Junior Gold Interim Report For the six month period ended 28 th February 2017 (Unaudited)
Registered Office Marlborough House 59 Chorley New Road Bolton BL1 4QP Authorised Corporate Director 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. Depositary 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 Sector Investment Managers Limited 67 Grosvenor Street London W1K 3JN Authorised and regulated by the Financial Conduct Authority. Auditor Barlow Andrews LLP Carlyle House 78 Chorley New Road Bolton BL1 4BY
CONTENTS PAGE AUTHORISED INVESTMENT ADVISER S REPORT 1 AUTHORISED STATUS AND GENERAL INFORMATION 3 AUTHORISED CORPORATE DIRECTORS STATEMENT 3 FUND INFORMATION Price and distribution record 4 Number of shares in issue/net asset value per share 4 Ongoing charges 4 Synthetic risk and reward indicator 5 Portfolio statement 6 Portfolio transactions 7 INTERIM FINANCIAL STATEMENTS Statement of total return 8 Statement of change in net assets attributable to shareholders 8 Balance sheet 9 Notes to the interim financial statements 9
AUTHORISED INVESTMENT ADVISER S REPORT For the six month period ended 28 February 2017 Percentage change to 28 February 2017 Six months 1 year 3 years 5 years Since launch* Junior Gold -14.81% 57.99% 8.94% -67.97% -54.47% * launched 01.09.2009 External Source of Economic Data: Morningstar (Class P - mid to mid, net income reinvested) Class P shares first priced on 13 December 2013. In the period to that date, the past performance information for the Class C shares has been used. In the context of very strong gains during calendar year 2016, the Fund s performance in the six month period to 28 February 2017 was volatile, losing 14.8% in value. Its benchmark, the FTSE Gold Mines Index, gave up 7.6% in this period indicating the higher volatility of smaller gold mining companies. The price of Gold dropped from about $1,350 to $1,100 before recovering to $1,250 per ounce during the period denting investors confidence. January and February, nevertheless, saw some return of interest with share prices recovering some of the ground lost post the Trump election victory. Global equity markets have rallied to new all-time highs, expecting faster US and global economic growth as the Trump administration attempts to implement its grand plans. The easy picks of oil pipeline approvals were first to receive the all-clear as they can be financed with private capital without impacting the US debt levels. Some other major elements of the plans, such as road, bridge and airport construction spending coupled with tax cuts are facing strong resistance by the Democrats and would require state-backing to finance. The Fed has also softened its tone on future interest rate rises. With clear indications of inflation rising, precious metals are set to benefit as real interest rates remain low. Markets are precariously set for a significant correction either on news of trouble with the Trump administration s plans or with worsening geopolitics. European instability concerns are mounting, with the French nationalist party of Marine Le Pen appearing strong for the first round of presidential elections in April, potentially introducing a harder stance in the European Union. In Germany, Angela Merkel has, for the first time in a decade, fallen behind in the polls for the elections in September. Financial investors have started buying into gold and silver again as safe havens. The Junior Gold Fund has been one of the top performing precious metals funds over a 12 month trailing period as reported by the leading fund database Morningstar: http://www.morningstar.co.uk/uk/fundquickrank/default.aspx. Despite high volatility and the sell-off in gold equities since Trump s election, we think that global economic worries, coupled with rapidly rising inflation in the UK, the Eurozone and America are likely to continue to support gold and silver prices as investors seek safe havens. Precious metals should be, in our view, a key component in every investor s asset base as insurance against the inevitable turbulence and the current sell-off in gold/ silver equities presents an excellent buying opportunity. Junior Gold s portfolio should continue to benefit from the recovery in precious metals prices and those of related equities. Angelos Damaskos 27 March 2017 This report contains FTSE data. Source: FTSE International Limited ( FTSE ) FTSE 2017. FTSE is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under licence. All rights in the FTSE indices and / or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and / or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE s express written consent. 1
AUTHORISED INVESTMENT ADVISER S REPORT (CONTINUED) Material Portfolio Changes For the six month period ended 28 February 2017 Major purchases Cost ( ) Major sales Proceeds ( ) Resolute Mining 1,007,599 Newmarket Gold 929,087 Yamana Gold 856,270 Goldcorp 878,722 Iamgold 813,815 Resolute Mining 854,818 Timmins Gold 660,649 Iamgold 841,965 Centamin 618,835 First Majestic Silver 804,338 Torex Gold Resources 572,600 Yamana Gold 667,910 Metals Exploration 410,000 Kingsgate Consolidated 600,965 K92 Mining 355,205 Centamin 531,185 Blackham Resources 336,049 Torex Gold Resources 447,030 First Majestic Silver 322,081 Endeavour Silver 325,101 Hochschild Mining 319,855 Pan African Resources 321,104 Gascoyne Resources 275,133 Argonaut Gold 315,043 Troy Resources 229,865 Premier Gold Mines 156,316 Red 5 212,412 Hochschild Mining 129,380 Fortuna Ventures 200,394 Red 5 116,363 Intermin Resources 173,311 Ramelius Resources 67,874 Millennium Minerals 70,405 Shanta Gold 55,742 Shanta Gold 65,856 Kingsrose Mining 46,966 Brio Gold 34,552 Other sales 2,362 Total purchases for the period 7,581,852 Total sales for the period 8,045,305 2
AUTHORISED STATUS AND GENERAL INFORMATION Authorised status Junior Gold is an investment company with variable capital (ICVC) incorporated under the Open Ended Investment Company (OEIC) Regulations 2001. It is a UCITS scheme as defined in the Collective Investment Schemes Sourcebook (COLL). The Company is incorporated in England and Wales with the registration number IC485487 and is authorised and regulated by the Financial Conduct Authority with effect from 27 August 2008. The shareholders are not liable for the debts of the Company. Investment objectives The investment objective of this Fund is to provide long-term capital growth from a globally diversified portfolio investing primarily in small to medium capitalisation companies specialising in identifying, developing and extracting gold. It may also invest in mining companies extracting other precious metals. There may be occasions, in light of adverse market conditions, where the Investment Manager chooses to hold high levels of cash, bonds and government securities. The Investment Manager may use derivatives for efficient portfolio management purposes only. Rights and terms attaching to each share class Each share of each class represents a proportional entitlement to the assets of the Fund. The allocation of income and taxation and the rights of each share in the event the Fund is wound up are on the same proportional basis. Change in prospectus No changes have been made since the last report. Up to date key investor information documents, prospectus and reports and accounts for any fund can be requested by the investor at any time. AUTHORISED CORPORATE DIRECTOR S 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 5 April 2017 3
FUND INFORMATION Price and distribution record Class C and Class I accumulation shares were first offered at 100p on 1 September 2009. Class P accumulation shares were first issued on 13 December 2013. Financial year to Highest price Lowest price Net income per share Class C 31 August 2014 45.64p 28.74p 0.0000p 31 August 2015 38.87p 20.27p 0.0000p 31 August 2016 63.81p 17.25p 0.0000p 31 August 2017* 57.83p 36.44p 0.0000p Class I 31 August 2014 45.96p 29.02p 0.0000p 31 August 2015 39.21p 20.50p 0.0000p 31 August 2016 64.72p 17.47p 0.0000p 31 August 2017* 58.66p 36.99p 0.0000p Class P 31 August 2014 45.20p 29.02p 0.0000p 31 August 2015 39.39p 20.68p 0.0000p 31 August 2016 65.54p 17.66p 0.0000p 31 August 2017* 59.44p 37.51p 0.0000p * six month period to 28 February 2017 Number of shares in issue/net asset value per share Net asset value Accumulation NAV per accumulation of scheme property shares in issue share Class C 31 August 2014 3,909,233 10,270,967 38.06p 31 August 2015 1,831,270 9,010,699 20.32p 31 August 2016 4,388,039 8,489,885 51.69p 28 February 2017 3,568,575 8,115,398 43.97p Class I 31 August 2014 5,392,793 14,044,901 38.40p 31 August 2015 2,755,306 13,400,507 20.56p 31 August 2016 5,046,780 9,626,434 52.43p 28 February 2017 2,514,998 5,630,487 44.67p Class P 31 August 2014 786,121 2,037,856 38.58p 31 August 2015 658,790 3,174,692 20.75p 31 August 2016 9,053,298 17,048,203 53.10p 28 February 2017 9,583,940 21,144,047 45.33p Ongoing charges Class C Class I Class P 31 August 2016 1.91% 1.66% 1.26% 28 February 2017 1.89% 1.64% 1.24% 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. 4
FUND INFORMATION (CONTINUED) Synthetic risk and reward indicator Lower risk Higher risk Typically lower rewards Typically higher rewards 1 2 3 4 5 6 7 The risk and reward indicator above aims to provide you with an indication of the overall risk and reward profile of the fund. It is calculated based on the volatility of the fund using weekly historic returns over the last five years. If five years data is not available for a fund, the returns of a representative portfolio are used. This Fund has been measured as 7 because it has experienced very high volatility historically. 5
Portfolio statement as at 28 February 2017 Holding or Bid Percentage of nominal value value total net assets as at 28 Feb 17 % AUSTRALIA (41.69%, Aug 2016-38.01%) 8,000,000 Azumah Resources 167,809 1.07 6,578,947 Azure Minerals 64,941 0.41 3,289,474 Azure Minerals Warrants * 0 0.00 4,000,000 Beadell Resources 690,978 4.41 800,000 Blackham Resources 315,876 2.02 2,000,000 Cardinal Resources 475,048 3.03 2,500,000 Doray Minerals 508,980 3.25 1,250,000 Eastern Goldfields 277,625 1.77 1,440,000 Focus Minerals 413,106 2.64 898,800 Gascoyne Resources 299,435 1.91 2,500,000 Intermin Resources 154,236 0.98 1,250,000 Intermin Resources Warrants * 15,424 0.10 13,333,335 Kingsrose Mining 658,075 4.20 361,130 Millennium Minerals 63,497 0.41 680,000 Perseus Mining 130,052 0.83 340,000 Perseus Mining Warrants * 0 0.00 1,432,128 Ramelius Resources 556,633 3.55 1,000,000 Resolute Mining 987,112 6.30 3,000,000 Troy Resources 286,879 1.83 3,515,528 West African Resources 466,311 2.98 Total Australia 6,532,017 41.69 CANADA (48.15%, Aug 2016-59.62%) 626,400 Alexco Resource 833,075 5.32 305,555 Americas Silver 822,061 5.24 166,666 Americas Silver Warrants * 0 0.00 300,000 Argonaut Gold 395,322 2.52 1,500,000 Aurcana 366,039 2.34 1,016,416 Austral Gold 108,514 0.69 400,000 Avino Silver & Gold Mines 573,461 3.66 17,656 Brio Gold 32,852 0.21 2,250,000 Dynasty Gold 48,043 0.31 180,000 Endeavour Silver 599,572 3.83 161,700 Fortuna Ventures 701,384 4.48 450,000 Golden Minerals 222,369 1.42 450,000 K92 Mining 277,274 1.77 1,141,351 Kerr Mines 90,519 0.58 1,250,000 Llave Oro * 0 0.00 50,000 Luna Gold 56,736 0.36 1,000,000 Maudore Minerals * 0 0.00 2,000,000 Minaurum Gold 213,523 1.36 2,000,000 Minaurum Gold Warrants * 91,510 0.58 333,800 Premier Gold Mines 521,317 3.33 600,000 Primero Mining 307,473 1.96 4,000,000 San Gold * 0 0.00 1,300,000 Teranga Gold 697,914 4.45 2,000,000 Timmins Gold 585,662 3.74 1,000,000 Timmins Gold Warrants * 0 0.00 Total Canada 7,544,620 48.15 6
Portfolio statement as at 28 February 2017 Holding or Bid Percentage of nominal value value total net assets as at 28 Feb 17 % UNITED KINGDOM (6.51%, Aug 2016-3.74%) 500,000 Aureus Mining Warrants ( 0.378) * 0 0.00 70,000 Hochschild Mining 183,960 1.17 8,200,000 Metals Exploration 389,500 2.49 4,350,000 Shanta Gold 445,875 2.85 Total United Kingdom 1,019,335 6.51 UNITED STATES (2.64%, Aug 2016-2.31%) 705,880 ECI Exploration & Mining * 269,485 1.72 290,000 Golden Minerals 143,928 0.92 145,000 Golden Minerals Warrants ($1.21) * 0 0.00 Total United States 413,413 2.64 Portfolio of investments 15,509,385 98.99 Net current assets 158,128 1.01 Net assets 15,667,513 100.00 * Unquoted Securities The investments of the Fund have been valued at their fair value at 12 noon on 28 February 2017. Fair value is normally the bid value of each security by reference to quoted prices from reputable sources; that is the market price. If the ACD believes that the quoted price is unreliable, or if no price exists, a valuation technique is used whereby fair value is the ACD's best estimate of a fair and reasonable value for that investment. The fair value excludes any element of accrued interest. All holdings of warrants are valued at the exercise price less the price of the underyling common shares. ECI Exploration is being priced at best estimate by the fund manager. Llave Oro is being valued at zero until further information is received from the company. Maudore Minerals and San Gold are deemed to be valueless. Portfolio transactions for the six months ended 28 February 2017 Total purchases, including transaction charges 7,581,852 Total sales proceeds, net of transaction charges 8,045,305 7
INTERIM FINANCIAL STATEMENTS (unaudited) For the six months ended 28 February 2017 Statement of total return 28 February 2017 29 February 2016 Income: Net capital gains/(losses) (3,233,559) 2,035,564 Revenue 6,543 16 Expenses (121,914) (46,509) Net expense before taxation (115,371) (46,493) Taxation (797) 0 Net expense after taxation (116,168) (46,493) Total return before distributions (3,349,727) 1,989,071 Distributions 1,502 (4,446) Change in net assets attributable to shareholders from investment activities (3,348,225) 1,984,625 Statement of change in net assets attributable to shareholders 28 February 2017 29 February 2016 Opening net assets attributable to shareholders * 18,488,117 5,245,366 Amounts receivable on issue of shares 8,636,021 1,629,835 Amounts payable on cancellation of shares (8,107,012) (614,776) Amounts payable on share class conversions (1,388) (451) 527,621 1,014,608 Change in net assets attributable to shareholders from investment activities (3,348,225) 1,984,625 Closing net assets attributable to shareholders 15,667,513 * 8,244,599 * These figures are not the same as the comparatives are taken from the preceding interim period and not the last final accounts. 8
INTERIM FINANCIAL STATEMENTS (unaudited) as at 28 February 2017 Balance sheet 28 February 2017 31 August 2016 Assets: Fixed Assets: Investment assets 15,509,385 19,167,993 Current Assets: Debtors 67,874 1,529,936 Cash and bank balances 348,176 228,589 Total assets 15,925,435 20,926,518 Liabilities: Creditors: Bank overdrafts 93,982 86,955 Other creditors 163,940 2,351,446 Total liabilities 257,922 2,438,401 Net assets attributable to shareholders 15,667,513 18,488,117 Notes to the interim financial statements 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 August 2016 and are described in those annual financial statements. 9
Marlborough Fund Managers Ltd Marlborough House 59 Chorley New Road Bolton BL1 4QP Investor Support: (0808) 145 2500 (FREEPHONE) Dealing: (0808) 145 2501 (FREEPHONE) Fax: (01204) 533 045 Email: investorsupport@marlboroughfunds.com 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.