Junior GoldJunior Gold · 2014. 11. 26. · JUNIOR GOLD JUNIOR GOLD MMaatteerriiaall Material...

Junior GoldJunior GoldJunior GoldJunior Gold

Annual ReportAnnual ReportAnnual ReportAnnual Report For the year ended 31For the year ended 31For the year ended 31For the year ended 31stststst August 2014August 2014August 2014August 2014

Fund DetailsFund DetailsFund DetailsFund Details

Junior GoldJunior GoldJunior GoldJunior Gold

Registered OfficeRegistered OfficeRegistered OfficeRegistered Office

Marlborough House

59 Chorley New Road

Bolton BL1 4QP

Authorised Corporate Director and RegistrarAuthorised Corporate Director and RegistrarAuthorised Corporate Director and RegistrarAuthorised Corporate Director and Registrar

Marlborough Fund Managers Ltd

Marlborough House

59 Chorley New Road

Bolton BL1 4QP

Authorised and regulated by the Financial Conduct Authority

Customer Support: (0808) 145 2500 (FREEPHONE)

Intermediary Support: (0808) 145 2502 (FREEPHONE

Dealing: (0808) 145 2501 (FREEPHONE)

Fax: (01204) 533045

Email: [email protected] Depositary:Depositary:Depositary: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:Investment Adviser:Investment Adviser:Investment Adviser:

Sector Investment Managers Limited

67 Grosvenor Street

London

W1K 3JN

Authorised and regulated by the Financial Conduct Authority

Auditors:Auditors:Auditors:Auditors:

Barlow Andrews LLP

Carlyle House

78 Chorley New Road

Bolton

BL1 4BY

JUNIOR JUNIOR JUNIOR JUNIOR GGGGOLDOLDOLDOLD

CONTENTSCONTENTSCONTENTSCONTENTS PAGE

AUTHORISED INVESTMENT ADVISER’S REPORT 1

AUTHORISED STATUS AND GENERAL INFORMATION 3

AUTHORISED CORPORATE DIRECTOR'S STATEMENT 4

STATEMENT OF AUTHORISED CORPORATE DIRECTOR'S

RESPONSIBILITIES 4

DEPOSITARY’S REPORT 5

AUDITORS' REPORT 6

COMPARATIVE TABLES 7

ONGOING CHARGES 8

SYNTHETIC RISK AND REWARD INDICATOR 8

PORTFOLIO STATEMENT 9

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

JUNIOR GOLDJUNIOR GOLDJUNIOR GOLDJUNIOR GOLD

AUTHORISED AUTHORISED AUTHORISED AUTHORISED INVESTMENT ADVISER’S REPORTINVESTMENT ADVISER’S REPORTINVESTMENT ADVISER’S REPORTINVESTMENT ADVISER’S REPORT

For the For the For the For the yearyearyearyear ended 31 Augustended 31 Augustended 31 Augustended 31 August 2014201420142014

Percentage change to 31 August 2014

Six months 1 year 3 years Since launch (1 September 2009)

Junior Gold -7.31% -16.37% -75.98% -61.36%* * on 01.10.2010 the name and objective of the Fund were amended to focus on gold mining companies rather than general miners.

External Source of Economic Data: Morningstar (mid to mid, net income reinvested)

The Fund’s performance in the twelve-month period to 31 August 2014 was disappointing, losing 16.4% of its

value. Its benchmark, the FTSE Gold Mines Index was down by 4.4% in the same period indicating continued

poor market conditions. We believe that the larger drop in value of the Fund was due to the continued risk-

aversion of investors towards gold mining, especially smaller capitalisation, less liquid shares. Gold has been

weak during the period, dropping 7.7% to $1,286/oz. Further economic stimulus announced by the ECB

weakened the Euro, sterling fell in the face of Scottish independence and the dollar became, once again, the

currency of choice. A stronger dollar has caused leading commodities to fall most notably iron-ore, copper and

gold. Geopolitics do not seem to matter to investors or the markets despite a deteriorating picture. As long as

there is little disruption to oil supply from two of the world’s largest producers, Saudi Arabia and Russia, the

leading markets are not overly concerned with hostilities in far-away places.

The insurance value of gold will become obvious should the situation change for the worse. Creeping

nationalism is becoming apparent in the Middle-Eastern conflicts, Russian ambitions and even in the Scottish

independence vote. After years of free market policies that created enormous economic growth, the current

tendency is to look inward and protect the local interests. This is just as much a threat to peace as it is to

economic growth. Any unexpected development in geopolitics that can have an impact on trade is likely to

worry markets.

The current bull market in US stocks is now over five years old, the second longest bull market in the last 100

years. Volatility is near historical lows and indicators of complacency are high. But there are some cracks

appearing. Property prices in London, one of the most favoured destinations for wealthy international investors

to park their cash, have recently recorded a drop, after five years of consistent and significant rises. American

real estate has also lost its momentum and there is some regional weakness. The Chinese property market has

also shown weakness in the past quarter reflecting the slow-down in the domestic economy. Property is the

most favoured asset-backed investment at present, in most cases winning over the allure of gold. But any further

weakness could spark selling by people who do not need a house in London, other than a pied-a-terre,

especially as it has been a spectacular investment in recent years. Capital moving out of real estate would be

looking for a safe haven and gold may provide the answer. We believe that any cause for market instability in

shares and tangible assets is likely to stimulate buying into gold ETFs and bullion pushing its price higher.

Precious metals mining shares have generally outperformed the commodities in the year to date. Admittedly

they are recovering from the extremely over-sold levels reached last year but, in any event, they seem to be

discounting higher gold prices in the near-future. The companies that have performed best are producers that

have managed to control costs, reduce output and focus on profitability. Some have taken advantage of low

valuations to make acquisitions. Others have moth-balled marginal projects and focused on the lower cost,

sustainable operations. Across the sector, there has been significant de-leveraging and restructuring of liabilities.

Overall, many of the earlier stage, speculative and higher cost projects have disappeared and the sector seems

healthier. Any recovery in the gold price, therefore, should support further re-rating. We believe Junior Gold

has a well-diversified portfolio of healthy operations that should benefit when the market changes.

Angelos Damaskos

3 October 2014

This report contains FTSE data. Source: FTSE International Limited (“FTSE”) © FTSE 2014. “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


Material Material Material Material Portfolio ChangesPortfolio ChangesPortfolio ChangesPortfolio Changes

For the year ended 31 August 2014

Major Purchases Cost (£) Major Sales Proceeds (£)

Aureus Mining 422,570 Rambler Metals & Mining 612,350

Luna Gold 355,149 Osisko Mining 419,406

Rio Alto Mining 349,495 Pretium 364,311

Kirkland Lake Gold 323,372 Teranga Gold 302,228

Endeavour Mining 312,726 Continental Gold 278,887

Golden Minerals 304,963 Kirkland Lake Gold 272,702

Teranga Gold 301,807 Asanko Gold 252,078

Resolute Mining 291,774 Banro Corp 230,195

Kingsgate Consolidated 278,469 Alexco Resource 185,123

Perseus Mining 268,859 Aureus Mining 134,206

Lake Shore Gold 255,727 Amara Mining 109,779

Pretium 251,986 Spanish Mountain Gold 28,069

Asanko Gold 236,932

Continental Gold 234,590

Great Panther Silver 229,616

Azumah Resources 200,139

Aurcana 186,591

Amara Mining 170,001

Scorpio Mining 158,388

Shanta Gold 144,784

Other purchases 1,007,514

Total purchases for the year 6,285,452 Total sales for the year 3,189,334

2


AUTHORISED STATUS AND GENERAL INFORMATIONAUTHORISED STATUS AND GENERAL INFORMATIONAUTHORISED STATUS AND GENERAL INFORMATIONAUTHORISED STATUS AND GENERAL INFORMATION

Authorised StatusAuthorised StatusAuthorised StatusAuthorised 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 ObjectivesInvestment ObjectivesInvestment ObjectivesInvestment Objectives

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 attaRights and Terms attaRights and Terms attaRights and Terms attaching to each Share Classching to each Share Classching to each Share Classching to each Share Class

Each share of each class represents a proportional entitlement to the assets of the scheme. The allocation of

income and taxation and the rights of each share in the event the scheme is wound up are on the same

proportional basis.

Change in ProspectusChange in ProspectusChange in ProspectusChange in Prospectus

From 13 December 2013, class P shares became available for purchase. Also, from that date the Authorised

Corporate Director’s periodic charge and Depositary fees are calculated on a daily basis.

Up to date key investor information documents, the full prospectus and reports and accounts for any fund can

be requested by the investor at any time.

3


AUTHORISED CORPORATE DIRECTOR’S STATEMENTAUTHORISED CORPORATE DIRECTOR’S STATEMENTAUTHORISED CORPORATE DIRECTOR’S STATEMENTAUTHORISED 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 HAMERALLAN HAMERALLAN HAMERALLAN HAMER

JOINT MANAGING DIRECTORJOINT MANAGING DIRECTORJOINT MANAGING DIRECTORJOINT MANAGING DIRECTOR

DOMDOMDOMDOM CLARKECLARKECLARKECLARKE

FINANCEFINANCEFINANCEFINANCE DIRECTOR DIRECTOR DIRECTOR DIRECTOR

MARLBOROUGH FUND MANAGERS LTDMARLBOROUGH FUND MANAGERS LTDMARLBOROUGH FUND MANAGERS LTDMARLBOROUGH FUND MANAGERS LTD

22222222 October 2014October 2014October 2014October 2014

STATSTATSTATSTATEMENT OF AUTHORISED CORPORATE DIRECTOR’S RESPONSIBILITIESEMENT OF AUTHORISED CORPORATE DIRECTOR’S RESPONSIBILITIESEMENT OF AUTHORISED CORPORATE DIRECTOR’S RESPONSIBILITIESEMENT OF AUTHORISED CORPORATE DIRECTOR’S RESPONSIBILITIES

Marlborough Fund Managers Ltd is the Authorised Corporate Director (ACD).

The rules contained in the Collective Investment Schemes Sourcebook (COLL) and made by the Financial

Conduct Authority pursuant to the Financial Services and Markets Act 2000 require the ACD to prepare

financial statements for each annual accounting period, reporting the financial position of the Company as at

the end of that period and of its income for the period. In preparing those financial statements the ACD is

required to:

- Comply with the Statement of Recommended Practice relating to Authorised Funds issued by the IMA,

the Instrument of Incorporation, and the rules in the COLL.

- Select suitable accounting policies and then apply them consistently.

- Make judgements and estimates that are reasonable and prudent.

- State whether applicable accounting standards have been followed, subject to any material departures

disclosed and explained in the financial statements.

- Prepare the financial statements on the going concern basis unless it is inappropriate to presume that

the Company will continue in operation.

The ACD is required to keep proper accounting records and to manage the Company in accordance with the

Regulations, the Instrument of Incorporation and the Prospectus.

4


DEPOSITARYDEPOSITARYDEPOSITARYDEPOSITARY’S’S’S’S REPORT REPORT REPORT REPORT TO THE SHAREHOLDERS OF TO THE SHAREHOLDERS OF TO THE SHAREHOLDERS OF TO THE SHAREHOLDERS OF JUNIOR JUNIOR JUNIOR JUNIOR GGGGOLDOLDOLDOLD

Statement of the Depositary’s responsibilities in respect of the SchemeStatement of the Depositary’s responsibilities in respect of the SchemeStatement of the Depositary’s responsibilities in respect of the SchemeStatement of the Depositary’s responsibilities in respect of the Scheme

The depositary is responsible for the safekeeping of all of the property of the company (other than tangible

moveable property) which is entrusted to it and for the collection of income that arises from that property.

It is the duty of the depositary to take reasonable care to ensure that the company is managed in accordance

with the Financial Conduct Authority’s Collective Investment Schemes Sourcebook (‘’The Sourcebook’’), the

Open-Ended Investment Companies Regulations 2001 (SI2001/1228) (the OEIC Regulations) and the company’s

Instrument of Incorporation and Prospectus, in relation to the pricing of, and dealings in, shares in the

company; the application of income of the company; and the investment and borrowing powers of the

company.

Report of the Depositary to the shareholders ofReport of the Depositary to the shareholders ofReport of the Depositary to the shareholders ofReport of the Depositary to the shareholders of Junior GolJunior GolJunior GolJunior Goldddd

Having carried out such procedures as we consider necessary to discharge our responsibilities as depositary of

the company it is our opinion, based on the information available to us and the explanations provided, that in

all material respects the company, acting through the Authorised Corporate Director:

(i) has carried out the issue, sale, redemption and cancellation, and calculation of the price of the company’s

shares and the application of the company’s income in accordance with the Sourcebook and, where

applicable, the OEIC Regulations, the instrument of incorporation and Prospectus of the company, and

(ii) has observed the investment and borrowing powers and restrictions applicable to the company.

HSBC BANK PLCHSBC BANK PLCHSBC BANK PLCHSBC BANK PLC LONDONLONDONLONDONLONDON

22222222 October 2014October 2014October 2014October 2014

5


INDEPENDENT AUDITORS’ REPORT TO THE INDEPENDENT AUDITORS’ REPORT TO THE INDEPENDENT AUDITORS’ REPORT TO THE INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERSSHAREHOLDERSSHAREHOLDERSSHAREHOLDERS OF JUNIOR OF JUNIOR OF JUNIOR OF JUNIOR GGGGOLDOLDOLDOLD

We have audited the financial statements of Junior Gold for the year ended 31 August 2014 which comprise

the statement of total return, the statement of change in net assets attributable to shareholders, the balance

sheet and related notes. The financial reporting framework that has been applied in their preparation is

applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting

Practice).

This report is made solely to the company’s shareholders, as a body, pursuant to paragraph 4.5.12 of the rules

of the Collective Investment Schemes Sourcebook. Our audit work has been undertaken so that we might state

to the company’s shareholders those matters we are required to state to them in an auditor's report and for no

other purposes. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone

other than the fund and the company and the company’s shareholders as a body, for our audit work, for this

report, or for the opinion we have formed.

Respective responsibilities of the authorised corporate director, the depositary and the auditorsRespective responsibilities of the authorised corporate director, the depositary and the auditorsRespective responsibilities of the authorised corporate director, the depositary and the auditorsRespective responsibilities of the authorised corporate director, the depositary and the auditors

As explained more fully in the Statement of Authorised Corporate Director’s responsibilities set out on page 4,

the authorised corporate director is responsible for the preparation of the financial statements and for being

satisfied that they give a true and fair view.

Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable

law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the

Auditing Practices Board’s Ethical Standards for Auditors.

Scope of the audit ofScope of the audit ofScope of the audit ofScope of the audit of the financial statementsthe financial statementsthe financial statementsthe financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to

give reasonable assurance that the financial statements are free from material misstatement, whether caused by

fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the

company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of

significant accounting estimates made by the Authorised Corporate Director; and the overall presentation of the

financial statements. In addition, we read all the financial and non-financial information in the annual report to

identify material inconsistencies with the audited financial statements and to identify any information that is

apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the

course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies

we consider the implications for our report.

Opinion on financial statementsOpinion on financial statementsOpinion on financial statementsOpinion on financial statements

In our opinion the financial statements:

• give a true and fair view of the state of the company’s affairs as at 31 August 2014 and of its net

expense and net gains or losses of the company property for the year then ended; and

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting

Practice.

Opinion on other matters prescribed by the Collective Investment Schemes SourcebookOpinion on other matters prescribed by the Collective Investment Schemes SourcebookOpinion on other matters prescribed by the Collective Investment Schemes SourcebookOpinion on other matters prescribed by the Collective Investment Schemes Sourcebook

In our opinion:

• the financial statements have been properly prepared in accordance with the Statement of

Recommended Practice for Authorised Funds issued by IMA, the rules contained in the Collective

Investment Schemes Sourcebook and the instrument of incorporation;

• there is nothing to indicate that proper accounting records for the company have not been kept or that

the financial statements are not in agreement with those records;

• we have been given all the information and explanations which, to the best of our knowledge and

belief, are necessary for the purposes of our audit; and

• the information given in the authorised corporate director’s report is consistent with the financial

statements.

22 October 2014 BARLOW ANDREWS LLP

CHARTERED ACCOUNTANTS & STATUTORY AUDITORS

78 CHORLEY NEW ROAD

BOLTON

BL1 4BY

6

JUNIOR JUNIOR JUNIOR JUNIOR GGGGOLDOLDOLDOLD

COMPARATIVE TABLESCOMPARATIVE TABLESCOMPARATIVE TABLESCOMPARATIVE TABLES

PrPrPrPrice and Distribution Record ice and Distribution Record ice and Distribution Record ice and Distribution Record

Accumulation shares were first offered at 100p on 1 September 2009. On 13 December 2013 class P shares

became available for purchase.

Highest Lowest Net accumulation Net income

price price per share per £1,000 invested

1 September 2009

Class C

2009 122.77p 96.07p - -

2010 177.09p 102.85p - -

2011 184.47p 127.25p - -

2012 145.42p 85.96p - -

2013 91.72p 28.74p - -

2014* 44.69p 29.87p - -

Class I

2009 122.65p 96.05p - -

2010 176.97p 102.77p - -

2011 184.38p 127.46p - -

2012 145.73p 86.28p - -

2013 92.08p 29.02p - -

2014* 45.06p 30.15p - -

Net income

per £1,000 invested

16 December 2013

Class P

2013 30.57p 29.02p - -

2014 45.20p 30.17p - -

(*up to 31 August 2014)

Number of shares in issue/Net asset value perNumber of shares in issue/Net asset value perNumber of shares in issue/Net asset value perNumber of shares in issue/Net asset value per shareshareshareshare

Net asset value Accumulation NAV per accumulation

of scheme property shares in issue Share

31 August 2012

Class C £10,481,952 11,071,329 94.68p

Class I £8,532,709 9,009,849 94.70p

31 August 2013

Class C £4,486,118 9,926,508 45.19p

Class I £3,354,478 7,371,737 45.50p

31 August 2014

Class C £3,909,233 10,270,967 38.06p

Class I £5,392,793 14,044,901 38.40p

Class P £786,121 2,037,856 38.58p

7


ONGOING CHARGESONGOING CHARGESONGOING CHARGESONGOING CHARGES

31 August 2013 Class C 1.95%

31 August 2013 Class I 1.70%

31 August 2014 Class C 1.97%

31 August 2014 Class I 1.67%

31 August 2014 Class P* 1.28%

*13 December 2013 to 31 August 2014

The ongoing charge figure is based on expenses for the year, except as indicated above, where the ongoing

charge figure has been annualised to give a more accurate representation of the true costs over one year.

This figure may vary from year to year. It excludes:

• Performance fees

• Portfolio transaction costs, except in the case of an entry/exit charge paid by the fund when buying or

selling units in another collective investment scheme.

SYNTHETIC RISK AND REWARD INDICATORSYNTHETIC RISK AND REWARD INDICATORSYNTHETIC RISK AND REWARD INDICATORSYNTHETIC RISK AND REWARD INDICATOR

Lower risk Higher risk

Typically lower rewards Typically higher rewards

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.

1 2 3 4 5 6 7

8


PORTFOLIO STATEMENTPORTFOLIO STATEMENTPORTFOLIO STATEMENTPORTFOLIO STATEMENT

as at 31 August 2014as at 31 August 2014as at 31 August 2014as at 31 August 2014

Holding orHolding orHolding orHolding or Bid Bid Bid Bid Percentage ofPercentage ofPercentage ofPercentage of

nominal valuenominal valuenominal valuenominal value valuevaluevaluevalue total net assetstotal net assetstotal net assetstotal net assets

as at 31 Aug 14as at 31 Aug 14as at 31 Aug 14as at 31 Aug 14 ££££ %%%%AUSTRALIA (16.71%, Aug 2013 - 15.83%)AUSTRALIA (16.71%, Aug 2013 - 15.83%)AUSTRALIA (16.71%, Aug 2013 - 15.83%)AUSTRALIA (16.71%, Aug 2013 - 15.83%)

7,000,000 Azumah Resources 145,843 1.45

150,000 Doray Minerals 52,791 0.52

72,000,000 Focus Minerals 405,433 4.02

500,000 Kingsgate Consolidated 254,803 2.53

2,000,000 Kingrose Mining 574,363 5.69

800,000 Resolute Mining 252,269 2.50Total Australia 1,685,502 16.71

CANADA (67.64%, Aug 2013 - 62.63%)CANADA (67.64%, Aug 2013 - 62.63%)CANADA (67.64%, Aug 2013 - 62.63%)CANADA (67.64%, Aug 2013 - 62.63%)

200,000 Alexco Resource 117,821 1.17

135,000 Allied Nevada Gold 299,360 2.97

1,800,000 Argentex Mining 70,026 0.69

300,000 Asanko Gold 410,150 4.07

500,000 Aurcana 163,949 1.62

150,000 Aurico Gold 401,814 3.98

2,250,000 Dynasty Gold 12,505 0.12

1,200,000 Endeavour Mining 606,889 6.02

140,000 Fortuna Ventures 433,381 4.30

450,000 Golden Minerals 277,602 2.75

600,000 Great Panther Silver 433,492 4.30

141,351 Kerr Mines 27,495 0.27

150,000 Kirkland Lake Gold 490,180 4.86

700,000 Lake Shore Gold 466,838 4.63

* 1,250,000 Llave Oro 55,576 0.55

500,000 Luna Gold 238,976 2.37

1,000,000 Maudore Minerals 30,567 0.30

* 274,500 Maudore Minerals Warrants 0 0.00

1,500,000 Perseus Mining 354,296 3.51

284,100 Richmont Mines 437,359 4.34

250,000 Rio Alto Mining 433,492 4.30

4,000,000 San Gold 277,880 2.75

2,000,000 Scorpio Mining 355,686 3.53

7,000,000 Spanish Mountain Gold 194,516 1.93

500,000 Teranga Gold 233,419 2.31Total Canada 6,823,269 67.64

UNITED KINGDOM (6.94%, Aug 2013 - 12.92%)UNITED KINGDOM (6.94%, Aug 2013 - 12.92%)UNITED KINGDOM (6.94%, Aug 2013 - 12.92%)UNITED KINGDOM (6.94%, Aug 2013 - 12.92%)

500,000 Amara Mining 123,750 1.23

2,000,000 Aureus Mining 460,000 4.55

* 500,000 Aureus Mining Wts (£0.625) 0 0.00

1,000,000 Shanta Gold 117,500 1.16Total United Kingdom 701,250 6.94

UNITED STATES (4.01%, Aug 2013 - 5.52%)UNITED STATES (4.01%, Aug 2013 - 5.52%)UNITED STATES (4.01%, Aug 2013 - 5.52%)UNITED STATES (4.01%, Aug 2013 - 5.52%)

* 705,880 ECI Exploration & Mining 404,138 4.01Total United States 404,138 4.01

Portfolio of investmentsPortfolio of investmentsPortfolio of investmentsPortfolio of investments 9,614,159 95.30

Net current assetsNet current assetsNet current assetsNet current assets 473,988 4.70Net assetsNet assetsNet assetsNet assets 10,088,147 100.00

* Unquoted Securities

9


FINANCIAL STATEMENTSFINANCIAL STATEMENTSFINANCIAL STATEMENTSFINANCIAL STATEMENTSFor the year ended 31 August 2014For the year ended 31 August 2014For the year ended 31 August 2014For the year ended 31 August 2014

Statement of total returnStatement of total returnStatement of total returnStatement of total return

NotesNotesNotesNotes 31 August 201431 August 201431 August 201431 August 2014 31 August 201331 August 201331 August 201331 August 2013

££££ ££££ ££££ ££££

Income:

Net capital gains/(losses) 4 (1,087,964) (8,446,055)

Revenue 6 7,465 25,022

Expenses 7 (148,278) (239,278)

Finance costs: Interest 9 (1,150) (1,098)

Net expense before taxation (141,963) (215,354)

Taxation 8 (1,064) (3,658)

Net expense after taxation (143,027) (219,012)

Total return before distributions (1,230,991) (8,665,067)

Finance costs: Distributions 9 (16,541) 8,893

Change in net assets attributable to shareholders frominvestment activities (1,247,532) (8,656,174)

Statement of change in net assets attributable to shareholdersStatement of change in net assets attributable to shareholdersStatement of change in net assets attributable to shareholdersStatement of change in net assets attributable to shareholders

31 August 201431 August 201431 August 201431 August 2014 31 August 201331 August 201331 August 201331 August 2013

££££ ££££ ££££ ££££

Opening net assets attributable to shareholders 7,840,596 19,014,661

Amounts receivable on issue of shares 6,381,650 1,681,841

Amounts payable on cancellation of shares (2,885,683) (4,198,699)

Amounts payable on share class conversions (712) 0

3,495,255 (2,516,858)

Stamp duty reserve tax (172) (1,033)

Change in net assets attributable to shareholders from

investment activities (1,247,532) (8,656,174)

Closing net assets attributable to shareholders 10,088,147 7,840,596

10


FINANCIAL STATEMENTSFINANCIAL STATEMENTSFINANCIAL STATEMENTSFINANCIAL STATEMENTSas at 31 August 2014as at 31 August 2014as at 31 August 2014as at 31 August 2014

Balance SheetBalance SheetBalance SheetBalance Sheet

NotesNotesNotesNotes 31 August 201431 August 201431 August 201431 August 2014 31 August 201331 August 201331 August 201331 August 2013

££££ ££££

Assets:Assets:Assets:Assets:

Investment assets 9,614,159 7,597,379

Debtors 10 287,267 513,632

Cash and bank balances 11 267,768 102,796

Total other assets 555,035 616,428

Total assets 10,169,194 8,213,807

Liabilities:Liabilities:Liabilities:Liabilities:

Investment liabilities 0 0

Creditors 12 (23,946) (306,767)

Bank overdrafts (57,101) (66,444)

Total other liabilities (81,047) (373,211)

Total liabilities (81,047) (373,211)

Net assets attributable to shareholdersNet assets attributable to shareholdersNet assets attributable to shareholdersNet assets attributable to shareholders 10,088,147 7,840,596

11


FINANCIAL STATEMENTSFINANCIAL STATEMENTSFINANCIAL STATEMENTSFINANCIAL STATEMENTS

Notes to the financial statementsNotes to the financial statementsNotes to the financial statementsNotes to the financial statements

1111 ACCOUNTING POLICIESACCOUNTING POLICIESACCOUNTING POLICIESACCOUNTING POLICIES

a Basis of preparation

The financial statements have been prepared under the historical cost convention, as modified by the revaluation of

investments, and in accordance with the Statement of Recommended Practice for Authorised funds issued by the

Investment Management Association in October 2010.

b Valuation of investments

The investments of the Fund have been valued using bid market values ruling on international stock exchanges at 12

noon on 29 August 2014, being the last valuation point of the year. Market value is defined by the SORP as fair value

which is generally the bid value of each security. Where applicable investments are valued to exclude accrued income.

Where a stock is unlisted or where there is a non liquid market, a valuation for this stock has been obtained from

market makers where possible, and suspended stocks are normally valued at their suspension price. However, where

the Manager believes that these prices do not reflect a fair value, or where no reliable price exists for a security, it is

valued at a price which in the opinion of the Manager reflects a fair and reasonable price for that investment.

All holdings of warrants are valued at the exercise price less the price of the underyling common shares. Llave Oro

and ECI Exploration are being priced at best estimate by the fund manager.

c Foreign exchange

All transactions in foreign currencies are converted into sterling at the rates of exchange ruling at the date of such

transactions. Foreign currency assets and liabilities at the end of the accounting period are translated at the exchange

rates at 12.00 noon on 29 August 2014.

d Revenue

Revenue includes dividends on shares when the security is quoted ex - dividend by 31 August 2014 and interest

received and accrued up to that date. All UK dividends are disclosed net of UK tax.

e Expenses

All expenses (other than those relating to the purchase and sale of investments) are charged against income as shown

in these accounts.

f Taxation/Deferred taxation

The tax accounting treatment follows that of the principal amount. Deferred tax is provided in full in respect of taxation

deferred by timing differences between the treatment of certain items for taxation and accounts purposes. The deferred

tax balance is not discounted.

2222 DISTRIBUTION POLICIESDISTRIBUTION POLICIESDISTRIBUTION POLICIESDISTRIBUTION POLICIES

a Basis of distribution

The policy of the Fund is to distribute any net revenue shown as such in the statement of total return. This amount

therefore takes into account the treatment of accumulation shares and of management expenses as described in the

accounting policies above.

b Apportionment to multiple share classes

The ACD's periodic charge is directly attributable to individual share classes. All other income and expenses are

allocated to the share classes pro-rata to the value of the net assets of the relevant share class on the day that the

income or expenses are recognised.

c Accumulation shares

Revenue attributable to accumulation shareholders is retained at the end of each distribution period and represents

a reinvestment of revenue.

d Equalisation

Equalisation applies only to shares purchased during the distribution period. It is the average amount of income included

in the purchase price of all group 2 shares and is refunded to holders of these shares as a return of capital. Being capital

it is not liable to UK income tax but must be deducted from the cost of the shares for UK capital gains tax purposes.

12




3333 RISK MANAGEMENT POLICIESRISK MANAGEMENT POLICIESRISK MANAGEMENT POLICIESRISK MANAGEMENT POLICIES

In pursuing its investment objective as stated on page 3, the Fund holds a number of financial instruments. The Fund's

financial instruments comprise securities held in accordance with the investment objectives and policies together with

cash balances, debtors and creditors that arise directly from its operations, for example, in respect of sales and purchases

awaiting settlement, amounts receivable for creations and payable for redemptions and debtors for accrued income.

The main risks arising from the Fund's financial instruments and the ACD's policies for managing these risks are

summarised below. These policies have been applied throughout the year.

Market price riskMarket price riskMarket price riskMarket price risk

Market price risk is the risk that the value of the Fund's investment holdings will fluctuate as a result of changes in market

prices caused by factors other than interest rate or foreign currency movement. Market price risk arises mainly from

uncertainty about future prices of financial instruments the Fund holds. It represents the potential loss the Fund might suffer

through holding market positions in the face of price movements. The Fund's investment portfolio is exposed to market price

fluctuations which are monitored by the ACD in pursuance of the investment objective and policy as set out in the

Full Prospectus.

Investment limits set out in the Instrument of Incorporation, the Full Prospectus and in the Collective Investment

Schemes Sourcebook mitigate the risk of excessive exposure to any particular security or issuer.

Foreign currency riskForeign currency riskForeign currency riskForeign currency risk

The income and capital value of the Fund's investments can be affected by foreign currency translation movements as some

of the Fund's assets and income are denominated in currencies other than sterling which is the Fund's functional currency.

The ACD has identified three principal areas where foreign currency risk could impact the Fund. These are, movements

in exchange rates affecting the value of investments, short-term timing differences such as exposure to exchange rate

movements in the period between when an investment purchase or sale is entered into and the date when settlement of the

investment occurs, and finally movements in exchange rates affecting income received by the Fund. The Fund converts all

receipts of income, received in currency, into sterling on the day of receipt.

Interest rate risk Interest rate risk Interest rate risk Interest rate risk

Interest rate risk is the risk that the value of the Fund's investment holdings will fluctuate as a result of changes in interest rates.

The Fund's cash holdings are held in deposit accounts, whose rates are determined by the banks concerned on a daily basis.

Liquidity riskLiquidity riskLiquidity riskLiquidity risk

The Fund's assets comprise mainly of readily realisable securities. The main liability of the Fund is the redemption of any

shares that investors wish to sell. Assets of the Fund may need to be sold if insufficient cash is available to finance such

redemptions. The liquidity of the Fund's assets is regularly reviewed by the ACD.

Credit riskCredit riskCredit riskCredit risk

Certain transactions in securities that the Fund enters into expose it to the risk that the counterparty will not deliver the

investment for a purchase, or cash for a sale after the Fund has fulfilled its responsibilities. The Fund only buys and sells

investments through brokers which have been approved by the ACD as an acceptable counterparty.

13




4444 NET CAPITAL GAINS/(LOSSES)NET CAPITAL GAINS/(LOSSES)NET CAPITAL GAINS/(LOSSES)NET CAPITAL GAINS/(LOSSES) 31 August 201431 August 201431 August 201431 August 2014 31 August 201331 August 201331 August 201331 August 2013

££££ ££££

The net gains/(losses) on investments during the year comprise:

Non-derivative securities (1,079,338) (8,426,009)

Currency gains/(losses) (5,933) (16,281)

Transaction charges (2,693) (3,765)Net capital gains/(losses) Net capital gains/(losses) Net capital gains/(losses) Net capital gains/(losses) (1,087,964) (8,446,055)

5555 PURCHASES, SALES AND TRANSACTION COSTSPURCHASES, SALES AND TRANSACTION COSTSPURCHASES, SALES AND TRANSACTION COSTSPURCHASES, SALES AND TRANSACTION COSTS 31 August 201431 August 201431 August 201431 August 2014 31 August 201331 August 201331 August 201331 August 2013

££££ ££££

Purchases excluding transaction costs 6,274,168 4,368,593

Commissions 11,281 5,040

Contract Charges and PTM Levy 3 0

Total purchase transaction costs 11,284 5,040Purchases including transaction costsPurchases including transaction costsPurchases including transaction costsPurchases including transaction costs 6,285,452 4,373,633

Sales excluding transaction costs 3,195,736 7,778,642

Commissions (6,391) (16,096)

Contract Charges and PTM Levy (11) (12)

Total sale transaction costs (6,402) (16,108)Sales net of transaction costsSales net of transaction costsSales net of transaction costsSales net of transaction costs 3,189,334 7,762,534

Transaction handling chargesTransaction handling chargesTransaction handling chargesTransaction handling charges 2,693 3,765

6666 REVENUEREVENUEREVENUEREVENUE 31 August 201431 August 201431 August 201431 August 2014 31 August 201331 August 201331 August 201331 August 2013

££££ ££££

Overseas dividends 7,430 24,388

Bank interest 35 634Total revenueTotal revenueTotal revenueTotal revenue 7,465 25,022

7777 EXPENSESEXPENSESEXPENSESEXPENSES 31 August 201431 August 201431 August 201431 August 2014 31 August 201331 August 201331 August 201331 August 2013

££££ ££££

Payable to the ACD or associate:

ACD's periodic charge 136,016 223,737

Registration fees 2,113 2,682

138,129 226,419

Payable to the Depositary or associate:

Depositary's fees 3,053 4,897

Safe Custody fees 1,942 3,140

4,995 8,037

Other expenses:

Financial Conduct Authority Fee 175 145

Audit fee 3,360 2,700

Price publication costs 1,619 1,977

5,154 4,822

Total expenses Total expenses Total expenses Total expenses 148,278 239,278

14




8888 TAXATIONTAXATIONTAXATIONTAXATION 31 August 201431 August 201431 August 201431 August 2014 31 August 201331 August 201331 August 201331 August 2013

££££ ££££

a Analysis of the tax charge for the year

UK Corporation tax at 20% 0 0

Overseas tax 1,064 3,658Total tax chargeTotal tax chargeTotal tax chargeTotal tax charge 1,064 3,658

b Factors affecting the tax charge for the year

Net expense before taxation (141,963) (215,354)

Corporation tax at 20% (28,393) (43,071)

Effects of:

Revenue not subject to taxation (1,486) (4,878)

Unrelieved excess management expenses 29,879 47,949

Overseas tax 1,064 3,658Current tax chargeCurrent tax chargeCurrent tax chargeCurrent tax charge 1,064 3,658

At 31 August 2014 the Fund had surplus management expenses of £1,841,978 (31.08.13 - £1,692,584). It is unlikely that

the Fund will generate sufficient taxable profits in the future to utilise these expenses and, therefore, no deferred tax asset

has been recognised.

9999 FINANCE COSTSFINANCE COSTSFINANCE COSTSFINANCE COSTS 31 August 201431 August 201431 August 201431 August 2014 31 August 201331 August 201331 August 201331 August 2013

££££ ££££

Distributions and interestDistributions and interestDistributions and interestDistributions and interest

The distributions take account of revenue deducted on the issue of shares and revenue received on the cancellation of

shares, and comprise:

Amounts deducted/(added) on cancellation of shares 2,462 (16,990)

Amounts deducted on issue of shares 14,791 8,097

Equalisation on conversions (712) 0

Finance costs: DistributionsFinance costs: DistributionsFinance costs: DistributionsFinance costs: Distributions 16,541 (8,893)

Finance costs: Interest 1,150 1,098Total finance costsTotal finance costsTotal finance costsTotal finance costs 17,691 (7,795)

Net deficit of revenue for the year (159,568) (210,119)Net expense after taxation for the yearNet expense after taxation for the yearNet expense after taxation for the yearNet expense after taxation for the year (143,027) (219,012)

10101010 DEBTORSDEBTORSDEBTORSDEBTORS 31 August 201431 August 201431 August 201431 August 2014 31 August 201331 August 201331 August 201331 August 2013

££££ ££££

Amounts receivable for issue of shares 286,923 126,812

Sales awaiting settlement 0 386,820

Accrued income 344 0Total debtorsTotal debtorsTotal debtorsTotal debtors 287,267 513,632

11111111 CASH AND BANK BALANCESCASH AND BANK BALANCESCASH AND BANK BALANCESCASH AND BANK BALANCES 31 August 201431 August 201431 August 201431 August 2014 31 August 201331 August 201331 August 201331 August 2013

££££ ££££

Capital bank account 267,768 102,796Total cash and bank balancesTotal cash and bank balancesTotal cash and bank balancesTotal cash and bank balances 267,768 102,796

12121212 CREDITORSCREDITORSCREDITORSCREDITORS 31 August 201431 August 201431 August 201431 August 2014 31 August 201331 August 201331 August 201331 August 2013

££££ ££££

Amounts payable for cancellation of shares 80 71,124

Purchases awaiting settlement 0 228,826

Accrued expenses 23,866 6,817Total creditorsTotal creditorsTotal creditorsTotal creditors 23,946 306,767

15




13131313 RELATED PARTIESRELATED PARTIESRELATED PARTIESRELATED PARTIES

The ACD is involved in all transactions in the shares of the Fund, the aggregate values of which are set out in the

statement of change in net assets attributable to shareholders on page 10.

During the year the ACD held shares in the sub-Fund and had holdings of 100.653 class 'C', 100.001 class 'I' and

95.000 class 'P' shares at the year end.

During the year, the Fund paid management and registration charges to its ACD as follows:

Outstanding at year end Outstanding at year end Outstanding at year end Outstanding at year end


££££ ££££ ££££

Marlborough Fund Managers Ltd 138,129 13,336 436

During the year, the scheme paid trustee and safe custody fees and transaction charges to its trustee as follows:

Outstanding at year end Outstanding at year end Outstanding at year end Outstanding at year end


££££ ££££ ££££

HSBC Bank 7,688 3,595 1,387

14141414 SHARE CLASSESSHARE CLASSESSHARE CLASSESSHARE CLASSES

The Fund currently has three share classes: Class 'C' ( minimum investment £1,000); Class 'I' (minimum investment £50,000);

Class 'P' (minimum investment £1,000,000). The annual management charges are 1.75%, 1.5% and 1.1% respectively.

Accumulation shares only are available in each class. The net asset value of each share class, the net asset value per share,

and the number of shares in each class are given in the comparative table on page 7.

15151515 RISK DISCLOSURESRISK DISCLOSURESRISK DISCLOSURESRISK DISCLOSURES

Currency Currency Currency Currency

At the year end date a portion of the net assets of the Fund were denominated in currencies other than sterling with the effect

that the balance sheet and total return can be affected by exchange rate movements. These net assets consist of the following:

Foreign currency exposure at 31 August 2014: Net current

Investments assets Total

£ £ £

Australian Dollar 1,685,502 0 1,685,502

Canadian Dollar 6,823,269 0 6,823,269

United States Dollar 404,138 347 404,4858,912,909 347 8,913,256

Foreign currency exposure at 31 August 2013: Net current

Investments assets Total

£ £ £

Australian Dollar 1,240,335 0 1,240,335

Canadian Dollar 4,910,325 150,581 5,060,906

United States Dollar 432,594 0 432,5946,583,254 150,581 6,733,835

16

Marlborough Fund Managers Limited Marlborough House 59 Chorley New Road Bolton BL1 4QP Customer Support: 0808 145 2500 Intermediary Support: 0808 145 2502 Dealing: 0808 145 2501 Fax: 01204 533045 Email: [email protected] Website: www.marlboroughfunds.com Marlborough Fund Managers Limited Registered in England No. 2061177 Authorised and regulated by the Financial Conduct Authority and a member of IMA

mailto:[email protected]

http://www.marlboroughfunds.com/

Junior GoldJunior Gold · 2014. 11. 26. · JUNIOR GOLD JUNIOR GOLD MMaatteerriiaall Material...

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