MI Activus Wealth Funds - MI Activus Investment Fund Interim Report 28 February 2018
Contents Page Directory....................................................................................... 1 Investment Objective and Policy..................................................................... 2 Investment Manager s Report....................................................................... 2 Portfolio Statement............................................................................... 3 Comparative Tables............................................................................... 5 Statement of Total Return.......................................................................... 7 Statement of Change in Net Assets Attributable to Shareholders............................................ 7 Balance Sheet................................................................................... 8 Certification of the Interim Report by the Authorised Corporate Director...................................... 8 Distribution Table................................................................................ 9 General Information............................................................................. 10
Directory Authorised Corporate Director (ACD) & Registrar Maitland Institutional Services Ltd Springfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PW Telephone: 01245 398950 Fax: 01245 398951 Website: www.maitlandgroup.com (Authorised and regulated by the Financial Conduct Authority) Customer Service Centre Springfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PW Telephone: 0345 026 4285 Fax: 0845 299 1760 E-mail: activus@maitlandgroup.co.uk (Authorised and regulated by the Financial Conduct Authority) Directors of the Authorised Corporate Director R. Ackermann J. Clark (appointed 21 December 2017) P.J. Foley-Brickley S. Georgala D. Jones G. Kok (appointed 30 November 2017) R.W. Leedham (retired 19 December 2017) Investment Manager Activus Wealth Ltd 9 Bowers Way, Harpenden AL5 4EP (Authorised and regulated by the Financial Conduct Authority) Depositary Northern Trust Global Services Limited 50 Bank Street, Canary Wharf, London E14 5NT (Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority) Independent Auditor KPMG LLP, Statutory Auditor Chartered Accountants 15 Canada Square, Canary Wharf, London E14 5GL MI Activus Wealth Funds - MI Activus Investment Fund 1
Investment Objective and Policy The Fund aims to achieve capital growth before fees of at least the Bank of England Base Rate plus 5% with lower volatility than global equity market indices. Investors should note that, notwithstanding that the objective is to achieve capital growth before fees of at least the Bank of England Base Rate plus 5%, capital is in fact at risk. The Fund aims to achieve a positive return over a 3 year period, however, there is no guarantee that a positive return will be achieved over that, or any, time period. The investment manager will adopt a global multi-asset approach without the constraints of a formal benchmark. The Fund will invest in collective investment schemes, listed investment companies and Exchange Traded Funds. Through such investments, the portfolio will achieve indirect exposure to a diversified range of asset classes. These asset classes will vary over time, but will be selected from the following: equities, fixed income, private equity, currencies, commodities, real estate and alternative investment strategies to the extent that each is permitted by the Regulations. The Fund may also invest in other transferable securities, money market instruments, deposits, cash and near cash investments and derivatives. Derivatives may be used both for investment purposes and for Efficient Portfolio Management. The composition of the portfolio will reflect the Investment Manager s view of the potential future return of different underlying asset classes and specific investments and will be actively managed to take advantage of relative value and pricing inefficiencies. Investment Manager s Report for the period ended 28 February 2018 2018 is proving highly volatile for equity markets especially in the early part of February. We were pleased to see that our defensive approach was vindicated with equity markets generally posting material falls from their January highpoints. The S&P 500 Index fell 10% from its January peak by 9 February while during this same period the MI Activus Investment Fund declined by just 1.7%. Disruptive technology positions and gold miners gave back some of their significant gains of the last two years while Asian equities and BH Global made a positive return on the month. For the 6 months to 28 February the Fund is down 2.5%. Looking at the year to date the FTSE All Share Index is down 5.1% while a traditional portfolio of 60% equities and 40% government bonds would be down 4%. Again, the Fund's cautious and diversified positioning means the Fund is down just 1.3% for 2018. In our January report we noted that we are in potentially dangerous territory and we believe that a cautious approach is warranted. We had observed that stocks had rallied strongly but unusually this was accompanied by the VIX Index also moving 42% higher to end January at 13.5. This turned out to be just a light hors d oeuvre before the main course that was to follow in early February when the VIX Index rose to 50. The S&P 500 Index fell in the early days of the month, breaking through the 3% decline barrier that had been in place for a record 311 trading days but then declining rapidly from there to hit a low on 9 February. The VIX Index duly moved higher in this down move for the S&P and smashed the record for the largest percentage daily gain by rising 115% easily trumping the previous record of 64% from 2007. The most aggressive part of this move took place in late US trading hours and caused chaos in the VIX futures contracts which rose a dramatic 60-80% in the afterhours market amid rampant speculation of market manipulation by those participants who were long volatility. Some of the short volatility products, linked to the VIX futures, that had produced very high returns during the long period of low and stable volatility, fell by more than 90% and in the case of the XIV ETN caused an acceleration event that meant that the issuer Credit Suisse had the option of closing it down which they exercised during the next trading day. Other short volatility products were also affected and late in February, ProShares the issuer of the SVXY ETF, reduced the target exposure for their short volatility product by 50%. This seemingly sensible risk reduction move created further losses for those long call options on the underlying SVXY. Lawsuits from option holders will likely follow. The major stock indices rallied from the 9 February lows but still remain somewhat fragile. Volatility has retreated from the levels of the spike up and are now sitting at around the long term average with the futures term structure not anticipating any major changes. We remain highly focussed on capital preservation in difficult markets. There will be better times ahead to put on more risk. 2 MI Activus Wealth Funds - MI Activus Investment Fund
Portfolio Statement as at 28 February 2018 Market % of total value net assets Holding Security 2018 Absolute Return 28.40% (23.44%) 141,172 BH Global - GBP Shares 1,962,291 3.84 322,989 City Financial Absolute Equity I Accumulation ^ 1,316,568 2.57 1,182,705 LF Odey Absolute Return - Institutional Accumulation ^ 3,350,248 6.56 173,555 DW Catalyst 1,721,527 3.37 201,598 Third Point Offshore Investors - Sterling Shares 1,736,286 3.40 143,679 Third Point Offshore Investors - US Dollar Shares 3,205,408 6.27 1,178,866 Winton Diversified UCITS GBP ^ 1,220,548 2.39 14,512,876 28.40 Asian Equities 6.62% (6.99%) 328,618 Aberdeen Asian Smaller Companies Investment Trust 3,384,765 6.62 Biotechnology 2.58% (2.94%) 178,000 Biotech Growth Trust 1,317,200 2.58 Commodities 13.38% (14.09%) 280,022 BlackRock Gold & General D Income GBP ^ 2,274,895 4.45 287,500 BlackRock World Mining Trust 1,132,750 2.22 133,000 ishares Physical Gold ETC ^ 2,499,070 4.89 80,000 ishares Physical Silver ETC ^ 928,800 1.82 6,835,515 13.38 Emerging Equities 7.02% (5.07%) 572,890 Aberdeen Emerging Markets Investment Company 3,586,291 7.02 Fixed Income 9.56% (9.95%) 1,742,548 BBGI SICAV 2,361,153 4.62 1,670,000 International Public Partnerships 2,521,700 4.94 4,882,853 9.56 Global Market Indirect 1.91% (6.58%) 100,000 Hansa Trust A Non voting 975,000 1.91 Multi Asset 7.57% (4.62%) 870,000 Henderson Alternative Strategies Trust 2,479,500 4.85 710,000 Syncona 1,391,600 2.72 3,871,100 7.57 Private Equity 9.46% (9.12%) 94,350 North Atlantic Smaller Companies Investment Trust 2,632,365 5.15 119,032 Pantheon International 2,202,092 4.31 4,834,457 9.46 UK Equity 8.88% (9.80%) 210,148 Marlborough Special Situations Class P Accumulation ^ 3,646,759 7.14 1,178,866 Woodford Patient Capital Trust 888,865 1.74 4,535,624 8.88 MI Activus Wealth Funds - MI Activus Investment Fund 3
Portfolio Statement continued Market % of total value net assets Holding Security 2018 DERIVATIVES 0.28% (0.67%) Options 0.28% (0.67%)^^ 250 S&P 500 Index 15.06.18 Put @ 1600 35,382 0.07 1,500 CBOE Volatility Index 21.03.18 Call @ 25 108,869 0.21 144,251 0.28 Investment assets 48,879,932 95.66 Net other assets 2,216,783 4.34 Net assets 51,096,715 100.00 All investments are ordinary shares or stock units on a regulated securities market unless otherwise stated. The percentages in brackets show the equivalent % holdings as at 31.08.17. This is delisted security and has been valued at the Manager s best assessment of their fair value. ^ Collective Investment Schemes permitted under COLL, not listed on any exchange. ^^ At the balance sheet date, all options were executed with one counterparty, Interactive Brokers. The net obligations on losses or gains for each transaction would be met by money held in the collateral account of the counterparty. As at 28 February 2018, the balance of the collateral account held at Interactive Brokers was 255,666, reflecting the anticipated settlement of the positions held. Total purchases for the period: 10,604,380 Total sales for the period: 5,611,335 4 MI Activus Wealth Funds - MI Activus Investment Fund
Comparative Tables Change in net assets per share A Accumulation Z Accumulation 28.02.18 p 31.08.17* p 28.02.18 p 31.08.17* p Opening net asset value per share 108.71 100.00 109.88 100.00 Return before operating charges^ 0.12 10.35-0.43 10.50 Operating charges -2.94-1.64-1.88-0.62 Return after operating charges^ -2.82 8.71-2.31 9.88 Distributions -0.40 0.00-0.94-0.91 Retained distributions on accumulation shares 0.40 0.00 0.94 0.91 Closing net asset value per share 105.89 108.71 107.57 109.88 ^After direct transaction costs of -0.05-0.42-0.05-0.42 Performance Return after charges -2.59% 8.71% -2.10% 9.88% Other Information Closing net asset value 37,897,164 36,704,067 13,199,551 11,985,947 Closing number of shares 35,787,701 33,761,900 12,270,553 10,907,988 Operating charges 2.72% 1.60% 1.72% 0.60% Ongoing operating charges** 2.72% 1.48% 1.72% 0.48% Direct transaction costs 0.05% 0.41% 0.05% 0.41% Prices Highest share price 109.94 108.99 111.26 110.15 Lowest share price 105.56 98.58 107.18 98.95 * Launched 19 July 2016. Operating charges include indirect costs incurred in the maintenance and running of the Fund, as disclosed (but not limited to) the detailed expenses within the Statement of Total Return. The figures used within this table have been calculated by annualising the expenses incurred against the average Net Asset Value for the accounting period. The return after charges is calculated as the closing net asset value per share plus the distributions on income shares minus the opening net asset value per share as a % of the opening net asset value per share. The Fund invests in collective investment schemes, the expenses incurred by these schemes in relation to the Fund (synthetic ongoing charge) are included within the operating charges. Direct transaction costs include fees, commissions, transfer taxes and duties in the purchasing and selling of investments, which are offset (where applicable) against any dilution levies charged within the accounting period. The figures used within the table have been calculated against the average Net Asset Value for the accounting period. MI Activus Wealth Funds - MI Activus Investment Fund 5
Comparative Tables continued Risk and reward profile The risk and reward indicator table demonstrates where the Fund ranks in terms of its potential risk and reward. The higher the rank the greater the potential reward but the greater the risk of losing money. It is based on past data, may change over time and may not be a reliable indication of the future risk profile of the Fund. The shaded area in the table below shows the Fund s ranking on the risk and reward indicator. Typically lower rewards, Typically higher rewards, lower risk higher risk 1 2 3 4 5 6 7 The Fund is ranked 4 because funds of this type have experienced average rises and falls in value in the past. Please note that even the lowest risk class can lose you money and that extreme market circumstances can mean you suffer severe losses in all cases. The indicator does not take into account the following risks of investing in this Fund: The Fund invests into other funds which themselves invest in assets such as bonds, company shares, cash and currencies. The objectives and risk profiles of these underlying funds may not be fully in line with those of this Fund. Bond values are affected by changes in interest rates, inflation and any decline in creditworthiness of the bond issuer. Bonds that produce a higher level of income usually also carry greater risk as such bond issuers may not be able to pay the bond income as promised or could fail to repay the capital amount used to purchase the bond. There may be cases where the organisation from which we buy a bond fails to carry out its obligations, which could cause losses to the Fund. Investing overseas can bring additional returns and spread risk to different markets. There are risks, however, that changes in currency exchange rates may cause the value of your investment to decrease and increase. This Fund can use derivatives in order to meet its investment objectives or to protect from price and currency movement. This may result in gains or losses that are greater than the original amount invested. For further risk information please see the prospectus. Risk warning An investment in an Open Ended Investment Company should be regarded as a medium to long-term investment. Investors should be aware that the price of shares and the revenue from them can fall as well as rise and investors may not receive back the full amount invested. Past performance is not a guide to future performance. Investments denominated in currencies other than the base currency are subject to fluctuation in exchange rates, which can be favourable or unfavourable. 6 MI Activus Wealth Funds - MI Activus Investment Fund
Statement of Total Return for the period ended 28 February 2018 01.09.17 to 19.07.16 to 28.02.18 28.02.17 Income Net capital (losses)/gains (1,529,916) 1,007,409 Revenue 507,454 274,632 Expenses (258,454) (245,560) Interest payable and similar charges (29) (27) Net revenue before taxation 248,971 29,045 Taxation Net revenue after taxation 248,971 29,045 Total return before distributions (1,280,945) 1,036,454 Distributions (248,948) (37,244) Change in net assets attributable to Shareholders from investment activities (1,529,893) 999,210 Statement of Change in Net Assets Attributable to Shareholders for the period ended 28 February 2018 01.09.17 to 19.07.16 to 28.02.18 28.02.17 Opening net assets attributable to Shareholders 48,690,014 Amounts receivable on issue of shares 4,232,040 42,230,055 Less: Amounts payable on cancellation of shares (553,304) (918,794) 3,678,736 41,311,261 Change in net assets attributable to Shareholders from investment activities (see Statement of Total Return above) (1,529,893) 999,210 Retained distributions on accumulation shares 257,858 53,484 Closing net assets attributable to Shareholders 51,096,715 42,363,955 The opening net assets attributable to shareholders for the current period do not equal the closing net assets attributable to shareholders for the comparative period as they are not consecutive periods. MI Activus Wealth Funds - MI Activus Investment Fund 7
Balance Sheet as at 28 February 2018 ASSETS 28.02.18 31.08.17 Fixed Assets Investments 48,879,932 45,413,911 Current Assets Debtors 119,542 214,666 Cash and bank balances 2,152,088 3,141,179 Total current assets 2,271,630 3,355,845 Total assets 51,151,562 48,769,756 LIABILITIES Investment liabilities Creditors Bank overdrafts (25,617) Other creditors (54,847) (54,125) Total creditors (54,847) (79,742) Total liabilities (54,847) (79,742) Net assets attributable to Shareholders 51,096,715 48,690,014 The interim financial statements have been prepared under the historical cost basis, as modified by the revaluation of investments and in accordance with FRS 102 and the Statement of Recommended Practice (SORP) for Financial Statements of UK Authorised Funds issued by the Investment Association (IA) in May 2014. The interim financial statements have been prepared on the same basis as the audited financial statements for the year ended 31 August 2017. The financial statements have been prepared on the going concern basis. Certification of the Interim Report by the Authorised Corporate Director This report has been prepared in accordance with the requirements of the Financial Conduct Authority s Collective Investment Schemes sourcebook ( the COLL Sourcebook ) and the Statement of Recommended Practice issued by the Investment Association. R. Ackermann D. Jones Directors Maitland Institutional Services Ltd 26 April 2018 8 MI Activus Wealth Funds - MI Activus Investment Fund
Distribution Table for the period ended 28 February 2018 Accumulation Share Distribution Share Distribution Shares Net Equalisation Amount Amount class revenue reinvested reinvested p p 2017 p 2018 p A Accumulation Interim Group 1 0.3974 0.3974 Group 2 0.3166 0.0808 0.3974 Z Accumulation Interim Group 1 0.9424 0.9424 0.5402 Group 2 0.2908 0.6516 0.9424 0.5402 Interim period: 01.09.17-28.02.18 Group 1: Group 2: Shares purchased prior to a distribution period Shares purchased during a distribution period Equalisation Equalisation applies only to shares purchased during the distribution period (Group 2 shares). It represents accrued revenue included in the purchase price of the shares. After averaging, it is returned with the distribution as a capital repayment. It is not liable to income tax but must be deducted from the cost of the shares for capital gains tax purposes. MI Activus Wealth Funds - MI Activus Investment Fund 9
General Information Authorised Status MI Activus Wealth Funds (the Company ) is structured as an Investment Company with Variable Capital ( ICVC ), under regulation 12 (Authorisation) of the OEIC Regulations (Open-Ended Investment Companies Regulations 2001 (SI 2001/1228)). The Company does not intend to have a direct interest in immovable property. The Company is authorised and regulated in the UK by the Financial Conduct Authority ( FCA ) as a UCITS Retail Scheme and Umbrella Company under the COLL Sourcebook. The Company was incorporated in England and Wales on 30 June 2016 under registration number IC001066. The Shareholders are not liable for the debts of the Company. The Company currently has one Sub-fund, which is detailed below: MI Activus Investment Fund (launched 19.07.2016). Head Office Springfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PW Address for Service The Head Office is the address in the United Kingdom for service on the Company of notices or other documents required or authorised to be served on it. Base Currency The base currency of the Company is Pounds Sterling. Share Capital The minimum share capital of the Company is 1 and the maximum is 100,000,000,000. Shares in the Company have no par value. The share capital of the Company at all times equals the sum of the net asset value of the Fund. Classes of Shares The Instrument of Incorporation allows each Fund to issue different classes of shares in respect of any Fund. The Fund currently has the following classes of shares available for investment: A Accumulation Z Accumulation Class Z shares are only available to clients of Activus Wealth Ltd. The Company may issue both Income and Accumulation Shares. Holders of Income shares are entitled to be paid the revenue attributable to such shares in respect of each annual accounting period in the currency of the relevant share class. Holders of Accumulation shares are not entitled to be paid the revenue attributable to such shares, but that revenue is retained and accumulated for the benefit of shareholders and is reflected in the price of shares. Valuation Point The scheme property of the Company and each Sub-Fund will normally be valued at 12:00 on each dealing day for the purpose of calculating the price at which shares in the Company may be issued, sold, repurchased or redeemed. For the purpose of the pricing of units, a business day is defined as a day on which the dealing office of the ACD is open for the buying and selling of shares. The ACD may at any time during a business day carry out an additional valuation of the property of the Fund if the ACD considers it desirable to do so, with the Depositary s approval. 10 MI Activus Wealth Funds - MI Activus Investment Fund
General Information continued Buying, Redeeming and Switching of Shares The ACD will accept orders for the purchase, sale and switching of shares on normal business days between 08:30 and 16:30. Instructions to buy or sell shares may either be in writing to: Springfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PW Or by telephone on: 0345 026 4285 The ACD has the right to establish facilities for recording telephone calls made or received on this telephone line. A contract note giving details of the shares purchased will be issued no later than the next business day after the business day on which an application to purchase shares is received and instrumented by the ACD. Certificates will not be issued in respect of shares. Ownership of shares will be evidenced by an entry on the register of shareholders. Pricing Basis There is a single price for buying, selling and switching shares in a Fund which represents the Net Asset Value of the Fund concerned. The share price is calculated on a forward pricing basis, that is at the next Valuation Point after the purchase or redemption is deemed to be accepted by the ACD. The prices of shares are published daily on www.maitlandgroup.com. Neither the Company nor the Company can be held responsible for any errors in the publication of the prices. The shares in the Company will be issued and redeemed on a forward pricing basis which means that the price will not necessarily be the same as the published price. Other Information The Instrument of Incorporation, Prospectus, Key Investor Information Document and the most recent interim and annual reports may be inspected at the office of the Company which is also the Head Office of the Company. Copies may be obtained free of charge upon application. They are also available from the website of the Company, the details of which are given in the directory of this report. Shareholders who have complaints about the operation of the Company should in the first instance contact the ACD, or, following that, may make their complaint direct to the Financial Ombudsman Service, Exchange Tower, London E14 9SR. Risk Warning An investment in an Open Ended Investment Company should be regarded as a medium to long-term investment. Investors should be aware that the price of shares and the revenue from them can fall as well as rise and investors may not receive back the full amount invested. Past performance is not a guide to future performance. Investments denominated in currencies other than the base currency are subject to fluctuation in exchange rates, which can be favourable or unfavourable. MI Activus Wealth Funds - MI Activus Investment Fund 11
Registered in England No 6252939. Authorised and regulated by the Financial Conduct Authority.