,571 15,053,130 27,288,742 30,233,004 Closing number of shares 9,250,338 10,674,240 20,076,064 23,903,418 Operating charges 0.78% 1.53% 1.51% 1.51% Direct transaction costs 0.00% 0.00% 0.00% 0.00% Prices Highest share price (pence) Lowest share price (pence) Income share class Change in net assets per share 31/08/ /02/ /02/ /02/2013 Opening net asset value per share Return before operating charges * Operating charges Return after operating charges Distribution on income shares Closing NAV per share * After direct transaction costs of Performance Return after charges -3.18% 3.86% 7.46% 9.85% Other Information Closing net asset value ( ) 2,045,584 3,171,709 93,324,516 52,461,614 Closing number of shares 1,601,593 2,385,223 71,989,948 43,129,759 Operating charges 0.78% 1.53% 1.51% 1.51% Direct transaction costs 0.00% 0.00% 0.00% 0.00% Prices Highest share price (pence) Lowest share price (pence)

11 Net Asset Value per Share and Comparative Tables (continued) R accumulation share class Change in net assets per share 31/08/ /02/ /02/ /02/2013 Opening net asset value per share Return before operating charges * Operating charges Return after operating charges Distribution on income shares Closing NAV per share Retained distribution on acc shares * After direct transaction costs of Performance Return after charges -2.80% 4.41% 8.30% 10.12% Other Information Closing net asset value ( ) 37,144,768 17,784,841 2,123,497 63,497 Closing number of shares 26,668,242 12,410,807 1,547,188 50,102 Operating charges 0.38% 0.78% 0.75% 0.71% Direct transaction costs 0.00% 0.00% 0.00% 0.00% Prices Highest share price (pence) Lowest share price (pence) R income share class Change in net assets per share 31/08/ /02/ /02/ /02/2013 Opening net asset value per share Return before operating charges * Operating charges Return after operating charges Distribution on income shares Closing NAV per share * After direct transaction costs of Performance Return after charges -2.79% 4.40% 8.26% 9.40% Other Information Closing net asset value ( ) 133,158, ,436, , ,863 Closing number of shares 104,232, ,070,983 98,702 88,664 Operating charges 0.38% 0.78% 0.76% 0.68% Direct transaction costs 0.00% 0.00% 0.00% 0.00% Prices Highest share price (pence) Lowest share price (pence)

12 Net Asset Value per Share and Comparative Tables (continued) Risk Warning An investment in an open-ended investment company (OEIC) should be regarded as a medium to long term investment. Investors should be aware that the price of shares and the income 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 fluctuations in exchange rates, which can be favourable or unfavourable. Yield Legacy share class 1.28% R share class 1.97% Fund Performance The performance of the fund is shown in the Investment Adviser s Report. Ongoing charges figure % % ACD's Annual Management Charge Other expenses Total Expense Ratio Synthetic TER Complete OCF Ongoing charges - R Class ACD's Annual Management Charge Other expenses Total Expense Ratio Synthetic TER Complete OCF

13 Financial statements Statement of total return For the period ended 31 August 2015 Notes Income Net capital (losses)/gains 4 (7,500,803) 2,067,687 Revenue 6 2,775,020 1,880,613 Expenses 7 (757,266) (777,457) Finance costs: Interest 9 (80) - Net revenue before taxation 2,017,674 1,103,156 Taxation Net revenue after taxation 2,017,674 1,103,156 Total return before distributions (5,483,129) 3,170,843 Finance costs: Distribution 9 (2,017,645) (1,103,148) Change in net assets attributable to shareholders from investment activities (7,500,774) 2,067,695 Statement of change in net assets attributable to shareholders For the period ended 31 August 2015 Opening net assets attributable to shareholders Amounts receivable on issue of shares Amounts payable on cancellation of shares 174,446, ,864,730 30,221, ,533,068 (12,733,371) (100,735,007) 17,488,568 20,798,061 Stamp duty reserve tax 1(f) - (24,832) Change in net assets attributable to shareholders from investment activities (7,500,774) 2,067,695 Retained distribution on accumulation shares 544, ,953 Closing net assets attributable to shareholders 184,978, ,946,607 10

14 Balance sheet As at 31 August 2015 Notes Assets Investment assets 171,094, ,234,587 Debtors 10 5,619,693 2,341,399 Bank balances 15,813,907 24,679,327 Total other assets 21,433,600 27,020,726 Total assets 192,528, ,255,313 Liabilities Creditors 11 5,918, ,544 Distribution payable on income shares 1,631,879 1,064,503 Total other liabilities 7,550,123 1,809,047 Net assets attributable to shareholders 184,978, ,446,266 11

15 Notes to the financial statements As at 31 August Accounting policies a) Basis of accounting The financial statements have been prepared under the historical cost basis, in accordance with Financial Reporting Standard (FRS 102), as modified by the revaluation of investments, and in accordance with the revised Statement of Recommended Practice (SORP) for Authorised Funds issued by the Investment Management Association in May No changes to the Net Asset Value of the fund have arisen from the adoption of the SORP. b) Basis of valuation of investments The investments are valued at quoted bid prices for dual priced funds and at quoted prices for single priced funds, on the last business day of the accounting period. c) Foreign 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 middle exchange rates ruling on that date. d) Revenue All income allocations and distributions declared by the managers of the underlying funds up to the accounting date are included in Income, net of attributable tax credits. The net allocations which are retained in Income are included in the fund s own income allocation. Bank and other interest receivable is accrued up to the accounting date. Equalisation on distributions received is deducted from the cost of the investment and not included in the fund s income available for distribution. e) Expenses The ACD s periodic charge is deducted from Income. All of the other expenses are charged against Income except for costs associated with the purchase and sale of investments which are charged against Capital. f) Taxation (i) The fund is treated as a corporate shareholder with respect to its underlying holdings and its income is subject to streaming into franked and unfranked. (ii) Corporation tax is provided at 20% on income, other than the franked portion of distributions from collective investment schemes, after deduction of expenses. (iii) The charge for deferred tax is based on the profit for the year and takes into account taxation deferred because of timing differences between the treatment of certain items for taxation and accounting purposes. Deferred tax is provided using the liability method on all timing differences, 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. (iv) Stamp duty reserve tax suffered on surrender of shares is deducted from capital up to 30 March Distribution policy Income arising from investments accumulates during each accounting period. Surplus income is allocated to shareholders in accordance with the COLL regulations. In order to conduct a controlled dividend flow to shareholders, interim distributions will be made at the ACD s discretion, up to a maximum of the distributable income available for the period. All remaining income is distributed in accordance with the COLL regulations. 12

16 3 Risk management policies In pursuing the investment objective, a number of financial instruments are held which may comprise securities and other investments, cash balances and debtors and creditors, that arise directly from operations. Derivatives, such as futures or forward foreign exchange contracts, may be utilised for efficient portfolio management purposes. Political and economic events in the major economies of the world, such as the United States, Japan and the European Union, will influence stock and securities markets worldwide. The main risks from the fund s holding of financial instruments with the ACD s policy for managing these risks are set out below: i. Credit Risk The fund may find that collective investment schemes in which it invests fail to settle their debts or deliver the investments purchased on a timely basis. ii. iii. iv. Interest Rate Risk Debt securities may be held by the underlying investments of the fund. The Interest Rate Risk of these securities is managed by the relevant manager. Foreign Currency Risk Although the net assets of the fund are denominated in sterling, a proportion of the fund s investments in collective investment schemes have currency exposure with the effect that the balance sheet and total return can be affected by currency movements. Liquidity Risk The main liability of the fund is the cancellation of any shares that investors want to sell. Securities may have to be sold to fund such cancellations should insufficient cash be held at the bank to meet this obligation. Smaller companies by their nature, tend to have relatively modest traded share capital, and the market in such shares can, at times, prove illiquid. Shifts in investor sentiment, or the announcement of new price-sensitive information, can provoke significant movement in share prices, and make dealing in any quantity difficult. The equity markets of emerging countries tend to be more volatile than the more developed markets of the world. Standards of disclosure and accounting regimes may not always fully comply with international criteria, and can make it difficult to establish accurate estimates of fundamental value. The dearth of accurate and meaningful information and insufficiencies in its distribution, can leave emerging markets prone to sudden and unpredictable changes in sentiment. The resultant investment flows can trigger significant volatility in these relatively small and illiquid markets. At the same time, this lack of liquidity, together with the low dealing volumes, can restrict the ACD s ability to execute substantial deals. v. Market Price Risk Market Price Risk is the risk that the value of the fund s financial instruments will fluctuate as a result of changes in market prices caused by factors other than interest rates or foreign currency movement. The Market Price Risk arises primarily from uncertainty about the future prices of financial instruments that the fund holds. Market Price Risk represents the potential loss the fund may suffer through holding market positions in the face of price movements. This risk is generally regarded as consisting of two elements Stock Specific Risk and Market Risk. The fund s exposure to Stock Specific Risk is reduced for equities and bonds through the holding of a diversified portfolio in accordance with the investment and borrowing powers set out in the Instrument of Incorporation. vi. vii. Counterparty Risk Transactions in securities entered into by the fund give rise to exposure to the risk that the counterparties may not be able to fulfil their responsibility by completing their side of the transaction. Fair Value of Financial Assets and Financial Liabilities There is no material difference between the value of the financial assets and liabilities, as shown in the balance sheet, and their fair value. 13

17 4 Net capital (losses)/gains Proceeds from sales on investments during the period 122,641,266 28,941,375 Original cost of investments sold during the period (123,671,710) (25,289,973) Losses realised on investments sold during the period (1,030,444) 3,651,402 Net appreciation thereon already recognised in prior periods (9,582) (3,510,612) Net realised (depreciation)/appreciation for the period (1,040,026) 140,790 Net unrealised (depreciation)/appreciation for the period (6,408,740) 1,983,656 Net (losses)/gains on non-derivative securities (7,451,465) 2,123,890 Net losses on derivatives (49,338) (56,203) Net capital (losses)/gains on investments (7,500,803) 2,067,687 5 Purchases, sales and transaction costs Equities Purchases excluding transaction costs 22,589,672 33,866,713 Commissions : 0.13% (0.03%) 28,398 10,122 Stamp duty and other charges : 0.22% (0.21%) 49,654 69,751 Trustee transaction charges : 0.00% (0.00%) 740 1,660 Purchases including transaction costs 22,668,464 33,948,246 Sales excluding transaction costs 13,412,307 22,063,127 Commissions : 0.03% (0.02%) (3,919) (5,250) Trustee transaction charges : 0.00% (0.00%) (659) (540) Sales including transaction costs 13,407,729 22,057,337 Collective Investment Schemes Purchases excluding transaction costs 104,010,519 60,393 Trustee transaction charges : 0.00% (0.00%) Purchases including transaction costs 104,011,119 60,393 Sales excluding transaction costs 49,119,949 2,878,249 Dilution levy : 0.06% (0.00%) (28,407) - Trustee transaction charges : 0.00% (0.00%) (500) (30) Sales including transaction costs 49,091,042 2,878,219 Debt Securities Purchases excluding transaction costs 25,000,000 18,601,077 Trustee transaction charges : 0.00% (0.00%) Purchases including transaction costs 25,000,030 18,601,157 Sales excluding transaction costs 60,141,336 4,000,000 Trustee transaction charges : 0.00% (0.00%) (170) (10) Sales including transaction costs 60,141,166 3,999,990 Trustee transaction charges have been deducted in determining net capital Transaction charges are displayed as percentage of purchase/sale Total stamp duty charges : 0.03% (0.05%) 49,654 69,751 Total commission charges : 0.02% (0.01%) 32,317 15,372 Total dilution levy charges : 0.02% (0.00%) 28,407 - Total trustee transaction charges : 0.00% (0.00%) 2,699 2,320 Total charges displayed as percentage of average net asset value Average portfolio dealing spread : 0.06% (0.02%) 102,062 22,950 14

18 6 Revenue UK franked dividends 1,494, ,115 Bond interest 517,960 91,264 Gross bond interest 48, ,377 Overseas franked income 689, ,154 Overseas gross unfranked income 24,013 78,703 Bank interest Total revenue 2,775,020 1,880,613 7 Expenses Payable to the ACD, associates of the ACD and agents of either: ACD's periodic charge 623, ,561 Payable to the Depositary associates of the Depositary and agents of either: Depositary's fee 39,954 33,149 Safe custody 21,342 13,611 61,296 46,760 Other expenses: FCA fee Audit fee 3,660 3,660 Registration fees 1, Printing costs Transfer agency fee 65,286 29,348 Distribution costs 2,015 2,015 Total expenses 757, ,457 8 Taxation a) Analysis of the tax charge for the period: UK Corporation tax - - Irrecoverable income tax - - Current tax charge (note 8b) - - Deferred tax (note 8c) - - Total tax charge - - b) Factors affecting the tax charge for the period: Net income before taxation 2,017,674 1,103,156 Corporation tax at 20% 403, ,632 Effects of: UK dividends (436,860) (247,054) Utilisation of excess management expenses 33,325 26,422 Corporation tax charge - - Irrecoverable income tax - - Current tax charge for the period (note 8a) - - c) Provision for deferred taxation No provision for deferred taxation has been made in the current period or prior accounting year. d) Factors that may affect future tax changes The fund has unutilised management expenses of 2,356,689 (prior year 2,190,064). The fund does not expect to be able to utilise this in the forseeable future. 15

19 9 Finance costs Distributions Interim 2,176,051 1,403,258 2,176,051 1,403,258 Amounts deducted on cancellation of shares 38, ,000 Amounts received on issue of shares (196,473) (603,110) Finance costs: Distributions 2,017,645 1,103,148 Finance costs: Interest 80 - Total finance costs 2,017,725 1,103,148 Represented by: Net revenue after taxation 2,017,674 1,103,156 Balance of revenue brought forward Balance of revenue carried forward (62) (58) Finance costs: Distributions 2,017,645 1,103,148 16

20 10 Debtors Amounts receivable for issue of shares 1,626,105 1,021,083 Amounts receivable for investment securities sold 3,437, ,734 Accrued income: UK franked dividends 377, ,465 Bond interest - 460,531 Gross bond interest 7,037 - Overseas franked dividends 31, , , ,689 Prepayments Taxation recoverable 139,796 81,757 Total debtors 5,619,693 2,341, Creditors Amounts payable for cancellation of shares 53,010 97,284 Amounts payable for investment securities purchased 5,694, ,735 Accrued expenses: Amounts payable to the ACD, associates and agents: ACD's periodic charge 98,851 93,439 Amounts payable to the Depositary, associates and agents: Depositary's fees 6,432 5,794 Transaction charges Safe custody fee 7,088 5,268 14,005 11,272 Other expenses 58,160 44,814 Total creditors 5,918, , Contingent liabilities and commitments There were no contingent liabilities or outstanding commitments at the balance sheet date [ : Nil]. 13 Related party transactions There were no related party transactions at the balance sheet date [ : Nil]. 14 Shareholders' funds Legacy Acc Legacy Inc RDR Acc RDR Inc Opening number of shares 10,674,240 2,385,223 12,410, ,070,983 Shares issued 624,869 38,806 15,562,300 15,650,372 Shares converted (800,501) (3,892) 787,737 3,890 Shares redeemed (1,248,271) (818,544) (2,092,602) (15,492,773) Closing number of shares 9,250,338 1,601,593 26,668, ,232,472 17

21 15 Post balance sheet events As at 20 October 2015, there were no material post balance sheet events which have a bearing on the understanding of the financial statements. 16 Risk disclosures Interest risk - Debt securities may be held by the underlying investments of the fund. The Interest Rate Risk of these securities is managed by the relevant manager. The table below shows the Interest Rate Risk profile at the balance sheet date: Floating rate assets (pounds sterling): 15,813,907 24,679,327 Assets on which interest is not paid (pounds sterling): 121,377,649 96,319,955 Assets on which interest is not paid (us dollars): 25,829,838 21,574,481 Assets on which interest is not paid (euro): 16,427,873 16,266,823 Assets on which interest is not paid (swiss francs): 8,378,767 4,749,783 Assets on which interest is not paid (swedish krona): 4,700,321 - Fixed rate assets (pounds sterling): - 12,664,944 Liabilities on which interest is not paid (pounds sterling): (7,550,123) (1,809,047) Net Assets 184,978, ,446,266 ii. Currency risk GBP 129,641, ,917,430 US Dollar 25,829,838 21,574,481 Euro 16,427,873 16,266,823 Swiss franc 8,378,767 8,687,532 Swedish krona 4,700,321 - Net Assets 184,978, ,446,266 The floating rate financial assets and liabilities comprise bank balances, which earn or pay interest at rates linked to the UK base rate. Fixed rate financial assets have a weighted average yield of nil% [ : 3.42%] and a weighted average period for which income is fixed of nil years [ : 0.71 years]. There are no material amounts of non-interest bearing financial assets and liabilities, other than collective investment schemes, which do not have maturity dates. 18

22 Distribution Table For the period ended 31 August 2015 in pence per share Interim Group 1 shares purchased prior to 01 March 2015 Group 2 shares purchased on or after 01 March 2015 Accumulation shares Units Net Income Equalisation Allocating Allocated Group Group Income shares Units Net Income Equalisation Payable Paid Group Group R Accumulation shares Units Net Income Equalisation Allocating Allocated Group Group R Income shares Units Net Income Equalisation Payable Paid Group Group Equalisation only applies to shares purchased during the distribution period (group 2 shares). It represents the accrued income 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. 19

23 General Information Valuation Point The Valuation Point of the fund is at 12 noon each business day. Valuations may be made at other times with the Depositary s approval. Buying and Selling of Shares The ACD will accept orders to buy or sell shares on normal business days between 9.00am and 5.00pm and transactions will be effected at prices determined by the following valuation. Instructions to buy or sell shares may be made either in writing to: Margetts Fund Management Ltd, PO Box 12081, Brentwood, CM14 9ND or by telephone on A contract note will be issued by close of business on the next business day after the dealing date to confirm the transaction. Prices The most recent mid prices of shares are published on the Margetts website at Other Information The Instrument of Incorporation, Prospectus, Key Investor Information Document, Supplementary Information Document and the latest annual and interim reports may be inspected at the offices of the ACD, with a copy available, free of charge, on written request. The register of shareholders can be inspected by shareholders during normal business hours at the offices of the Administrator. The Head Office of the Company is at 1 Sovereign Court, Graham Street, Birmingham B1 3JR and is also the address of the place in the United Kingdom for service on the Company of notices or other documents required or authorised to be served on it. The base currency of the Company is pounds ( ) sterling. The maximum share capital of the Company is currently 10,000,000,000 and the minimum is 1,000. Shares in the Company have no par value and therefore the share capital of the Company at all times equals the Company s current net asset value. The prospectus has been updated to state that The Bank of New York Mellon s charges for transfer agency services are subject to annual inflationary increases capped at 3% per annum. Shareholders who have any complaints about the operation of the fund should contact the ACD or the Depositary in the first instance. In the event that a shareholder finds the response unsatisfactory, they may make their complaint direct to the Financial Ombudsman Service at South Quay Plaza, 183 Marsh Wall, London E14 9SR. Data Protection Act Shareholders names will be added to a mailing list which may be used by the ACD, its associates or third parties, to inform investors of other products by sending details of such products. Shareholders who do not want to receive such details should write to the ACD, requesting their removal from any such mailing list. 20