annual report & financial statements - omnis investments · 2020-01-31 · 256987 02 omnis...

Annual Report &

Financial Statements Omnis Portfolio Investments ICVC For the year ended 30 September 2019

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cont

ents Page

Omnis Portfolio Investments ICVC

Directory* 3

Authorised Corporate Director’s (“ACD”) Report* 5

Certification of Financial Statements by Directors of the Authorised Corporate Director* 9

Statement of the ACD’s Responsibilities 10

Statement of the Depositary’s Responsibilities in respect of the Scheme and Report of the Depositary 11

Independent Auditor’s Report to Shareholders 12

Accounting Policies and Financial Instruments 14

Fund Investment Commentaries and Financial Statements*

Omnis Absolute Return Bond Fund 23

Omnis Alternative Strategies Fund 44

Omnis Asia Pacific (ex-Japan) Equity Fund 59

Omnis Asia Pacific Equity Fund 76

Omnis Developed Markets (ex-UK, ex-US) Equity Fund 90

Omnis Diversified Returns Fund 103

Omnis Emerging Markets Equity Fund 128

Omnis European Equity Fund 144

Omnis European Equity Leaders Fund 158

Omnis European Equity Opportunities Fund 177

Omnis Global Bond Fund 196

Omnis Global Emerging Markets Equity Leaders Fund 241

Omnis Global Emerging Markets Equity Opportunities Fund 258

Omnis Income & Growth Fund 276

Omnis Japanese Equity Fund 297

Omnis Short-Dated Bond Fund 317

Omnis Sterling Corporate Bond Fund 339

Omnis Strategic Bond 360

Omnis UK All Companies Fund 392

Omnis UK Equity Income 410

Omnis UK Gilt Fund 428

Omnis UK Smaller Companies Fund 444

Omnis US Equity Fund 462

Omnis US Equity Leaders Fund 477

Omnis US Smaller Companies Fund 496

General Information 518

* Collectively, these comprise the Authorised Corporate Director’s Report.

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* Please note that telephone calls may be recorded for monitoring and training purposes, and to confirm investors’ instructions.

The Company and Head Office Omnis Portfolio Investments ICVC Washington House Lydiard Fields Swindon SN5 8UB Incorporated in England and Wales under registration number IC000982 Website address: www.omnisinvestments.com (Authorised and regulated by the FCA) Directors and Secretary of the ACD Kevin Chidwick Peter Davis Douglas Naismith Dominic Sheridan Toni Meadows (appointed 5 August 2019) Andy Whipp (Secretary) Registrar DST Financial Services International Limited DST House, St Nicholas Lane Basildon Essex SS15 5FS Auditor Deloitte LLP Statutory Auditor 110 Queen Street Glasgow, G1 3BX Customer Service Centre Omnis Portfolio Investments ICVC PO BOX 10191 Chelmsford CM99 2AP Telephone: 0345 140 0070* Depositary State Street Trustees Limited 20 Churchill Place London E14 5HJ (Authorised and regulated by the FCA)

Authorised Corporate Director (“ACD”) Omnis Investments Limited Washington House Lydiard Fields Swindon SN5 8UB (Authorised and regulated by the FCA) Investment Managers AXA Investment Managers UK Limited 7 Newgate Street London EC1A 7NX (Authorised and regulated by the FCA) FIL Pensions Management Oakhill House, 130 Tonbridge Road Hildenborough, Tonbridge Kent TN11 9DZ (Authorised and regulated by the FCA) Fulcrum Asset Management LLP Marble Arch House 66 Seymour Street London W1H 5BT (Authorised and regulated by the FCA) Franklin Templeton Fund Management Limited Cannon Place, 78 Cannon Street London EC4N 6HL (Authorised and regulated by the FCA) Hermes Investment Management Limited 150 Cheapside London EC2V 6ET (Authorised and regulated by the FCA) Jupiter Asset Management Limited The Zig Zag Building 70 Victoria Street London SW1E 6SQ (Authorised and regulated by the FCA)

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Directory

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Investment Managers (continued) Octopus Investments Limited 33 Holborn London EC1N 2HT (Authorised and regulated by the FCA) Royal London Asset Management Limited 55 Gracechurch Street London EC3V 0RL (Authorised and regulated by the FCA) RWC Asset Management LLP Verde 4th Floor 10 Bressenden Place London SW1E 5DH (Authorised and regulated by the FCA) Schroder Investment Management Limited 1 London Wall Place London EC2Y 5AU (Authorised and regulated by the FCA) T. Rowe Price International Limited 60 Queen Victoria Street London EC4N 4TZ (Authorised and regulated by the FCA) Threadneedle Asset Management Limited 78 Cannon Street London EC4N 6AG (Authorised and regulated by the FCA) Veritas Asset Management LLP 90 Long Acre London WC2E 9RA (Authorised and regulated by the FCA)

Directory (continued)

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We are pleased to present the Annual Report & Audited Financial Statements for Omnis Portfolio Investments ICVC for the year ended 30 September 2019.

Authorised Status

Omnis Portfolio Investments ICVC (“the Company”) is an investment company with variable capital incorporated in England and Wales under registered number IC000982 and authorised by the Financial Conduct Authority (“FCA”) with effect from 3 September 2013. The Company has an unlimited duration.

Shareholders are not liable for the debts of the Company.

Head office: Washington House, Lydiard Fields, Swindon, SN5 8UB

The Head Office is the address of the place in the UK for service on the Company of notices or other documents required or authorised to be served on it.

Structure of the Company

The Company is structured as an umbrella company, in that different Funds may be established from time to time by the ACD with the approval of the FCA. On the introduction of any new Fund or Class, a revised prospectus will be prepared setting out the relevant details of each Fund or Class.

The Company is a UCITS scheme.

The assets of each Fund will be treated as separate from those of every other Fund and will be invested in accordance with the investment objective and investment policy applicable to that Fund. Investment of the assets of each of the Funds must comply with the FCA’s Collective Investment Schemes Sourcebook (“COLL”) and the investment objective and policy of the relevant Fund.

Cross Holdings

There were no shares in any sub-fund held by other sub-funds of the ICVC.

Base Currency

The base currency of the Company is Pounds Sterling. Each Fund and Class is designated in 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 Values of each of the Funds.

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Authorised Corporate Director’s (“ACD”) Report

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Investment Review Year to 30th September 2019

In Sterling terms, the year to end September 2019 was generally good for most asset classes but this was in no small part due to the impact of Brexit uncertainty which has dragged the pound lower. Global economic growth is soft compared to history and has stayed within a narrow range for some years, whilst inflationary pressures have not surfaced in-spite of low unemployment. The absence of inflation in a low growth world has allowed monetary authorities to keep interest rates low. This so called “lower for longer” environment has been a good backdrop for companies to grow their earnings and has generally supported stock market levels. However, the economic recovery since the global financial crisis of 2008 has been one of the longest but also the slowest in recent history. The positive environment relies heavily on the delicate balance of low growth, low inflation and supportive economic policies. This year there have been prolonged periods when investors have questioned the longevity of the current economic upswing and factors such as politics played a lead role in driving investor sentiment.

The uncertainty created by the developing trade war between the US and its major trading partners, particularly China, impacted the behaviour of many sectors of the economy, from consumers to manufacturers to government. In addition, the UK’s inability to agree a pathway out of the European Union impacted decision-making as the relationship remains in limbo.

Earnings growth and companies buying back their own shares have supported equity markets for some years but this year witnessed very little earnings growth for the first time in a number of years. Investors have therefore been very sensitive towards economic policy changes as the continuation of the positive economic cycle needs the support of loose fiscal and monetary policy. For this reason, the year began in turbulent fashion as markets questioned the stated intention of the Federal Reserve in the US to raise interest rates. The fear being that more interest rate increases would impact economic growth prospects. The year was therefore permeated by periods in which investors fretted about the impact of policy changes and politics on growth. Although economic activity has slowed in many regions it has remained positive.

In the UK, Brexit or the lack of it dominated all our lives. The deal that the then Prime Minister, Theresa May, agreed with Europe failed to pass through parliament on a number of occasions, due to dislike of the terms around a back-stop for Ireland. This ultimately led to her resignation and replacement by Boris Johnson who, in-spite of parliament, refused to remove the threat of a disorderly ‘no deal’ exit as a negotiating tool. The UK equity market is diverse and derives much of its earnings base from overseas markets. Although the uncertainty of Brexit did impact more domestically focused businesses, the overall market was able to generate positive returns, aided by this global earnings base and a healthy dividend yield of 5%.

Economic activity in Europe has slowed markedly during the period, causing the European Central Bank (ECB) to respond by cutting interest rates further into negative territory, restarting quantitative easing and committing to continue with asset purchases until it achieves its inflation target. This shift from a date-dependent to a state-dependent form of forward guidance is significant in that it could lead to a large expansion in the total size of assets purchased by the central bank. While those asset purchases may have a limited effect on their own, if combined with fiscal stimulus from the economies that can afford it, they could help to support growth. But the timing of any fiscal stimulus from Europe remains uncertain.

Authorised Corporate Director’s (“ACD”) Report (continued)


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President Trump has a different style of leadership from what markets are used to dealing with. His willingness to communicate directly with the world in an unfiltered way via Twitter is something that has wrong footed markets a few times in the last year. His policies have undoubtedly given the US economy a temporary boost and kept the US dollar strong. Activity is now slowing to below trend growth, not helped by the level of the dollar, and the on-going belief in tariffs as an instrument of trade policy which looks likely to cause a further slowdown. Given the proximity of the US election we expect the US and China to find a limited solution to their on-going dispute, but as at the end of the period this had not been forthcoming. Instead a new political uncertainty has been introduced with the start of impeachment hearings in September, 2019.

Even though unemployment remains at very low levels in the US, inflation has stayed low and this has afforded the Federal Reserve room to lower interest rates twice, effectively reversing the rate rise from the start of the 4th quarter of 2018, a move that had originally triggered a period of market volatility.

In Japan, the main domestic political event was the Upper House elections in July, which were won comfortably by Shinzo Abe‘s Liberal Democratic Party. However, the party fell just short of the two-thirds majority, which would have facilitated Mr Abe’s pursuit of constitutional reform. For months, investors have been concerned by the potential impact of a planned hike in consumption tax. This rise came into place just after the end of the period, so it remains to be seen what impact it has on an economy that is already feeling the effects of the global slowdown in manufacturing. Faced with these risks, Japanese consumer confidence has continued to decline. The Bank of Japan resisted the temptation to ease policy and said it would review the outlook at its next meeting, perhaps hinting at further easing to come.

In Asian and Emerging Markets, the rate of slowdown in Chinese economic activity is a key factor with far wider global implications. China now represents a large proportion of global economic growth. In all areas Chinese growth has slowed to levels not seen for many years. As it progresses to being more domestic demand led and less reliant on capital spending directed by the government, this slowdown is understandable. If China can manage this transition successfully it would be to the benefit of the long-term stability of the region, but the reliance of global growth on China means that any factors seen to upset this progression impacts market behaviour. It is in this context that we must view the trade wars between the US and China, meaning that a resolution would be taken positively by markets.

Fixed income markets posted above average returns for the year, as government bond yields continued to fall (and prices rose) in most major markets. Concerns about future economic growth rates caused the yield curve to temporarily invert between 2 and 10 years, in both the UK and US. This is usually a sign of economic slowdown and a belief that interest rates are too high but thus far the environment remains supportive to bonds. With global growth within a tight range it has been good for corporate cashflows. This has seen spreads on corporate debt remain within a tight range when compared to government bond yields, which have been falling.



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The local currency gains for government bond investors have been good for some years, but in an environment where yields are negative across the term structure in markets like Germany and Japan, it is difficult to see this positive trend continuing at the pace it has done in recent years.

Toni Meadows Chief Investment Officer Omnis Investments Limited

30 October 2019

This review should be read in conjunction with the individual Omnis fund commentaries from the Investments Managers of the funds below.

Brexit

At the time of reporting, the UK remained in the process of negotiating its departure from the EU. The political and economic consequences are unknown and it is currently unclear how the UK’s departure from the EU will affect aspects of the UK’s regulatory regime. This may have an effect on the securities and foreign exchange markets (and therefore on the Omnis funds) in terms of volatility. Omnis distributes its funds entirely in the United Kingdom and is not reliant on, and does not utilise, cross-border, distribution provisions currently in place with other EU Member States.



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Director’s Certification

This report has been prepared in accordance with the requirements of COLL, as issued and amended by the FCA. We hereby certify the report on behalf of the Directors of Omnis Investments Limited.

The Directors are of the opinion that it is appropriate to continue to adopt the going concern basis (excluding the 6 following funds which are due to close: Omnis Alternative Strategies Fund, Omnis Asia Pacific Equity Fund, Omnis Developed Markets (ex-UK,ex-US) Equity Fund, Omnis Emerging Markets Equity Fund, Omnis European Equity Fund and Omnis US Equity Fund) in the preparation of the financial statements as the assets of the Funds consist predominately of securities that are readily realisable and, accordingly, the Funds have adequate resources to continue in operational existence for the foreseeable future.

Following approval from shareholders a Scheme of Arrangement was implemented on 24 August 2019 transferring assets from the following funds to new/existing funds within the ICVC:

The following 4 Funds were no longer available for investment from 23 August 2019:

• Omnis Alternative Strategies Fund

• Omnis Emerging Markets Equity Fund

• Omnis European Equity Fund

• Omnis US Equity Fund

The following nine Funds were launched on 24 August 2019:

• Omnis Absolute Return Bond Fund

• Omnis Diversified Returns Fund

• Omnis European Equity Leaders Fund

• Omnis European Equity Opportunities Fund

• Omnis Global Emerging Markets Equity Leaders Fund

• Omnis Global Emerging Markets Equity Opportunities Fund

• Omnis Short-Dated Bond Fund

• Omnis US Equity Leaders Fund

• Omnis US Smaller Companies Fund

Following the Scheme the Directors confirm that the ICVC and Discontinuing Funds will be able to meet all liabilities during the 12 months to 30 September 2020.

Dominic Sheridan

Toni Meadows

Director, For and in Behalf of Omnis Investment Limited

27 January 2020

Certification of Financial Statements by Directors of the Authorised Corporate Director For the year ended 30 September 2019


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The Authorised Corporate Director (“ACD”) of Omnis Managed Investments ICVC (“Company”) is responsible for preparing the Annual Report and the Financial Statements in accordance with the Open-Ended Investment Companies Regulations 2001 (“the OEIC Regulations”) as amended, the FCA’s Collective Investment Schemes Sourcebook (“COLL”) and the Company’s Instrument of Incorporation.

The OEIC Regulations and COLL require the ACD to prepare Financial Statements for each annual accounting period which:

• are in accordance with United Kingdom Generally Accepted Accounting Practice (“United Kingdom Accounting Standards and applicable law”) including Financial Reporting Standards 102 (“FRS 102”) applicable in the UK and Republic of Ireland and the Statement of Recommended Practice: “Financial Statements of UK Authorised Funds” issued by the Investment Association (formerly Investment Management Association) (“IMA SORP”) in May 2014; and

• give a true and fair view of the financial position of the sub funds as at the end of that period and the net revenue and the net capital gains or losses on the property of the sub funds for that period.

In preparing the Financial Statements, the ACD is required to:

• select suitable accounting policies and then apply them consistently;

• make judgments and estimates that are reasonable and prudent;

• state whether applicable UK Accounting Standards and the IMA SORP have been followed, subject to any material departures disclosed and explained in the Financial Statements; and

• 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 responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Financial Statements comply with the applicable IMA SORP and United Kingdom Accounting Standards and applicable law. The ACD is also responsible for the system of internal controls, for safeguarding the assets of the Company and for taking reasonable steps for the prevention and detection of fraud and other irregularities.

In accordance with COLL 4.5.8BR, the Annual Report and the audited Financial Statements were approved by the board of directors of the ACD of the Company and authorised for issue on 21 January 2020.

Omnis Investments Limited

27 January 2020

Statement of the ACD’s Responsibilities For the year ended 30 September 2019


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The Depositary must ensure that the Company is managed in accordance with the Financial Conduct Authority’s Collective Investment Schemes Sourcebook, the Open-Ended Investment Companies Regulations 2001 (SI 2001/1228), as amended, the Financial Services and Markets Act 2000, as amended, (together “the Regulations”), the Company’s Instrument of Incorporation and Prospectus (together “the Scheme documents”) as detailed below.

The Depositary must in the context of its role act honestly, fairly, professionally, independently and in the interests of the Company and its investors.

The Depositary is responsible for the safekeeping of all custodial assets and maintaining a record of all other assets of the Company in accordance with the Regulations.

The Depositary must ensure that:

• the Company’s cash flows are properly monitored and that cash of the Company is booked into the cash accounts in accordance with the Regulations;

• the sale, issue, repurchase, redemption and cancellation of shares are carried out in accordance with the Regulations;

• the value of shares of the Company are calculated in accordance with the Regulations;

• any consideration relating to transactions in the Company’s assets is remitted to the Company within the usual time limits;

• the Company’s income is applied in accordance with the Regulations; and

• the instructions of the Authorised Fund Manager (“the AFM”) which is the UCITS Management Company, are carried out (unless they conflict with the Regulations).

The Depositary also has a duty to take reasonable care to ensure that Company is managed in accordance with the Regulations and Scheme documents in relation to the investment and borrowing powers applicable to the Company.

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 AFM:

(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 Regulations and the Scheme documents of the Company, and

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

State Street Trustees Limited Depositary London

27 January 2020

Statement of the Depositary’s Responsibilities in Respect of the Scheme and Report of the Depositary to the Shareholders of the Portfolio Investments ICVC For the year ended 30 September 2019


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Report on the audit of the financial statements

Opinion In our opinion the financial statements of Omnis Portfolio Investments ICVC (the ‘Company’):

• give a true and fair view of the financial position of the Company as at 30 September 2019 and of the net revenue and expense and the net capital gains and losses on the property of the Company for the period ended 30 September 2019; and

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice, including Financial Reporting Standard 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, the Statement of Recommended Practice “Financial Statements of UK Authorised Funds”, the rules in the Collective Investment Schemes Sourcebook and the Instrument of Incorporation.

We have audited the financial statements of the Company which comprise the Accounting Policies and Financial Instrument and for each sub-fund: • the Statement of Total Return; • the Statement of Change in Net Assets Attributable to Shareholders; • the Balance Sheet; • the related notes; and

• the distribution tables.

The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (United Kingdom Generally Accepted Accounting Practice), the Statement of Recommended Practice: “Financial Statements of UK Authorised Funds” issued by the Investment Association in May 2014, the Collective Investment Schemes Sourcebook and the Instrument of Incorporation.

Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor's responsibilities for the audit of the financial statements section of our report.

We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

We are required by ISAs (UK) to report in respect of the following matters where:

• the authorised corporate director’s (ACD’s) use of the going concern basis of accounting in preparation of the financial statements is not appropriate; or

• the ACD has not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

We have nothing to report in respect of these matters.

Other information

The ACD is responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on

Independent Auditor’s Report to Shareholders For the year ended 30 September 2019


the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in respect of these matters.

Responsibilities of depositary and ACD As explained more fully in the depositary’s responsibilities statement and the ACD’s responsibilities statement, the depositary is responsible for the safeguarding the property of the Company and the ACD is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the ACD determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the ACD is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the ACD either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Report on other legal and regulatory requirements

Opinions on other matters prescribed by the Collective Investment Schemes Sourcebook In our opinion: • proper accounting records for the Company and the sub-funds have been kept and the financial

statements are in agreement with those records; • we have received all the information and explanations which, to the best of our knowledge and

belief, were necessary for the purposes of our audit; and • the information disclosed in the annual report for the period ended 30 September 2019 for the

purpose of complying with Paragraph 4.5.9R of the Collective Investment Schemes Sourcebook is consistent with the financial statements.

Use of our report This report is made solely to the Company’s shareholders, as a body, in accordance with Paragraph 4.5.12R of the Collective Investment Schemes Sourcebook of the Financial Conduct Authority. 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 purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s shareholders as a body, for our audit work, for this report, or for the opinions we have formed.

Deloitte LLP Statutory Auditor Glasgow, United Kingdom 27 January 2020

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Independent Auditor’s Report to Shareholders (continued) For the year ended 30 September 2019


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Accounting Policies and Financial Instruments For the year ended 30 September 2019

1. Accounting Basis and Policies

(a) Basis of accounting The Financial Statements have been prepared under the historical cost basis, as modified by the revaluation of investments and in accordance with Financial Reporting Standard 102 (“FRS 102”) and in accordance with the Statement of Recommended Practice (“SORP”) for Financial Statements of UK Authorised Funds issued by the Investment Management Association (now known as the Investment Association) in May 2014.

As described in the Certification of Financial Statements by Directors of the ACD on page 9, the ACD continues to adopt the going concern basis in the preparation of the Financial Statements of the Funds, excluding the 6 following funds which are due to close: Omnis Alternative Strategies Fund, Omnis Asia Pacific Equity Fund, Omnis Developed Markets (ex-UK, ex-US) Equity Fund, Emerging Markets Equity Fund, Omnis European Equity Fund and Omnis US Equity Fund.

(b) Recognition of revenue Dividends on quoted equities and preference shares are recognised when the securities are quoted ex-dividend and are recognised net of attributable tax credits.

Revenue from unquoted securities is recognised when the dividend is declared.

Rebates of annual management charges (“AMC”) on underlying investments are accounted for on an accruals basis and recognised as revenue or capital in line with the treatment of the charge on the underlying Fund.

Revenue from debt securities is accounted for on an effective yield basis. Accrued interest on purchase and sale contracts is recognised as revenue and transferred to revenue or capital as appropriate.

Distributions from Collective Investment Schemes are recognised when the schemes are quoted ex-distribution. Equalisation returned with the distribution is deducted from the cost of the investment and does not form part of the distributable revenue.

Interest on bank and other cash deposits is recognised on an accruals basis.

All revenue includes withholding taxes but excludes irrecoverable tax credits.

Any reported revenue from an offshore fund, in excess of any distribution received in the reporting period, is recognised as revenue no later than the date on which the reporting fund makes this information available.

Returns on derivative transactions have been treated as either revenue or capital depending on the motives and circumstances on acquisition.

(c) Treatment of stock and special dividends The ordinary element of stock dividends received in lieu of cash dividends is credited to capital in the first instance followed by a transfer to revenue of the cash equivalent being offered and this forms part of the distributable revenue.

Special dividends are reviewed on a case by case basis in determining whether the dividend is to be treated as revenue or capital. Amounts recognised as revenue will form part of the distributable revenue. The tax treatment follows the treatment of the principal amount.


1. Accounting Basis and Policies (continued)

(d) Treatment of expenses Expenses of the Funds are charged against revenue except for costs associated with the purchase and sale of investments which are allocated to the capital of the Funds.

Rebates on the fees payable to the ACD are accounted for on an accruals basis and recognised as revenue or capital in line with the treatment of the ACD fee on each fund. Rebates on the fees payable to the ACD are netted off against the expense to which they relate.

(e) Allocation of revenue and expenses to multiple share classes and funds Any revenue or expenses not directly attributable to a particular share class or fund will normally be allocated pro-rata to the net assets of the relevant share classes and funds.

(f) Taxation Tax is provided for using tax rates and laws which have been enacted or substantively enacted at the balance sheet date.

Corporation tax is provided for on the income liable to corporation tax less deductible expenses.

Corporation tax is provided for on realised gains on non-reporting offshore funds less deductible expenses. Deferred tax is provided for on unrealised gains on non-reporting offshore funds less deductible expenses.

Deferred tax is provided using the liability method on all timing differences arising on the treatment of certain items for taxation and accounting purposes, 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.

Overseas capital gains tax is recognised when paid and no provision is made for this.

(g) Distribution policy The net revenue after taxation, as disclosed in the Financial Statements, after adjustment for items of a capital nature, is distributable to shareholders as dividend or interest distributions. Any revenue deficit is deducted from capital at year end.

In addition, portfolio transaction charges will be charged wholly to the capital of all Funds. Accordingly, the imposition of such charges may constrain the capital growth of every Fund.

The ACD has elected to pay all revenue less expenses charged to revenue and taxation as a final distribution at the end of the annual accounting period.

Interim distributions may be made at the ACD’s discretion and in line with the Prospectus.

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Accounting Policies and Financial Instruments (continued) For the year ended 30 September 2019


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(h) Basis of valuation of investments Listed investments are valued at close of business bid prices excluding any accrued interest in the case of fixed interest securities, on the last business day of the accounting period.

Market value is defined by the SORP as fair value which is the bid value of each security.

Collective Investment Schemes 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.

The fair value of derivative instruments is marked to market value. The forward currency contracts are valued at the prevailing forward exchange rates.

The Fair Value of unquoted investments are determined by the ACD based on guidance from an independent valuation firm, reflecting, where appropriate:

• the price of recent transactions

• a milestone approach

• probability weighted expected returns

• the financial performance of the company.

This approach complies with the revised International Private Equity and Venture Capital Valuation Guidelines (IPEVCV) for the valuation of unquoted investments.

Fair Value is defined consistently with the definition contained in International Financial Reporting Standard 13: Fair Value Measurement; which states that Fair Value is “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date” (“Fair Value”).

In estimating Fair Value, it is assumed that the underlying business activities of the Investments to be ongoing.

The approach used in relation to the individual unquoted investments is set out in the Funds Portfolio Statement.

Suspended investments are valued by the Investment Manager and approved by the ACD, taking into account, where appropriate, latest dealing prices, valuations from reliable sources, financial performance and other relevant factors.

(i) Exchange rates Transactions in foreign currencies are recorded in Sterling at the rates ruling at the dates of the transactions. Assets and liabilities expressed in foreign currencies at the end of the accounting period are translated into Sterling at the closing mid market exchange rates ruling on that date.

(j) Dilution adjustment The ACD may require a dilution adjustment on the sale and redemption of shares if, in its opinion, the existing shareholders (for sales) or remaining shareholders (for redemptions) might otherwise be adversely affected. In particular, the dilution adjustment may be charged in the following circumstances: where the scheme property is in continual decline; on a Fund experiencing large levels of net sales relative to its size; on ‘large deals’; in any case where the ACD is of the opinion that the interests of remaining shareholders require the imposition of a dilution adjustment.



17



(k) Equalisation Equalisation applies only to shares purchased during the distribution period (Group 2 shares). It represents the 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.

(l) Derivatives Some of the Funds may enter into permitted transactions such as derivative contracts or forward foreign currency transactions. Where these transactions are used to protect or enhance revenue, the revenue and expenses are included within net revenue in the Statement of Total Return.

Where the transactions are used to protect or enhance capital, the gains/losses are treated as capital and included within gains/losses on investments in the Statement of Total Return. Any open positions in these types of transactions at the period end are included in the Balance Sheet at their mark to market value.

(m) Significant judgements and sources of estimation uncertainty The area where the ACD considers the judgements and key estimation of uncertainty to be most significant involve assumptions or estimates applied in respect of the valuation of the unquoted investments which are believed to be reasonable at the date of the financial statements. In future, actual experience could differ from those estimates.

2. Derivatives and other financial instruments In pursuing the investment objectives 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 currency contracts, may be used in line with the investment policies of the Funds.

The ACD maintains a detailed Risk Management Policy for identifying, measuring and documenting mitigation activities for those risks to which the Funds may be exposed.

Funds that may use derivatives for investment purposes are monitored daily using the absolute Value at Risk (‘VaR’) approach. This is the maximum expected loss for the Fund over a 20-day holding period at a confidence level of 99%. All of the assets within the fund are taken into account for the VaR calculation, not just derivatives. The absolute VaR may not exceed 20% of the fund’s net asset value (‘NAV’). VaR is calculated using a factor exposure model, based on two years’ historic price data.

The global exposure of funds that use derivatives for hedging and efficient portfolio management purposes only are monitored daily using the commitment approach. This involves converting a portfolio’s derivative positions into equivalent positions in the underlying asset and monitors any future commitments to which the fund may be obligated. The net exposure of derivatives cannot exceed 100% of the fund’s NAV.



18


2. Derivatives and other financial instruments (continued)

Risk Utilisation of the VaR Limit Fund Measurement Lowest Highest Average

Omnis Absolute Return Bond Fund Value at Risk 1.17% 3.99% 1.91% Omnis Alternative Strategies Fund Commitment N/A N/A N/A Omnis Asia Pacific (ex-Japan) Equity Fund Commitment N/A N/A N/A Omnis Asia Pacific Equity Fund Commitment N/A N/A N/A Omnis Developed Markets (ex-UK, ex-US) Equity Fund Commitment N/A N/A N/A Omnis Diversified Returns Fund Value at Risk 1.17% 2.27% 1.77% Omnis Emerging Markets Equity Fund Commitment N/A N/A N/A Omnis European Equity Fund Commitment N/A N/A N/A Omnis European Equity Leaders Fund Commitment N/A N/A N/A Omnis European Equity Opportunities Fund Commitment N/A N/A N/A Omnis Global Bond Fund Value at Risk 5.03% 7.07% 5.80% Omnis Global Emerging Markets Equity Leaders Fund Commitment N/A N/A N/A Omnis Global Emerging Markets Equity Opportunities Fund Commitment N/A N/A N/A Omnis Income & Growth Fund Commitment N/A N/A N/A Omnis Japanese Equity Fund Commitment N/A N/A N/A Omnis Short-Dated Bond Fund Value at Risk 0.68% 2.58% 0.78% Omnis Sterling Corporate Bond Fund Value at Risk 3.16% 4.21% 3.97% Omnis Strategic Bond Value at Risk 1.59% 5.32% 2.10% Omnis UK All Companies Fund Commitment N/A N/A N/A Omnis UK Equity Income Commitment N/A N/A N/A Omnis UK Gilt Fund Value at Risk 9.34% 11.45% 10.00% Omnis UK Smaller Companies Fund Commitment N/A N/A N/A Omnis US Equity Fund Commitment N/A N/A N/A Omnis US Equity Leaders Fund Commitment N/A N/A N/A Omnis US Smaller Companies Fund Commitment N/A N/A N/A

None of the Funds using the commitment method employ significant leverage.



19



(a) Foreign currency risk The revenue and capital value of the assets of the Funds can be significantly affected by currency translation movements.

The ACD has identified three principal areas where foreign currency risk could impact the Funds:

• Movements in rates affect the value of investments;

• Movements in rates affect the short term timing differences;and

• Movements in rates affect the revenue received.

There is the risk that the value of such assets and/or the value of any distributions from such assets may decrease if the underlying currency in which assets are traded falls relative to the base currency in which Shares of the relevant Fund are valued and priced.

The Funds of the Company are not required to hedge their foreign currency risk, although they may do so through foreign currency exchange contracts, forward contracts, currency options and other methods. To the extent that the Funds of the Company do not hedge their foreign currency risk or such hedging is incomplete or unsuccessful, the value of the Funds of the Company’s assets and revenue could be adversely affected by currency exchange rate movements. There may also be circumstances in which a hedging transaction may reduce currency gains that would otherwise arise in the valuation of the Funds of the Company in circumstances where no such hedging transactions are undertaken.

(b) Interest rate risk profile of financial assets and liabilities The interest rate risk is the risk that the value of the Funds of the Company’s investments will fluctuate due to changes in the interest rate. Cash flows from floating rate securities, bank balances, or bank overdrafts will be affected by the changes in interest rates. As the Funds of the Company’s objective is to seek capital growth, these cash flows are considered to be of secondary importance and are not actively managed. The details of each Funds’ interest rate risk profile is shown in note 13, note 14 or note 15 of the individual fund notes.

The Funds of the Company did not have any long-term financial liabilities at the balance sheet date.

The Omnis Global Bond Fund, Omnis Absolute Return Bond Fund, Omnis Diversified Returns Fund, Omnis Short-Dated Bond Fund, Omnis Sterling Corporate Bond Fund, Omnis UK Gilt Fund and Omnis Strategic Bond Fund invest primarily in interest-bearing securities, although other Funds may also invest in these types of securities to a lesser degree.

(c) Credit risk The Omnis Absolute Return Bond Fund, Omnis Diversified Returns Fund, Omnis Global Bond Fund, Omnis Short-Dated Bond Fund, Omnis Sterling Corporate Bond Fund, Omnis Strategic Bond Fund, Omnis UK Gilt Fund invest primarily in interest-bearing securities, although other Funds may also invest in these types of securities to a lesser degree. If any individual company fails to perform well, then the credit rating of that company may fall and the bonds would fall in price as a result of the perceived increased credit risk. Adhering to investment guidelines and avoiding excessive exposure to one particular issuer can limit credit risk. The ACD closely monitors the ratings of the bonds within the portfolio.



20



(d) Liquidity risk The primary source of liquidity risk is the liability to shareholders for any cancellation of shares. The assets of the Funds comprise, in the main, of ready realisable securities, but, subject to the Regulations, the Funds of the Company may invest up to and including 10% of the Scheme Property of the Funds of the Company in transferable securities which are not approved securities (essentially transferable securities which are admitted to official listing in an EEA state or traded on or under the rules of an eligible securities market). Such securities and instruments are generally not publicly traded, may be unregistered for securities law purposes and may only be able to be resold in privately negotiated transactions with a limited number of purchasers. The difficulties and delays associated with such transactions could result in the Funds of the Company’s inability to realise a favourable price upon disposal of such securities, and at times might make disposition of such securities and instruments impossible. To the extent that Funds of the Company invest in such securities and instruments the terms of which are privately negotiated, the terms of these may contain restrictions regarding resale and transfer.

The Omnis Income & Growth Fund actively utilises the opportunity for investment in unapproved securities.

In addition, certain listed securities and instruments, particularly securities and instruments of smaller capitalised or less seasoned issuers, may from time to time lack an active secondary market and may be subject to more abrupt or erratic price movements than securities of larger, more established companies or stock market averages in general. In the absence of an active secondary market the Funds of the Company’s ability to purchase or sell such securities at a fair price may be delayed.

(e) Market price risk The Funds of the Company invest primarily in equities, bonds, units in Collective Investment Schemes and derivatives. The values of these investments are not fixed and may go down as well as up. This may be the result of a specific factor affecting the value of an individual equity or be caused by general market factors (such as government policy or the health of the underlying economy) which can affect the entire portfolio. The Investment Manager seeks to minimise these risks by holding a diversified portfolio in line with the objectives of each Fund. In addition, the management of the Funds of the Company complies with the FCA’s COLL sourcebook, which includes rules prohibiting a holding greater than 20% of assets in any one Fund.

If the market prices had increased or decreased by 10% as at the balance sheet date, the net asset values of the Funds would have changed by the following amounts. These calculations are applied to non-derivative securities only.



21



(e) Market price risk (continued)

Increase Decrease Fund Name £’000 £’000

Omnis Absolute Return Bond Fund 8,033 8,033 Omnis Asia Pacific (ex-Japan) Equity Fund 16,045 16,045 Omnis Diversified Returns Fund 12,893 12,893 Omnis European Equity Leaders Fund 19,418 19,418 Omnis European Equity Opportunities Fund 19,617 19,617 Omnis Global Bond Fund 45,704 45,704 Omnis Global Emerging Markets Equity Leaders Fund 21,555 21,555 Omnis Global Emerging Markets Equity Opportunities Fund 22,580 22,580 Omnis Income & Growth Fund 30,138 30,138 Omnis Japanese Equity Fund 33,917 33,917 Omnis Short-Dated Bond Fund 8,152 8,152 Omnis Sterling Corporate Bond Fund 35,002 35,002 Omnis Strategic Bond 6,798 6,798 Omnis UK All Companies Fund 115,866 115,866 Omnis UK Equity Income 10,113 10,113 Omnis UK Gilt Fund 94,198 94,198 Omnis UK Smaller Companies Fund 13,660 13,660 Omnis US Equity Leaders Fund 75,496 75,496 Omnis US Smaller Companies Fund 8,532 8,532

(f) Counterparty risk Transactions in securities entered into by the Funds of the Company 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. The Investment Managers minimise this risk by conducting trades through only the most reputable counterparties.

The ACD monitors the Funds’ exposure to individual counterparties and applies limits which may not be exceeded.

(g) Default risk The Omnis Absolute Return Bond Fund, Omnis Diversified Returns Fund, Omnis Global Bond Fund, Omnis Short-Dated Bond Fund, Omnis Sterling Corporate Bond Fund, Omnis Strategic Bond Fund, Omnis UK Gilt Fund invest primarily in bonds that are at risk of default at any given time. The risk of default is mitigated by the regular monitoring of bonds internally and externally through ratings agencies. The Investment Manager seeks to minimize these risks by holding a diversified portfolio in line with the objectives of each Fund.




(h) Derivatives and forward transactions All of the Funds may use derivatives for the purposes of Efficient Portfolio Management and, where disclosed below, certain of the Funds’ of the Company utilise derivative instruments for investment purposes.

Omnis Absolute Return Bond Fund Credit Default Swap, Futures and Forward Foreign Exchange.

Omnis Diversified Returns Fund Interest Rate Swaption, Currency Option, Interest Rate Swap, Credit Default Swap, Futures and Forward Foreign Exchange.

Omnis Global Bond Fund Interest Rate Swaption, Currency Option, Interest Rate Swap, Credit Default Swap, Futures and Forward Foreign Exchange.

Omnis Short-Dated Bond Fund Forward Foreign Exchange.

Omnis Sterling Corporate Bond Fund Futures and Forward Foreign Exchange.

Omnis Strategic Bond Fund Interest Rate Swap, Credit Default Swap, Futures and Forward Foreign Exchange.

(i) 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.

(j) Leverage Leverage is defined as any method by which a Fund increases its exposure through borrowing or the use of derivatives. The leverage employed for each Fund is disclosed in the Notes to the Financial Statements and is calculated as the sum of the net asset value and the incremental exposure generated through the use of derivatives (calculated in accordance with the commitment approach (CESR/10-788)) divided by the net asset value.

22




23

Omnis Absolute Return Bond Fund

Investment Objective

The Fund aims to achieve a return consisting of both income and capital of 2% above the rate of cash, measured as GBP SONIA (3 Months), after all fees and expenses, over a five-year rolling period. There is no guarantee that this will be achieved over this, or any, timeframe and capital is at risk.

Investment Policy

The Fund intends to invest in a globally diversified portfolio with at least 80% invested in a broad range of fixed income securities such as global government bonds, corporate bonds and currency markets. The fund will invest in bonds issued either in sterling, or in another currency which will be hedged back into sterling. The Fund may invest up to 60% in sub-investment grade bonds (considered to be Standard & Poor’s credit rating of below BBB or equivalent).

The Fund may also invest in other transferable securities, units in collective investment schemes (including schemes managed and operated by the ACD or its associates), money market instruments, warrants, cash, near cash and deposits as detailed in the Prospectus.

Derivatives may be used both for investment purposes and for efficient portfolio management.

Benchmark

The performance of the Fund will be measured against the GBP SONIA (3 Months) + 2%, net of fees and expenses, for target return purposes.

Portfolio Review

Over the period the fund returned -0.05% [source: Return after operating charges as per Comparative Table] and the benchmark returned 0.29% [source: Financial Express, bid to bid, net income reinvested].

We are pleased to report, over the Fund build-up period, we were successful at restructuring and fully building out the investment positions. We took our time to scale into positions using a cautious, well-considered approach during a quiet period in the markets at the end of the summer months. Typically, this period is characterised by poor liquidity which is why our main concern was to minimise trading costs for the Fund. The starting point for the strategy came at a relatively more illiquid point than normal in the markets on the back of the August UK bank holiday. This in combination with the Trump “tweet-bombs” around trade with China led to increased diligence and a reluctance to aggressively offer or bid outside of the natural ranges for positions. Due to this careful approach, we managed the restructuring without a notable negative impact on performance.

The performance over the reporting period was driven by our positions in Basic Industry, Energy and Banking. Individual names in these sectors that added to performance included Anglo American, First Quantum and Petroleos Mexicanos.

The main detractors over the month were Utilities, Services and Index trades. Positions in in Banking, mainly Rabobank, Energy mainly NRG and Services mainly ADT also detracted from performance. From a credit ratings perspective BB and BBB names contributed the most to overall absolute performance. Geographically, the positive absolute performance was driven by exposure to regions that had strong performance, namely Western Europe, Middle East & Africa and Latin America.

Investment Manager’s Report For the period ending 30 September 2019

256987 04 Omnis Portfolio Investments pp023-pp043 (Absolute Return Bond).qxp 29/01/2020 10:46

24


Outlook

A dovish tone from Central Banks across the globe and supportive comments at the G20 meeting have led to improved investor confidence. Accommodative monetary policy is back on the major Central Banks’ agenda. This will increase the share of negative yielding assets but will remain a tailwind for spread products.

We see better risk adjusted return potential in Investment Grade and the higher rated segments of High Yield credit given the slowdown in the global economy. Overall, we favour credits that are positioned to cope with macroeconomic weakness and have levers such as dividend cuts available to them. With credit curves currently steep, we favour lending for longer to stronger lenders, both in High Yield and Investment Grade. Negative basis is at the very wides, making cash bonds look more attractive than Credit Default Swaps in certain capital structures.

The large amount of negative yielding bonds globally is driving demand for short dated debt, keeping yield curves steep and increasing the importance of extending maturity by purchasing longer dated bonds to optimise the roll-down return in the Fund. Additionally, the 10-year versus 30-year relationship has steepened during the third quarter, enabling us to extend our exposure in some investment grade names.

Technical factors affecting the global high yield market, such as negatively convexity, remains an issue. Positioning in sectors that have better convexity (such as Energy, Basic Industries and Banks which should be more insulted from interest rate rises) will be key to generating positive performance and as a result we have little exposure to sectors that have the worst negative convexity (such as Media).

Investment Manager Hermes Investment Management Limited 21 October 2019

Investment Manager’s Report (continued) For the period ending 30 September 2019


25


Purchases Sales

Portfolio Name Cost £’000 Portfolio Name Proceeds £’000

United States Treasury Bill 0% 19/11/2019 22,357 United States Treasury Note/Bond 2.5% 28/02/2021 19,694 United States Treasury Bill 0% 19/09/24 18,071 Cooperatieve Rabobank 3.25% Perpetual 1,817 Dell International 6.02% 15/06/2026 1,463 Enbridge 5.5% 15/07/2077 1,299 Netflix 5.375% 01/02/2021 1,268 Achmea 4.625% Perpetual 1,166 CCO 4.75% 01/03/2030 1,142 NXP 4.625% 01/06/2023 1,142

iShares Ultrashort Bond 56,459 United States Treasury Bill 0% 19/11/2019 19,453 United States Treasury Bill 0% 19/09/24 17,998 JP Morgan 8,543 iShares UK Gilts 0-5yr 5,931 iShares Corp Bond 0-5yr 3,352 Achmea 4.625% Perpetual 1,160 CCO 4.75% 01/03/2030 1,143 Thermo Fisher Scientific 1.875% 01/10/49 547 Barclays 6.375% Perpetual 385

Material Portfolio Changes For the period ended 30 September 2019


26


A Income 30/09/19

(p) Change in net assets per Share Opening net asset value per share 100.00 Return before operating charges* 0.03 Operating charges (0.08) Return after operating charges (0.05) Distributions (0.12) Closing net asset value per share 99.83 * after direct transaction costs of: 0.00 Performance Return after operating charges (0.05%) Other information Closing net asset value (£’000) 86,802 Closing number of shares 86,950,223 Operating charges 0.74% Direct transaction costs 0.00% Prices (p)** Highest share price 100.28 Lowest share price 100.00 Share class A Income launched on 24 August 2019 at a price of 100 pence.

**The highest and lowest share prices are based on published price. The opening and closing net asset values per share include accounting adjustments, therefore they may appear higher or lower as a result.

Comparative Table As at 30 September 2019


27


Operating Charge Total

Other Transaction operating AMC expenses costs charge

Date (%) (%) (%) (%)

30/09/19 Share Class A Income 0.65 0.05 0.04 0.74

The Operating Charge is the ratio of the Fund’s total disclosable costs (excluding overdraft interest) to the average net assets of the Fund.

• This indicator is based on historical data and may not be a reliable indication of the future

risk profile of the Fund.

• The risk category shown is not guaranteed to remain unchanged and may shift over time.

• The risk and reward indicator table demonstrates where a Fund ranks in terms of its potential risk and return. The higher the rank the greater the potential reward but the greater the risk of losing money. The lowest category does not mean ‘risk free’.

• The Fund appears as a “3” on the scale. This is because the Fund invests in a diverse mixture of investments.

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 income from them may 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 of a Fund are subject to fluctuation in exchange rates, which may be favourable or unfavourable.

Share Class A 1 2 3 4 5 6 7

Typically lower rewards Typically higher rewards

Higher riskLower risk3

Risk and Reward Profile As at 30 September 2019

Performance Information As at 30 September 2019


28


Holdings or Nominal Market value % of Total Value Investments £’000 Net Assets

Australia 1.41%

GBP 200,000 BHP Billiton Finance 6.5% 22/10/2077 226 0.26 USD 1,050,000 BHP Billiton Finance USA 6.75% 19/10/2075 994 1.15

1,220 1.41 Austria 1.54%

EUR 400,000 BAWAG 5% Perpetual 363 0.42 USD 50,000 Sappi Papier 7.5% 15/06/2032 42 0.05

USD 800,000 Suzano Austria 5% 15/01/2030 653 0.75 USD 300,000 Suzano Austria 7% 16/03/2047 278 0.32

1,336 1.54 Belgium 0.56%

EUR 500,000 Solvay 4.25% Perpetual 486 0.56 486 0.56

Canada 1.94%

USD 1,600,000 Enbridge 5.5% 15/07/2077 1,299 1.50 USD 500,000 First Quantum Minerals 6.875% 01/03/2026 387 0.44

1,686 1.94 Cayman Islands 2.24%

USD 250,000 Avolon 3.625% 01/05/2022 206 0.24 USD 200,000 Banco BTG Pactual 7.75% 15/02/2029 169 0.19 USD 300,000 Banco Mercantil del Norte 7.5% Perpetual 246 0.28 USD 370,000 Country Garden 5.125% 17/01/2025 294 0.34 EUR 200,000 UPCB Finance VII 3.625% 15/06/2029 188 0.22 USD 900,000 Vale Overseas 6.25% 10/08/2026 844 0.97

1,947 2.24 Colombia 0.29%

USD 300,000 Colombia Government International Bond 4.375% 12/07/2021 252 0.29

252 0.29 France 3.44%

EUR 414,000 Altice France 3.375% 15/01/2028 372 0.43 GBP 700,000 BNP Paribas 5.75% 24/01/2022 768 0.88 EUR 300,000 Caisse Nationale de Reassurance Mutuelle Agricole

6.375% Perpetual 309 0.36 EUR 700,000 Crown European 2.875% 01/02/2026 671 0.77 GBP 800,000 Electricite de France 6% Perpetual 869 1.00

2,989 3.44 Germany 0.87%

USD 400,000 Commerzbank 7% Perpetual 334 0.38 EUR 500,000 HT1 Funding 1.787% Perpetual 423 0.49

757 0.87 Ireland 4.72%

USD 1,250,000 AerCap Ireland Capital 3.65% 21/07/2027 1,026 1.18 GBP 400,000 Ardagh Packaging Finance 4.75% 15/07/2027 408 0.47 USD 770,000 Bank of Ireland 4.125% 19/09/2027 613 0.71 EUR 300,000 Bank of Ireland 7.375% Perpetual 275 0.32 USD 200,000 Credit Bank of Moscow Via CBOM Finance

8.875% Perpetual 129 0.15

Portfolio Statement As at 30 September 2019


29



Ireland 4.72% (continued)

USD 900,000 MMC Norilsk Nickel Via MMC Finance 3.849% 08/04/2022 743 0.85

USD 750,000 Novolipetsk Steel Via Steel Funding 4.7% 30/05/2026 651 0.75 EUR 284,000 Permanent TSB 2.125% 26/09/2024 251 0.29

4,096 4.72 Italy 2.09%

EUR 150,000 Banca Monte dei Paschi di Siena 10.5% 23/07/2029 128 0.15 USD 300,000 Intesa Sanpaolo 5.71% 15/01/2026 257 0.29

EUR 1,200,000 Telecom Italia 1.125% 26/03/2022 1,066 1.23 EUR 400,000 Unione di Banche Italiane 4.375% 12/07/2029 365 0.42

1,816 2.09 Jersey 2.30%

GBP 900,000 British Land White 2015 0% 09/06/2020 890 1.03 GBP 1,000,000 Glencore Finance Europe 6% 03/04/2022 1,105 1.27

1,995 2.30 Luxembourg 3.08%

USD 1,000,000 Allergan Funding 4.55% 15/03/2035 861 0.99 GBP 200,000 Gazprom Via Gaz Capital 4.25% 06/04/2024 216 0.25 EUR 271,000 Matterhorn Telecom 3.125% 15/09/2026 244 0.28 USD 800,000 Millicom International Cellular 5.125% 15/01/2028 675 0.78 EUR 300,000 Mitsubishi UFJ Investor Services & Banking

Luxembourg FRN 4.088% 15/12/2050 150 0.17 USD 600,000 Severstal Via Steel Capital 5.9% 17/10/2022 526 0.61

2,672 3.08 Mexico 2.16%

EUR 500,000 America Movil 0% 28/05/2020 441 0.51 EUR 300,000 Cemex 3.125% 19/03/2026 274 0.32 USD 300,000 Orbia Advance 4.875% 19/09/2022 255 0.29 USD 300,000 Orbia Advance 5.5% 15/01/2048 245 0.28 EUR 800,000 Petroleos Mexicanos 2.75% 21/04/2027 660 0.76

1,875 2.16 Netherlands 5.91%

EUR 300,000 ABN AMRO Bank 4.75% Perpetual 277 0.32 USD 300,000 Alcoa Nederland 6.125% 15/05/2028 259 0.30 USD 300,000 Argentum Netherlands 5.75% 15/08/2050 267 0.31 EUR 450,000 Bharti Airtel International Netherlands 3.375%

20/05/2021 416 0.48 EUR 2,000,000 Cooperatieve Rabobank 3.25% Perpetual 1,739 2.00 USD 1,300,000 NXP 4.625% 01/06/2023 1,118 1.29

USD 900,000 Petrobras Global Finance 5.999% 27/01/2028 811 0.93 EUR 135,000 Teva Pharmaceutical Finance Netherlands II 1.625%

15/10/2028 79 0.09 USD 200,000 VEON 3.95% 16/06/2021 164 0.19

5,130 5.91

Portfolio Statement (continued) As at 30 September 2019


30




Philippines 0.37%

EUR 350,000 Philippine Government International Bond 0.875% 17/05/2027 320 0.37

320 0.37 Portugal 0.24%

EUR 200,000 Caixa Geral de Depositos 10.75% Perpetual 206 0.24 206 0.24

Spain 0.42%

EUR 400,000 Bankia 6% Perpetual 365 0.42 365 0.42

Turkey 0.19%

USD 200,000 Turkiye Garanti Bankasi 5.875% 16/03/2023 163 0.19 163 0.19

United Kingdom 5.14%

GBP 400,000 Anglo American Capital 3.375% 11/03/2029 420 0.48 EUR 300,000 Barclays 1.875% 08/12/2023 280 0.32 USD 150,000 Barclays Bank 6.278% Perpetual 128 0.15 USD 150,000 Barclays Bank FRN 2.3125% Perpetual 88 0.10 USD 100,000 HSBC Bank FRN 2.5% Perpetual 60 0.07 GBP 200,000 Jaguar Land Rover Automotive 2.75% 24/01/2021 188 0.22 USD 150,000 National Westminster Bank FRN 2.375% Perpetual 99 0.11

GBP 1,063,402 OAK NO 2 FRN 1.4646% 26/05/2055 1,063 1.23 GBP 250,000 Pension Insurance 5.625% 20/09/2030 259 0.30 GBP 600,000 Phoenix 5.75% 31/12/2049 539 0.62 GBP 830,000 Rothesay Life 3.375% 12/07/2026 812 0.94 GBP 200,000 Rothesay Life 6.875% Perpetual 192 0.22 GBP 300,000 Virgin Media Secured Finance 6% 15/01/2025 333 0.38

4,461 5.14 United States 53.10%

USD 750,000 Air Lease 3.625% 01/12/2027 625 0.72 USD 1,000,000 Aircastle 4.25% 15/06/2026 832 0.96

USD 250,000 Aircastle 5% 01/04/2023 215 0.25 USD 400,000 Antero Resources 5% 01/03/2025 267 0.31 EUR 500,000 Celanese US 1.125% 26/09/2023 456 0.53 USD 100,000 CenturyLink 7.6% 15/09/2039 80 0.09 USD 100,000 Charter Communications Operating

4.464% 23/07/2022 85 0.10 USD 500,000 Charter Communications Operating


5.375% 01/05/2047 353 0.41 USD 250,000 CIT 5% 01/08/2023 216 0.25 USD 100,000 CIT 5.8% Perpetual 83 0.09

USD 1,100,000 Clearway Energy Operating 5% 15/09/2026 918 1.06 USD 50,000 Dell 5.4% 10/09/2040 40 0.05

USD 1,600,000 Dell International 6.02% 15/06/2026 1,460 1.68 USD 150,000 Diamond Sports 6.625% 15/08/2027 126 0.15


31




United States 53.10%(continued)

USD 200,000 Domtar 6.75% 15/02/2044 181 0.21 USD 300,000 DR Horton 4% 15/02/2020 245 0.28 USD 750,000 Dresdner Funding Trust I 8.151% 30/06/2031 821 0.94 USD 500,000 Energy Transfer Operating 6.25% Perpetual 376 0.43 USD 120,000 EnLink Midstream Partners 5.45% 01/06/2047 80 0.09 USD 151,000 EnLink Midstream Partners 5.6% 01/04/2044 102 0.12

USD 1,200,000 Enterprise Products Operating 5.375% 15/02/2078 939 1.08 USD 200,000 EQT 3.9% 01/10/2027 141 0.16 USD 500,000 General Electric 5% Perpetual 384 0.44 GBP 400,000 General Electric 6.25% 29/09/2020 418 0.48 USD 300,000 Goodyear Tire & Rubber 4.875% 15/03/2027 239 0.27 USD 350,000 Hanesbrands 4.875% 15/05/2026 300 0.35 USD 500,000 HCA 4.125% 15/06/2029 426 0.49 USD 900,000 HCA 4.75% 01/05/2023 780 0.90 USD 100,000 Hess 4.3% 01/04/2027 85 0.10 USD 100,000 Hess 5.8% 01/04/2047 93 0.11 EUR 400,000 Huntsman International 4.25% 01/04/2025 406 0.47 EUR 250,000 Huntsman International 5.125% 15/04/2021 234 0.27 USD 200,000 International Game Technology 6.25% 15/02/2022 171 0.20 EUR 450,000 IQVIA 2.25% 15/01/2028 405 0.47 USD 700,000 Kinder Morgan Energy Partners 4.7% 01/11/2042 588 0.68 USD 800,000 L Brands 7.5% 15/06/2029 645 0.74 USD 900,000 Lennar 4.125% 15/01/2022 748 0.86

USD 1,100,000 Lennar 4.75% 29/11/2027 956 1.10 EUR 150,000 Liberty Mutual 3.625% 23/05/2059 138 0.16 USD 100,000 Marathon Oil 3.85% 01/06/2025 84 0.10 USD 250,000 Marathon Oil 5.2% 01/06/2045 228 0.26 USD 700,000 MPLX 5.2% 01/03/2047 628 0.72 EUR 150,000 MPT Operating Partnership 3.325% 24/03/2025 146 0.17 USD 300,000 NBM US 7% 14/05/2026 255 0.29

USD 1,500,000 Netflix 5.375% 01/02/2021 1,253 1.44 USD 1,000,000 Plains All American Pipeline 2.85% 31/01/2023 812 0.93

USD 850,000 Plains All American Pipeline 6.125% Perpetual 648 0.75 USD 650,000 Range Resources 4.875% 15/05/2025 435 0.50 USD 100,000 SM Energy 6.625% 15/01/2027 70 0.08 USD 400,000 Sprint Spectrum 3.36% 20/09/2021 327 0.38 USD 500,000 Tenet Healthcare 4.875% 01/01/2026 416 0.48 USD 100,000 T-Mobile USA 4% 15/04/2022 83 0.10 USD 300,000 T-Mobile USA 4.75% 01/02/2028 255 0.29

USD 1,250,000 Toll Brothers Finance 3.8% 01/11/2029 998 1.15 USD 4,000,000 United States Treasury Bill 0% 19/11/2019 3,238 3.73

USD 24,000,000 United States Treasury Note/Bond 2.5% 28/02/2021 19,674 22.67 USD 250,000 Vulcan Materials 4.5% 15/06/2047 217 0.25 USD 70,000 WPX Energy 5.25% 15/10/2027 57 0.06

USD 200,000 WPX Energy 5.75% 01/06/2026 166 0.19 46,092 53.10


32




Virgin Islands 0.54%

USD 250,000 Gerdau Trade 4.75% 15/04/2023 213 0.25 USD 300,000 Gerdau Trade 4.875% 24/10/2027 256 0.29

469 0.54 Swap (0.96)%

EUR 4,500,000 BNP Capital Markets Credit Default Swap EUR 1% 20/12/2024 (4) (0.01)



EUR 2,250,000 Credit Suisse Credit Default Swap EUR 5% 20/12/2022 299 0.35 EUR 2,250,000 Credit Suisse Credit Default Swap EUR 5% 20/12/2022 287 0.33 EUR 3,900,000 Credit Suisse Credit Default Swap EUR 5% 20/12/2022 512 0.59 USD 4,500,000 Credit Suisse Credit Default Swap USD 1% 20/06/2024 76 0.08 EUR 3,000,000 Goldman Sachs Credit Default Swap EUR 1%

20/12/2022 35 0.04 EUR 4,500,000 Goldman Sachs Credit Default Swap EUR 1%



20/12/2022 (29) (0.04) EUR 1,500,000 Goldman Sachs Credit Default Swap EUR 1%


20/12/2024 (687) (0.79) USD 5,000,000 Goldman Sachs Credit Default Swap USD 1%

20/06/2024 142 0.17 USD 4,500,000 Goldman Sachs Credit Default Swap USD 1%



20/12/2024 (3) 0.00 USD 3,000,000 Goldman Sachs Credit Default Swap USD 5%



20/12/2024 (674) (0.77) EUR 2,000,000 JPMorgan Credit Default Swap EUR 1% 20/12/2022 27 0.03 EUR 4,500,000 JPMorgan Credit Default Swap EUR 1% 20/12/2022 79 0.09

EUR 300,000 JPMorgan Credit Default Swap EUR 5% 20/12/2024 35 0.04 EUR 1,750,000 Morgan Stanley Credit Default Swap EUR 1%

20/12/2022 (27) (0.03) EUR 3,000,000 Morgan Stanley Credit Default Swap EUR 5%

20/06/2023 493 0.57


33




Swap (0.96)% (continued)

EUR 2,750,000 Morgan Stanley Credit Default Swap EUR 5% 20/12/2022 385 0.45


EUR 12,250,000 Morgan Stanley Credit Default Swap EUR 5% 20/12/2024 (1,530) (1.76)

(833) (0.96) Futures 0.12%

(96) German Euro BUND Futures December 2019 51 0.06 (91) US Treasury Note 10 Year Futures December 2019 37 0.04 (4) US Treasury Ultra Bond Futures December 2019 18 0.02

106 0.12 Forward Currency Contracts (0.68)%

Sold EUR16,000,000 for GBP14,225,676 Settlement 18/12/2019 31 0.04 Sold USD73,400,000 for GBP58,751,552 Settlement 18/12/2019 (625) (0.72)

(594) (0.68)

Portfolio of investments 79,012 91.03 Net other assets 7,790 8.97 Net assets 86,802 100.00

The investments have been valued in accordance with note 1(h) of the Accounting Policies and Financial Instruments.

All investments are ordinary bonds unless otherwise stated and admitted to official stock exchange listings.

Gross purchases for the year (excl. Derivatives): £123,215,000 (See note 15). In addition, transfers totalling £74,321,000 were made via inspecie into the portfolio during the period.

Total sales net of transaction costs for the year (excl. Derivatives): £117,053,000 (See note 15)

Credit Rating as at 30 September 2019 % of Total Net Assets

Bonds Rating AAA 27.98 AA 0.00 A 3.23 BBB 45.93 BB 9.52 B 2.94 CCC 0.15 D 0.00 NR 4.79 Bonds 94.54 Uninvested Cash 4.10 Equities 0.00 FX/Derivatives 1.36 Net Assets 100.00


34


Statement of Total Return For the period ended 30 September 2019

24/08/19 to 30/09/19

Note £’000 £’000

Income: Net capital losses 2 (77) Revenue 3 102 Expenses 4 (71) Net revenue before taxation 31 Taxation 5 – Net revenue after taxation 31 Total return before distributions (46) Distributions 6 (102) Change in net assets attributable to Shareholders from investment activities (148)

24/08/19 to 30/09/19 £’000 £’000

Opening net assets attributable to Shareholders – Inspecie transfer 84,985 Amounts receivable on issue of Shares 2,066 Amounts payable on cancellation of Shares (101)

1,965 Change in net assets attributable to Shareholders from investment activities (see above) (148) Closing net assets attributable to Shareholders 86,802

Statement of Change in Net Assets Attributable to Shareholders For the period ended 30 September 2019


35


30/09/19

Note £’000 £’000

Assets: Fixed assets: Investments 83,897 Current assets: Debtors 7 2,272 Cash and bank balances 8 6,950 Total current assets 9,222 Total assets 93,119 Liabilities: Investment liabilities (4,885) Creditors: Bank overdrafts 10 (86) Distribution payable (103) Other creditors 9 (1,243) Total creditors (1,432) Total liabilities (6,317) Net assets attributable to Shareholders 86,802

Balance Sheet As at 30 September 2019


36


1. Accounting basis and policies

The Fund’s Financial Statements have been prepared on the basis detailed on 14 to 17.

2. Net capital losses 24/08/19 to

30/09/19 £’000

The net capital losses during the period comprise: Currency losses (49) Derivative contracts 263 Forward currency contracts (17) Non-derivative securities (270) Transaction charges (4) Net capital losses (77)

3. Revenue 24/08/19 to

30/09/19 £’000

Bank interest 1 Interest from Debt Securities 147 Offshore funds dividends 40 Overseas dividends 2 Revenue from swaps (88) Total revenue 102

4. Expenses 24/08/19 to

30/09/19 £’000

Payable to the ACD, associates of the ACD, and agents of either of them AMC fees 58

58 Payable to the Depositary, associates of the Depositary and agents of either of them Depositary fees 2 Safe custody fees 1

3 Other expenses Audit fees 10

10 Total expenses 71

Audit fees are £8,000 ex VAT.

Notes to the Financial Statements For the period ended 30 September 2019


37


5. Taxation

(a) Analysis of the tax charge in the period 24/08/19 to

30/09/19 £’000

Total current tax charge – Total taxation for the period (Note 6 (b)) –

(b) Factors affecting the tax charge for the period

The tax assessed for the period is different from that calculated when the standard rate of corporation tax for an open ended investment company of 20% is applied to the net revenue before taxation. The differences are explained below:

24/08/19 to

30/09/19 £’000

Net revenue before taxation 31 Net revenue for the period multiplied by the standard rate of corporation tax 6 Effects of: Tax deductible interest distributions (6) Total tax charge for the period –

OEICs are exempt from tax on capital gains in the UK. Therefore, any capital return is not included within the reconciliation above.

(c) Provision for deferred tax

There is no provision required for deferred taxation at the Balance Sheet date in the current period.

6. Distributions

The distributions take account of revenue received on the creation of Shares and revenue deducted on the cancellation of Shares, and comprise:

24/08/19 to

30/09/19 £’000

Final 103 Deduct: Revenue received on creation of Shares (1) Net distribution for the period 102

Reconciliation of net revenue after taxation to distributions Net revenue after taxation 31 Expenses charged to capital 71 Net distribution for the period 102

Details of the distributions per Share are set out in the distribution tables on page 43.

Notes to the Financial Statements (continued) For the period ended 30 September 2019


38


7. Debtors 30/09/19

£’000

Accrued revenue 695 Amounts receivable for creation of Shares 388 Inspecie transfer receivable 23 Sales awaiting settlement 1,166 Total debtors 2,272

8. Cash and bank balances 30/09/19

£’000

Cash and bank balances 3,158 Amount held at futures clearing houses and brokers 3,792 Total cash and bank balances 6,950

9. Other creditors 30/09/19

£’000

Purchases awaiting settlement 1,180 1,180

Accrued expenses Manager and Agents AMC fees 46

46 Depositary and Agents Depositary fees 2 Safe custody fees 1 Transaction charges 4

7 Other accrued expenses Audit fees 10

10 Total other creditors 1,243

10. Bank overdrafts 30/09/19

£’000

Amounts overdrawn at futures clearing houses and brokers 86 Total bank overdrafts 86



39


11. Related party transactions

Management fees paid to the ACD, are disclosed in note 4 and amounts due at the period end are disclosed in note 9.

Monies received and paid by the ACD through the creation and cancellation of Shares are disclosed in the Statement of Change in Net Assets Attributable to Shareholders and amounts due at the period end are disclosed in notes 7 and 9.

The ACD and its associates (including other authorised investment funds managed by the ACD) have no Shareholdings in the Company at the period end.

Significant Shareholdings

As at the balance sheet date, the following had significant Shareholdings within the Fund:

Shareholders 30/09/19 (%)

Sterling ISA Managers (Nominees) Limited 80.1

12. Share Classes

The Share Classes and ACD’s Annual Management Charges (“AMC”) applicable to each Share Class are as follows:

%

Share Class A Income 0.65

Each Share Class has equal rights in the event of the wind up of any fund.

The reconciliation of the opening and closing numbers of shares of each class is shown below:

24/08/19 Issued Cancelled Converted 30/09/19

Share Class A Income – 87,051,155 (100,932) – 86,950,223

13. Capital commitments and contingent liabilities

There were no contingent liabilities or outstanding commitments at the balance sheet date.

14. Derivatives and other financial instruments

The main risks from the Fund’s holding of financial instruments, together with the ACD’s policy for managing these risks, are disclosed in note 2 on page 17 of the report.

(a) Foreign currency risk

A proportion of the financial net assets of the Fund are denominated in currencies other than Sterling with the effect that the balance sheet and total return can be affected by currency movements.

The Fund holds an insignificant foreign currency exposure at 30 September 2019 therefore a currency table has not been disclosed.

Changes in exchange rates would have no material impact on the valuation of foreign currency financial assets or liabilities as at the balance sheet date. Consequently, no sensitivity analysis has been presented.



40



(b) Interest rate risk profile of financial assets and liabilities

The table below shows the interest rate risk profile at the balance sheet date:

Financial Floating rate Fixed rate assets

financial financial not carrying assets assets interest Total

Currency Assets £’000 £’000 £’000 £’000

30/09/19 Euro 2,572 11,983 24,786 39,341 Sterling 5,442 7,643 538 13,623 US Dollar 396 59,247 9,780 69,423 Total 8,410 78,873 35,104 122,387

Financial

Floating rate Fixed rate liabilities not financial financial carrying liabilities liabilities interest Total

Currency Liabilities £’000 £’000 £’000 £’000

30/09/19 Euro – – 25,045 25,045 Sterling – – 166 166 US Dollar 86 – 10,288 10,374 Total 86 – 35,499 35,585

Changes in interest rates would have no material impact on the valuation of floating rate financial assets or liabilities as at the balance sheet date. Consequently, no sensitivity analysis has been presented.

(c) Counterparty risk

The table below shows the counterparty risk as at the balance sheet date:

Derivative Collateral Collateral Collateral Exposure Posted Received Asset Class

Counterparty £ £ £

BNP Paribas – 860 – Cash Credit Suisse 1,174 – 1,880 Cash Goldman Sachs – 600 – Cash JPMorgan 141 – 130 Cash Morgan Stanley 106 1,203 – Cash Northern Trust – 370 – Cash

(d) Leverage

There was 224.32% leverage as at 30 September 2019, other than that available to the Fund as a result of its ability to borrow up to 10% of its value on a permanent basis.

Average Highest Lowest Leverage Leverage Leverage 30/09/19

Absolute Return Bond 152.24% 225.25% 81.11% 224.32%



41


15. Portfolio transaction costs 24/08/19 to 30/09/19

£’000 £’000

Analysis of total purchase costs Purchases in the period before transaction costs: Bonds 123,215 Inspecie Transfer 74,321

197,536 Total purchase costs – Gross purchase total 197,536 Analysis of total sale costs Gross sales in the period before transaction costs: Bonds 42,768 Collective Investment Schemes 74,285

117,053 Total sale costs – Total sales net of transaction costs 117,053

The portfolio transaction costs table above includes direct transaction costs suffered by the Fund during the period.

Separately identifiable direct transaction costs (commissions and taxes etc.) are attributable to the Fund’s purchase and sale of equity shares. Additionally for equity shares there is a dealing spread cost (the difference between the buying and selling prices) which will be suffered on purchase and sale transactions.

24/08/19 to

30/09/19 Transaction costs as percentage of principal amounts %

Purchases – Commissions Bonds 0.0000 Inspecie Transfer 0.0000 Purchases – Taxes Bonds 0.0000 Inspecie Transfer 0.0000 Sales – Commissions Bonds 0.0000 Collective Investment Schemes 0.0000 Sales – Taxes Bonds 0.0000 Collective Investment Schemes 0.0000

24/08/19 to

30/09/19 Transaction costs as percentage of average net asset value %

Commissions 0.0000 Taxes 0.0000

At the balance sheet date the average portfolio dealing spread was 0.46%.



42


16. Fair value disclosure 30/09/19

Assets Liabilities £’000 £’000

Valuation technique Level 1: The unadjusted quoted price in an active market for identical assets or liabilities 23,018 – Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly 60,879 (4,885) Level 3: Inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability – –

83,897 (4,885)



43


Final Distribution in pence per Share

Group 1 Shares purchased prior to 24 August 2019 Group 2 Shares purchased on or after 24 August 2019 to 30 September 2019

Distribution Net payable

revenue Equalisation 29/11/19 (p) (p) (p)

Share Class A Income Group 1 0.1190 – 0.1190 Group 2 0.0531 0.0659 0.1190

Share class A Income launched on 24 August 2019.

Distribution Table As at 30 September 2019


44

Omnis Alternative Strategies Fund


To achieve a positive return, consisting of both income and capital growth which after all fees and expenses produces a return above the rate measured as GBP SONIA (3 Months) over a three-year rolling period.

It should be noted that capital invested is not protected and is at risk. There is no defined period over which the Fund aims to provide a positive return. There is no guarantee that the Fund will achieve a positive return over any time period.

Investment Policy

The Fund will be invested to exploit anomalies in markets including in the equity, fixed interest and property markets. There will be no restrictions on the underlying content of the investments held, in terms of investment type, geographical or economic sector, other than those imposed by the Regulations or the Prospectus.

The Fund intends to invest at least 70% in a range of collective investment schemes (including exchange traded funds and other schemes managed by the ACD or its associates).

The Fund may also invest in other transferable securities including equity and fixed income, money market instruments, warrants, cash, near cash and deposits as detailed in the Prospectus.

Derivatives may be used for the purposes of hedging and efficient portfolio management.

Benchmark

The performance of the Fund will be measured against the GBP SONIA (3 Months) Index for target return purposes.

Portfolio Review

Despite ongoing geopolitical and trade war concerns, markets continued to move upwards as both equities and bonds were supported by the prospects of renewed central bank support.

As the year unfolded, we sought to take profits from some holdings and we trimmed exposures to assets such as the Oaktree Global Convertible Bond Fund. We also introduced a couple of new investments: Artemis US Absolute Return (a long/short market neutral US equity strategy) and Ramius Merger Arbitrage.

Q2 2019 saw good performance from our credit and duration holdings and shorter dated credit exposures (including Hermes Absolute Return Credit and Royal London Short Duration Global High Yield and L&G Short Dated Corporate Bond). Among equity long/short strategies BlackRock European Absolute Return did well, helped by its more quality growth stock picking, whilst Merian Global Equity Absolute Return and Melchior European Absolute Return suffered from their more defensive orientations.

Investment Manager’s Report For the period ending 23 August 2019

256987 05 Omnis Portfolio Investments pp044-pp058 (Alternative Strategies).qxp 29/01/2020 10:46

45


We reduced market beta exposures as equity markets pushed on and trimmed NN Alternative Beta, Oaktree Global Convertibles and Allianz Structured Return. The defensiveness of the portfolio was increased through US 7-10yr Treasury ETF and cash.

Investment Manager Octopus Investments Limited 21 October 2019

Investment Manager’s Report (continued) For the period ending 23 August 2019


46


Net asset value

Omnis Alternative Strategies Fund merged with Omnis Short-Dated Bond Fund, Omnis Absolute Return Bond Fund, Omnis Diversified Returns Fund on 24 August 2019 and therefore the Net Asset Value of all Classes is nil. This Fund has no shareholders as at year end.

Net Asset Value per Share As at 30 September 2019


47


Operating Charge Synthetic Rebates from Total

Other expense underlying Transaction operating AMC expenses ratio funds costs charge

Date (%) (%) (%) (%) (%) (%)

30/09/19 Share Class A Income – – – – – N/A

28/09/18 Share Class A Income 0.75 0.04 0.78 (0.12) 0.00 1.46

The Operating Charge is the ratio of the Fund's total disclosable costs (excluding overdraft interest) to the average net assets of the Fund.

Omnis Alternative Strategies Fund merged with Omnis Short-Dated Bond Fund, Omnis Absolute Return Bond Fund, Omnis Diversified Returns Fund on 24 August 2019.

At the period end there will be no distribution, as revenue was distributed to the Shareholders along with their final redemption proceeds.

Risk Warning




48



Portfolio of investments 0 0.00 Net other assets 0 0.00 Net assets 0 0.00

There are no holdings at 30 September 2019.

Gross purchases for the year: £323,827,000 [2018: £127,564,000] (See note 15).

Total sales net of transaction costs for the year: £314,840,000 [2018: £61,469,000] (See note 15). In addition, transfers totalling £294,006,000 were made via inspecie out of the portfolio during the year.



49


29/09/18 to 30/09/19 01/10/17 to 28/09/18

Note £’000 £’000 £’000 £’000

Income: Net capital losses 2 (2,578) (1,400) Revenue 3 4,368 3,453 Expenses 4 (2,327) (2,099) Interest payable and similar charges 5 (6) – Net revenue before taxation 2,035 1,354 Taxation 6 (284) (236) Net revenue after taxation 1,751 1,118 Total return before distributions (827) (282) Distributions 7 (1,585) (1,132) Change in net assets attributable to Shareholders from investment activities (2,412) (1,414)

29/09/18 to 30/09/19 01/10/17 to 28/09/18 £’000 £’000 £’000 £’000

Opening net assets attributable to Shareholders 297,132 235,622 Inspecie transfer (294,006) – Amounts receivable on issue of Shares 65,338 77,783 Amounts payable on cancellation of Shares (66,052) (14,859)

(714) 62,924 Change in net assets attributable to Shareholders from investment activities (see above) (2,412) (1,414) Closing net assets attributable to Shareholders – 297,132

Statement of Change in Net Assets Attributable to Shareholders For the year ended 30 September 2019

Statement of Total Return For the year ended 30 September 2019


50


30/09/19 28/09/18

Note £’000 £’000 £’000 £’000

Assets: Fixed assets: Investments – 284,537 Current assets: Debtors 8 – 3,766 Cash and bank balances 9 1,605 17,600 Total current assets 1,605 21,366 Total assets 1,605 305,903 Liabilities: Investment liabilities – – Creditors: Distribution payable (1,157) (728) Other creditors 10 (448) (8,043) Total creditors (1,605) (8,771) Total liabilities (1,605) (8,771) Net assets attributable to Shareholders – 297,132



51



The Fund’s Financial Statements have been prepared on the basis detailed on pages 14 to 17.

2. Net capital losses 29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

The net capital losses during the year comprise: Currency (losses)/gains (7) 10 Non-derivative securities (2,626) (1,476) Rebates received from underlying funds 59 70 Transaction charges (4) (4) Net capital losses (2,578) (1,400)

3. Revenue 29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

Bank interest 15 4 Franked dividends from Collective Investment Schemes 204 145 Interest income from Collective Investment Schemes 281 631 Offshore funds dividends 3,554 2,357 Overseas dividends 29 (1) Rebates received from underlying funds 285 236 Unfranked dividends from Collective Investment Schemes – 81 Total revenue 4,368 3,453

4. Expenses 29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

Payable to the ACD, associates of the ACD, and agents of either of them AMC fees 2,129 1,989

2,129 1,989 Payable to the Depositary, associates of the Depositary and agents of either of them Depositary fees 80 75 Safe custody fees 14 13

94 88 Other expenses Audit fees 4 10 Professional fees 8 11 Publication fees 2 1 Retained amount 90 –

104 22 Total expenses 2,327 2,099

Audit fees are £3,280 ex VAT (2018: £8,050).

Notes to the Financial Statements For the year ended 30 September 2019


52


5. Interest payable and similar charges 29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

Interest 6 – Total interest payable and similar charges 6 –

6. Taxation

(a) Analysis of the tax charge in the year 29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

Corporation tax 284 235 Irrecoverable overseas tax – 1 Total current tax charge 284 236 Total taxation for the year (Note 6 (b)) 284 236

(b) Factors affecting the tax charge for the year

The tax assessed for the year is different from that calculated when the standard rate of corporation tax for an open ended investment company of 20% (2018: 20%) is applied to the net revenue before taxation. The differences are explained below:

29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

Net revenue before taxation 2,125 1,354 Net revenue for the year multiplied by the standard rate of corporation tax 425 271 Effects of: Non taxable overseas dividends (94) – Non taxable UK dividends (41) – Rebated capital expenses deductible for tax purposes (6) 14 Revenue not subject to corporation tax – (49) Total tax charge for the year 284 236



There is no provision required for deferred taxation at the Balance Sheet date in the current year or prior year.

Notes to the Financial Statements (continued) For the year ended 30 September 2019


53


7. Distributions


29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

Interim 1,628 438 Final – 728 Add: Revenue paid on cancellation of Shares 5 34 Deduct: Revenue received on creation of Shares (48) (68) Net distribution for the year 1,585 1,132

Reconciliation of net revenue after taxation to distributions Net revenue after taxation 1,841 1,118 Net movement in revenue account (250) – Tax relief from capital* (6) 14 Net distribution for the year 1,585 1,132

*Tax relief has arisen whereby excess revenue expenses have been utilised to reduce the tax arising on offshore capital gains.


8. Debtors 30/09/19 28/09/18

£’000 £’000

Accrued bank interest – 1 Amounts due for rebates from underlying funds – 70 Amounts receivable for creation of Shares – 598 Income tax recoverable – 1 Sales awaiting settlement – 3,095 Prepaid expenses – 1 Total debtors – 3,766

9. Cash and bank balances 30/09/19 28/09/18

£’000 £’000

Cash and bank balances 1,605 17,600 Total cash and bank balances 1,605 17,600



54


10. Other creditors 30/09/19 28/09/18

£’000 £’000

Corporation tax payable 284 235 Purchases awaiting settlement – 7,603 Transfer to other Omnis fund 45 – Amounts due for rebates from underlying funds 10 – Income tax recoverable 8 –

347 7,838 Accrued expenses Manager and Agents AMC fees – 186

– 186 Depositary and Agents Depositary fees 6 7 Safe custody fees – 1

6 8 Other accrued expenses Audit fees 4 10 Publication fees 1 1 Retained amount 90 –

95 11 Total other creditors 448 8,043


Management fees paid to the ACD, are disclosed in note 4 and amounts due at the year end are disclosed in note 10.

Monies received and paid by the ACD through the creation and cancellation of Shares are disclosed in the Statement of Change in Net Assets Attributable to Shareholders and amounts due at the year end are disclosed in notes 8 and 10.

The ACD and its associates (including other authorised investment funds managed by the ACD) have no Share holdings in the Company at the year end.



55


12. Share Classes

The Share Classes and ACD’s Annual Management Charges ("AMC") applicable to each Share Class are as follows:

%





Share Class A Income 285,970,714 63,330,796 (349,301,510) – –


There were no contingent liabilities or outstanding commitments at the balance sheet date (2018: nil).








The Fund does not invest in either fixed or floating rate securities and interest rate risk exposure is restricted to interest receivable on bank deposit or payable on bank overdraft positions which will be affected by fluctuations in interest rates.

As at 30 September 2019, 0.00% of the Fund's assets were interest bearing (2018: 5.92%).




56


15. Portfolio transaction costs 29/09/18 to 30/09/19 01/10/17 to 28/09/18

£’000 £’000 £’000 £’000

Analysis of total purchase costs Purchases in the year before transaction costs: Collective investment schemes 323,824 127,560

323,824 127,560 Commissions – Collective investment schemes 3 4 Total purchase costs 3 4 Gross purchase total 323,827 127,564 Analysis of total sale costs Gross sales in the year before transaction costs: Inspecie transfer 294,006 Collective investment schemes 314,842 61,472

608,848 61,472 Commissions – Collective investment schemes (1) (3) Taxes – Collective investment schemes (1) – Total sale costs (2) (3) Total sales net of transaction costs 608,846 61,469

The portfolio transaction costs table above includes direct transaction costs suffered by the Fund during the year.

For the Fund’s investment in Collective Investment Scheme holdings there will potentially be dealing spread costs applicable to purchases and sales. However, additionally there are indirect transaction costs suffered in those underlying funds, throughout the holding period for the instruments, which are not separately identifiable and do not form part of the analysis above.



57


15. Portfolio transaction costs (continued) 29/09/18 to 01/10/17 to

30/09/19 28/09/18 Transaction costs as percentage of principal amounts % %

Purchases – Commissions Collective investment schemes 0.0009 0.0033 Purchases – Taxes Collective investment schemes 0.0000 0.0000 Sales – Commissions Collective investment schemes 0.0002 0.0049 Sales – Taxes Collective investment schemes 0.0002 0.0000

01/10/18 to 01/10/17 to

30/09/19 28/09/18 Transaction costs as percentage of average net asset value % %

Commissions N/A 0.0027 Taxes N/A 0.0000

At the balance sheet date the average portfolio dealing spread was 0.00% (2018: 0.03%).

16. Post balance sheet events

There are no post balance sheet events which require adjustments at the year end.

17. Fair value disclosure 30/09/19 28/09/18

Assets Liabilities Assets Liabilities £’000 £’000 £’000 £’000

Valuation technique Level 1: The unadjusted quoted price in an active market for identical assets or liabilities – – 32,276 – Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly – – 252,261 – Level 3: Inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability – – – –

– – 284,537 –



58


Interim Distribution in pence per Share

Group 1 Shares purchased prior to 29 September 2018 Group 2 Shares purchased on or after 29 September 2018 to 31 March 2019

Distribution Distribution Net paid paid

revenue Equalisation 31/05/19 31/05/18 (p) (p) (p) (p)

Share Class A Income Group 1 0.1550 – 0.1550 0.1759 Group 2 0.1036 0.0514 0.1550 0.1759


Group 1 Shares purchased prior to 1 April 2019 Group 2 Shares purchased on or after 1 April 2019 to 23 August 2019

Distribution Distribution Net payable paid



At the period end there will be no distribution, as revenue was distributed to the Shareholders along with their final redemption proceeds on 24 August 2019.



59

Omnis Asia Pacific (ex-Japan) Equity Fund

Investment Manager’s Report For the year ending 30 September 2019


The Fund aims to achieve a return consisting of both income and capital growth which, after all fees and expenses, exceeds that of the FTSE World Asia Pacific ex Japan TR index over a five-year rolling period.

Investment Policy

The Fund intends to invest at least 70% in the equity securities of Asian companies, defined as those which are domiciled, incorporated or have a significant exposure to the Asia Pacific region and Australasia (excluding Japan). The Fund may also invest in other transferable securities (for example, equity securities of other international companies excluding Japan), units in collective investment schemes (including exchange traded funds and schemes managed and operated by the ACD or its associates), money market instruments, warrants, cash, near cash and deposits as detailed in the Prospectus.

It is envisaged that the investment portfolio of the Fund will be concentrated, typically comprising between 35 and 60 stocks.


Benchmark

The performance of the Fund will be measured against the FTSE World Asia Pacific ex-Japan TR Index for target return purposes.

Portfolio Review

Over the period the Fund returned 8.58% [source: Return after operating charges as per Comparative Table] and the benchmark returned 3.85% [source: Financial Express, bid to bid, net income reinvested].

The Fund is a focused, fundamentally driven, stock picking based portfolio composed of large industry leading companies in Asia. Our strategy is a combination of a top-down thematic approach and bottom-up fundamental research. We have identified five themes for investment in Asia: Aspirational Asia (Asian consumers), Healthy Asia (Healthcare), Efficient Asia, Green Asia and Connected Asia.

Aspirational Asia is about the burgeoning growth of the Asian consumers who are increasingly moving to premium quality products. The consumers have also moved on from the simple consumption of physical goods to services such as tourism, hospitality, sports and financial services. Healthy Asia is about healthcare in Asia. With rising income and the increase of healthcare provision by the government, we are seeing a rapid growth in the healthcare sector including hospitals and pharmaceuticals companies. We are especially interested in the rise of domestic R&D in innovative drugs, which in the long run will lead to the emergence of world class pharmaceutical companies from Asia. Connected Asia is a theme about the growth in digitalisation in Asia. Increased connectivity is giving rise to rapid growth in ecommerce, mobile payments, cloud computing, as well online entertainment and social media. Green Asia is about environmental protection and the growing efforts in containing pollution and fending off the negative impact of urbanisation and industrialisation. Efficient Asia is about Asian companies going through restructuring to make themselves much more efficient users of capital. We believe significant values can be released to benefit all shareholders through these restructuring efforts and through better corporate

256987 06 Omnis Portfolio Investments pp059-pp075 (Asia Pacific (ex-Japan) Equity).qxp 29/01/2020 10:45

60


Investment Manager’s Report (continued) For the year ending 30 September 2019

governance. With the aforementioned themes in mind, we look for beneficiaries of these long-term structural growth opportunities. We then perform fundamental analysis on the companies, looking at their products, business model and the quality of management. We build our conviction about these companies through a thorough study of their financials and track record. Through our analysis, we arrive at a fair value for the companies in question and when we have enough margin of safety we invest in these companies. We also incorporate ESG consideration into our analysis.

Over the years we have found that the best time to invest in quality businesses with longer term growth potential is when the market is stressed due to worries about macroeconomic factors. The last quarter of 2018 was a such a time. The market convulsed as fears about global growth mounted as a result of a trade war between China and US. During that time, we built our position in Kweichow Moutai, TSMC, Transurban, HDFC Bank, and Ping An Insurance. Kweichow Moutai is the most sought-after liquor brand (baijiu) in China. Its long heritage and unique flavour have ensured its popularity among the Chinese middle class for more than a century. As the rank of middle-class people swells, demand is rising rapidly. Supply of Moutai (restricted by terror), however, cannot keep up with the rise in demand and the result is increased profitability for the company. Kweichow Moutai is a great illustration for our Aspirational Asia theme. Total consumption of baijiu is declining in volume terms but rising rapidly in value terms, as more and more consumers move to high end premier products such as Moutai. We bought into the company in two tranches in October and early January. The stock returned 73% for the fund and is the top contributor to performance. HDFC Bank is the largest and best run private sector bank in India. We like its consumer finance business which has been growing consistently at c. 15-20% for the bank over the past decade. For us it is a steady compounder in a market where banks generally still have pricing power as capital continues to be in short supply. TSMC is a leading semiconductor manufacturer in the world with over 50% market share in high end ICs that go into the latest models of smartphones and servers, etc. It was considered a great bargain at the end of 2018 when stock markets fell dramatically globally.

Outlook

Our base view for the rest of year and into next year is that global growth will probably slow down. The risk of a trade war still remains. We continue to believe that by focusing on companies with quality management and in industries that have long term secular growth potential, we will be able to achieve a good return over the longer term.

Investment Manager Veritas Asset Management LLP 21 October 2019


61


Material Portfolio Changes For the year ended 30 September 2019

Purchases Sales

Portfolio Name Cost £’000 Portfolio Name Proceeds £’000 Taiwan Semiconductor

Manufacturing 11,905 Aristocrat Leisure 9,771 LG Household & Health Care 8,135 CP ALL 7,567 CP ALL Foreign 7,477 Hang Seng Bank 7,006 Samsung Electronics 6,831 Alibaba ADR* 6,760 Ping An Insurance 6,630 Kweichow Moutai 6,624 * American Depositary Receipt.

BHP 14,844 Rio Tinto 13,371 United Overseas Bank 11,714 Galaxy Entertainment 9,020 CP ALL 7,477 Washington H. Soul Pattinson 7,004 SEEK 6,750 Hang Seng Bank 6,319 Treasury Wine Estates 5,983 Hong Kong Exchanges & Clearing 5,809


62



A Income 30/09/19

(p) Change in net assets per Share Opening net asset value per share 100.00 Return before operating charges* 9.32 Operating charges (0.74) Return after operating charges 8.58 Distributions (0.93) Closing net asset value per share 107.65 * after direct transaction costs of: 0.13 Performance Return after operating charges 8.58% Other information Closing net asset value (£’000) 176,061 Closing number of shares 163,553,328 Operating charges 0.75% Direct transaction costs 0.13% Prices (p) Highest share price 111.40 Lowest share price 87.79

Share class A Income launched on 29 September 2018 at a price of 100 pence.


63





Date (%) (%) (%) (%)






• The risk and reward indicator table demonstrates where a Fund ranks in terms of its potential risk and return. The higher the rank the greater the potential reward but the greater the risk of losing money. The lowest category does not mean 'risk free'.

• The Fund appears as a “5” on the scale. This is because the Fund invests in assets that typically carry medium risk and offer medium rewards compared with other categories of assets.

Risk Warning







64




Australia 27.16%

626,000 Aristocrat Leisure 10,484 5.96 45,742 Cochlear 5,211 2.96 90,200 CSL 11,537 6.55

500,000 Goodman 3,878 2.20 122,474 REA 7,251 4.12 770,000 Transurban 6,191 3.52 321,000 Treasury Wine Estates 3,262 1.85

47,814 27.16

Bermuda 0.29%

100,000 Dairy Farm 511 0.29 511 0.29

Cayman Islands 9.13%

52,900 Alibaba ADR* 7,179 4.08 67,500 BeiGene 525 0.30 6,000 BeiGene ADR* 596 0.34

85,000 Ctrip.com International ADR* 2,020 1.14 100,000 Shenzhou 1,056 0.60 137,600 Tencent 4,700 2.67

16,076 9.13

China 12.18%

389,877 Aier Eye Hospital 1,572 0.89 123,549 Jiangsu Hengrui Medicine 1,133 0.65 78,767 Kweichow Moutai 10,297 5.85

808,000 Ping An Insurance 7,523 4.27 112,909 Zhejiang Supor 921 0.52

21,446 12.18

Hong Kong 10.73%

1,550,000 AIA 11,873 6.74 1,674,000 China Everbright International 1,042 0.59 1,250,000 CSPC Pharmaceutical 2,031 1.16

700,000 Techtronic Industries 3,949 2.24 18,895 10.73

India 2.63%

100,000 HDFC Bank ADR* 4,629 2.63 4,629 2.63


65




Singapore 5.26%

125,000 CLSA Global Markets Warrant 14/10/2019 2,113 1.20 12,500 CLSA Global Markets Warrant 13/05/2020 966 0.55

106,900 CLSA Global Markets Warrant 19/05/2020 855 0.49 100,900 CLSA Global Markets Warrant 06/09/2020 2,046 1.16 62,900 CLSA Global Markets Warrant 18/05/2022 1,005 0.57 85,300 CLSA Global Markets Warrant 10/02/2023 674 0.38

106,000 United Overseas Bank 1,596 0.91 9,255 5.26

South Korea 9.57%

9,000 LG Household & Health Care 7,974 4.53 8,300 Samsung Biologics 1,729 0.98

215,000 Samsung Electronics 7,147 4.06 16,850 9.57

Taiwan 7.57%

1,877,000 Taiwan Semiconductor Manufacturing 13,329 7.57 13,329 7.57

Thailand 6.61%

4,000,000 CP ALL 8,596 4.88 100,000 Kasikornbank 417 0.24 633,900 Kasikornbank Foreign 2,632 1.49

11,645 6.61



All investments are ordinary shares unless otherwise stated and admitted to official stock exchange listings.

*American Depositary Receipts.

Gross purchases for the year: £164,083,000 (See note 15). In addition transfers totalling £124,558,000 were made via inspecie into the portfolio during the year.

Total sales net of transaction costs for the year: £142,188,000 (See note 15).


66



29/09/18 to 30/09/19

Note £’000 £’000

Income: Net capital gains 2 14,304 Revenue 3 2,889 Expenses 4 (1,162) Interest payable and similar charges 5 (10) Net revenue before taxation 1,717 Taxation 6 (205) Net revenue after taxation 1,512 Total return before distributions 15,816 Distributions 7 (1,512) Change in net assets attributable to Shareholders from investment activities 14,304

29/09/18 to 30/09/19

£’000 £’000

Opening net assets attributable to Shareholders – Inspecie transfer 138,891 Amounts receivable on issue of Shares 28,533 Amounts payable on cancellation of Shares (5,687)

22,846 Dilution adjustment 20 Change in net assets attributable to Shareholders from investment activities (see above) 14,304 Closing net assets attributable to Shareholders 176,061



67



30/09/19

Note £’000 £’000

Assets: Fixed assets: Investments 160,450 Current assets: Debtors 8 2,598 Cash and bank balances 9 15,814 Total current assets 18,412 Total assets 178,862 Liabilities: Investment liabilities – Creditors: Distribution payable (1,280) Other creditors 10 (1,521) Total creditors (2,801) Total liabilities (2,801) Net assets attributable to Shareholders 176,061


68




The Fund's Financial Statements have been prepared on the basis detailed on pages 14 to 17.

2. Net capital gains 29/09/18 to

30/09/19 £’000

The net capital gains during the year comprise: Currency gains 117 Non-derivative securities 14,199 Transaction charges (12) Net capital gains 14,304


30/09/19 £’000

Bank interest 11 Overseas dividends 2,867 Overdraft interest 11 Total revenue 2,889


30/09/19 £’000

Payable to the ACD, associates of the ACD, and agents of either of them AMC fees 1,051

1,051 Payable to the Depositary, associates of the Depositary and agents of either of them Depositary fees 44 Safe custody fees 43

87 Other expenses Audit fees 10 Professional fees 10 Publication fees 3 ADR fees 1

24 Total expenses 1,162

Audit fees are £8,000 ex Vat.


69



5. Interest payable and similar charges 29/09/18 to

30/09/19 £’000

Interest 10 Total interest payable and similar charges 10

6. Taxation

(a) Analysis of the tax charge in the year 29/09/18 to

30/09/19 £’000

Irrecoverable overseas tax 205 Total taxation for the year (Note 6 (b)) 205


The tax assessed for the year is different from that calculated when the standard rate of corporation tax for an open ended investment company of 20% is applied to the net revenue before taxation. The differences are explained below:

29/09/18 to

30/09/19 £’000

Net revenue before taxation 1,717 Net revenue for the year multiplied by the standard rate of corporation tax 343 Effects of: Irrecoverable overseas tax 205 Movement in excess management expenses 205 Non taxable overseas dividends (545) Overseas tax expensed (3) Total tax charge for the year 205



There is no provision required for deferred taxation at the Balance Sheet date in the current year.

(d) Factors that may affect future tax charges

At the year end, after offset against revenue taxable on receipt, there is a potential deferred tax asset of £204,668 in relation to surplus management expenses. It is unlikely that the Fund will generate sufficient taxable profits in the future to utilise this amount and therefore no deferred tax asset has been recognised in the year.


70



7. Distributions


29/09/18 to

30/09/19 £’000

Interim 242 Final 1,280 Add: Revenue paid on cancellation of Shares 13 Deduct: Revenue received on creation of Shares (23) Net distribution for the year 1,512

Reconciliation of net revenue after taxation to distributions

Net revenue after taxation 1,512 Net distribution for the year 1,512


8. Debtors 30/09/19

£’000

Accrued bank interest 1 Accrued revenue 312 Amounts receivable for creation of Shares 29 Sales awaiting settlement 2,256 Total debtors 2,598


£’000

Cash and bank balances 15,814 Total cash and bank balances 15,814


71




£’000

Amounts payable for cancellation of Shares 184 Purchases awaiting settlement 1,209

1,393 Accrued expenses Manager and Agents AMC fees 98


18 Other accrued expenses Audit fees 10 Publication fees 2





The ACD and its associates (including other authorised investment funds managed by the ACD) have no Shareholdings in the Company at the year end.






72



12. Share Classes


%





Share Class A Income – 169,175,031 (5,621,703) – 163,553,328







The table below shows the foreign currency risk profile at the balance sheet date:

Net foreign currency exposure

30/09/19 Currency £’000

Australian Dollar 47,973 Hong Kong Dollar 32,785 New Taiwan Dollar 12,344 Singapore Dollar 3,857 South Korean Won 16,850 Thailand Baht 11,645 US Dollar 22,601 Yuan Renminbi 13,923 Total foreign currency exposure 161,978 Sterling 14,083 Total net assets 176,061

If GBP to foreign currency exchange rates had strengthened/increased or weakened/decreased by 10% as at the balance sheet date, the net asset value of the fund would have decreased or increased by £16,198,000. These calculations assume all other variables remain constant.


73





The Fund does not invest in either fixed or floating rate securities and interest rate risk exposure is restricted to interest receivable on bank deposits or payable on bank overdraft positions which will be affected by fluctuations in interest rates.

As at 30 September 2019, 8.98% of the Fund's assets were interest bearing.



£’000 £’000

Analysis of total purchase costs Purchases in the period before transaction costs: Equities 163,986 Inspecie 124,558

288,544 Commissions – Equities 55 Taxes – Equities 42 Total purchase costs 97 Gross purchase total 288,641 Analysis of total sale costs Gross sales in the period before transaction costs: Equities 142,290

142,290 Commissions – Equities (42) Taxes – Equities (60) Total sale costs (102) Total sales net of transaction costs 142,188


For the Fund’s investment in Collective Investment Scheme holdings there will potentially be dealing spread costs applicable to purchases and sales. However, additionally there are indirect transaction costs suffered in those underlying funds, throughout the holding year for the instruments, which are not separately identifiable and do not form part of the analysis above.


74



15. Portfolio transaction costs (continued) 29/09/18 to


Purchases – Commissions Equities 0.0191 Purchases – Taxes Equities 0.0146 Sales – Commissions Equities 0.0295 Sales – Taxes Equities 0.0422

29/09/18 to








Valuation technique Level 1: The unadjusted quoted price in an active market for identical assets or liabilities 160,450 – Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly – – Level 3: Inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability – –

160,450 –


75





Distribution Net paid




Group 1 Shares purchased prior to 1 April 2019 Group 2 Shares purchased on or after 1 April 2019 to 30 September 2019



Share Class A Income Group 1 0.7825 – 0.7825 Group 2 0.4404 0.3421 0.7825 Share class A Income launched on 29 September 2018.


Net Asset Value

Omnis Asia Pacific Equity Fund merged with Omnis Asia Pacific (ex-Japan) Equity Fund and Omnis Japanese Equity Fund on 29 September 2018 and therefore the Net Asset Value of all Class is nil. This Fund has no shareholders as at year end.

76

Omnis Asia Pacific Equity Fund

The Omnis Asia Pacific Equity Fund will commence the termination process in due course and therefore there is no Investment Manager’s Report.

Investment Manager’s Report For the year ended 30 September 2019


256987 07 Omnis Portfolio Investments pp076-pp089 (Asia Pacific Equity).qxp 29/01/2020 10:44

77



Operating Charge Rebates from Total

Other underlying Transaction operating AMC expenses funds costs charge

Date (%) (%) (%) (%) (%)

30/09/19 Share Class A Income – – – – N/A

28/09/18 Share Class A Income 0.75 0.05 0.03 0.02 0.85


Omnis Asia Pacific Equity Fund merged with Omnis Asia Pacific (ex-Japan) Equity Fund and Omnis Japanese Equity Fund on 29 September 2018. At the period end there was no distribution, as revenue was transferred to funds in line with the merger.

Risk Warning



78






Gross purchases for the year: £0 [2018: £135,220,000] (See note 14).

Total sales net of transaction costs for the year: £0 [2018: £94,234,000] (See note 14). In addition, transfers totalling £225,202,000 were made via inspecie out of the portfolio during the period.


79


29/09/18 to 30/09/19 01/10/17 to 28/09/18

Note £’000 £’000 £’000 £’000

Income: Net capital (losses)/gains 2 (79) 36,768 Revenue 3 231 4,220 Expenses 4 48 (1,834) Net revenue before taxation 279 2,386 Taxation 5 (21) (225) Net revenue after taxation 258 2,161 Total return before distributions 179 38,929 Distributions 6 (1,594) (2,225) Change in net assets attributable to Shareholders from investment activities (1,415) 36,704

29/09/18 to 30/09/19 01/10/17 to 28/09/18

£’000 £’000 £’000 £’000

Opening net assets attributable to Shareholders 261,044 147,693 Inspecie transfer (259,629) – Amounts receivable on issue of Shares – 110,848 Amounts payable on cancellation of Shares – (34,201)

(259,629) 76,647 Change in net assets attributable to Shareholders from investment activities (see above) (1,415) 36,704 Closing net assets attributable to Shareholders – 261,044




80


30/09/19 28/09/18

Note £’000 £’000 £’000 £’000

Assets: Fixed assets: Investments – 224,923 Current assets: Debtors 7 24 1,653 Cash and bank balances 8 150 36,295 Total current assets 174 37,948 Total assets 174 262,871 Liabilities: Investment liabilities – – Creditors: Distribution payable – (1,594) Other creditors 9 (174) (233) Total creditors (174) (1,827) Total liabilities (174) (1,827) Net assets attributable to Shareholders – 261,044



81





2. Net capital gains 29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

The net capital losses during the year comprise: Currency losses – (193) Forward currency contracts – 45 Non-derivative securities (80) 36,951 Transaction charges 1 (35) Net capital (losses)/gains (79) 36,768

3. Revenue 29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

Bank interest – 1 Franked dividends from Collective Investment Schemes – 120 Overseas dividends 231 4,099 Total revenue 231 4,220

4. Expenses 29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

Payable to the ACD, associates of the ACD, and agents of either of them AMC fees – 1,643

– 1,643 Payable to the Depositary, associates of the Depositary and agents of either of them Depositary fees – 62 Safe custody fees – 47

– 109 Other expenses Audit fees – 10 Professional fees – 6 Publication fees – 1 Custodian out of pocket expenses – 1 Retained amount (48) 64

(48) 82 Total expenses (48) 1,834



82



5. Taxation


30/09/19 28/09/18 £’000 £’000

Irrecoverable overseas tax 21 225 Total taxation for the year (Note 5 (b)) 21 225



29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

Net revenue before taxation 279 2,386 Net revenue for the year multiplied by the standard rate of corporation tax 56 477 Effects of: Expenses not deductible for tax purposes (10) 13 Irrecoverable overseas tax 21 225 Movement in excess management expenses – 348 Non taxable overseas dividends (46) – Overseas tax expensed – (1) Revenue not subject to corporation tax – (837) Total tax charge for the year 21 225





At the year end, after offset against revenue taxable on receipt, there is a potential deferred tax asset of £509,743 (2018: £509,576) in relation to surplus management expenses. It is unlikely that the Fund will generate sufficient taxable profits in the future to utilise this amount and therefore no deferred tax asset has been recognised in the year.


83



6. Distributions


29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

Interim – 652 Final – 1,594 Add: Revenue paid on cancellation of Shares 1,594 70 Deduct: Revenue received on creation of Shares – (91) Net distribution for the year 1,594 2,225


Net revenue after taxation 258 2,161 Expenses charged to capital (48) 64 Revenue deficit 1,384 – Net distribution for the year 1,594 2,225

7. Debtors 30/09/19 28/09/18

£’000 £’000

Accrued revenue – 1,020 Amounts receivable for creation of Shares – 610 Overseas withholding tax recoverable 24 23 Total debtors 24 1,653


£’000 £’000

Cash and bank balances 150 36,295 Total cash and bank balances 150 36,295


84



9. Other creditors 30/09/19 28/09/18

£’000 £’000

Transfer to other Omnis fund 158 – 158 –

Accrued expenses Manager and Agents AMC fees – 146

– 146 Depositary and Agents Depositary fees – 6 Safe custody fees – 4 Transaction charges – 2

– 12 Other accrued expenses Audit fees – 10 Publication fees – 1 Retained amount 16 64

16 75 Total other creditors 174 233






85



11. Share Classes


%





Share Class A Income 171,230,389 – – (171,230,389) –








Net foreign currency exposure 30/09/19 28/09/18

Currency £’000 £’000

Australian Dollar – 45,230 Hong Kong Dollar – 16,764 Japanese Yen – 153,605 Singapore Dollar – 10,322 US Dollar 24 56 Total foreign currency exposure 24 225,977 Sterling (24) 35,067 Total net assets – 261,044

If GBP to foreign currency exchange rates had strengthened/increased or weakened/decreased by 10% as at the balance sheet date, the net asset value of the fund would have decreased or increased by £2,000 (2018: £22,598,000). These calculations assume all other variables remain constant.


86





As at 30 September 2019, 0.00% of the Fund’s assets were interest bearing (2018: 13.90%).


Financial Floating rate Fixed rate assets

financial financial not carrying assets assets interest Total

Currency Assets £’000 £’000 £’000 £’000

30/09/19 US Dollar – – 24 24 Sterling 150 – – 150 Total 150 – 24 174

28/09/18 Australian Dollar – – 45,230 45,230 Hong Kong Dollar 12 – 16,752 16,764 Japanese Yen – – 153,605 153,605 Singapore Dollar – – 10,322 10,322 US Dollar – – 56 56 Sterling 36,283 – 547 36,830 Total 36,295 – 226,512 262,807

Financial

Floating rate Fixed rate liabilities not financial financial carrying liabilities liabilities interest Total


30/09/19 Sterling – – (174) (174) Total – – (174) (174)

28/09/18 Sterling – – (1,763) (1,763) Total – – (1,763) (1,763)



87




£’000 £’000 £’000 £’000

Analysis of total purchase costs Purchases in the year before transaction costs: Equities – 126,118 Collective Investment Schemes – 9,047

– 135,165 Commissions – Equities – 38 Taxes – Equities – 17 Total purchase costs – 55 Gross purchase total – 135,220 Analysis of total sale costs Gross sales in the year before transaction costs: Equities – 66,791 Collective Investment Schemes – 27,490 In-Specie Transfer 225,202

225,202 94,281 Commissions – Equities – (31) Taxes – Equities – (16) Total sale costs – (47) Total sales net of transaction costs 225,202 94,234



88





Purchases – Commissions Equities 0.0000 0.0301 Purchases – Taxes Equities 0.0000 0.0135 Sales – Commissions Equities 0.0000 0.0464 Sales – Taxes Equities 0.0000 0.0240

29/09/18 to 01/10/17 to








Valuation technique Level 1: The unadjusted quoted price in an active market for identical assets or liabilities – – 224,923 – Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly – – – – Level 3: Inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability – – – –

– – 224,923 –


89



Omnis Asia Pacific Equity Fund merged with Omnis Asia Pacific (ex-Japan) Equity Fund and Omnis Japanese Equity Fund on 29 September 2018. At the year end there was no distribution, as revenue was transferred to funds in line with the merger.


90

Omnis Developed Markets (ex-UK, ex-US) Equity Fund

The Omnis Developed Markets (ex-UK, ex-US) Equity Fund will commence the termination process in due course and therefore there is no Investment Manager’s Report.

Net Asset Value

Omnis Developed Markets (ex-UK, ex-US) Equity Fund merged with Omnis European Equity Fund, Omnis Asia Pacific (ex-Japan) Equity Fund and Omnis Japanese Equity Fund on 29 September 2018 and therefore the Net Asset Value of all Classes is nil. This Fund has no shareholders as at year end.


Investment Manager’s Report For the year ended 30 September 2019

256987 08 Omnis Portfolio Investments pp090-pp102 (Developed Markets (ex-UK, ex-US) Equity).qxp 29/01/2020 10:47

91




Date (%) (%) (%) (%)

30/09/19 Share Class A Income – – – N/A



Omnis Developed Markets (ex-UK, ex-US) Equity Fund merged with Omnis European Equity Fund, Omnis Asia Pacific (ex-Japan) Equity Fund and Omnis Japanese Equity Fund on 29 September 2018.

At the period end there was no distribution, as revenue was transferred to funds in line with the merger.

Risk Warning




92





Gross purchases for the year: £0 [2018: £115,027,000] (See note 15).

Total sales net of transaction costs for the year: £0 [2018: £145,763,000] (See note 15). In addition, transfers totalling £368,831,000 were made via inspecie out of the portfolio during the year.



93


29/09/18 to 30/09/19 01/10/17 to 28/09/18

Note £’000 £’000 £’000 £’000

Income: Net capital (losses)/gains 2 (508) 10,869 Revenue 3 76 9,325 Expenses 4 46 (3,094) Interest payable and similar charges 5 – (1) Net revenue before taxation 122 6,230 Taxation 6 (63) (848) Net revenue after taxation 59 5,382 Total return before distributions (449) 16,521 Distributions 7 – (5,649) Change in net assets attributable to Shareholders from investment activities (449) 10,602

29/09/18 to 30/09/19 01/10/17 to 28/09/18

£’000 £’000 £’000 £’000

Opening net assets attributable to Shareholders 403,744 392,203 Inspecie transfer (403,295) – Amounts receivable on issue of Shares – 20,979 Amounts payable on cancellation of Shares – (20,050)

(403,295) 929 Dilution adjustment – 10 Change in net assets attributable to Shareholders from investment activities (see above) (449) 10,602 Closing net assets attributable to Shareholders – 403,744




94


30/09/19 28/09/18

Note £’000 £’000 £’000 £’000

Assets: Fixed assets: Investments – 369,280 Current assets: Debtors 8 14 1,273 Cash and bank balances 9 211 38,853 Total current assets 225 40,126 Total assets 225 409,406 Liabilities: Investment liabilities – – Creditors: Distribution payable – (5,167) Other creditors 10 (225) (495) Total creditors (225) (5,662) Total liabilities (225) (5,662) Net assets attributable to Shareholders – 403,744



95




2. Net capital (losses)/gains 29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

The net capital (losses)/gains during the year comprise: Currency gains/(losses) 5 (309) Non-derivative securities (513) 11,180 Transaction charges – (2) Net capital (losses)/gains (508) 10,869

3. Revenue 29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

Bank interest 1 2 Overseas dividends 75 9,323 Total revenue 76 9,325

4. Expenses 29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

Payable to the ACD, associates of the ACD, and agents of either of them AMC fees – 2,583

– 2,583 Payable to the Depositary, associates of the Depositary and agents of either of them Depositary fees – 112 Safe custody fees (1) 105

(1) 217 Other expenses Audit fees – 10 Professional fees – 13 Publication fees – 4 Closure costs (45) 267

(45) 294 Total expenses (46) 3,094




96



30/09/19 28/09/18 £’000 £’000

Interest – 1 Total interest payable and similar charges – 1

6. Taxation


30/09/19 28/09/18 £’000 £’000




29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

Net revenue before taxation 122 6,230 Net revenue for the year multiplied by the standard rate of corporation tax 24 1,246 Effects of: Expenses not deductible for tax purposes (9) 53 Irrecoverable overseas tax 63 848 Movement in excess management expenses (2) 527 Non taxable overseas dividends (13) Overseas tax expensed – (8) Revenue not subject to corporation tax – (1,818) Total tax charge for the year 63 848






97


6. Taxation (continued)


At the year end, after offset against revenue taxable on receipt, there is a potential deferred tax asset of £1,811,330 (2018: £1,813,336) in relation to surplus management expenses. It is unlikely that the Fund will generate sufficient taxable profits in the future to utilise this amount and therefore no deferred tax asset has been recognised in the year.

7. Distributions


29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

Interim – 574 Final – 5,167 Add: Revenue paid on cancellation of Shares – 37 Deduct: Revenue received on creation of Shares – (129) Net distribution for the year – 5,649

Reconciliation of net revenue after taxation to distributions Net revenue after taxation 59 5,382 Expenses charged to capital (45) 267 Revenue deficit (14) – Net distribution for the year – 5,649

8. Debtors 30/09/19 28/09/18

£’000 £’000

Accrued bank interest – 1 Accrued revenue – 768 Amounts receivable for creation of Shares – 153 Overseas withholding tax recoverable 14 351 Total debtors 14 1,273


£’000 £’000

Cash and bank balances 211 38,853 Total cash and bank balances 211 38,853



98


10. Other creditors 30/09/19 28/09/18

£’000 £’000

Transfer to other Omnis fund 3 – 3 –

Accrued expenses Manager and Agents AMC fees – 200

– 200 Depositary and Agents Depositary fees – 9 Safe custody fees – 8

– 17 Other accrued expenses Audit fees – 10 Publication fees – 1 Retained amount 222 267








99


12. Share Classes


%





Share Class A Income 307,827,485 – (307,827,485) – –










Australian Dollar – 29,059 Danish Krone – 79 Euro 110 174,573 Hong Kong Dollar – 23,927 Japanese Yen – 106,276 Norwegian Krone – 41 Swedish Krona – 17,180 Swiss Franc – 19,328 US Dollar – 234 Total foreign currency exposure 110 370,697 Sterling (110) 33,047 Total net assets – 403,744



100



(a) Foreign currency risk (continued)







£’000 £’000 £’000 £’000

Analysis of total purchase costs Purchases in the year before transaction costs: Equities – 114,896

– 114,896 Commissions – Equities – 105 Taxes – Equities – 26 Total purchase costs – 131 Gross purchase total – 115,027 Analysis of total sale costs Gross sales in the year before transaction costs: Equities – 145,904 In-Specie Transfer 369,130 –

369,130 145,904 Commissions – Equities – (121) Taxes – Equities – (20) Total sale costs – (141) Total sales net of transaction costs 369,130 145,763




101


15. Portfolio transaction costs (continued)


29/09/18 to 01/10/17 to



29/09/18 to 01/10/17 to









– – 369,280 –



102


Omnis Developed Markets (ex-UK, ex-US) Equity Fund merged with Omnis European Equity Fund, Omnis Asia Pacific (ex-Japan) Equity Fund and Omnis Japanese Equity Fund on 29 September 2018. At the year end there will be no distribution, as revenue was transferred to funds in line with the merger.



103

Omnis Diversified Returns Fund


The Fund aims to achieve a return consisting of both income and capital of 2% above the rate of cash, measured as GBP SONIA (3 Months), after all fees and expenses, over a five-year rolling period. There is no guarantee that this will be achieved over this, or any, timeframe and capital is at risk.

Investment Policy

The Fund intends to invest at least 70% in a diversified and broad range of assets such as equities, fixed income and cash either directly or indirectly (through the use of derivatives). Indirect exposure to alternative asset classes such as commodities and property may be sought through investment in transferable securities, eligible index derivatives and collective investment schemes (including schemes managed and operated by the ACD or its associates).

The Fund may also invest in other transferable securities, exchange traded funds, money market instruments, warrants, cash, near cash and deposits as detailed in the Prospectus.


Benchmark

The performance of the Fund will be measured against the GBP SONIA (3 Months) + 2%, net of fees and expenses, for target return purposes.

Portfolio Review


The Fund’s performance reflected our defensive and equity thematic strategies which were affected by a correction to their strong performance for the year so far. All of this has recovered in the early part of October. Our directional global equity strategy fared reasonably well during the period despite a broadly flat performance from global equities. Our overall equity beta at the portfolio level has been reduced throughout the period and now sits at well below average. Relative value strategies have detracted overall as our fixed income views struggled to gain traction and our equity thematic portfolio retraced strong year to date gains in September. We expect a resumption of longer term trends and for relative value to move back into positive territory for the year to date. Indeed October is off to a strong start.


256987 09 Omnis Portfolio Investments pp103-pp127 (Diversified Returns Fund).qxp 29/01/2020 10:43

104


Outlook

Given the growth outlook and the very sparse level of future expected returns in traditional assets, we are cautious on both equity and bond markets, preferring to hold very little directional risk in either market. With very low bond yields and likely more interest rate cuts to come, our strong preference is to express a position for a steepening of the bond yield curve, especially in the US. The marked fall in bond yields has provided a significant cushion to equity markets this year despite the deteriorating growth outlook. Given similar yield declines are far less likely from here, equity markets are more vulnerable to continued macro deterioration,. For this reason, we remain cautious about pro-cyclical assets, such as equities and credit, especially where valuations are less appealing. Within equities, where index-level returns may remain low and volatile, as they have been since early 2018, we continue to invest thematically in developed equity markets and position for value in emerging markets. Overall, we expect the portfolio’s sensitivity to broad movements in equity and bond markets to remain low for the foreseeable future. Conversely, the risk in relative value strategies across the four main asset classes has steadily risen in recent months and is positioned to be a driver of uncorrelated returns as well as having important defensive characteristics.

Investment Manager Fulcrum Asset Management LLP 21 October 2019



105


Purchases Sales


United States Treasury Inflation Indexed Bonds 0.5% 15/04/2024 20,126 France Treasury Bill 0% 25/03/2020 10,411 France Treasury Bill 0% 26/02/2020 10,006 France Treasury Bill 0% 12/02/2020 10,001 France Treasury Bill 0% 29/01/2020 10,001 Republic of South Africa Government Bond 8.875% 28/02/2035 9,117 United States Treasury Bill 0% 19/12/2019 7,609 Italy Buoni Poliennali Del Tesoro 3.85% 01/09/2049 7,416 Mexico Bonos 8.5% 31/05/2029 7,392 United States Treasury Bill 0% 29/11/2019 7,291

iShares UK Gilts 0-5yr 56,736 Bloomberg Barclays 1-5 yr 33,948 Pimco 28,836 ishares MSCI World Hedge 18,023 Bloomberg Barclays 1-3 yr 8,461 Mexico Bonos 8.5% 31/05/2029 7,514 French Republic Government Bond 1.5% 25/05/2050 3,679 Republic of South Africa Government Bond 8.875% 28/02/2035 3,088 Italy Buoni Poliennali Del Tesoro 3.85% 01/09/2049 2,406 Vaneck Vectors Gold Miners 1,645



106


A Income 30/09/19 (p)

Change in net assets per Share Opening net asset value per share 100.00 Return before operating charges* (0.52) Operating charges (0.11) Return after operating charges (0.63) Distributions – Closing net asset value per share 99.37 * after direct transaction costs of: 0.02 Performance Return after operating charges (0.63%) Other information Closing net asset value (£’000) 172,710 Closing number of shares 173,810,244 Operating charges 1.01% Direct transaction costs 0.01% Prices (p)** Highest share price 100.58 Lowest share price 99.59

Share class A Income launched on 24 August 2019 at a price of 100 pence.

** The highest and lowest share prices are based on published price. The opening and closing net asset values per share include accounting adjustments, therefore they may appear higher or lower as a result.



107




Date (%) (%) (%) (%)



• This indicator is based on historical data and may not be a reliable indication of the future risk profile of the Fund.



• The Fund appears as a “3” on the scale. This is because the Fund invests in a diverse mixture of investments.

Risk Warning




Higher riskLower risk




108



Collective Investment Scheme 4.79% Ireland 2.17%

161,058 iShares Physical Gold 3,756 2.17 3,756 2.17

Jersey 2.62%

41,264 WisdomTree Physical Platinum 2,778 1.61 134,197 WisdomTree Physical Silver 1,744 1.01

4,522 2.62

8,278 4.79

Equity 13.84% Australia 0.13%

2,251 Atlassian 229 0.13 229 0.13

Austria 0.20%

3,665 CA Immobilien Anlagen 105 0.06 5,725 OMV 249 0.14

354 0.20

Belgium 0.09%

8,718 Euronav EUR 65 0.04 11,553 Euronav USD 86 0.05

151 0.09

Bermuda 0.15%

39,296 DHT 196 0.11 5,713 Teekay LNG Partners 63 0.04

259 0.15

Canada 1.17%

9,734 Franco-Nevada 720 0.42 7,565 Nutrien 306 0.18

25,873 Osisko Gold Royalties 195 0.11 998 Shopify 252 0.15

25,457 Wheaton Precious Metals 542 0.31 2,015 1.17

Denmark 0.10%

119 AP Moller – Maersk 110 0.06 6,441 D/S Norden 71 0.04

181 0.10

France 0.15%

6,243 TOTAL 264 0.15 264 0.15



109



Germany 1.61%

935 Ado Properties 31 0.02 14,280 Alstria office** 199 0.12

837 Deutsche Boerse 106 0.06 6,548 Deutsche Wohnen 194 0.11

21,951 K+S 246 0.14 5,428 LEG Immobilien 505 0.29 1,159 SAP* 111 0.06

15,660 TAG Immobilien 290 0.17 4,921 TLG Immobilien 109 0.06

22,396 Vonovia 924 0.54 551 Wirecard 72 0.04

2,787 1.61

Greece 0.06%

13,253 Star Bulk Carriers 108 0.06 108 0.06

Italy 0.13%

17,981 Eni 224 0.13 224 0.13

Luxembourg 0.37%

69,978 Aroundtown 464 0.27 9,194 Grand City Properties 168 0.10

632 0.37

Monaco 0.13%

6,912 Gaslog 72 0.04 6,766 Scorpio Tankers 164 0.09

236 0.13

Netherlands 0.30%

95 Adyen 51 0.03 9,904 OCI 189 0.11

11,517 Royal Dutch Shell 274 0.16 514 0.30

Norway 1.59%

954 Aker 41 0.02 4,898 BW Offshore 27 0.01

56,214 DNB 805 0.47 40,321 DNO 47 0.03 17,978 Equinor 278 0.16 11,054 Frontline NOK 81 0.05 14,057 Frontline USD 104 0.06 15,231 Golden Ocean NOK 72 0.04 6,232 Golden Ocean USD 29 0.02

18,648 Norwegian Finans 127 0.07 5,979 Ocean Yield 27 0.02



110



Norway 1.59% (continued)

22,749 Sbanken 132 0.08 5,974 Ship Finance International 68 0.04

19,124 SpareBank 1 168 0.10 25,796 SpareBank 1 Nord Norge 156 0.09 18,950 SpareBank 1 SR-Bank 168 0.10 4,437 Wallenius Wilhelmsen 8 0.00

11,332 Yara International 397 0.23 2,735 1.59

Portugal 0.12%

17,360 Galp Energia 212 0.12 212 0.12

Singapore 0.06%

21,087 BW LPG 100 0.06 100 0.06

Spain 0.12%

16,692 Repsol 212 0.12 212 0.12

Sweden 0.03%

2,136 Lundin Petroleum 52 0.03 52 0.03


54,842 BP 283 0.16 2,873 Energean Oil & Gas 27 0.01

18,313 Genel Energy 34 0.02 75,741 Hurricane Energy 32 0.02 1,160 London Stock Exchange 85 0.05 1,845 Stolt-Nielsen 17 0.01 4,097 TORM 28 0.02

506 0.29

United States 7.04%

555 Adobe 125 0.07 86 Amazon.com 121 0.07

25,519 American Homes 4 Rent** 536 0.31 5,026 Apartment Investment & Management** 213 0.12 1,776 AvalonBay Communities** 310 0.18

101 BlackRock 37 0.02 1,836 Blackstone 73 0.04 2,498 Burlington Stores 405 0.23 2,602 Camden Property Trust** 235 0.14

416 Cboe Global Markets 39 0.02 20,596 CF Industries 822 0.48

756 CME 130 0.07 1,825 Costco Wholesale 427 0.25



111



United States 7.04% (continued)

2,736 Coupa Software 287 0.17 1,431 Diamond S Shipping 13 0.01

21,795 Diversified Gas & Oil 24 0.01 3,875 Dollar General 500 0.29 4,390 Dollar Tree 407 0.24 7,732 Dorian LPG 65 0.04 2,930 EOG Resources 176 0.10 2,170 Equity LifeStyle Properties** 235 0.14 4,645 Equity Residential** 325 0.19 1,229 Essex Property Trust** 326 0.19

546 FactSet Research Systems 108 0.06 758 Fidelity National Information Services 82 0.05

1,096 Fiserv 92 0.05 263 FleetCor Technologies 61 0.03

1,212 Global Payments 156 0.09 1,095 HubSpot 135 0.08 1,697 Intercontinental Exchange 127 0.07 3,645 International Seaways 57 0.03

21,869 Invitation Homes** 525 0.30 10,469 Kosmos Energy 53 0.03

630 Mastercard 139 0.08 1,344 Microsoft 152 0.09 3,127 Mid-America Apartment Communities** 330 0.19

24,198 Mosaic 403 0.23 590 MSCI 104 0.06 463 Nasdaq 37 0.02

3,047 Navigator 26 0.02 5,319 Ollie’s Bargain Outlet 253 0.15

941 Paypal 79 0.05 4,489 Ross Stores 400 0.23 5,709 Royal Gold 570 0.33

642 S&P Global 128 0.07 2,661 salesforce.com 320 0.18

736 ServiceNow 152 0.09 1,201 Splunk 115 0.07 1,034 Square 52 0.03 2,040 Sun Communities** 246 0.14 1,849 Talos Energy 30 0.02 7,828 TJX Cos 354 0.20

584 Tyler Technologies 124 0.07 6,744 UDR** 265 0.15 1,665 Veeva Systems 206 0.12

936 Visa 131 0.08 357 WEX 58 0.03 969 Workday 134 0.08

2,579 Zendesk 152 0.09 12,187 7.04

23,958 13.84



112



Government Bonds 55.99% France 24.54%

EUR 113,00,000 France Treasury Bill 0% 12/02/2020 10,020 5.80 EUR 117,00,000 France Treasury Bill 0% 25/03/2020 10,382 6.01 EUR 113,00,000 France Treasury Bill 0% 26/02/2020 10,023 5.80 EUR 113,00,000 France Treasury Bill 0% 29/01/2020 10,018 5.80 EUR 17,30,000 French Republic Government Bond

1.5% 25/05/2050 1,944 1.13 42,387 24.54

Italy 3.85%

EUR 16,50,000 Italy Buoni Poliennali Del Tesoro 2.8% 01/03/2067 1,733 1.00 EUR 38,50,000 Italy Buoni Poliennali Del Tesoro 3.85% 01/09/2049 4,917 2.85

6,650 3.85

South Africa 3.45%

ZAR 118,240,000 Republic of South Africa Government Bond 8.875% 28/02/2035 5,959 3.45

5,959 3.45


GBP 1,300,000 United Kingdom Gilt 4.75% 07/03/2020 1,323 0.77 1,323 0.77

United States 23.38%

USD 9,400,000 United States Treasury Bill 0% 19/12/2019 7,599 4.40 USD 9,000,000 United States Treasury Bill 0% 29/11/2019 7,282 4.22

USD 24,050,000 United States Treasury Inflation Indexed Bonds 0.5% 15/04/2024 20,106 11.64


40,374 23.38

96,693 55.99

Swap (0.95)%

USD 50,227,000 Barclays Interest Rate Swap USD 1.25% 18/12/2024 (585) (0.34)

USD 84,367,500 Barclays Interest Rate Swap USD 1.66% 27/08/2029 83 0.05

CNY 97,500,000 JPMorgan Interest Rate Swap CNY 2.87% 18/12/2024 51 0.03

EUR 5,054,900 Mizuho Interest Rate Swap EUR 1.15% 15/07/2029 (41) (0.02) GBP 60,000,000 Mizuho Interest Rate Swap GBP 0.9% 26/06/2025 895 0.52 GBP 30,000,000 Mizuho Interest Rate Swap GBP 1.05% 26/06/2030 (1,145) (0.66) GBP 35,000,000 Mizuho Interest Rate Swap GBP 3.51% 15/04/2024 (511) (0.30) USD 87,128,300 Mizuho Interest Rate Swap USD 1.7% 08/08/2024 (162) (0.10) USD 9,600,000 Mizuho Interest Rate Swap USD 1.98% 15/07/2029 (148) (0.09)

CAD 17,500,000 Morgan Stanley Interest Rate Swap CAD 1.47% 18/12/2024 (131) (0.08)

AUD 30,750,000 UBS Interest Rate Swap AUD 0.82% 18/12/2024 65 0.04 (1,629) (0.95)



113



Options 0.54%

JPY 61 Japan NIKKEI 225 Option November 2019 Call 22625 44 0.03 USD 159 US BP 9AM Option November 2019 123 127 0.07 USD 145 US Euro 9AM Option December 2019 1.135 16 0.01 USD 105 US JPY 9AM Option December 2019 90.5 14 0.01 USD 83 US S+P500 EMINI Option October 2019 PUT 2850 47 0.03 USD 50 US S+P500 EMINI Option October 2019 PUT 2900 41 0.02 USD 56 US S+P500 EMINI Option September 2019 PUT 2840 0 0.00

USD (82) US S+P500 EMINI Option September 2019 PUT 3080 (20) (0.01) AUD 27,281,000 FX001045 AUD CALL NZD PUT 129 0.07 AUD 34,944,000 FX001074 AUD CALL CAD PUT 5 0.00 EUR 22,270,000 FX001084 EUR CALL JPY PUT 3 0.00 EUR 22,599,000 FX001085 EUR CALL USD PUT 68 0.04 EUR 22,545,000 FX001096 EUR PUT USD CALL 149 0.09 EUR 17,650,000 FX001098 EUR CALL USD PUT 20 0.01 EUR 13,713,000 FX001100 EUR CALL USD PUT 71 0.04 EUR 13,713,000 FX001101 EUR PUT USD CALL 54 0.03 CAD 21,303,000 FX001102 CAD PUT NOK CALL 62 0.04 GBP 9,985,000 FX001103 GBP CALL USD PUT 31 0.02

EUR 16,888,000 FX001104 EUR PUT HUF CALL 48 0.03 AUD 9,094,000 FX001106 AUD CALL NZD PUT 10 0.01

919 0.54

Futures (0.19)%

(23) Australian S+P/ASX 200 F-REIT December 2019 0 0.00 29 Australian SPI 200 Futures December 2019 (11) (0.01) 6 Canadian S+P/TSX 60 Futures December 2019 (7) 0.00 3 Dutch Amsterdam Futures October 2019 2 0.00

17 French CAC40 10 Euro Futures October 2019 6 0.00 11 German DAX MINI Futures December 2019 4 0.00

(149) German Euro BTP Futures December 2019 25 0.01 71 German Euro BUND Futures December 2019 24 0.01

(38) German Euro BUXL 30 Year Bond Futures December 2019 (77) (0.04)

(507) German Euro STOXX 50 Futures December 2019 (193) (0.11) (367) German Euro STOXX 600 REAL Futures

December 2019 (110) (0.06) (177) German Euro STOXX 600 RETL Futures

December 2019 (49) (0.03) (242) German Euro STOXX 600 TRVL Futures

December 2019 (54) (0.03) (101) German Euro STOXX 600 UTIL Futures

December 2019 (45) (0.03) (304) German Euro STOXX Bank Futures

December 2019 (7) 0.00 (45) German MSCI Futures December 2019 22 0.01

2 Hong Kong Hang Seng Futures October 2019 0 0.00 57 Hong Kong HSCEI Futures October 2019 (1) 0.00



114



Futures (0.19)% (continued)

2 Italian FTSE/MIB Futures December 2019 1 0.00 247 Japan NIKKEI 225 MINI Futures October 2019 97 0.06 40 Korean Bond 10 Year Futures December 2019 (5) 0.00 4 Singaporean MSCI SING Futures October 2019 0 0.00

22 Singaporean NIKKEI 225 (SGX) Futures December 2019 (5) 0.00

3 Spanish IBEX 35 Futures October 2019 3 0.00 14 Swedish OMXS 30 Futures October 2019 1 0.00 16 UK FTSE 100 Futures December 2019 13 0.01 26 UK FTSE 250 Futures December 2019 (7) 0.00 98 US EMGMKT Futures December 2019 (104) (0.06)

(70) US EMINI S+P Futures December 2019 (6) 0.00 69 US GBP Futures December 2019 (12) (0.01) (4) US JPY Futures December 2019 3 0.00

(28) US NASDAQ 100 EMINI Futures December 2019 66 0.04 24 US NZD Futures December 2019 (25) (0.01) 44 US S+P 500 EMINI Futures December 2019 18 0.01

371 US Treasury Note 10 Year Futures December 2019 (11) (0.01) (32) US XAF Financial Futures December 2019 21 0.01

68 US XAU Futures December 2019 92 0.05 (27) US XAY Futures December 2019 1 0.00

(330) (0.19)

Forward Currency Contracts (0.25)%

Bought CAD189,389 for GBP115,475 Settlement 31/10/2019 1 0.00

Bought CAD5,723,519 for USD4,322,541 Settlement 31/10/2019 2 0.00

Bought EUR2,722,285 for GBP2,417,898 Settlement 31/10/2019 (7) 0.00

Bought EUR23,344,000 for USD25,733,195 Settlement 31/10/2019 (185) (0.11)

Bought EUR27,105 for GBP24,098 Settlement 01/10/2019 0 0.00

Bought EUR29,199 for GBP25,954 Settlement 02/10/2019 0 0.00

Bought IDR68,830,018,000 for USD4,788,508 Settlement 18/12/2019 17 0.01

Bought INR175,222,084 for USD2,418,000 Settlement 18/12/2019 28 0.02

Bought JPY1,069,081,788 for USD9,988,394 Settlement 31/10/2019 (63) (0.04)

Bought KRW5,713,686,090 for USD4,770,987 Settlement 18/12/2019 13 0.01

Bought MXN185,739,519 for GBP7,527,855 Settlement 18/12/2019 (10) (0.01)



115



Forward Currency Contracts (0.25)% (continued)

Bought MXN190,067,491 for USD9,492,799 Settlement 18/12/2019 14 0.01

Bought NOK39,001,333 for USD4,322,541 Settlement 31/10/2019 (23) (0.01)

Bought NOK940,776 for GBP84,328 Settlement 31/10/2019 0 0.00

Bought PHP123,180,112 for USD2,356,973 Settlement 18/12/2019 10 0.01

Bought SEK360,262 for GBP30,019 Settlement 31/10/2019 0 0.00

Bought USD2,370,000 for IDR33,730,080,700 Settlement 18/12/2019 11 0.01

Bought USD384,859 for GBP311,684 Settlement 31/10/2019 0 0.00

Bought USD4,318,495 for CAD5,723,519 Settlement 31/10/2019 (5) 0.00

Bought USD4,322,541 for NOK39,158,284 Settlement 31/10/2019 9 0.01

Bought USD5,920,065 for THB180,857,390 Settlement 18/12/2019 (2) 0.00

Bought USD7,109,680 for SGD9,834,081 Settlement 18/12/2019 (6) 0.00

Bought USD9,566,032 for MXN190,067,491 Settlement 18/12/2019 45 0.03

Bought ZAR56,132,384 for GBP3,064,606 Settlement 18/12/2019 (100) (0.06)

Sold CAD416,732 for GBP253,338 Settlement 31/10/2019 (2) 0.00

Sold DKK1,778,757 for GBP211,037 Settlement 31/10/2019 0 0.00

Sold EUR11,300,000 for GBP10,003,223 Settlement 12/02/2020 (43) (0.02)



Sold EUR11,700,000 for GBP10,466,890 Settlement 25/03/2020 49 0.03


Sold MXN181,743,791 for GBP7,388,420 Settlement 18/12/2019 32 0.02

Sold NOK31,054,776 for GBP2,766,781 Settlement 31/10/2019 (5) 0.00



116



Forward Currency Contracts (0.25)% (continued)

Sold SEK1,099,409 for GBP91,116 Settlement 31/10/2019 0 0.00

Sold USD29,745 for GBP24,169 Settlement 01/10/2019 0 0.00

Sold USD74,206,599 for GBP59,748,698 Settlement 31/10/2019 (399) (0.23)

Sold USD9,000,000 for GBP7,293,308 Settlement 29/11/2019 6 0.00

Sold USD9,400,000 for GBP7,609,740 Settlement 19/12/2019 6 0.00

Sold ZAR168,132,956 for GBP9,052,147 Settlement 18/12/2019 171 0.10

(486) (0.25)


The investments have been valued in accordance with note 1(h) of the Accounting Policies and Financial Instruments


* American Depositary Receipt. ** Real Estate Investment Trust.

Gross purchases for the period (excl. Derivatives): £149,171,000 (See note 15). In addition, transfers totalling £145,504,000 were made via inspecie into the portfolio during the period.

Total sales net of transaction costs for the period (excl. Derivatives): £165,027,000 (See note 15).

Associated Bond Ratings as at 30 September 2019 % of Total Net Assets

Bonds Rating AA 48.70 BBB 3.90 BB 3.50 Bonds 56.10 Uninvested Cash 13.70 Equities 14.00 FX/Derivatives 16.20 Net Assets 100.00

The above information has been supplied by the Investment Manager. Bonds not rated are of investment grade, but rating not sought by issuer.



117


24/08/19 to 30/09/19

Note £’000 £’000

Income: Net capital losses 2 (1,005) Revenue 3 85 Expenses 4 (184) Net expense before taxation (99) Taxation 5 (3) Net expense after taxation (102) Total return before distributions (1,107) Distributions 6 – Change in net assets attributable to Shareholders from investment activities (1,107)

24/08/19 to 30/09/19

£’000 £’000


3,848 Change in net assets attributable to Shareholders from investment activities (see above) (1,107) Closing net assets attributable to Shareholders 172,710




118



30/09/19

Note £’000 £’000

Assets: Fixed assets: Investments 131,812 Current assets: Debtors 7 1,246 Cash and bank balances 8 60,566 Total current assets 61,812 Total assets 193,624 Liabilities: Investment liabilities (4,409) Creditors: Bank overdrafts 10 (217) Other creditors 9 (16,288) Total creditors (16,505) Total liabilities (20,914) Net assets attributable to Shareholders 172,710


119





30/09/19 £’000

The net capital losses during the period comprise: Brokers commission on futures (15) Currency gains 563 Derivative contracts 293 Forward currency contracts (643) Non-derivative securities (1,196) Transaction charges (7) Net capital losses (1,005)


30/09/19 £’000

Bank interest 2 Interest from Debt Securities 48 Offshore funds dividends 12 Overseas dividends 23 Total revenue 85


30/09/19 £’000



7 Other expenses Audit fees 10 Professional fees 2





120


5. Taxation


30/09/19 £’000

Irrecoverable overseas tax 3 Total taxation for the period (Note 5 (b)) 3


The tax assessed for the period is different from that calculated when the standard rate of corporation tax for an open ended investment company of 20% is applied to the net expense before taxation. The differences are explained below:

24/08/19 to

30/09/19 £’000

Net expense before taxation (99) Net expense for the period multiplied by the standard rate of corporation tax (20) Effects of: Irrecoverable overseas tax 3 Movement in excess management expenses 22 Non taxable overseas dividends (2) Total tax charge for the period 3





At the period end, after offset against revenue taxable on receipt, there is a potential deferred tax asset of £22,483 in relation to surplus management expenses. It is unlikely that the Fund will generate sufficient taxable profits in the future to utilise this amount and therefore no deferred tax asset has been recognised in the period.



121


6. Distributions


24/08/19 to

30/09/19 £’000

Net distribution for the period – Reconciliation of net expense after taxation to distributions Net expense after taxation (102) Revenue deficit 102 Net distribution for the period –


7. Debtors 30/09/19

£’000

Accrued bank interest 2 Accrued revenue 142 Amounts receivable for creation of Shares 759 Sales awaiting settlement 298 Inspecie transfer receivable 45 Total debtors 1,246


£’000 Cash and bank balances 51,584 Amount held at futures clearing houses and brokers 8,982 Total cash and bank balances 60,566



122



£’000







£’000

Amounts overdrawn at futures clearing houses and brokers 217 Total bank overdrafts 217











123


12. Share Classes


30/09/19 (%)
















124





Financial assets

Floating rate Fixed rate not carrying financial assets financial assets interest Total

Currency Assets £’000 £’000 £’000 £’000

30/09/19 Australian Dollar – – 250 250 Canadian Dollar 195 – 65 260 Chinese Yuan – – 51 51 Danish Krone 1 – 209 210 Euro 684 49,037 5,741 55,462 Indian Rupee – – 28 28 Indonesian Rupiah – – 17 17 Japanese Yen 54 – 140 194 Mexican Peso – – 46 46 Norwegian Krone – – 2,736 2,736 Philippine Peso – – 10 10 South African Rand – 5,959 216 6,175 South Korean Won 104 – 13 117 Sterling 45,692 1,323 2,251 49,266 Swedish Krona 1 – 83 84 Thailand Baht – – – – US Dollar 15,455 40,372 22,891 78,718 Total 62,186 96,691 34,747 193,624

Financial

Floating rate Fixed rate liabilities financial financial not carrying liabilities liabilities interest Total


30/09/19 Australian Dollar 137 – 233 370 Canadian Dollar – – 140 140 Euro – – 1,243 1,243 Hong Kong Dollar 79 – – 79 Japanese Yen – – 68 68 Mexican Peso – – 10 10 Norwegian Krone – – 207 207 Singapore Dollar 1 – – 1 South African Rand – – 100 100 South Korean Won – – 5 5 Sterling – – 2,005 2,005 US Dollar – – 16,686 16,686 Total 217 – 20,697 20,914 Changes in interest rates would have no material impact on the valuation of floating rate financial assets or liabilities as at the balance sheet date. Consequently, no sensitivity analysis has been presented.



125





Derivative Collateral Collateral Collateral Counterparty Exposure £’000 Posted £’000 Received £’000 Asset Class

JPMorgan 672 – – – Goldman Sachs 73 – – – State Street 17 – – –

(d) Leverage



Sterling Corporate Bond 499.89% 893.72% 0.00% 587.39%


£’000 £’000

Analysis of total purchase costs Purchases in the period before transaction costs: Equities 25,036 Bonds 113,518 Inspecie transfer 145,504 Collective Investment Schemes 10,594

294,652 Commissions – Equities 20 Taxes – Equities 3 Total purchase costs 23 Gross purchase total 294,675 Analysis of total sale costs Gross sales in the period before transaction costs: Equities 690 Bonds 16,687 Collective Investment Schemes 147,650

165,027 Total sale costs – Total sales net of transaction costs 165,027


For the Fund’s investment transactions in debt instruments any applicable transaction charges form part of the dealing spread for these instruments.



126


15. Portfolio transaction costs (continued) For the Fund’s investment in Collective Investment Scheme holdings there will potentially be dealing spread costs applicable to purchases and sales. However, additionally there are indirect transaction costs suffered in those underlying funds, throughout the holding period for the instruments, which are not separately identifiable and do not form part of the analysis above.

24/08/19 to


Purchases – Commissions Equities 0.0799 Bonds 0.0000 Collective Investment Schemes 0.0000 Purchases – Taxes Equities 0.0120 Bonds 0.0000 Collective Investment Schemes 0.0000 Sales – Commissions Equities 0.0000 Bonds 0.0000 Collective Investment Schemes 0.0000 Sales – Taxes Equities 0.0000 Bonds 0.0000 Collective Investment Schemes 0.0000

24/08/19 to





There are no post balance sheet events which require adjustments at the period end.



Valuation technique Level 1: The unadjusted quoted price in an active market for identical assets or liabilities 123,370 (730) Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly 8,442 (3,679) Level 3: Inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability – –

131,812 (4,409)



127


First Distribution in pence per share








128

Omnis Emerging Markets Equity Fund



The Fund aims to achieve a return consisting primarily of capital growth (and potentially a low level of income) which exceeds that of the MSCI Emerging Markets TR Index after all fees and expenses over a five-year rolling period.

Investment Policy

The Fund intends to invest at least 70% in Emerging Market companies, defined as those which are domiciled, incorporated or have a significant exposure to Emerging Markets.

The Fund may also invest in other transferable securities (for example, equity securities of other international companies), units in collective investment schemes (including schemes managed and operated by the ACD or its associates), money market instruments, warrants, cash, near cash and deposits as detailed in the Prospectus.

Derivatives may also be used for the purposes of hedging and efficient portfolio management.


Benchmark

The performance of the Fund will be measured against the MSCI Emerging Markets TR Index for target return purposes.

Portfolio Review

The fund’s investment approach is centred on the search for underappreciated change. This guiding principle is rooted in the notion that markets are inherently inefficient when it comes to pricing in change, whether on an industry or company level. We therefore look for companies that are experiencing some form of positive change, but where the market in general has been slow to recognise the long-term impact.

During the period under review, notable positive contributions to the fund’s return came from Interglobe Aviation, an Indian airline, as the company benefited from a falling oil price in late 2018 (which means it could spend less on fuel), and then in early 2019 from rising flight prices as the company emerged from a period of intense price competition in its sector with an increased market share.

Another positive contribution came from Brazilian construction and industrial maintenance company Mills Esturias, which saw its share price rise dramatically during the period as it not only benefited from a market bounce in Brazil following the election of Jair Bolsonaro, but also a positive reaction to the company’s merger with Solaris, the number two player in its industry. Another successful investment for the fund in a Brazilian company was PagSeguro, a financial technology firm that we believe is well-placed to benefit from a long-term transition from cash to digital payments. Elsewhere, Norilsk Nickel, a Russian producer of nickel and palladium, also rose strongly on the back of gains in the nickel price.

On the negative side, a detractor from the fund’s returns during the period was Ascendis Health, a South African conglomerate that experienced a falling share price following a couple of earnings announcements that disappointed the market, as well as forced selling from its largest shareholder. Another notable detractor was Reliance Capital, an Indian financial services company, which fell

256987 10 Omnis Portfolio Investments pp128-pp143 (Emerging Markets Equity).qxp 29/01/2020 10:43

129



after Reliance Communications (which has the same majority shareholder) experienced financial difficulties. The fund’s investment in Chinese technology firm Baidu was also a negative after the firm issued earnings guidance that disappointed the market. Across all the internet giants, there has been a slowdown in advertising spend despite the increased availability of online advertising channels.

Notable transactions during the period included trimming back the fund’s positions in the likes of Interglobe Aviation, Mediatek, and Hindustan Petroleum into share price strength, while exposure to SK Hynix and LG Chem was also reduced. Purchases included adding to positions in both Samsung Electronics and TSMC (Taiwan Semiconductor Manufacturing Company), while the fund was also a net buyer of shares in Indian IT outsourcing company Infosys and Mexican companys Mexichem (now called Orbia Advance) and Vesta. These transactions were undertaken at a variety of times during the period, as we took advantage of opportunities to add to shares on weakness and sell into strength.

Investment Manager Jupiter Asset Management Limited 21 October 2019


130


Net asset value

Omnis Emerging Markets Equity Fund merged with Omnis Global Emerging Markets Equity Leaders Fund and Omnis Global Emerging Markets Equity Opportunities Fund on 24 August 2019 and therefore the Net Asset Value of all Classes is nil. This Fund has no shareholders as at year end.



131


Operating Charge Rebates from Total

Other underlying Transaction operating AMC expenses funds costs charge

Date (%) (%) (%) (%) (%)

30/09/19 Share Class A Income – – – – N/A

28/09/18 Share Class A Income 0.75 0.17 (0.02) 0.01 0.91


Omnis Emerging Markets Equity Fund merged with Omnis Global Emerging Markets Equity Leaders Fund and Omnis Global Emerging Markets Equity Opportunities Fund on 24 August 2019.


Risk Warning




132









133


29/09/18 to 30/09/19 01/10/17 to 28/09/18

Note £’000 £’000 £’000 £’000

Income: Net capital gains/(losses) 2 13,901 (59,322) Revenue 3 14,356 11,446 Expenses 4 (3,723) (3,503) Interest payable and similar charges 5 (6) (2) Net revenue before taxation 10,627 7,941 Taxation 6 (1,277) (1,112) Net revenue after taxation 9,350 6,829 Total return before distributions 23,251 (52,493) Distributions 7 (9,493) (6,969) Change in net assets attributable to Shareholders from investment activities 13,758 (59,462)

29/09/18 to 30/09/19 01/10/17 to 28/09/18

£’000 £’000 £’000 £’000

Opening net assets attributable to Shareholders 389,096 334,504 Inspecie transfer 406,548 – Amounts receivable on issue of Shares (321,945) 149,707 Amounts payable on cancellation of Shares (487,457) (35,718) (809,402) 113,989 Dilution adjustment – 65 Change in net assets attributable to Shareholders from investment activities (see above) 13,758 (59,462) Closing net assets attributable to Shareholders – 389,096




134



30/09/19 28/09/18

Note £’000 £’000 £’000 £’000

Assets: Fixed assets: Investments – 388,827 Current assets: Debtors 8 8 2,011 Cash and bank balances 9 12,764 4,905 Total current assets 12,772 6,916 Total assets 12,772 395,743 Liabilities: Creditors: Distribution payable (6,762) (4,943) Other creditors 10 (6,010) (1,704) Total creditors (12,772) (6,647) Total liabilities (12,772) (6,647) Net assets attributable to Shareholders – 389,096


135





2. Net capital gains/(losses) 29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

The net capital gains/(losses) during the year comprise: Currency losses (2,486) (452) Forward currency contracts (12) – Non-derivative securities 16,627 (58,797) Transaction charges (214) (73) Transfer to other Omnis fund (14) – Net capital gains/(losses) 13,901 (59,322)

3. Revenue 29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

Bank interest 6 1 Offshore funds dividends 103 – Overseas dividends 13,530 10,867 Rebates received from underlying funds 46 77 UK dividends 671 501 Total revenue 14,356 11,446


136



4. Expenses 29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000



540 594 Other expenses Audit fees 4 10 Professional fees* 26 21 Publication fees 4 1 Custodian out of pocket expenses 31 16 ADR fees 33 15 Retained amount 178 –

276 63 Total expenses 3,723 3,503

Audit fees are £3,280 ex Vat (2018: £8,050). * Includes tax service fee paid to Deloitte LLP £9,558 (2018: £5,308).


30/09/19 28/09/18 £’000 £’000

Interest 6 2 Total interest payable and similar charges 6 2


137



6. Taxation 29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

(a) Analysis of the tax charge in the year

Irrecoverable overseas tax 1,277 987 Overseas capital gains tax – 125 Total taxation for the year (Note 6 (b)) 1,277 1,112



29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

Net revenue before taxation 10,627 7,941 Net revenue for the year multiplied by the standard rate of corporation tax 2,125 1,588 Effects of: Expenses not deductible for tax purposes 36 3 Irrecoverable overseas tax 1,277 987 Movement in excess management expenses (53) 306 Overseas capital gains tax in capital – 125 Overseas tax expensed (76) (50) Revenue not subject to corporation tax (2,032) (1,847) Total tax charge for the year 1,277 1,112







138



7. Distributions


29/09/18 to 01/10/17 to 30/09/19 28/09/18

£’000 £’000

Interim 9,735 2,309 Final – 4,943 Add: Revenue paid on cancellation of Shares 93 320 Deduct: Revenue received on creation of Shares (335) (603) Net distribution for the year 9,493 6,969 Reconciliation of net revenue after taxation to distributions Net revenue after taxation 9,350 6,829 Equalisation on conversion of Shares – 15 Expenses charged to capital 178 – Net movement in revenue account (35) – Capital gains tax – 125 Net distribution for the year 9,493 6,969


8. Debtors 30/09/19 28/09/18

£’000 £’000

Accrued revenue – 225 Amounts due for rebates from underlying funds 8 13 Amounts receivable for creation of Shares – 1,688 Sales awaiting settlement – 84 Prepaid expenses – 1 Total debtors 8 2,011


£’000 £’000



139


10. Other creditors 30/09/19 28/09/18

£’000 £’000

Purchases awaiting settlement – 1,399 Transfer to other Omnis fund 14 – Retained cash 5,805 –

5,819 1,399 Accrued expenses Manager and Agents AMC fees – 238

– 238 Depositary and Agents Depositary fees 8 9 Safe custody fees – 42 Transaction charges – 6


183 10 Total other creditors 6,010 1,704





12. Share Classes


%


Each Share Class has equal rights in the event of the wind up of any fund. The reconciliation of the opening and closing numbers of shares of each class is shown below:

28/09/18 Issued Cancelled Converted 30/09/19 Share Class A Income 295,290,237 64,777,755 (360,067,992) – –



140







A proportion of the financial net assets of the Fund are denominated in currencies other than Sterling with the effect that the balance sheet and total return can be affected by currencymovements. The table below shows the foreign currency risk profile at the balance sheet date:


30/09/19 28/08/19 Currency £’000 £’000

Brazilian Real – 13,337 Colombian Peso – 7,647 Hong Kong Dollar – 55,332 Indian Rupee – 30,617 Indonesian Rupiah – 14,805 Mexican Peso – 16,506 Nigerian Naira – 10,856 Pakistani Rupee – 4,568 Philippine Peso – 10,278 Polish Zloty – 10,253 Russian Ruble – 6,292 South African Rand – 17,421 South Korean Won – 52,879 Taiwan Dollar 5,341 39,700 Turkish Lira – 5,366 UAE Dirham – 7,555 US Dollar – 72,200 Total foreign currency exposure 5,341 375,612 Sterling (5,341) 13,484 Total net assets – 389,096




141




The Fund does not invest in either fixed or floating rate securities and interest rate risk exposure is restricted to interest receivable on bank deposits or payable on bank overdraft positions which will be affected by fluctuations in interest rates. As at 30 September 2019, 0.00% of the Fund’s assets were interest bearing (2018: 1.26%). Changes in interest rates would have no material impact on the valuation of floating rate financial assets or liabilities as at the balance sheet date. Consequently, no sensitivity analysis has been presented.


£’000 £’000 £’000 £’000

Analysis of total purchase costs Purchases in the year before transaction costs: Equities 268,475 220,761 Collective Investment Schemes 184,059 –

452,534 220,761 Commissions – Equities 192 177 Commissions – Collective Investment Schemes 22 Taxes – Equities 71 129 Total purchase costs 307 306 Gross purchase total 452,819 221,067 Analysis of total sale costs Gross sales in the year before transaction costs: Equities 449,477 108,175 Collective Investment Schemes 3,288 Inspecie transfer 406,548 –

859,313 108,175 Commissions – Equities (410) (81) Taxes – Equities (618) (62) Total sale costs (1,028) (143) Total sales net of transaction costs 858,285 108,032

The portfolio transaction costs table above includes direct transaction costs suffered by the Fund during the year. For the Fund’s investment in Collective Investment Scheme holdings there will potentially be dealing spread costs applicable to purchases and sales. However, additionally there are indirect transaction costs suffered in those underlying funds, throughout the holding period for the instruments, which are not separately identifiable and do not form part of the analysis above.



142




Purchases – Commissions Equities 0.0716 0.0802 Collective Investment Schemes 0.0118 0.0000 Purchases – Taxes Equities 0.0266 0.0585 Collective Investment Schemes 0.0000 0.0000 Sales – Commissions Equities 0.0912 0.0749 Collective Investment Schemes 0.0000 0.0000 Sales – Taxes Equities 0.1376 0.0576 Collective Investment Schemes 0.0000 0.0000

29/09/18 to 01/10/17 to


Commissions N/A 0.0680 Taxes N/A 0.0504 At the balance sheet date the average portfolio dealing spread was 0.00% (2018: 0.37%).






– – 388,827 –



143













At the period end there will be no distribution, as revenue was distributed to the Shareholders along with their final redemption proceeds on 24 August 2019.


144

Omnis European Equity Fund



The Fund aims to achieve a return consisting primarily of capital growth (and potentially a low level of income) which exceeds that of the FTSE World Europe Ex-UK TR Index after all fees and expenses over a five-year rolling period.

Investment Policy

The Fund intends to invest at least 70% in European companies, defined as those which are domiciled, incorporated or have a significant exposure to Europe, excluding the United Kingdom.




Benchmark

The performance of the Fund will be measured against the FTSE World Europe Ex UK TR Index for target return purposes.

Portfolio Review

Our long-standing investment approach has been to seek out superior-quality companies that can grow their profits over time, but with a sharp focus on not overpaying for that growth. As such, there were no significant changes in terms of sectors or geographies during the period. As ever, we continue to look for a broad range of quality growth companies with good prospects that we are happy to hold over the medium term. We increase or reduce holdings in response to changes in the market valuation of the shares.

The fund gained ground during this period, though it lagged the market overall. Underperformance relative to the FTSE World Europe index was a consequence of what the fund held and what it did not. For the latter, the fund held no utilities and almost no telecoms companies – both sectors tend to have high debt levels and low growth. However these sectors delivered higher returns than the wider market because short-term investors bought them for their bond-like characteristics. For example, in terms of opportunity cost, not owning Nestlé ‘cost’ the fund around 1% in forgone returns relative to the index as shares in this low-growth index giant rose around 30% during the period*.

The biggest detractor from returns came from dialysis group Fresenius Medical Care which warned that it would struggle to reach its ambitious growth targets for 2019/20. In our view the market overreacted to this uncertainty and we believe its future growth prospects remain intact. Ryanair’s revenues came under pressure at a time when the low-cost carrier suffered from higher costs. Umicore fell after it delayed plans to increase battery production capacity in the face of weaker demand for electric vehicles as China halved its 2019 subsidy for pure battery electric vehicles.

256987 11 Omnis Portfolio Investments pp144-pp157 (European Equity).qxp 29/01/2020 10:43

145



On the positive side there were numerous strong contributors including: Essity (hygiene products) which benefitted from strong profits’ growth from higher prices and improving margins; Euronext (financial market infrastructure/data services) benefitted from strong growth and higher levels of market volatility; LVMH (luxury goods) continued to see strong trading; RELX continued to deliver reliable growth supported by strong cashflows and a high return on investment; Edenred (prepaid corporate services vouchers) benefitted from strong growth in Latin America; Vinci (large construction projects/toll roads) gained from improving sales, margins and profitability while Deutsche Boerse’s investment in big data increased its competitive advantage while a series of small bolt-on acquisitions helped diversify revenues further. The value that we saw in Dutch-based optical group GrandVision was recognised when EssilorLuxottica bid for it at a substantial premium.

Major purchases over the period included: brewer Heineken where we saw room for margins to improve; EssilorLuxottica where we thought growth prospects of the merged lenses and eyewear businesses were being overshadowed by a board room disagreement; Deutsche Boerse where we saw further growth prospects; Ingenico where a market sell off in January provided an attractive entry point and Norwegian telecoms operator Telenor. Scandinavia is a more attractive market than central Europe while Telenor also has exposure to faster-growing emerging markets.

Major sales in the fund included: enterprise software giant SAP; luxury goods business LVMH and building materials group CRH where in each case the shares had performed strongly over the year so we progressively trimmed our holdings to recycle the cash into more attractively-valued opportunities. In May we sold consumer goods company Henkel which did not develop as we had expected. We took profits in some of Ingenico in July after a strong rally.



146




Date (%) (%) (%) (%)

30/09/19 Share Class A Income – – – N/A



Omnis European Equity Fund merged with Omnis European Equity Leaders Fund and Omnis European Equity Opportunities Fund on 24 August 2019.


Risk Warning




147






Gross purchases for the year: £504,900,000 [2018: £111,583,000] (See note 15). In addition, transfers totalling £210,181,000 were made via inspecie transfer into the portfolio during the year.

Total sales net of transaction costs for the year: £515,895,000 [2018: £51,125,000] (See note 15). In addition, transfers totalling £345,333,000 were made via outspecie transfer out of portfolio during the year.


148


29/09/18 to 30/09/19 01/10/17 to 28/09/18

Note £’000 £’000 £’000 £’000

Income: Net capital gains/(losses) 2 9,969 (3,800) Revenue 3 7,118 3,221 Expenses 4 (2,585) (971) Interest payable and similar charges 5 (2) (1) Net revenue before taxation 4,531 2,249 Taxation 6 (982) (383) Net revenue after taxation 3,549 1,866 Total return before distributions 13,518 (1,934) Distributions 7 (3,599) (1,866) Change in net assets attributable to Shareholders from investment activities 9,919 (3,800)

29/09/18 to 30/09/19 01/10/17 to 28/09/18

£’000 £’000 £’000 £’000

Opening net assets attributable to Shareholders 136,704 80,654 Inspecie transfer 221,812 – Amounts receivable on issue of Shares 54,920 83,890 Amounts payable on cancellation of Shares (423,355) (24,080)

(368,435) 59,810 Dilution adjustment – 40 Change in net assets attributable to Shareholders from investment activities (see above) 9,919 (3,800) Closing net assets attributable to Shareholders – 136,704




149



30/09/19 28/09/18

Note £’000 £’000 £’000 £’000

Assets: Fixed assets: Investments – 136,427 Current assets: Debtors 8 (57) 602 Cash and bank balances 9 3,797 1,568 Total current assets 3,740 2,170 Total assets 3,740 138,597 Liabilities: Investment liabilities – – Creditors: Distribution payable (3,644) (1,788) Other creditors 10 (96) (105) Total creditors (3,740) (1,893) Total liabilities (3,740) (1,893) Net assets attributable to Shareholders – 136,704


150






30/09/19 28/09/18 £’000 £’000

The net capital gains/(losses) during the year comprise: Currency gains/(losses) 256 (134) Non-derivative securities 9,756 (3,616) Transaction charges (26) (50) Transfer to other Omnis fund (17) – Net capital gains/(losses) 9,969 (3,800)

3. Revenue 29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

Bank interest 6 1 Overseas dividends 6,888 3,220 UK dividends 224 – Total revenue 7,118 3,221

4. Expenses 29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

Payable to the ACD, associates of the ACD, and agents of either of them AMC fees 2,360 895

2,360 895 Payable to the Depositary, associates of the Depositary and agents of either of them Depositary fees 89 33 Safe custody fees 56 24


80 19 Total expenses 2,585 971



151



30/09/19 28/09/18 £’000 £’000


6. Taxation


30/09/19 28/09/18 £’000 £’000




29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

Net revenue before taxation 4,531 2,249 Net revenue for the year multiplied by the standard rate of corporation tax 906 450 Effects of: Expenses not deductible for tax purposes 13 – Irrecoverable overseas tax 982 383 Movement in excess management expenses 507 196 Non taxable overseas dividends (1,381) – Non taxable UK dividends (45) – Revenue not subject to corporation tax – (646) Total tax charge for the year 982 383








152


7. Distributions


29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

Interim 3,644 88 Final – 1,788 Add: Revenue paid on cancellation of Shares 47 303 Deduct: Revenue received on creation of Shares (92) (313) Net distribution for the year 3,599 1,866 Reconciliation of net revenue after taxation to distributions Net revenue after taxation 3,549 1,866 Expenses charged to capital 66 – Net movement in revenue account (16) – Net distribution for the year 3,599 1,866


8. Debtors 30/09/19 28/09/18

£’000 £’000

Accrued revenue – 6 Amounts receivable for creation of Shares – 430 Retained Cash (149) – Overseas withholding tax recoverable 92 166 Total debtors (57) 602


£’000 £’000




153


10. Other creditors 30/09/19 28/09/18

£’000 £’000

Purchases awaiting settlement – 2 Transfer to other Omnis fund 17 –

17 2 Accrued expenses Manager and Agents AMC fees – 84








12. Share Classes


%








154











Danish Krone – 7,950 Euro 91 120,476 Swedish Krone – 6,411 Swiss Franc – 1,775 Total foreign currency exposure 91 136,612 Sterling (91) 92 Total net assets – 136,704








155



£’000 £’000 £’000 £’000

Analysis of total purchase costs Purchases in the year before transaction costs: Equities 379,497 111,390 Collective Investment Schemes 124,919 – Inspecie transfer 210,181 –

714,597 111,390 Commissions – Equities 59 41 Commissions – Collective Investment Schemes 12 – Taxes – Equities 413 152 Total purchase costs 484 193 Gross purchase total 715,081 111,583

Analysis of total sale costs Gross sales in the year before transaction costs: Equities 740,984 51,146 Inspecie transfer 120,363 –

861,347 51,146 Commissions – Equities (119) (21) Taxes – Equities – – Total sale costs (119) (21) Total sales net of transaction costs 861,228 51,125





156





29/09/18 to 01/10/17 to









– – 136,427 –



157












Share Class A Income Group 1 1.1721 – 1.1721 1.6346 Group 2 0.3435 0.8286 1.1721 1.6346 At the period end there will be no distribution, as revenue was distributed to the Shareholders along with their final redemption proceeds on 24 August 2019.


158

Omnis European Equity Leaders Fund



The Fund aims to achieve a return consisting of both income and capital growth which, after all fees and expenses, exceeds the FTSE World Europe ex UK TR index over a five-year rolling period.

Investment Policy

The Fund intends to invest at least 80% in the equity securities of European companies defined as those which are domiciled, incorporated or have a significant exposure to Europe, excluding the United Kingdom. The fund will invest primarily in industry-leading companies delivering reliable earning streams. Exposure to established larger companies will be greater than 50% of the fund. Large companies are defined as those with a market cap of $10 billion or more at the time of the Fund’s investment. Companies whose capitalisation no longer meets this definition after investment will continue to be considered large market capitalisation companies.

The Fund may also invest in other transferable securities (for example, equity securities of other international companies), units in collective investment schemes (including schemes managed and operated by the ACD or its associates), money market instruments, warrants, cash and near cash deposits as detailed in the Prospectus.

It is envisaged that the investment portfolio of the Fund will be concentrated, typically comprising between 40 and 60 holdings.


Benchmark

The performance of the Fund will be measured against the FTSE World Europe ex UK TR Index for target return purposes.

Portfolio Review

Over the period the fund returned 0.03% [source: Return after operating charges as per Comparative Table] and the benchmark returned 3.30% [source: Financial Express, bid to bid, net income reinvested].

Although there is not much portfolio activity to review in this five week period there were some notable changes in the broad macroeconomic backdrop and in certain sectors within European equity markets. In the latter part of August there was little corporate news flow. Nevertheless, equity markets were volatile, broadly driven by the ongoing rally in government bonds arising from growing concerns about President Trump’s belligerence in the US-China trade war as the economic data pointed to a sharp slowdown, bleeding from manufacturing into the services sector. For European equities, the trend seen earlier in the year reasserted itself with investors hiding in defensive areas of the market such as healthcare, utilities, consumer staples. With the majority of European countries seeing their government bond yields fall to record lows the European banking sector was hit hard as lower yields compressed the profit margins on their lending. The fund has very low exposure to mainstream banks as we see better growth opportunities in areas of speciality finance such as financial exchanges and payment processors. Industrial and cyclical shares were also weak.

In September there was a brief but strong sector rotation in markets out of momentum-driven quality growth stocks and into value, although this partially unwound towards month end.

256987 12 Omnis Portfolio Investments pp158-pp176 (European Equity Leaders).qxp 29/01/2020 10:42

159



Nevertheless, the European equity market remained resilient, trading at the top of its year-to-date range despite a recent series of disappointing economic indicators and weaker-than-expected German data where the global slowdown in manufacturing activity arising from US trade tensions with China continued to hit German exporters hard. We expect these worsening macroeconomic indicators to eventually feed through into companies reports and outlook statements – something we pay close attention to. In his swansong, Mario Draghi oversaw a small reduction in interest rates to -0.5%, signalled the resumption of open-ended quantitative easing and told markets, companies and consumers that interest rates would stay low until inflation was close to the official target. In doing so he passed the baton of stimulus to governments.

The increasing tensions in the US-China trade war have made it harder to differentiate the noise from the signals but, despite this uncertainty, we remain focused on our companies. In this brief review period we did not feel the need to make any significant changes to a portfolio that has a high degree of liquidity. We continued to take advantage of market volatility to trim and/or add to our positions, making piecemeal rather than wholesale changes. For example, we trimmed strong performers such as Ingenico, ASML, GrandVision and Deutsche Boerse recycling some of the cash across various companies such as RELX, but also keeping the cash ready for any opportune moments that might arise.

We did however make one new purchase over the period and took a position in Prosus which recently listed on the Dutch stock exchange having being carved out of Naspers, the South Africa based global internet and technology investor. Prosus is mainly a holding company for a substantial stake in Tencent – the global internet and entertainment group and one of the largest technology investors in the world. Compared to the US and Asia, Europe has comparatively few global tech giants so Prosus offers a way to share in the growth prospects of Asia. In the European technology arena the fund also has holdings in SAP, Dassault Systems, Ingenico, ASML and Nexi an Italian digital payments business. The Italian government is keen to reduce the use of untraceable cash payments that occur in the country’s sizable black economy.

Outlook

Our long-standing investment approach has been to seek out superior-quality companies that can grow their profits over time, but with a sharp focus on not overpaying for that growth. As such, investors should not expect any significant changes in terms of sectors or geographies during the forthcoming period. As ever, we continue to look for a broad range of quality growth companies with good prospects that we are happy to hold over the medium term. We increase or reduce holdings in response to changes in the market valuation of the shares. Investors can expect the fund to by and large avoid highly cyclical areas such as oil & gas, mining and areas subject to extensive regulation such as utilities and power generation.

Our view remains that the market’s fixation on ‘growth-at-any-price’ stocks in recent years has left numerous perfectly decent, but slightly unfashionable, businesses looking neglected. While perhaps less ‘glamorous’, we have numerous examples in the portfolio of stocks trading at valuations which we consider as having healthy growth prospects and significant upside potential. We aim to take advantage of any market volatility to further improve the ‘quality growth’ bias of our holdings whenever we feel that share valuations have come down to more reasonable levels and to continue to improve the quality of long-term growth companies in the fund while keeping to our discipline of only paying a small premium to the market for businesses that in our view offer demonstrably superior growth prospects. This supports our optimism for the portfolio’s prospects. Typically, many of these companies have products and services that are well adapted to demand trends along with


160


successful digital strategies. Such businesses are often ‘capital light’ and have much of their value in intellectual assets such as software, patents, biochemicals and/or operate in areas where it is hard for other companies to compete. We see few attractions in the bulk of Europe’s incumbent banking sector, where growth is minimal, profits are squeezed and bad debts lurk on balance sheets. In contrast, we see many opportunities in the so-called alternative financials arena which continues to benefit from the secular move to greater digitalisation and processing of information to create new markets and, in doing so, deliver what customers want.

Looking forward, we envisage plenty of scope to continue this process of adding to the overall quality of the portfolio, given the many potential sources of friction. This could include China’s slowing economy and the US’s surging budget deficit and hostility towards global trade, and the final outcome of the Brexit deal. Whatever events may come, we are confident that overall we have a portfolio of individual businesses operating in diverse areas across the European and global economy which are well placed to prosper.




161



Purchases Sales

Portfolio Name Cost £’000 Portfolio Name Proceeds £’000 Prosus 3,502

SAP 1,421 Fresenius Medical Care 1,310 RELX 723 Safran 489 Amadeus IT 449 Telenor 430 Nokia 384 Hexagon 368 ASML 288

ASML 1,553 GrandVision 1,536 EssilorLuxottica 1,181 Deutsche Boerse 682 Novo Nordisk 628 Umicore 329 Ingenico 116


162



A Income Shares

30/09/19 (p)

Change in net assets per Share Opening net asset value per share 100.00 Return before operating charges* 0.12 Operating charges (0.09) Return after operating charges 0.03 Distributions – Closing net asset value per share 100.03 * after direct transaction costs of: 0.01 Performance Return after operating charges 0.03% Other information Closing net asset value (£'000) 198,970 Closing number of shares 198,906,722 Operating charges 0.82% Direct transaction costs 0.01% Prices (p) Highest share price 101.63 Lowest share price 98.48 Share Class A Income launched on 24 August 2019 at a price of 100 pence.


163





Date (%) (%) (%) (%)








Risk Warning







164




Belgium 1.45%

93,954 Umicore 2,878 1.45 2,878 1.45

Denmark 3.16%

150,368 Novo Nordisk 6,286 3.16 6,286 3.16

Finland 2.58%

1,247,741 Nokia 5,129 2.58 5,129 2.58

France 24.72%

134,443 BNP Paribas 5,313 2.67 201,224 Bureau Veritas 3,934 1.98 26,188 Dassault Systemes 3,028 1.52 49,147 Edenred 1,913 0.96 61,165 EssilorLuxottica 7,156 3.60 42,461 Ingenico 3,362 1.69 15,028 LVMH Moet Hennessy Louis Vuitton 4,845 2.44 42,390 Safran 5,417 2.72 73,559 Thales 6,866 3.45 84,108 Vinci 7,346 3.69

49,180 24.72

Germany 17.49%

101,227 Brenntag 3,978 2.00 53,161 Deutsche Boerse 6,742 3.39

116,690 Fresenius Medical Care 6,367 3.20 54,362 Gerresheimer 3,153 1.58 23,697 Knorr-Bremse 1,809 0.91 75,595 SAP 7,196 3.62

173,680 Siemens Healthineers 5,542 2.79 34,787 17.49

Ireland 1.42%

20,403 Kingspan (Ireland Listed) 806 0.41 50,694 Kingspan (London Listed) 2,009 1.01

2,815 1.42

Italy 5.04%

525,309 Cerved 3,716 1.87 24,014 Ferrari 3,001 1.51

398,029 Nexi 3,308 1.66 10,025 5.04


165




Netherlands 14.00%

20,834 ASML 4,180 2.10 78,272 Euronext 5,183 2.61

171,014 Flow Traders 3,631 1.82 16,253 GrandVision 395 0.20 84,940 Heineken 7,448 3.74

437,089 ING 3,714 1.87 55,618 Prosus 3,307 1.66

27,858 14.00

Norway 2.57%

313,346 Telenor 5,109 2.57 5,109 2.57

Spain 5.36%

78,114 Amadeus IT 4,542 2.28 391,973 Applus Services 4,123 2.07

1,726,015 Prosegur Cash 2,013 1.01 10,678 5.36

Sweden 6.73%

242,334 Assa Abloy 4,386 2.20 26,845 EQT 194 0.10

274,754 Essity 6,526 3.28 58,435 Hexagon 2,292 1.15

13,398 6.73

Switzerland 5.79%

11,225 Lonza 3,082 1.55 4,694 Partners 2,925 1.47

23,170 Sika 2,752 1.38 76,049 Stadler Rail 2,774 1.39

11,533 5.79


369,782 RELX 7,132 3.58 151,026 Unilever 7,369 3.70

14,501 7.28




Gross purchases for the period: £10,376,000 (See note 14). In addition, transfers totalling £189,613,000 were made via inspecie into the portfolio during the period.

Total sales net of transaction costs for the period: £6,025,000 (See note 14).


166



24/08/19 to 30/09/19

Note £’000 £’000

Income: Net capital gains 2 194 Revenue 3 39 Expenses 4 (176) Net expense before taxation (137) Taxation 5 (3) Net expense after taxation (140) Total return before distributions (54) Distributions 6 – Change in net assets attributable to Shareholders from investment activities 54

24/08/19 to 30/09/19

£’000 £’000


1,351 Change in net assets attributable to Shareholders from investment activities (see above) 54 Closing net assets attributable to Shareholders 198,970



167


30/09/19

Note £’000 £’000

Assets: Fixed assets: Investments 194,177 Current assets: Debtors 7 289 Cash and bank balances 8 4,776 Total current assets 5,065 Total assets 199,242 Liabilities: Investment liabilities – Creditors: Other creditors 9 (272) Total creditors (272) Total liabilities (272) Net assets attributable to Shareholders 198,970



168






30/09/19 £'000

The net capital gains during the period comprise: Currency losses (17) Non-derivative securities 213 Transaction charges (2) Net capital gains 194


30/09/19 £'000

Overseas dividends 39 Total revenue 39


30/09/19 £'000







169



5. Taxation 24/08/19 to

30/09/19 £'000

(a) Analysis of the tax charge in the period




24/08/19 to

30/09/19 £'000

Net expense before taxation (137) Net expense for the period multiplied by the standard rate of corporation tax (27) Effects of: Irrecoverable overseas tax 3 Movement in excess management expenses 35 Revenue not subject to corporation tax (8) Total tax charge for the period 3







170



6. Distributions


24/08/19 to

30/09/19 £'000

Net distribution for the period – Reconciliation of net expense after taxation to distributions Net expense after taxation (140) Revenue deficit 140 Net distribution for the period – Details of the distributions per Share are set out in the distribution tables on page 176.

7. Debtors 30/09/19

£'000

Accrued revenue 8 Amounts receivable for creation of Shares 204 Overseas withholding tax recoverable 3 Inspecie transfer receivable 74 Total debtors 289


£'000



171




£'000

Amounts payable for cancellation of Shares 127 127




10 Total other creditors 272










172



11. Share Classes


%


Each Share Class has equal rights in the event of the wind up of any fund. The reconciliation of the opening and closing numbers of shares of each class is shown below:






The main risks from the Fund's holding of financial instruments, together with the ACD’s policy for managing these risks, are disclosed in note 2 on page 17 of the report.





30/09/19 Currency £'000

Danish Krone 6,286 Euro 157,861 Norwegian Krone 5,109 Swedish Krona 13,399 Swiss Franc 11,533 Total foreign currency exposure 194,188 Sterling 4,782 Total net assets 198,970



173







Financial assets Floating rate Fixed rate not carrying

financial assets financial assets interest Total Currency Assets £'000 £'000 £'000 £'000

30/09/19 Danish Krone – – 6,286 6,286 Euro – – 157,861 157,861 Norwegian Krone – – 5,109 5,109 Sterling 4,776 – 278 5,054 Swedish Krona – – 13,399 13,399 Swiss Franc – – 11,533 11,533 Total 4,776 – 194,466 199,242

Financial Floating rate Fixed rate liabilities not

financial financial carrying liabilities liabilities interest Total

Currency Liabilities £'000 £'000 £'000 £'000

30/09/19 Sterling – – 272 272 Total – – 272 272



174




£'000 £'000

Analysis of total purchase costs Purchases in the year before transaction costs: Equities 10,367 Inspecie transfer 189,613

199,980 Commissions – Equities 6 Taxes – Equities 3 Total purchase costs 9 Gross purchase total 199,989 Analysis of total sale costs Gross sales in the year before transaction costs: Equities 6,028

6,028 Commissions – Equities (3) Total sale costs (3) Total sales net of transaction costs 6,025


24/08/19 to


Purchases – Commissions Equities 0.0584 Inspecie transfer 0.0000 Purchases – Taxes Equities 0.0278 Inspecie transfer 0.0000 Sales – Commissions Equities 0.0562 Sales – Taxes Equities 0.0000

24/08/19 to 30/09/19

Transaction costs as percentage of average net asset value %




175






Assets Liabilities £'000 £'000


194,177 –


176









177

Omnis European Equity Opportunities Fund



The Fund aims to achieve a return consisting of both income and capital growth which, after all fees and expenses, exceeds the FTSE World Europe ex UK TR index over a five-year rolling period.

Investment Policy

The Fund intends to invest at least 80% in the equity securities of European companies defined as those which are domiciled, incorporated or have a significant exposure to Europe, excluding the United Kingdom. The fund will adopt a flexible approach to investment, investing primarily in companies that are perceived to be undervalued relative to their economic potential. Exposure to small and medium sized companies will be greater than 50% of the fund. Small and medium sized companies are defined as those with a market cap of $10 billion or less at the time of the Fund’s investment. Companies whose capitalisation no longer meets this definition after investment will continue to be considered small and medium market capitalisation companies.




Benchmark

The performance of the Fund will be measured against the FTSE World Europe ex UK TR Index for target return purposes.

Portfolio Review


The fund launched at the end of August, and we took four weeks to fully transfer the fund into our target allocation, keeping seven of the positions that were inherited. The portfolio is now fully invested across continental Europe as per its investment policy. The fund has overweight positions in Sweden, Austria and Ireland and underweights in the Netherlands and Switzerland. The 14% underweight in Switzerland is due to us not owning the large Healthcare, Consumer Staple and Financials companies as per our strategy.

The portfolio has material overweight positions in Technology, Industrial and Consumer Discretionary companies and underweight positions in Financials, Consumer Stables and Regulated Sectors. We believe that good drivers for fundamental analysis include demand, pricing and costs while weak drivers include regulation, balance sheet risk and commodity prices. Our overweight sectors are in areas where the financial potential of the business is largely determined by fundamental drivers leading to a higher degree of forecast accuracy and therefore higher investment conviction. Conversely, companies where profitability is largely determined by changes to the regulatory environment, balance sheet risk or commodity prices are unlikely to lead to high conviction in our profit forecasts hence we are underweight.

256987 13 Omnis Portfolio Investments pp177-pp195 (European Equity Opportunities).qxp 29/01/2020 10:42

178



The luxury sector including our positions in Kerring and Moncler underperformed in Q3, primarily driven by political issues in Hong Kong. The percentage of sales that comes from Hong Kong differs within the sector but averages around 10%. Initial estimates are that the area will suffer a contraction in the region of 50%, clearly a negative for the sector. Although some of this might be repatriated in Mainland China, given that 75% of local luxury spend is from Mainland China visitors, there will be some lost revenue for the companies which net-net will be a negative. Furthermore, Hong Kong is one of the highest margin geographies for the sector given the high sales densities that most companies achieve there.

HelloFresh was a strong performer. Since its IPO in 2017, the company has continued to deliver revenue growth ahead of consensus expectations. Consensus estimates for 2019 sales now sit 17% ahead of forecasts at the time of the IPO as the roll out of its meal kit service has been more successful than expected. The business is starting to show positive operating leverage and the International Segment delivered an adjusted EBTIDA margin of 11.5% in the latest quarter, with more mature countries within the segment delivering a margin in the high-teens. By next year the business could turn free cash flow positive and in the longer term we expect the business to generate an EBITDA margin around 10%, well in excess of the 7% consensus forecasts for 2021.

STMicroelectronics was strong as it continues to recover from the semiconductor cycle slowdown in 2018. In September an iPhone 11 Pro Max teardown from TechInsights revealed that STM had 4 chips designed into Apple’s most recent smartphone product. This is positive for the stock as it continues to show a strong relationship with the largest (by value) smartphone producer, and an increasing value per device sold. The company has slowly been filling the capacity left by the reduction in business with Nokia and Ericsson, driving margins higher than consensus expectations. The company has developed many interesting new technologies such as silicon carbide-based products for electric vehicle applications and next generation imaging sensors which are allowing it to gain market share.

Outlook

• European Equity FCF Yields are attractive vs European Bond Yields.

• European Earnings Outlook is now stable after downgrades earlier in the year.

• Government Debt/GDP Ratios have improved post crisis, fiscal response to weakness possible.

• Good environment to identify outcomes better than the market expects at the micro level.

• Political uncertainties caused by Brexit and a swing to populist parties remains a risk.

The strategy aims to build a diversified portfolio of investments across different and uncorrelated industries, with a focus on the mid cap space where thorough analysis of the economic fundamentals of businesses can add significant value. Mid cap stocks offer more interesting investment opportunities by virtue of the more limited coverage and therefore the ability to have a differentiated view of the fundamentals. Over the long term, mid cap stocks should outperform large caps, and given the relative information inefficiency we believe there is more opportunity to correctly identify those companies where their economic potential is not being reflected in the share price.


179



The strategy will perform best when there is a high correlation between company fundamentals, share prices and the magnitude and direction of change of corporate earnings expectations. The strategy is likely to perform worst when the reverse is true, i.e. when a market is not fundamentally driven with high correlation. In the current environment, we believe there is still a large opportunity to correctly identify where consensus is forecasting profits incorrectly.

We have demonstrated a positive track record in the past of identifying where consensus is incorrectly forecasting company profits and expect to be able to continue to do so going forward. In the current environment of low interest rates, macroeconomic and political uncertainty, and new disruptive technologies, we believe there should be strong stock dispersion and hence that fundamental analysis can still deliver outperformance. By continuing to repeat our process, that has been practiced by the team for over 30 years, we believe we can deliver our Investment Objective regardless of overall market direction.

Investment Manager RWC Asset Management LLP 21 October 2019


180



Purchases Sales

Portfolio Name Cost £’000 Portfolio Name Proceeds £’000 Scout24 6,254

Alten 6,243 FinecoBank Banca Fineco 5,702 Moncler 5,694 Sonova 5,532 Kone 5,455 Erste Group Bank 5,342 DCC 5,250 Bayer 5,111 Ingenico 5,036

iShares MSCI Europe ex-UK 40,403 Vanguard FTSE Developed Europe ex UK 40,373 iShares MSCI Europe 40,107 EssilorLuxottica 3,527 ASML 2,604 Amadeus IT 2,344 Novo Nordisk 2,323 Applus 2,246 Atlas Copco 1,047 TeamViewer 862


181



A Income 30/09/19

(p) Change in net assets per Share Opening net asset value per share 100.00 Return before operating charges* 0.47 Operating charges (0.09) Return after operating charges 0.38 Distributions – Closing net asset value per share 100.38 * after direct transaction costs of: 0.42 Performance Return after operating charges 0.38% Other information Closing net asset value (£’000) 199,374 Closing number of shares 198,621,370 Operating charges 0.82% Direct transaction costs 0.39% Prices (p) Highest share price 102.49 Lowest share price 98.71



182





Date (%) (%) (%) (%)








Risk Warning







183



Aerospace & Defense 2.63%

41,084 Safran 5,250 2.63 5,250 2.63

Automobiles & Parts 2.52%

130,584 Faurecia 5,027 2.52 5,027 2.52

Banks 5.29% 181,541 Erste Group Bank 4,874 2.44 659,261 FinecoBank Banca Fineco 5,676 2.85

10,550 5.29

Beverages 2.16%

29,821 Pernod Ricard 4,311 2.16 4,311 2.16

Construction & Materials 1.19%

119,440 Wienerberger 2,367 1.19 2,367 1.19

Electronic & Electrical Equipment 2.08%

71,606 Legrand 4,148 2.08 4,148 2.08

Financial Services 1.99%

599,443 Avanza 3,968 1.99 3,968 1.99

Food & Drug Retailers 2.89%

469,768 HelloFresh 5,760 2.89 5,760 2.89

Food Producers 1.93%

40,562 Kerry 3,847 1.93 3,847 1.93

General Retailers 2.01%

9,690 Kering 4,008 2.01 4,008 2.01

Healthcare Equipment & Services 8.26%

159,043 Ambu 2,136 1.07 452,356 Elekta 4,827 2.42 40,718 EssilorLuxottica 4,764 2.39 25,105 Sonova 4,738 2.38

16,465 8.26



184




Industrial Engineering 8.47%

70,865 Andritz 2,348 1.18 97,107 Atlas Copco 2,138 1.07

101,909 Kone 4,704 2.36 127,480 Norma 3,573 1.79 104,144 Stabilus 4,133 2.07

16,896 8.47

Industrial Metals & Mining 1.81%

99,821 Aurubis 3,617 1.81 3,617 1.81

Industrial Transportation 2.12%

54,882 DSV Panalpina 4,227 2.12 4,227 2.12

Media 1.60%

286,991 ProSiebenSat.1 Media 3,197 1.60 3,197 1.60

Oil & Gas Producers 2.29%

243,491 Motor Oil Hellas Corinth Refineries 4,567 2.29 4,567 2.29

Oil Equipment, Services & Distribution 3.01%

1,571,149 CGG 2,855 1.43 140,811 Golar 1,483 0.74

1,513,144 PGS 1,671 0.84 6,009 3.01

Personal Goods 4.85% 181,818 Moncler 5,265 2.64 20,403 Swatch 4,398 2.21

9,663 4.85

Pharmaceuticals & Biotechnology 8.30%

84,227 Bayer 4,822 2.42 67,246 BioGaia 2,395 1.20

189,652 Grifols 4,530 2.27 114,647 Novo Nordisk 4,793 2.41

16,540 8.30


185




Software & Computer Services 13.10%

64,533 Alten 5,983 3.00 31,528 Amadeus IT 1,833 0.92

125,980 Hexagon 4,941 2.48 51,342 SAP 4,887 2.45

135,392 Scout24 6,264 3.14 101,524 TeamViewer 2,200 1.11

26,108 13.10

Support Services 9.29%

71,058 Adecco 3,192 1.60 306,164 Applus 3,221 1.62 221,101 Bureau Veritas 4,323 2.17 74,847 DCC 5,312 2.66 19,032 Wirecard 2,476 1.24

18,524 9.29

Technology Hardware & Equipment 6.16%

14,588 ASML 2,927 1.47 62,597 Ingenico 4,956 2.49

279,846 STMicroelectronics 4,390 2.20 12,273 6.16

Tobacco 2.21%

131,103 Swedish Match 4,409 2.21 4,409 2.21

Travel & Leisure 2.23%

122,790 Wizz Air 4,439 2.23 4,439 2.23



All investments are ordinary shares unless otherwise stated and admitted to official stock exchange listings. Gross purchases for the period: £178,623,000 (See note 14). In addition, transfers totalling £155,720,000 were made via inspecie into the portfolio during the period.



186



24/08/19 to 30/09/19

Note £’000 £’000

Income: Net capital gains 2 854 Revenue 3 62 Expenses 4 (177) Net expense before taxation (115) Taxation 5 (1) Net expense after taxation (116) Total return before distributions 738 Distributions 6 – Change in net assets attributable to Shareholders from investment activities 738

24/08/19 to 30/09/19

£’000 £’000





187



30/09/19

Note £’000 £’000



188






30/09/19 £’000

The net capital gains during the period comprise: Currency gains 185 Non-derivative securities 671 Transaction charges (2) Net capital gains 854


30/09/19 £’000

Bank interest 1 Offshore funds dividends 14 Overseas dividends 47 Total revenue 62


30/09/19 £’000







189



5. Taxation


30/09/19 £’000




24/08/19 to

30/09/19 £’000

Net expense before taxation (115) Net expense for the period multiplied by the standard rate of corporation tax (23) Effects of: Irrecoverable overseas tax 1 Movement in excess management expenses 35 Non taxable overseas dividends (12) Total tax charge for the period 1







190



6. Distributions


24/08/19 to

30/09/19 £’000

Net distribution for the period –

Reconciliation of net expense after taxation to distributions

Net expense after taxation (116) Revenue deficit 116 Net distribution for the period –


7. Debtors 30/09/19

£’000

Amounts receivable for creation of Shares 181 Overseas withholding tax recoverable 1 Inspecie transfer receivable 74 Total debtors 256


£’000



191




£’000

Amounts payable for cancellation of Shares 163 163














192



11. Share Classes


%














30/09/19 Currency £’000

Danish Krone 11,156 Euro 137,104 Norwegian Krone 1,671 Swedish Krona 22,678 Swiss Franc 12,328 US Dollar 1,489 Total foreign currency exposure 186,426 Sterling 12,948 Total net assets 199,374



193






As at 30 September 2019, 1.63% of the Fund’s assets were interest bearing.


£’000 £’000


333,831 Commissions – Equities* 304 Commissions – Collective Investment Schemes – Taxes – Equities 208 Taxes – Collective Investment Schemes – Total purchase costs 512 Gross purchase total 334,343

Analysis of total sale costs Gross sales in the year before transaction costs: Equities 17,992 Collective Investment Schemes 121,119

139,111 Commissions – Equities* (31) Commissions – Collective Investment Schemes (235) Taxes – Equities – Total sale costs (266) Total sales net of transaction costs 138,845

* includes Research Commission which will be refunded by the Investment Manager.




194





Purchases – Commissions Equities* 0.1424 Collective Investment Schemes 0.0000 Purchases – Taxes Equities 0.0974 Collective Investment Schemes 0.0000 Sales – Commissions Equities* 0.1723 Collective Investment Schemes 0.1940 Sales – Taxes Equities 0.0000 Collective Investment Schemes 0.0000

24/08/19 to



* includes Research Commission which will be refunded by the Investment Manager.







196,170 –


195










196

Omnis Global Bond Fund


The Fund aims to achieve a return consisting of a combination of income and capital growth which exceeds that of the ICE BoAML Global Broad Market TR Index, after all fees and expenses, over a five-year rolling period.

Investment Policy

The Fund intends to invest (directly or indirectly) at least 70% in non-Sterling denominated government and non-government fixed and variable interest rate securities.

The Fund may also invest in other transferable securities (for example, Sterling denominated fixed and variable interest rate securities), units in collective investment schemes, (including exchange traded funds and other schemes managed by the ACD or its associates) money market instruments, deposits, derivative instruments and warrants, cash, near cash and deposits as detailed in the Prospectus.

Use may also be made of stock lending, temporary borrowing and cash holdings. Derivatives may also be used for the purposes of hedging and efficient portfolio management.

Benchmark

The performance of the Fund will be measured against the ICE BoA ML Global Broad Market TR Index for target return purposes only.

Portfolio Review


Government bond yields fell markedly, underpinning the strong return by the Fund. After early weakness, corporate bonds outperformed government bonds in the rest of the year.

Despite the Federal Reserve Bank (‘the Fed’) implementing the fourth rate rise of 2018 in December, Fed Chair Powell indicated a more dovish pivot in March and cut rates in July and September. It became evident that the Eurozone economy required further support for the European Central Bank (‘ECB’) to achieve its inflation target, and in September it announced a new round of stimulus measures. In the UK, the initial Brexit withdrawal agreement drew widespread criticism, and the Brexit deadline was extended to 31 October. Boris Johnson taking over as prime minister led to a harder line on the Brexit process.

The 12 months started with issues such as China’s slowdown, uncertainty over global trade, Italy’s fragility, and the possibility of a disorderly Brexit weakening sentiment late last year. We increased the average maturity of the bonds, primarily by reducing the underweight in the US. While remaining cautious on credit risk market sensitivity, the re-pricing of risk gave an opportunity to add to US and Euro investment grade credit. We also reduced the underweight in the euro.

There was severe market pessimism priced into bond valuations at the turn of the year. However, we believed it was too early to call the end of the global cycle. We increased the Fund’s exposure by becoming more underweight in US bond maturities. However, our optimism on the economy was overshadowed by a turnaround by the US Fed, who hinted at its intention to lower interest rates. As a result, we converted the underweight in the US to an overweight. This also gave us greater conviction on inflation and we increased the overweight in the US. We used the fall in European yields to take profit on the European position, but increased allocation to peripheral risk


256987 14 Omnis Portfolio Investments pp196-pp240 (Global Bond).qxp 29/01/2020 10:40

197


such as Spain. We increased exposure to more market sensitive European currencies, such as the Swedish krona. Elsewhere, as we expected clarity on issues such as the China/US trade dispute and Brexit, we extended the overweight in sterling relative to the benchmark.

At the start of Q2, we believed expectations of the Eurozone outlook had become excessively downbeat so continued to overweight the more cyclical European currencies. Similarly, we thought that central banks are determined to elongate the cycle, and that the weakness of Eurozone manufacturing might be a factor for renewed ECB support, which led us to add European exposure, and later US exposure.

Additionally, we introduced an underweight to the Czech koruna to offset the risk of increased trade tensions. Structural underweights to some of the more trade sensitive currencies such as the Taiwanese dollar and the Korean won worked well, particularly in periods of heightened trade uncertainty between the US and China.

In terms of asset allocation, we envisaged that low interest rates may reinvigorate investors’ appetite for higher yielding assets and as such, added US securitised debt.

During Q3, we maintained the bias for overweight sensitivity to interest rates in the US and non-core European markets such as France and Italy as we expected central banks to lower interest rates, given the low level of inflation. Our expectations of lower US interest rates also led us to target opportunities in emerging market currencies. Meanwhile, increased central bank support against a resilient domestic economic backdrop formed the premise for buying more US investment grade corporate bonds.

Outlook

Central banks globally have provided additional support in response to late cycle vulnerabilities and benign inflation. Global economic data, particularly across manufacturing, continues to disappoint, partially driven by ongoing trade uncertainty and weak investment. This is most evident in Europe and China. Germany is on the brink of recession due to its reliance on external demand and its inability to generate sustainable domestic demand. While a trade resolution between the US and China is likely to be beneficial, it is unlikely to be a panacea for global growth.

China’s transition toward services and the resulting reduction in global demand for manufactured goods and commodities is likely to persist. China continues to face a dilemma as it attempts to balance growth with financial stability, but interest rates may have to remain low to support the transition. We see China as less and less of a source of global growth optimism.

Against this backdrop, it has become clear that the US policy mix is too tight for the rest of the world. However, domestic conditions have remained resilient to global weakness by virtue of the economy’s relatively closed nature. The Fed has proactively delivered insurance cuts. However, a more aggressive response is likely to be contingent on a deterioration of domestic conditions and a deceleration of activity to below trend.

Structural factors such as demographics and technological advances continue to mute inflation. We think fiscal policy is increasingly likely to be required for central banks to reach their growth and inflation objectives. However, governments are likely to react at differing pace. Across the euro area, while an expansive fiscal policy is gaining traction across member states, we do not envisage an immediate or significant fiscal response.



198



Our view is that the UK is showing the most willingness and has the greatest capacity to ease fiscally. If easing is necessitated by a further deterioration in global growth, demand for the dollar should provide further support. Conversely, more aggressive easing in reaction to domestic weakness would likely lead to a weakening of the dollar. As a result, we expect the dollar to remain range bound until a clearer direction is found. Ultimately, we think prolonged global weakness may eventually weigh on US growth, prompting further action by the Fed.

The euro area’s anaemic growth, demographics and limited policy options have led to comparisons with Japan. We do not think it is clear that the ECB and European governments will be able to reflate the economy. We think core European yield curves could flatten – i.e. short and long interest rates move towards each other - and bond yields of periphery countries could converge with those of the core markets.

Investment Manager Schroder Investment Management Limited 21 October 2019


199



Purchases Sales

Portfolio Name Cost £’000 Portfolio Name Proceeds £’000 United States Treasury Note/Bond 1.375% 31/08/2020 15,970 French Republic Government Bond OAT 1.5% 25/05/2050 13,377 Spain Government Bond 1.4% 30/07/2028 11,041 Spain Government Bond 1.45% 30/04/2029 8,124 UK Treasury 1.625% 22/10/2028 7,555 United States Treasury Note/ Bond 1.5% 30/09/2024 6,242 Portugal Obrigacoes do Tesouro 1.95% 15/06/2029 5,113 UK Treasury 1.75% 22/01/2049 4,833 Italy Buoni Poliennali Del Tesoro 3.1% 01/03/2040 4,565 Australia Government Bond 3.25% 21/04/2025 4,446

United States Treasury Note/ Bond 1.625% 15/02/2026 17,143 United States Treasury Note/Bond 1.375% 31/08/2020 17,135 Canada Housing Trust No 1 (Germany Listed) 2.65% 15/12/2028 11,065 Spain Government Bond 1.4% 30/07/2028 10,993 United States Treasury Note/Bond 1.75% 30/09/2022 9,313 Spain Government Bond 1.45% 30/04/2029 9,121 French Republic Government Bond OAT 1.5% 25/05/2050 7,981 Spain Government Bond 1.4% 30/04/2028 7,453 UK Treasury 1.625% 22/10/2028 7,127 UK Treasury 3.25% 22/01/2044 6,233


200



A Income

30/09/19 28/09/18 30/09/17 (p) (p) (p)

Change in net assets per Share Opening net asset value per share 119.07 120.33 127.53 Return before operating charges* 17.61 1.27 (4.77) Operating charges (0.67) (0.64) (0.68) Return after operating charges 16.94 0.63 (5.45) Distributions (1.95) (1.89) (1.75) Closing net asset value per share 134.06 119.07 120.33 * after direct transaction costs of: 0.02 0.02 0.02 Performance Return after operating charges 14.23% 0.52% (4.27%) Other information Closing net asset value (£’000) 463,932 395,484 309,735 Closing number of shares 346,071,855 332,142,621 257,402,744 Operating charges 0.53% 0.54% 0.54% Direct transaction costs 0.02% 0.02% 0.02% Prices (p) Highest share price 140.10 123.98 133.43 Lowest share price 117.35 114.42 120.89


201





Date (%) (%) (%) (%)

30/09/19 Share Class A Income 0.45 0.04 0.04 0.53 28/09/18 Share Class A Income 0.45 0.05 0.04 0.54





• The Fund appears as a “4” on the scale. This is because the Fund invests in fixed income investments whose values do not fluctuate widely.

Risk Warning







202




Africa 1.06% (0.19%)

EUR 2,300,000 African Development Bank 0.5% 21/03/2029 2,174 0.47 AUD 750,000 African Development Bank 2.75% 03/02/2020 412 0.09 GBP 324,000 Investec 4.5% 05/05/2022 346 0.07

ZAR 33,271,000 Republic of South Africa Government Bond 10.5% 21/12/2026 1,985 0.43

4,917 1.06

Australia 1.23% (1.49%)

GBP 105,000 APT Pipelines 3.125% 18/07/2031 114 0.02 AUD 6,938,000 Australia Government Bond 3.25% 21/04/2025 4,296 0.93

USD 695,000 Boral Finance 3% 01/11/2022 565 0.12 AUD 500,000 New South Wales Treasury 6% 01/03/2022 307 0.06 EUR 280,000 Transurban Finance 1.45% 16/05/2029 265 0.06 EUR 200,000 Westpac Banking 1.5% 24/03/2021 182 0.04

5,729 1.23

Austria 0.02% (0.04%)

EUR 100,000 Raiffeisen Bank International 1.5% 12/03/2030 88 0.02 88 0.02

Belgium 2.29% (2.32%)

EUR 40,000 Anheuser-Busch InBev 1.5% 17/03/2025 38 0.01 EUR 200,000 Argenta Spaarbank 1% 06/02/2024 184 0.04

EUR 6,146,000 Belgium Government International Bond 0.5% 22/10/2024 5,734 1.24

EUR 4,700,000 Belgium Government International Bond 4.25% 28/09/2021 4,570 0.98

EUR 100,000 Elia System Operator 1.375% 14/01/2026 95 0.02 10,621 2.29

Bermuda 0.11% (0.00%)

USD 637,825 CAL Funding III 3.62% 25/06/2042 525 0.11 525 0.11

Brazil 0.64% (0.38%)

BRL 11,000,000 Brazil Notas do Tesouro Nacional Serie F 10% 01/01/2025 2,456 0.53

USD 600,000 Brazilian Government International Bond 4.875% 22/01/2021 503 0.11

2,959 0.64


203



Canada 3.56% (3.87%)

CAD 6,400,000 Canada Housing Trust No 1 2.1% 15/09/2029 4,031 0.87 CAD 2,539,000 Canadian Government Bond 1.5% 01/06/2026 1,569 0.34 CAD 9,957,000 Canadian Government Bond 3.5% 01/06/2020 6,173 1.33 CAD 2,238,000 Canadian Government Bond 3.5% 01/12/2045 1,948 0.42

EUR 230,000 Canadian Imperial Bank of Commerce 0.375% 15/10/2019 204 0.04

USD 431,000 Canadian Natural Resources 3.85% 01/06/2027 368 0.08 USD 209,000 Cenovus Energy 4.25% 15/04/2027 176 0.04 USD 291,000 Cenovus Energy 5.4% 15/06/2047 264 0.06 USD 320,000 Enbridge 6% 15/01/2077 270 0.06 USD 300,000 Province of Quebec Canada 2.875% 16/10/2024 256 0.05 USD 689,000 Rogers Communications 4.35% 01/05/2049 644 0.14 USD 750,000 Royal Bank of Canada 1.875% 05/02/2020 608 0.13

16,511 3.56

Czech 0.05% (0.00%)

EUR 117,000 CEZ 0.875% 21/11/2022 106 0.02 EUR 139,000 EP Infrastructure 1.698% 30/07/2026 124 0.03

230 0.05

Denmark 0.25% (0.19%)

EUR 100,000 Danske Bank 0.875% 22/05/2023 90 0.02 DKK 4,000,000 Denmark Government Bond 1.5% 15/11/2023 519 0.11

EUR 163,000 ISS Global 0.875% 18/06/2026 147 0.03 GBP 110,000 Orsted 2.125% 17/05/2027 116 0.02 EUR 30,000 Orsted 3% 10/08/2020 27 0.01

EUR 110,000 Orsted 6.25% 26/06/2023 116 0.03 EUR 158,000 Sydbank 1.375% 18/09/2023 146 0.03

1,161 0.25

Finland 0.39% (0.07%)

EUR 1,599,000 Finland Government Bond 0.5% 15/09/2029 1,529 0.33 EUR 101,000 Kojamo 1.5% 19/06/2024 93 0.02 EUR 101,000 Kojamo 1.625% 07/03/2025 94 0.02 EUR 120,000 Nokia 2% 11/03/2026 112 0.02

1,828 0.39

France 9.05% (7.25%)

EUR 100,000 Autoroutes du Sud de la France 1.25% 18/01/2027 96 0.02 EUR 400,000 Banque Federative du Credit Mutuel

0.125% 05/02/2024 355 0.08 EUR 400,000 Banque Federative du Credit Mutuel

0.75% 08/06/2026 366 0.08 EUR 100,000 BPCE 0.625% 26/09/2023 91 0.02 EUR 200,000 BPCE 1% 01/04/2025 183 0.04 EUR 100,000 BPCE 2.75% 30/11/2027 95 0.02

USD 1,050,000 BPCE 3% 22/05/2022 862 0.18 USD 1,000,000 Caisse d’Amortissement de la Dette Sociale

1.875% 28/07/2020 811 0.17



204




France 9.05% (7.25%) (continued)

USD 870,000 Caisse d’Amortissement de la Dette Sociale 1.875% 12/02/2022 708 0.15

USD 300,000 Caisse d’Amortissement de la Dette Sociale 3.375% 20/03/2024 260 0.06

EUR 800,000 Caisse des Depots et Consignations 0% 19/06/2024 724 0.16 USD 1,600,000 Caisse des Depots et Consignations 2% 14/11/2020 1,299 0.28

EUR 100,000 Caisse Nationale de Reassurance Mutuelle Agricole Groupama 6.375% Perpetual 103 0.02

EUR 100,000 Capgemini 1.75% 01/07/2020 89 0.02 EUR 100,000 Cie de Financement Foncier 0.125% 18/02/2020 89 0.02 EUR 100,000 Coentreprise de Transport d’Electricite

2.125% 29/07/2032 103 0.02 USD 2,863,000 Council Of Europe Development Bank

1.75% 26/09/2022 2,330 0.50 EUR 940,000 Council Of Europe Development Bank

1.75% 24/04/2024 920 0.20 EUR 100,000 Credit Agricole Assurances 4.25% Perpetual 97 0.02 EUR 100,000 Credit Agricole Assurances 4.5% Perpetual 99 0.02 EUR 100,000 Credit Mutuel Arkea 3.375% 11/03/2031 102 0.02 EUR 100,000 Dassault Systemes 0% 16/09/2022 89 0.02 EUR 200,000 Dassault Systemes 0% 16/09/2024 177 0.04

EUR 1,500,000 Dexia Credit Local 1% 18/10/2027 1,452 0.31 EUR 100,000 Electricite de France 4% Perpetual 95 0.02 EUR 100,000 Engie 1.375% 21/06/2039 97 0.02

EUR 6,000,000 French Republic Government Bond OAT 0.75% 25/05/2028 5,831 1.26



EUR 100,000 Holding d’Infrastructures de Transport 2.25% 24/03/2025 96 0.02

EUR 450,000 HSBC SFH France 0.375% 11/03/2022 406 0.09 EUR 400,000 Iliad 1.5% 14/10/2024 350 0.08 EUR 400,000 In’li 1.125% 02/07/2029 369 0.08 EUR 100,000 La Poste 0.375% 17/09/2027 90 0.02 EUR 100,000 Orange 0.5% 04/09/2032 86 0.02 EUR 100,000 Orange 1.125% 15/07/2024 93 0.02 EUR 100,000 Orange 1.375% 04/09/2049 84 0.02 EUR 100,000 Orange 5% Perpetual 108 0.02 GBP 100,000 Orange 5.75% Perpetual 111 0.02 EUR 200,000 RTE 1.125% 09/09/2049 173 0.04

EUR 4,500,000 SFIL 0.1% 18/10/2022 4,046 0.87 USD 3,600,000 SFIL 3% 15/06/2021 2,975 0.64 USD 3,704,000 SNCF Reseau 2.75% 18/03/2022 3,072 0.66

EUR 100,000 Societe Fonciere Lyonnaise 2.25% 16/11/2022 94 0.02


205




France 9.05% (7.25%) (continued)

EUR 300,000 TDF Infrastructure 2.5% 07/04/2026 283 0.06 EUR 100,000 TDF Infrastructure 2.875% 19/10/2022 94 0.02 EUR 200,000 Teleperformance 1.5% 03/04/2024 185 0.04 EUR 180,000 TOTAL 2.708% Perpetual 171 0.04 EUR 200,000 UNEDIC 1.25% 28/03/2027 197 0.04

41,994 9.05

Germany 3.64% (6.13%)

EUR 100,000 ADO Properties 1.5% 26/07/2024 89 0.02 EUR 100,000 Allianz 4.75% Perpetual 101 0.02 EUR 100,000 alstria office REIT 0.5% 26/09/2025 88 0.02

EUR 1,800,000 Bundesrepublik Deutschland Bundesanleihe 2.5% 15/08/2046 2,741 0.59

EUR 37,429 Bundesrepublik Deutschland Bundesanleihe 3.25% 04/07/2042 60 0.01

EUR 100,000 Deutsche Bahn Finance 0.875% 11/07/2031 95 0.02 EUR 100,000 Eurogrid 1.625% 03/11/2023 94 0.02

USD 3,109,000 FMS Wertmanagement 2.75% 06/03/2023 2,612 0.56 EUR 2,677,000 Kreditanstalt fuer Wiederaufbau 0.75% 15/01/2029 2,607 0.56 USD 2,000,000 Kreditanstalt fuer Wiederaufbau 2% 02/05/2025 1,652 0.36 USD 4,036,000 Kreditanstalt fuer Wiederaufbau 2.375% 29/12/2022 3,351 0.72 USD 1,800,000 Landesbank Baden-Wuerttemberg

2.125% 31/01/2020 1,460 0.32 USD 750,000 Landwirtschaftliche Rentenbank 2% 13/01/2025 619 0.13 USD 700,000 Landwirtschaftliche Rentenbank 2.375% 10/06/2025 589 0.13 AUD 200,000 Landwirtschaftliche Rentenbank 4.75% 06/05/2026 133 0.03 EUR 200,000 SAP 0.75% 10/12/2024 184 0.04 EUR 46,000 Schaeffler 1.875% 26/03/2024 43 0.01 EUR 46,000 Schaeffler 2.875% 26/03/2027 45 0.01

EUR 100,000 Volkswagen Bank 0.625% 08/09/2021 89 0.02 EUR 36,000 Volkswagen Bank 1.25% 15/12/2025 33 0.01

EUR 100,000 Volkswagen Bank 1.875% 31/01/2024 93 0.02 EUR 100,000 Volkswagen Bank 2.5% 31/07/2026 97 0.02

16,875 3.64

Hong Kong 0.09% (0.00%)

USD 500,000 AIA 3.6% 09/04/2029 433 0.09 433 0.09

Iceland 0.06% (0.09%)

EUR 103,000 Arion Banki 0.75% 29/06/2020 91 0.02 EUR 112,000 Islandsbanki 1.125% 12/04/2022 101 0.02 EUR 100,000 Islandsbanki 1.125% 19/01/2024 89 0.02

281 0.06


206



Ireland 1.01% (0.43%)

USD 330,000 AerCap Ireland Capital 2.875% 14/08/2024 267 0.06 USD 534,000 Avolon Holdings Funding 3.625% 01/05/2022 439 0.10 EUR 191,000 Bank of Ireland 1.25% 09/04/2020 170 0.04 USD 944,000 Bank of Ireland 4.5% 25/11/2023 803 0.17 EUR 100,000 CRH Finance 1.375% 18/10/2028 96 0.02 EUR 241,000 ESB Finance 2.125% 05/11/2033 254 0.05 GBP 50,000 ESB Finance 6.5% 05/03/2020 51 0.01

EUR 132,000 FCA Bank 0.5% 13/09/2024 117 0.03 EUR 100,000 FCA Bank 1.25% 21/06/2022 91 0.02

EUR 2,006,787 Ireland Government Bond 1.1% 15/05/2029 1,968 0.42 EUR 100,000 Roadster Finance 1.625% 09/12/2024 91 0.02 EUR 100,000 Roadster Finance 2.375% 08/12/2027 92 0.02 GBP 249,959 Scorpio European Loan Conduit No.34

FRN 3.16538% 17/05/2029 250 0.05 4,689 1.01

Italy 1.76% (1.88%)

EUR 100,000 Assicurazioni Generali 4.596% Perpetual 97 0.02 EUR 880,000 Italy Buoni Poliennali Del Tesoro 0.35% 15/06/2020 781 0.17

EUR 1,474,000 Italy Buoni Poliennali Del Tesoro 0.95% 01/03/2023 1,346 0.29 EUR 2,000,000 Italy Buoni Poliennali Del Tesoro 2.05% 01/08/2027 1,966 0.42 EUR 3,799,000 Italy Buoni Poliennali Del Tesoro 2.8% 01/03/2067 3,991 0.86

8,181 1.76

Japan 14.71% (13.99%)

JPY 1,099,000,000 Japan Government Ten Year Bond 0.1% 20/12/2026 8,533 1.84 JPY 2,219,000,000 Japan Government Ten Year Bond 1.2% 20/12/2020 16,968 3.66 JPY 1,109,950,000 Japan Government Thirty Year Bond 1.1% 20/03/2033 9,604 2.07 JPY 1,373,950,000 Japan Government Thirty Year Bond 1.9% 20/09/2042 14,105 3.04

JPY 487,000,000 Japan Government Thirty Year Bond 2.3% 20/05/2030 4,630 1.00 JPY 1,707,150,000 Japan Government Twenty Year Bond 2.1% 20/09/2024 14,406 3.10 68,246 14.71

Luxembourg 2.47% (2.88%)

EUR 100,000 Allergan Funding SCS 1.25% 01/06/2024 92 0.02 EUR 121,000 Becton Dickinson Euro Finance 0.632% 04/06/2023 108 0.02 EUR 201,000 Becton Dickinson Euro Finance 1.208% 04/06/2026 183 0.04 EUR 122,000 Blackstone Property Partners Europe 1.4% 06/07/2022 111 0.02 EUR 249,000 Blackstone Property Partners Europe 1.75% 12/03/2029 221 0.05 EUR 157,000 Blackstone Property Partners Europe 2% 15/02/2024 147 0.03 EUR 237,000 Blackstone Property Partners Europe 2.2% 24/07/2025 224 0.05 EUR 187,000 DH Europe Finance II 0.2% 18/03/2026 165 0.04 EUR 228,000 DH Europe Finance II 1.35% 18/09/2039 201 0.04

EUR 3,789,000 European Financial Stability Facility 0% 17/11/2022 3,409 0.73 EUR 2,215,000 European Financial Stability Facility 0.95% 14/02/2028 2,174 0.47 GBP 2,657,000 European Investment Bank 0.75% 15/11/2024 2,669 0.58

EUR 200,000 GELF Bond Issuer I 1.625% 20/10/2026 190 0.04 USD 415,000 Ingersoll-Rand Luxembourg Finance 3.5% 21/03/2026 350 0.08



207



Luxembourg 2.47% (2.88%) (continued)

EUR 100,000 Logicor Financing 0.5% 30/04/2021 89 0.02 EUR 139,000 Logicor Financing 0.75% 15/07/2024 123 0.03 EUR 157,000 Logicor Financing 1.625% 15/07/2027 141 0.03 EUR 100,000 Medtronic Global 0.25% 02/07/2025 89 0.02 EUR 104,000 Medtronic Global 0.375% 07/03/2023 93 0.02 EUR 101,000 Medtronic Global 1% 02/07/2031 93 0.02 EUR 201,000 Medtronic Global 1.125% 07/03/2027 189 0.04 EUR 100,000 Medtronic Global 1.5% 02/07/2039 94 0.02 EUR 100,000 Medtronic Global 1.75% 02/07/2049 93 0.02 EUR 100,000 Medtronic Global 2.25% 07/03/2039 106 0.02 EUR 100,000 SELP Finance 1.5% 20/11/2025 93 0.02

11,447 2.47

Macao 0.00% (0.04%)

Mexico 0.18% (0.91%)

USD 410,000 Grupo Bimbo 5.95% Perpetual 349 0.08 EUR 122,000 Mexico Government International

Bond 1.625% 08/04/2026 113 0.02 EUR 116,000 Petroleos Mexicanos 1.875% 21/04/2022 103 0.02 EUR 100,000 Petroleos Mexicanos 2.5% 21/08/2021 91 0.02 EUR 213,000 Sigma Alimentos 2.625% 07/02/2024 202 0.04

858 0.18

Netherlands 2.39% (3.03%)

EUR 164,000 ABN AMRO Bank 0.875% 15/01/2024 150 0.03 GBP 100,000 ABN AMRO Bank 1% 30/06/2020 100 0.02 EUR 115,000 ABN AMRO Bank 4.125% 28/03/2022 112 0.02 EUR 100,000 Achmea 4.25% Perpetual 95 0.02 EUR 160,000 Achmea Bank 1.125% 25/04/2022 146 0.03 EUR 100,000 Alliander 0.875% 24/06/2032 94 0.02 EUR 100,000 Argentum Netherlands for Swiss Life 4.375% Perpetual 101 0.02 EUR 100,000 Bayer Capital 2.125% 15/12/2029 97 0.02

USD 2,900,000 BNG Bank 2.375% 01/02/2022 2,386 0.51 EUR 100,000 Cetin Finance 1.423% 06/12/2021 91 0.02 EUR 153,000 Coca-Cola HBC Finance 1% 14/05/2027 142 0.03 USD 800,000 Constellium 5.875% 15/02/2026 678 0.15 USD 500,000 Cooperatieve Rabobank 4.625% 01/12/2023 434 0.09 EUR 113,000 Cooperatieve Rabobank 4.75% 06/06/2022 113 0.03 EUR 100,000 Enel Finance International 1% 16/09/2024 92 0.02 USD 205,000 Enel Finance International 4.625% 14/09/2025 181 0.04 EUR 116,000 Enexis 0.75% 02/07/2031 106 0.02 EUR 100,000 Iberdrola International 3.25% Perpetual 97 0.02 GBP 200,000 ING 3% 18/02/2026 215 0.05 GBP 301,000 Koninklijke KPN 5% 18/11/2026 351 0.08 GBP 122,000 LafargeHolcim Sterling Finance Netherlands 3%

12/05/2032 129 0.03 USD 530,000 Mondelez International 2.25% 19/09/2024 427 0.09

EUR 1,881,000 Netherlands Government Bond 0.25% 15/07/2029 1,777 0.38



208



Netherlands 2.39% (3.03%) (continued)

EUR 1,200,000 Netherlands Government Bond 2.5% 15/01/2033 1,469 0.32 GBP 100,000 NIBC Bank 3.125% 15/11/2023 104 0.02 USD 262,000 NXP 3.875% 18/06/2026 223 0.05 EUR 94,000 Siemens Financieringsmaatschappij 0% 05/09/2024 83 0.02

EUR 104,000 Siemens Financieringsmaatschappij 0.5% 05/09/2034 90 0.02 EUR 100,000 Sika Capital 1.5% 29/04/2031 96 0.02 EUR 100,000 Vesteda Finance 1.5% 24/05/2027 94 0.02 EUR 100,000 Volkswagen International Finance 3.375% Perpetual 93 0.02 EUR 100,000 Vonovia Finance 1.25% 06/12/2024 93 0.02 EUR 100,000 Vonovia Finance 1.625% 07/10/2039 89 0.02 EUR 100,000 Vonovia Finance 4% Perpetual 95 0.02 EUR 200,000 Wintershall Dea Finance 0.84% 25/09/2025 177 0.04 EUR 200,000 Wintershall Dea Finance 1.823% 25/09/2031 181 0.04 EUR 111,000 WPC Eurobond 2.25% 09/04/2026 106 0.02

11,107 2.39

Norway 0.37% (0.33%)

USD 876,000 Kommunalbanken 2% 19/06/2024 722 0.16 NOK 9,361,000 Norway Government Bond 1.75% 06/09/2029 876 0.19

EUR 100,000 Santander Consumer Bank 0.125% 11/09/2024 88 0.02 1,686 0.37

Peru 0.00% (0.04%)

Philippines 0.13% (0.14%)

USD 750,000 Asian Development Bank 2% 22/01/2025 619 0.13 619 0.13

Poland 0.60% (0.65%)

EUR 2,600,000 Poland Government International Bond 1.375% 22/10/2027 2,573 0.56

EUR 220,000 Tauron Polska Energia 2.375% 05/07/2027 207 0.04 2,780 0.60

Portugal 0.18% (0.05%)

EUR 786,000 Portugal Obrigacoes do Tesouro 1.95% 15/06/2029 815 0.18 815 0.18

Romania 0.00% (0.05%)

Spain 3.48% (5.35%)

EUR 100,000 Abertis Infraestructuras 2.375% 27/09/2027 96 0.02 GBP 300,000 Abertis Infraestructuras 3.375% 27/11/2026 318 0.07

EUR 2,827,000 Autonomous Community of Madrid Spain 1.773% 30/04/2028 2,835 0.61

EUR 100,000 Autonomous Community of Madrid Spain 4.3% 15/09/2026 114 0.02

EUR 200,000 Banco de Sabadell 0.875% 05/03/2023 180 0.04 EUR 100,000 Banco de Sabadell 1.75% 10/05/2024 91 0.02 GBP 400,000 Banco Santander 1.375% 31/07/2024 400 0.09 USD 600,000 Banco Santander 2.706% 27/06/2024 492 0.10



209



Spain 3.48% (5.35%) (continued)

USD 200,000 Banco Santander 3.306% 27/06/2029 167 0.03 EUR 100,000 Bankinter 0.875% 05/03/2024 91 0.02 EUR 200,000 Bankinter 2.5% 06/04/2027 185 0.04 EUR 100,000 CaixaBank 1.125% 12/01/2023 91 0.02 EUR 100,000 Canal de Isabel II Gestion 1.68% 26/02/2025 94 0.02 EUR 300,000 Cepsa Finance 1% 16/02/2025 272 0.06 EUR 100,000 IE2 Holdco 2.375% 27/11/2023 96 0.02 EUR 200,000 Inmobiliaria Colonial 1.625% 28/11/2025 188 0.04 EUR 100,000 Inmobiliaria Colonial 2% 17/04/2026 96 0.02 EUR 100,000 International Consolidated Airlines 0.5% 04/07/2023 88 0.02 EUR 100,000 International Consolidated Airlines 1.5% 04/07/2027 88 0.02 EUR 232,000 NorteGas Energia Distribucion 2.065% 28/09/2027 222 0.05 EUR 300,000 Santander Consumer Finance 0.875% 24/01/2022 271 0.06

EUR 9,471,000 Spain Government Bond 1.45% 31/10/2027 9,357 2.02 USD 350,000 Telefonica Emisiones 4.665% 06/03/2038 307 0.07

16,139 3.48

Sweden 0.67% (0.71%)

EUR 266,000 Castellum 0.75% 04/09/2026 234 0.05 EUR 100,000 Castellum 2.125% 20/11/2023 94 0.02 EUR 212,000 Heimstaden Bostad 2.125% 05/09/2023 197 0.04 EUR 102,000 Molnlycke 1.875% 28/02/2025 96 0.02 GBP 100,000 Skandinaviska Enskilda Banken 1.25% 05/08/2022 101 0.02

USD 2,200,000 Stadshypotek 2.5% 05/04/2022 1,811 0.39 SEK 6,500,000 Sweden Government Bond 3.5% 01/06/2022 596 0.13

3,129 0.67

Switzerland 0.77% (0.79%)

USD 1,359,000 Credit Suisse 2.593% 11/09/2025 1,092 0.24 CHF 1,350,000 Swiss Confederation Government Bond 4%

11/02/2023 1,282 0.28 USD 201,000 UBS 3.126% 13/08/2030 164 0.03 USD 995,000 UBS Group Funding Switzerland 2.859%

15/08/2023 816 0.18 EUR 200,000 UBS Group Funding Switzerland FRN 0.304%

20/09/2022 178 0.04 3,532 0.77

United Kingdom 5.97% (7.45%)

GBP 100,000 Accent Capital 2.625% 18/07/2049 109 0.02 EUR 100,000 Annington Funding 1.65% 12/07/2024 92 0.02 GBP 100,000 Assura Financing 3% 19/07/2028 111 0.02 GBP 120,000 Barclays 2.375% 06/10/2023 121 0.03 EUR 210,000 Barclays 2.625% 11/11/2025 188 0.04 GBP 100,000 Barclays 3% 08/05/2026 103 0.02 USD 200,000 Barclays 4.61% 15/02/2023 168 0.04 USD 255,000 Barclays Bank 10.179% 12/06/2021 231 0.05



210



United Kingdom 5.97% (7.45%) (continued)

EUR 124,000 BAT International Finance 2.25% 16/01/2030 112 0.02 EUR 100,000 BNZ International Funding 0.5% 13/05/2023 90 0.02 EUR 105,000 British Telecommunications 0.5% 12/09/2025 92 0.02 EUR 119,000 British Telecommunications 1.125% 12/09/2029 105 0.02 EUR 100,000 Channel Link Enterprises Finance 1.761% 30/06/2050 89 0.02 EUR 100,000 Credit Agricole 1% 16/09/2024 93 0.02 EUR 100,000 Credit Suisse 1.375% 29/11/2019 89 0.02 EUR 200,000 Credit Suisse FRN 0.087% 16/10/2019 177 0.04 GBP 254,000 CYBG 4% 03/09/2027 253 0.05 EUR 106,000 DS Smith 1.375% 26/07/2024 97 0.02 GBP 293,144 EMF-UK 2008-1 FRN 1.76463% 13/03/2046 292 0.06 GBP 351,000 Eurohome UK Mortgages 2007-2

FRN 1.05463% 15/09/2044 329 0.07 GBP 140,712 Eurosail PRIME-UK 2007-A FRN 1.18463%

13/09/2045 132 0.03 EUR 200,000 G4S International Finance 1.5% 09/01/2023 181 0.04 EUR 104,000 G4S International Finance 1.5% 02/06/2024 95 0.02 EUR 274,000 G4S International Finance 1.875% 24/05/2025 252 0.05 GBP 105,000 Grainger 3.375% 24/04/2028 111 0.02 GBP 50,000 Great Rolling Stock 6.25% 27/07/2020 52 0.01

USD 750,000 HSBC 3.262% 13/03/2023 619 0.13 USD 200,000 HSBC 3.803% 11/03/2025 169 0.04 GBP 707,397 Income Contingent Student Loans 2 2007-2009

FRN 1.8575% 24/07/2058 702 0.15 EUR 104,000 Informa 1.5% 05/07/2023 96 0.02 EUR 207,000 ITV 1.375% 26/09/2026 185 0.04 EUR 100,000 ITV 2% 01/12/2023 93 0.02 EUR 200,000 ITV 2.125% 21/09/2022 185 0.04 GBP 100,000 Liberty Living Finance 2.625% 28/11/2024 104 0.02 GBP 100,000 Liberty Living Finance 3.375% 28/11/2029 108 0.02 EUR 200,000 Lloyds Bank 1.375% 16/04/2021 182 0.04 EUR 100,000 Lloyds Bank Corporate Markets 0.25% 04/10/2022 88 0.02 USD 396,000 Lloyds Banking 2.858% 17/03/2023 322 0.07 USD 200,000 Lloyds Banking 4.05% 16/08/2023 170 0.04 GBP 364,000 London & Quadrant Housing Trust 2.625%

28/02/2028 385 0.08 EUR 100,000 London Stock Exchange 0.875% 19/09/2024 91 0.02 EUR 100,000 London Stock Exchange 1.75% 19/09/2029 96 0.02 GBP 664,611 Mansard Mortgages 2006-1 FRN 1.11713%

15/10/2048 636 0.14 GBP 399,000 National Grid Electricity Transmission 1.375%

16/09/2026 401 0.09 GBP 126,000 National Westminster Bank FRN 1.31186%

22/03/2023 127 0.03 EUR 101,000 Nationwide Building Society 2% 25/07/2029 91 0.02 GBP 100,000 Next 3% 26/08/2025 104 0.02 EUR 165,000 NGG Finance 2.125% 05/09/2082 145 0.03



211



United Kingdom 5.97% (7.45%) (continued)

GBP 210,000 Notting Hill Genesis 2.875% 31/01/2029 225 0.05 GBP 486,901 Paragon Mortgages No 10 FRN 1.10138%

15/06/2041 462 0.10 GBP 200,000 Pension Insurance 6.5% 03/07/2024 224 0.05 GBP 100,000 Prudential 3.875% 20/07/2049 102 0.02 GBP 201,000 Prudential 5.625% 20/10/2051 230 0.05 GBP 711,560 RMAC Securities No 1 FRN 0.94988% 12/06/2044 672 0.15 EUR 100,000 Royal Bank of Scotland 2% 08/03/2023 92 0.02 USD 450,000 Royal Bank of Scotland 3.875% 12/09/2023 377 0.08 USD 200,000 Royal Bank of Scotland 4.269% 22/03/2025 170 0.04 EUR 100,000 Royal Mail 2.375% 29/07/2024 95 0.02 GBP 60,000 Santander UK 3.875% 15/10/2029 71 0.02

USD 410,000 Santander UK 4.796% 15/11/2024 356 0.08 GBP 212,000 SSE 3.875% Perpetual 214 0.05 USD 655,000 Standard Chartered 2.744% 10/09/2022 532 0.11 USD 540,000 Standard Chartered 3.885% 15/03/2024 452 0.10 GBP 100,000 Tesco Personal Finance 3.5% 25/07/2025 102 0.02

GBP 6,900,000 UK Treasury 1.5% 22/01/2021 6,991 1.51 GBP 252,490 UK Treasury 1.5% 22/07/2047 284 0.06 GBP 619,000 UK Treasury 1.625% 22/10/2028 686 0.15 GBP 98,252 UK Treasury 1.75% 07/09/2037 112 0.02

GBP 4,401,000 UK Treasury 1.75% 22/01/2049 5,268 1.14 GBP 36,452 UK Treasury 4% 07/03/2022 40 0.01 GBP 82,522 UK Treasury 4.25% 07/06/2032 119 0.03

USD 275,000 Virgin Media Secured Finance 5.5% 15/05/2029 233 0.05 GBP 303,000 Western Power Distribution 3.5% 16/10/2026 324 0.07 EUR 217,000 Yorkshire Building Society 1.25% 17/03/2022 197 0.04 GBP 200,000 Yorkshire Building Society 3% 18/04/2025 205 0.04

27,698 5.97

United States 41.39% (37.35%)

USD 559,664 Accredited Mortgage Loan Trust 2004-2 FRN 2.61838% 25/07/2034 448 0.10

USD 73,497 Aegis Asset Backed Securities Trust Mortgage Pass-Through Certificates Series 2005-4 FRN 2.46838% 25/10/2035 59 0.01

USD 275,000 Albertsons 5.75% 15/03/2025 230 0.05 USD 467,000 Alcon Finance 2.75% 23/09/2026 382 0.08 USD 64,000 Alexandria Real Estate Equities 4% 15/01/2024 56 0.01

USD 269,000 Altria 3.8% 14/02/2024 228 0.05 USD 94,000 Altria 3.875% 16/09/2046 70 0.02 USD 50,000 American Axle & Manufacturing 6.5% 01/04/2027 39 0.01

USD 165,000 American Express 2.5% 30/07/2024 135 0.03 USD 754,000 American Express 3.125% 20/05/2026 636 0.14 USD 716,000 American Tower 3.375% 15/10/2026 604 0.13 USD 257,000 American Tower 3.8% 15/08/2029 222 0.05



212



United States 41.39% (37.35%) (continued)

USD 129,905 AmeriCredit Automobile Receivables 2015-4 2.88% 08/07/2021 106 0.02

USD 250,000 AmeriCredit Automobile Receivables Trust 2015-3 3.34% 08/08/2021 204 0.04

USD 389,800 AmeriCredit Automobile Receivables Trust 2016-2 2.87% 08/11/2021 317 0.07

USD 335,000 Ameriquest Mortgage Securities Inc Asset-Backed Pass-Through Certificates Series 2005-R5 FRN 2.96338% 25/07/2035 269 0.06

USD 128,000 Amphenol 2.8% 15/02/2030 101 0.02 USD 362,000 Analog Devices 3.125% 05/12/2023 303 0.06 USD 251,000 Anheuser-Busch InBev Worldwide 3.75% 15/07/2042 208 0.04 USD 315,000 Anheuser-Busch InBev Worldwide 4% 13/04/2028 282 0.06

USD 430,000 Anheuser-Busch InBev Worldwide 4.15% 23/01/2025 381 0.08 USD 244,000 Anheuser-Busch InBev Worldwide 4.9% 01/02/2046 236 0.05 EUR 170,000 Apple 1.375% 24/05/2029 167 0.04 USD 159,000 Apple 3.45% 09/02/2045 137 0.03 EUR 126,000 AT&T 2.35% 05/09/2029 127 0.03 EUR 120,000 AT&T 2.45% 15/03/2035 119 0.03 EUR 100,000 AT&T 2.5% 15/03/2023 95 0.02 EUR 100,000 AT&T 3.55% 17/12/2032 112 0.02 USD 884,000 AT&T 4.1% 15/02/2028 776 0.17 USD 306,000 AT&T 4.125% 17/02/2026 268 0.06 USD 304,000 AT&T 4.3% 15/02/2030 271 0.06 USD 303,000 AT&T 4.3% 15/12/2042 256 0.05 GBP 100,000 AT&T 4.375% 14/09/2029 117 0.02 USD 222,000 AT&T 4.75% 15/05/2046 199 0.04 GBP 100,000 AT&T 5.5% 15/03/2027 125 0.03 USD 160,000 AXA Equitable 4.35% 20/04/2028 138 0.03 USD 463,000 AXA Equitable 5% 20/04/2048 406 0.09 USD 862,000 BANK 2018-BNK12 4.255% 15/05/2061 796 0.17

USD 1,502,000 Bank of America 3.004% 20/12/2023 1,242 0.27 USD 631,000 Bank of America 3.366% 23/01/2026 533 0.11 USD 637,000 Bank of America 3.5% 19/04/2026 548 0.12

USD 1,637,000 Bank of America 3.559% 23/04/2027 1,399 0.30 GBP 100,000 Bank of America 6.125% 15/09/2021 110 0.02 USD 755,000 Bank of America 6.25% Perpetual 667 0.14 USD 100,000 Barrick North America Finance 5.7% 30/05/2041 103 0.02 USD 590,000 Barrick North America Finance 5.75% 01/05/2043 628 0.14 USD 396,000 BAT Capital 2.764% 15/08/2022 324 0.07 USD 878,000 BAT Capital 3.222% 15/08/2024 721 0.16 USD 447,000 BAT Capital 3.557% 15/08/2027 364 0.08 USD 433,000 Bayer US Finance II 4.25% 15/12/2025 375 0.08 USD 200,000 Bayer US Finance II 4.625% 25/06/2038 174 0.04 USD 393,188 Bayview Commercial Asset Trust 2007-2

FRN 2.28838% 25/07/2037 311 0.07 USD 286,000 BB&T 2.5% 01/08/2024 234 0.05



213




USD 940,000 BB&T 2.85% 26/10/2024 782 0.17 USD 923,000 BB&T 4.8% Perpetual 749 0.16

USD 1,095,000 BBVA 2.5% 27/08/2024 881 0.19 USD 51,123 Bear Stearns ARM Trust 2004-3 4.2016%

25/07/2034 42 0.01 USD 600,000 Becton Dickinson 3.363% 06/06/2024 507 0.11 USD 935,000 Benchmark 2018-B7 Mortgage Trust 4.51%

15/05/2053 882 0.19 USD 1,206,000 Benchmark 2018-B8 Mortgage Trust 4.2317%

15/01/2052 1,116 0.24 USD 325,000 Berkshire Hathaway Energy 4.45% 15/01/2049 314 0.07 GBP 148,000 Berkshire Hathaway Finance 2.375% 19/06/2039 160 0.03 USD 978,000 BF 2019-NYT Mortgage Trust FRN 4.0275%

15/11/2035 798 0.17

USD 780,000 Blackbird Capital Aircraft Lease Securitization 2016-1 2.487% 16/12/2041 630 0.14

USD 473,000 Boston Properties 3.4% 21/06/2029 400 0.09 USD 381,000 Boston Properties 3.8% 01/02/2024 327 0.07 USD 165,000 Boston Properties 4.5% 01/12/2028 152 0.03 USD 335,000 Boston Scientific 4% 01/03/2029 300 0.06 USD 378,000 Bristol-Myers Squibb 3.2% 15/06/2026 321 0.07

USD 1,171,000 Bristol-Myers Squibb 3.4% 26/07/2029 1,014 0.22 USD 490,000 BX Commercial Mortgage Trust 2018-BIOA

FRN 3.14855% 15/03/2037 398 0.09 USD 713,033 BX Commercial Mortgage Trust 2018-IND

FRN 3.3275% 15/11/2035 579 0.12 USD 301,000 BXP Trust 2017-GM 3.379% 13/06/2039 262 0.06 USD 640,000 Caesars Resort Collection 5.25% 15/10/2025 531 0.11 USD 194,000 Camden Property Trust 3.15% 01/07/2029 164 0.04 USD 72,000 Camden Property Trust 4.1% 15/10/2028 65 0.01

USD 471,000 Campbell Soup 3.95% 15/03/2025 404 0.09 USD 1,139,000 Capital One 2.15% 06/09/2022 922 0.20

USD 343,000 Capital One Financial 3.05% 09/03/2022 284 0.06 USD 117,000 Capital One Financial 3.75% 09/03/2027 100 0.02 USD 772,000 Capital One Financial 3.9% 29/01/2024 661 0.14 USD 436,000 Capital One Multi-Asset Execution Trust 2.84%

15/12/2024 362 0.08 USD 1,250,000 CCO 5.875% 01/04/2024 1,058 0.23 USD 1,525,000 Cedar Funding V CLO FRN 3.40325% 17/07/2031 1,231 0.27

USD 354,000 Charter Communications Operating Capital 4.908% 23/07/2025 315 0.07

USD 352,000 Chase Issuance Trust FRN 2.22125% 15/01/2022 286 0.06 USD 375,000 Cheniere Energy Partners 5.625% 01/10/2026 322 0.07 USD 406,000 Cigna 3.4% 17/09/2021 337 0.07

USD 1,000,000 Citigroup 3.3% 27/04/2025 847 0.18 USD 935,000 Citigroup 3.887% 10/01/2028 812 0.17



214





USD 1,464,000 Citigroup 4.044% 01/06/2024 1,255 0.27 USD 1,430,000 Citigroup Commercial Mortgage Trust

2013-375P 3.51758% 10/05/2035 1,197 0.26 USD 301,000 Comcast 4.15% 15/10/2028 274 0.06 USD 644,000 Comcast 4.6% 15/10/2038 624 0.13 USD 196,000 Comcast 4.7% 15/10/2048 195 0.04 USD 575,000 Comerica 3.7% 31/07/2023 490 0.11 USD 250,000 Comerica Bank 2.5% 23/07/2024 204 0.04 USD 771,000 COMM 2018-COR3 Mortgage Trust 4.228%

10/05/2051 708 0.15 USD 494,000 COMM 2019-521F Mortgage Trust FRN 2.9275%

15/06/2034 401 0.09 USD 369,000 COMM 2019-521F Mortgage Trust FRN 3.5775%

15/06/2034 299 0.06 USD 1,084,000 CommonSpirit Health 2.76% 01/10/2024 892 0.19

USD 122,000 CommScope Technologies 6% 15/06/2025 89 0.02 USD 342,000 Conagra Brands 3.8% 22/10/2021 286 0.06

USD 1,150,000 Conagra Brands 4.3% 01/05/2024 998 0.22 USD 22,000 Conagra Brands 4.85% 01/11/2028 20 0.00

USD 654,000 Concho Resources 3.75% 01/10/2027 550 0.12 USD 414,000 Constellation Brands 3.2% 15/02/2023 345 0.07 USD 248,000 Constellation Brands 3.6% 15/02/2028 212 0.05 USD 293,000 Constellation Brands 4.25% 01/05/2023 254 0.05 USD 199,000 Constellation Brands FRN 2.85813% 15/11/2021 161 0.03 USD 202,000 Continental Resources 4.375% 15/01/2028 169 0.04 USD 365,000 Cooperatieve Rabobank FRN 2.69663% 26/04/2021 297 0.06

USD 1,014,000 CORE 2019-CORE Mortgage Trust FRN 2.9075% 15/12/2031 823 0.18

USD 593,000 Corning 5.35% 15/11/2048 623 0.13 USD 667,031 Countrywide Asset-Backed Certificates 4.66207%

25/04/2047 589 0.13 USD 865,412 Countrywide Asset-Backed Certificates CWL

2006 13 1AF4 4.29409% 25/01/2037 716 0.15 USD 493,194 Countrywide Asset-Backed Certificates CWL

2006 13 1AF5 4.29409% 25/01/2037 410 0.09 USD 438,000 Cox Communications 3.15% 15/08/2024 365 0.08 USD 500,000 Crown Castle International 3.2% 01/09/2024 418 0.09 USD 353,000 Crown Castle International 3.7% 15/06/2026 302 0.07 USD 340,000 CrownRock 5.625% 15/10/2025 278 0.06

USD 1,173,000 CSC 5.5% 15/04/2027 1,007 0.22 USD 57,000 CVS Health 3% 15/08/2026 46 0.01

USD 658,000 CVS Health 5.05% 25/03/2048 608 0.13 USD 525,000 CWHEQ Revolving Home Equity Loan Resecuritization

Trust Series 2006-RES FRN 2.2175% 15/11/2035 417 0.09 USD 387,000 DBGS 2018-BIOD Mortgage Trust 4.466% 15/10/2051 364 0.08 USD 341,000 DBGS 2019-1735 Mortgage Trust 4.19455% 10/04/2037 301 0.06


215




USD 332,000 Dell EMC 4.9% 01/10/2026 288 0.06 USD 242,000 Dell EMC 5.3% 01/10/2029 214 0.05 USD 150,000 Devon Energy 5% 15/06/2045 141 0.03 USD 410,000 Devon Energy 5.85% 15/12/2025 395 0.09 EUR 100,000 Digital Euro Finco 2.5% 16/01/2026 98 0.02 EUR 100,000 Digital Euro Finco 2.625% 15/04/2024 97 0.02 USD 965,000 Digital Realty Trust 3.7% 15/08/2027 822 0.18

USD 1,245,000 Discover Bank 2.45% 12/09/2024 1,006 0.22 USD 451,000 Discover Card Execution Note Trust 1.85%

16/10/2023 366 0.08 USD 374,000 Discover Financial Services 3.95% 06/11/2024 321 0.07 USD 713,000 Discover Financial Services 4.5% 30/01/2026 629 0.14 USD 390,000 Discovery Communications 4.125% 15/05/2029 333 0.07 USD 438,000 Dollar Tree FRN 3.00325% 17/04/2020 355 0.08 USD 135,000 Dow Chemical 4.625% 01/10/2044 117 0.03 USD 138,000 Dow Chemical 9.4% 15/05/2039 181 0.04 USD 344,000 Dryden 71 CLO FRN 3.45338% 15/01/2029 279 0.06 USD 218,000 Duke Realty 3.375% 15/12/2027 184 0.04 USD 200,000 DuPont de Nemours 4.205% 15/11/2023 174 0.04 USD 119,174 ECAF I 3.473% 15/06/2040 96 0.02 USD 250,000 Eldorado Resorts 6% 01/04/2025 214 0.05 USD 27,000 Encompass Health 4.5% 01/02/2028 22 0.00

USD 333,000 Encompass Health 5.75% 15/09/2025 283 0.06 USD 523,000 Energy Transfer Operating 4.05% 15/03/2025 444 0.10 USD 882,000 Energy Transfer Operating 6.625% Perpetual 677 0.15 USD 240,000 EnLink Midstream Partners 4.85% 15/07/2026 185 0.04 USD 216,000 Enterprise Products Operating 5.375%

15/02/2078 169 0.04 USD 774,000 EQT 3.9% 01/10/2027 544 0.12 USD 565,000 Essex Portfolio 3% 15/01/2030 462 0.10 USD 235,000 Essex Portfolio 3.875% 01/05/2024 201 0.04 USD 36,000 Express Scripts 3.4% 01/03/2027 30 0.01

USD 170,797 Fannie Mae Connecticut Avenue Securities FRN 3.31838% 25/04/2029 139 0.03



USD 2,192,909 Fannie Mae Pool 3% 01/09/2049 1,807 0.39 USD 2,055,737 Fannie Mae Pool 3.5% 01/02/2047 1,749 0.38

USD 493,035 Fannie Mae Pool 3.5% 01/03/2048 411 0.09 USD 1,002,844 Fannie Mae Pool 4% 01/06/2047 852 0.18 USD 1,197,769 Fannie Mae Pool 4% 01/09/2047 1,018 0.22 USD 1,967,218 Fannie Mae Pool 4% 01/11/2047 1,672 0.36

USD 756,144 Fannie Mae Pool 4% 01/01/2048 643 0.14 USD 518,346 Fannie Mae Pool 4% 01/06/2048 437 0.09



216





USD 1,512,958 Fannie Mae Pool 4% 01/05/2049 1,276 0.28 USD 1,389,809 Fannie Mae Pool 4.5% 01/11/2048 1,191 0.26

USD 856,847 Fannie Mae Pool BH2623F 4% 01/08/2047 728 0.16 USD 1,814,790 Fannie Mae Pool BH6668F 4% 01/08/2047 1,542 0.33

USD 500,694 Fannie Mae Pool BN6751F 2.5% 01/06/2034 410 0.09 USD 1,248,721 Fannie Mae Pool MA3709F 2.5% 01/06/2034 1,022 0.22

USD 246,000 FedEx 4.1% 01/02/2045 198 0.04 EUR 252,000 Fidelity National Information Services 0.75%

21/05/2023 228 0.05 EUR 100,000 Fidelity National Information Services 2.95%

21/05/2039 109 0.02 USD 281,000 Fidelity National Information Services 3.75%

21/05/2029 247 0.05 USD 710,000 Fidelity National Information Services 4.5%

15/08/2046 670 0.14 USD 656,000 Fifth Third Bancorp 3.65% 25/01/2024 561 0.12 USD 250,000 First Republic Bank 4.625% 13/02/2047 232 0.05 EUR 100,000 Fiserv 0.375% 01/07/2023 89 0.02 EUR 100,000 Fiserv 1.125% 01/07/2027 92 0.02 GBP 115,000 Fiserv 2.25% 01/07/2025 119 0.03 USD 822,000 Fiserv 3.2% 01/07/2026 690 0.15 USD 718,376 Flagstar Mortgage Trust 2017-2 3.5% 25/10/2047 591 0.13 USD 200,000 Ford Motor Credit 5.113% 03/05/2029 163 0.04 USD 195,000 Fortive 2.35% 15/06/2021 158 0.03 USD 265,000 Fortive 4.3% 15/06/2046 226 0.05

USD 3,428,782 Freddie Mac Gold Pool 3% 01/05/2049 2,827 0.61 USD 1,304,477 Freddie Mac Gold Pool 3.5% 01/08/2047 1,096 0.24 USD 3,288,954 Freddie Mac Gold Pool 3.5% 01/06/2049 2,743 0.59

USD 790,051 Freddie Mac Gold Pool 4% 01/07/2047 672 0.14 USD 829,037 Freddie Mac Gold Pool 4% 01/08/2047 705 0.15

USD 2,001,050 Freddie Mac Gold Pool 4% 01/11/2047 1,702 0.37 USD 1,192,136 Freddie Mac Gold Pool 4% 01/01/2048 1,014 0.22 USD 1,500,000 Freddie Mac Multifamily Structured Pass Through

Certificates 3.12% 25/09/2026 1,295 0.28 USD 1,825,000 Freddie Mac Multifamily Structured Pass Through

Certificates 3.284% 25/06/2025 1,574 0.34 USD 440,000 Freddie Mac Multifamily Structured Pass Through

Certificates 3.78% 25/10/2028 401 0.09 USD 366,000 Freddie Mac Multifamily Structured Pass Through

Certificates 3.926% 25/07/2028 336 0.07 USD 961,000 Freddie Mac Multifamily Structured Pass Through

Certificates 4.06% 25/10/2028 892 0.19 USD 642,606 Freddie Mac Pool 3% 01/10/2046 537 0.12 USD 57,769 Freddie Mac Structured Agency Credit Risk Debt

Notes FRN 4.61838% 25/12/2027 47 0.01 USD 123,708 Freddie Mac Structured Agency Credit Risk Debt

Notes FRN 4.81838% 25/05/2028 101 0.02


217




USD 250,000 Freddie Mac Structured Agency Credit Risk Debt Notes FRN 5.31838% 25/10/2027 214 0.05




USD 250,000 Galaxy XXI CLO FRN 3.29763% 20/04/2031 201 0.04 USD 47,000 General Electric 4.125% 09/10/2042 38 0.01

USD 101,000 General Mills 4% 17/04/2025 88 0.02 USD 141,000 General Motors Financial 3.15% 30/06/2022 116 0.03

USD 1,082,031 Ginnie Mae II Pool 4.5% 20/05/2049 926 0.20 USD 460,000 Golden Nugget 6.75% 15/10/2024 378 0.08 USD 292,000 Goldentree Loan Management US CLO 2

FRN 3.42763% 28/11/2030 237 0.05 EUR 163,000 Goldman Sachs 1.375% 15/05/2024 150 0.03 USD 539,000 GS Mortgage Securities Trust 2016-GS2 3.05%

10/05/2049 456 0.10 USD 479,000 GS Mortgage Securities Trust 2017-GS5 3.674%

10/03/2050 422 0.09 USD 292,000 HCA 5.125% 15/06/2039 259 0.06

USD 326,000 HCA 5.5% 15/06/2047 298 0.06 USD 165,000 Hess 3.5% 15/07/2024 136 0.03 USD 181,000 Hess 4.3% 01/04/2027 153 0.03 USD 461,000 Hexcel 3.95% 15/02/2027 390 0.08 USD 150,000 High Street Funding Trust II 4.682% 15/02/2048 140 0.03 USD 670,000 Hilton USA Trust 2016-HHV Class C 4.1935%

05/11/2038 589 0.13 USD 670,000 Hilton USA Trust 2016-HHV Class D 4.1935%

05/11/2038 580 0.13 USD 210,000 Home Depot 4.25% 01/04/2046 203 0.04

CAD 1,000,000 International Bank for Reconstruction & Development 1.125% 11/03/2020 611 0.13

USD 255,000 International Game Technology 6.25% 15/01/2027 229 0.05

USD 281,000 J.P. Morgan Chase Commercial Mortgage Securities Trust 2016-NINE 2.8541% 06/09/2038 235 0.05

USD 971,000 JC Penney 5.875% 01/07/2023 678 0.15 USD 763,995 JP Morgan Mortgage Trust 2016-3 3.5% 25/10/2046 629 0.14 USD 146,327 JP Morgan Mortgage Trust 2016-4 3.5% 25/10/2046 120 0.03 USD 720,511 JP Morgan Mortgage Trust 2017-1 3.5% 25/01/2047 586 0.13 USD 566,327 JP Morgan Mortgage Trust 2017-2 3.5% 25/05/2047 466 0.10 USD 258,723 JP Morgan Mortgage Trust 2017-3 3.5% 25/08/2047 212 0.05 USD 783,911 JP Morgan Mortgage Trust 2017-4 3.5% 25/11/2048 644 0.14 USD 697,346 JP Morgan Mortgage Trust 2018-4 3.5% 25/10/2048 574 0.12 USD 485,515 JP Morgan Mortgage Trust 2018-8 A5 4% 25/01/2049 397 0.09



218





USD 622,866 JP Morgan Mortgage Trust 2018-8 A15 4% 25/01/2049 509 0.11

USD 140,909 JP Morgan Mortgage Trust 2018-9 4% 25/02/2049 115 0.02

EUR 200,000 JPMorgan Chase 1.5% 27/01/2025 189 0.04 USD 250,000 JPMorgan Chase 2.95% 01/10/2026 208 0.04

USD 2,430,000 JPMorgan Chase 4.023% 05/12/2024 2,101 0.45 USD 1,149,000 JPMorgan Chase FRN 2.98938% 23/04/2024 930 0.20

USD 805,000 Kansas City Southern 4.7% 01/05/2048 771 0.17 USD 310,000 Keurig Dr Pepper 3.551% 25/05/2021 257 0.06 USD 295,000 Keurig Dr Pepper 4.057% 25/05/2023 253 0.05 USD 276,000 Keysight Technologies 4.6% 06/04/2027 246 0.05 USD 483,000 Kimco Realty 3.7% 01/10/2049 384 0.08 EUR 242,000 KKR Group Finance V 1.625% 22/05/2029 226 0.05 USD 425,000 Kraft Heinz Foods 5% 04/06/2042 356 0.08 USD 218,000 Kroger 3.875% 15/10/2046 167 0.04 USD 238,000 Kroger 4.45% 01/02/2047 198 0.04 USD 311,000 L3Harris Technologies 3.85% 15/06/2023 266 0.06 USD 586,000 Las Vegas Sands 3.2% 08/08/2024 485 0.10 USD 359,000 LCM XV FRN 3.51763% 20/07/2030 292 0.06 EUR 110,000 Liberty Mutual 3.625% 23/05/2059 101 0.02 USD 179,000 M&T Bank 5.125% Perpetual 153 0.03 USD 826,000 Madison Park Funding XVIII FRN 3.46763%

21/10/2030 671 0.14 USD 1,000,000 Manufacturers & Traders Trust 3.4%

17/08/2027 867 0.19 USD 355,000 Marathon Petroleum 3.8% 01/04/2028 300 0.06 USD 114,000 Marathon Petroleum 4.5% 01/04/2048 96 0.02 USD 848,000 Mastercard 2.95% 01/06/2029 722 0.16

USD 116,000 Mastercard 3.65% 01/06/2049 106 0.02 USD 153,000 Merck 3.4% 07/03/2029 135 0.03 USD 539,000 MetLife 6.4% 15/12/2036 517 0.11 USD 280,000 MGM Growth Properties 4.5% 15/01/2028 236 0.05 USD 100,000 MidAmerican Energy 3.95% 01/08/2047 92 0.02 USD 155,000 Moody’s 2.75% 15/12/2021 127 0.03 EUR 155,000 Morgan Stanley 0.637% 26/07/2024 139 0.03 EUR 100,000 Morgan Stanley 1.375% 27/10/2026 94 0.02

USD 1,331,000 Morgan Stanley 2.625% 17/11/2021 1,088 0.23 USD 1,271,000 Morgan Stanley 3.125% 27/07/2026 1,061 0.23 USD 1,035,000 Morgan Stanley 3.875% 29/04/2024 892 0.19

USD 732,000 Morgan Stanley 3.875% 27/01/2026 637 0.14 USD 807,000 Morgan Stanley 4.431% 23/01/2030 734 0.16 EUR 460,000 Morgan Stanley FRN 0.296% 19/11/2019 407 0.09 USD 249,000 Mosaic 3.25% 15/11/2022 207 0.04 USD 265,000 Mosaic 4.25% 15/11/2023 227 0.05 USD 311,000 Motorola Solutions 4.6% 23/02/2028 272 0.06 USD 656,000 MPLX 4.5% 15/04/2038 552 0.12


219




USD 825,000 MPT Operating Partnership 5% 15/10/2027 701 0.15 USD 487,000 MSCG Trust 2018-SELF FRN 3.6775% 15/10/2037 396 0.09 USD 504,850 Nationstar Home Equity Loan Trust 2007-A FRN

2.24838% 25/03/2037 404 0.09 USD 625,000 Netflix 4.875% 15/04/2028 516 0.11 USD 186,000 Newell Brands 3.85% 01/04/2023 155 0.03 USD 382,000 Newell Brands 4.2% 01/04/2026 324 0.07 USD 449,000 Noble Energy 3.85% 15/01/2028 377 0.08 USD 111,000 Noble Energy 3.9% 15/11/2024 94 0.02 USD 381,000 Occidental Petroleum 2.7% 15/08/2022 312 0.07 USD 188,000 Occidental Petroleum 2.9% 15/08/2024 154 0.03 USD 301,000 Occidental Petroleum FRN 3.437% 13/08/2021 246 0.05 USD 342,000 Occidental Petroleum FRN 3.637% 15/08/2022 279 0.06 USD 560,000 One Market Plaza Trust 2017-1MKT 4.0163%

10/02/2032 475 0.10 USD 375,000 One Market Plaza Trust 2017-1MKT 4.1455%

10/02/2032 319 0.07 USD 680,000 OneMain Financial Issuance Trust 2017-1 2.37%

14/09/2032 551 0.12 USD 200,000 ONEOK 4.35% 15/03/2029 173 0.04 USD 547,372 Option One Mortgage Loan Trust 2007-FXD2

5.82% 25/03/2037 450 0.10 USD 176,106 Option One Mortgage Loan Trust 2007-FXD2

5.947% 25/03/2037 145 0.03 USD 565,000 Phillips 66 Partners 2.45% 15/12/2024 455 0.10 USD 500,000 PNC Bank 2.7% 01/11/2022 411 0.09 USD 320,000 PNC Bank 2.95% 23/02/2025 268 0.06 USD 730,000 PNC Financial Services 2.6% 23/07/2026 599 0.13 USD 58,000 PNC Financial Services 3.45% 23/04/2029 50 0.01

USD 881,000 Progressive 5.375% Perpetual 738 0.16 EUR 110,000 Prologis 3% 02/06/2026 114 0.02 EUR 164,000 Prologis Euro Finance 0.25% 10/09/2027 143 0.03 USD 487,000 Prudential Financial 4.5% 15/09/2047 402 0.09 USD 505,000 Qualitytech 4.75% 15/11/2025 424 0.09 USD 300,000 Radiate 6.625% 15/02/2025 245 0.05 USD 573,000 RAMP Series 2007-RZ1 Trust FRN 2.26838%

25/02/2037 453 0.10 USD 270,000 Refinitiv 6.25% 15/05/2026 235 0.05 USD 395,000 Regions Bank 2.75% 01/04/2021 322 0.07 USD 417,000 Regions Financial 2.75% 14/08/2022 343 0.07 USD 666,000 Roper Technologies 3.65% 15/09/2023 566 0.12 USD 385,000 Roper Technologies 3.8% 15/12/2026 334 0.07 USD 410,000 Sabine Pass Liquefaction 4.2% 15/03/2028 352 0.08 USD 360,000 Sabine Pass Liquefaction 5.625% 01/03/2025 328 0.07 USD 268,000 Santander 3.5% 07/06/2024 223 0.05 USD 170,973 Santander Drive Auto Receivables Trust

2016-3 2.46% 15/03/2022 139 0.03



220





USD 300,000 SBA Communications 4.875% 01/09/2024 253 0.05 USD 275,000 Scientific Games International 5% 15/10/2025 230 0.05

USD 1,005,000 Sempra Energy 3.8% 01/02/2038 840 0.18 USD 356,000 Sherwin-Williams 2.75% 01/06/2022 292 0.06

USD 1,135,000 Simon Property 2% 13/09/2024 912 0.20 USD 72,777 SoFi Professional Loan Program 2017-E 1.86%

26/11/2040 59 0.01 USD 209,375 SoFi Professional Loan Program 2018-B

Trust 2.64% 25/08/2047 170 0.04 USD 1,301,000 Sound Point CLO XVIII FRN 3.39763% 21/01/2031 1,049 0.23

USD 69,000 Southern California Edison 3.65% 01/03/2028 60 0.01 USD 712,000 Southern California Edison 4.2% 01/03/2029 644 0.14 USD 570,000 Southwestern Energy 7.75% 01/10/2027 404 0.09 USD 260,000 Sprint Capital 6.875% 15/11/2028 229 0.05 USD 278,000 State Street 5.625% Perpetual 233 0.05 USD 124,838 Structured Asset Investment Loan

Trust 2003-BC4 FRN 3.21838% 25/06/2033 101 0.02 USD 561,000 SunTrust Banks 2.7% 27/01/2022 460 0.10

USD 1,327,000 SunTrust Banks 5.125% Perpetual 1,082 0.23 USD 206,000 Synchrony Financial 3.95% 01/12/2027 171 0.04 USD 529,000 Synchrony Financial 4.375% 19/03/2024 456 0.10 USD 925,000 TAL Advantage V 3.55% 20/11/2038 751 0.16

USD 1,040,000 Tenet Healthcare 4.625% 15/07/2024 867 0.19 EUR 100,000 Thermo Fisher Scientific 0.125% 01/03/2025 88 0.02 EUR 100,000 Thermo Fisher Scientific 0.5% 01/03/2028 88 0.02 EUR 100,000 Thermo Fisher Scientific 0.875% 01/10/2031 89 0.02 USD 875,000 THL Credit Wind River 2013-2 CLO

FRN 3.52963% 18/10/2030 705 0.15 USD 828,000 THL Credit Wind River 2017-3 CLO

FRN 3.25088% 15/10/2030 671 0.14

USD 423,326 Towd Point Mortgage Trust 2017-1 2.75% 25/10/2056 345 0.07





USD 250,000 TransDigm 7.5% 15/03/2027 221 0.05 USD 275,000 Tutor Perini 6.875% 01/05/2025 216 0.05 USD 446,000 Tyson Foods 4% 01/03/2026 392 0.08 USD 297,000 UDR 3.2% 15/01/2030 248 0.05 USD 455,000 Union Electric 3.5% 15/03/2029 402 0.09 USD 305,000 United Rentals North America 4.875% 15/01/2028 257 0.06

USD 2,100,000 United States Treasury Bill 0% 08/10/2019 1,703 0.37


221




USD 7,701,000 United States Treasury Note/Bond 1.5% 30/09/2024 6,229 1.34

USD 17,245,000 United States Treasury Note/Bond 2.5% 15/02/2046 15,077 3.25

USD 121,000 United Technologies 2.8% 04/05/2024 101 0.02 USD 264,000 United Technologies 3.95% 16/08/2025 235 0.05 USD 500,000 Valero Energy 3.4% 15/09/2026 416 0.09 USD 415,000 Ventas Realty 3.5% 01/02/2025 352 0.08 EUR 118,000 Verizon Communications 0.875% 08/04/2027 108 0.02 GBP 100,000 Verizon Communications 2.5% 08/04/2031 106 0.02 USD 45,000 Verizon Communications 3.376% 15/02/2025 38 0.01

USD 729,000 Verizon Communications 3.85% 01/11/2042 630 0.14 USD 295,000 Verizon Communications 4.016% 03/12/2029 267 0.06 USD 254,000 Viacom 4.25% 01/09/2023 218 0.05 USD 275,000 VOC Escrow 5% 15/02/2028 230 0.05 USD 355,000 Vornado Realty 3.5% 15/01/2025 297 0.06

USD 1,200,000 Voya CLO 2014-2 FRN 3.55325% 17/04/2030 974 0.21 USD 224,000 Wabtec 4.4% 15/03/2024 194 0.04

USD 2,441,000 Walt Disney 1.75% 30/08/2024 1,960 0.42 USD 196,999 WaMu Mortgage Pass-Through Certificates

Series 2004-AR4 Trust 4.50465% 25/06/2034 160 0.03 EUR 150,000 Wells Fargo 2% 27/04/2026 147 0.03 GBP 100,000 Wells Fargo 2.125% 22/04/2022 102 0.02 USD 506,000 Wells Fargo 3.196% 17/06/2027 423 0.09

USD 2,080,000 Wells Fargo 3.75% 24/01/2024 1,784 0.38 USD 1,199,000 Welltower 3.625% 15/03/2024 1,021 0.22

USD 780,000 Williams 4% 15/09/2025 668 0.14 USD 130,000 Williams 4.85% 01/03/2048 113 0.02 USD 275,000 Williams Scotsman International 6.875%

15/08/2023 234 0.05 USD 182,000 Worldwide Plaza Trust 2017-WWP 3.5263%

10/11/2036 159 0.03 USD 48,000 Wynn Las Vegas 5.25% 15/05/2027 40 0.01

USD 235,000 Wynn Las Vegas 5.5% 01/03/2025 200 0.04 EUR 200,000 Zimmer Biomet 1.414% 13/12/2022 183 0.04 EUR 100,000 Zimmer Biomet 2.425% 13/12/2026 98 0.02 USD 260,000 Zions Bancorporation 3.5% 27/08/2021 215 0.05

191,961 41.39



222



Swaps (0.29%) ((0.52%))

EUR 394,085 Citi Credit Default Swap EUR 1% 20/06/2024 4 0.00 EUR 120,968 Citi Credit Default Swap EUR 1% 20/06/2024 0 0.00 EUR 120,968 JPMorgan Credit Default Swap EUR 1% 20/06/2024 0 0.00 EUR 119,490 JPMorgan Credit Default Swap EUR 1% 20/12/2024 (3) 0.00


USD 5,757,000 Morgan Stanley Credit Default Swap USD 1% 20/06/2024 99 0.02

USD 21,467,160 Morgan Stanley Credit Default Swap USD 5% 20/06/2024 (1,238) (0.26)

EUR 3,499,000 Morgan Stanley Interest Rate Swap EUR 0.028% 15/08/2028 (72) (0.02)



USD 1,120,089 Morgan Stanley Interest Rate Swap USD 2.073% 15/02/2029 (27) (0.01)

USD 627,250 Morgan Stanley Interest Rate Swap USD 2.0995% 05/02/2029 (17) 0.00




(1,360) (0.29)



223



Options (0.17%) (0.18%)

USD 2,659,000 BSD3DGUP0 USD CALL CAD PUT 4 0.00 USD 2,659,000 BSD3DHCC7 USD PUT JPY CALL 14 0.00

USD (2,659,000) BSD3RQ0V3 USD PUT JPY CALL (14) 0.00 USD (15,369,000) BSD3WS241 SWAPTION (106) (0.02)USD (15,369,000) BSD3WS266 SWAPTION (555) (0.12)

EUR 6,335,000 BSD443H64 EUR PUT GBP CALL 0.895 EO 162 0.04 EUR (6,335,000) BSD443HH0 EUR CALL GBP PUT 0.965 EO (56) (0.01) USD (7,693,000) BSD45J5X2 IRS SWAPTION (173) (0.04) USD (7,693,000) BSD45J637 IRS SWAPTION (125) (0.03) USD (4,056,000) BSD478FW5 CDX SWAPTION (13) 0.00 USD (4,056,000) BSD47CUT6 CDX SWAPTION (11) 0.00

USD 5,775,000 BSD48QSE0 USD PUT RUB CALL 155 0.03 USD 2,887,659 BSD48QVL0 USD PUT BRL CALL 16 0.00

USD (2,887,659) BSD48QXA2 USD PUT BRL CALL (3) 0.00 USD (5,775,000) BSD48QYS2 USD PUT RUB CALL (37) (0.01)

USD 2,888,000 BSD48R0Z1 USD PUT MXN CALL 26 0.01 USD (2,888,000) BSD48R149 USD PUT MXN CALL (3) 0.00

GBP 4,710,000 BSD49E0C0 GBP CALL USD PUT 108 0.02 GBP (4,710,000) BSD49E0G1 GBP CALL USD PUT (32) (0.01) GBP (4,710,000) BSD49E0H9 GBP PUT USD CALL (30) (0.01) USD (3,630,000) BSD4AD303 USD PUT KRW CALL (53) (0.01)

EUR 6,335,000 BSD4B7YV3 EUR CALL GBP PUT 56 0.01 EUR (6,335,000) BSD4B7YW1 EUR PUT GBP CALL (162) (0.03)

USD 5,775,000 BSD4D6M46 USD PUT ZAR CALL 17 0.00 USD (5,775,000) BSD4D6M53 USD PUT ZAR CALL (105) (0.02)

GBP 4,710,000 BSD4DJHE2 GBP CALL USD PUT 32 0.01 USD (5,775,000) BSD4DVYT3 USD PUT ZAR CALL (17) 0.00

USD 5,775,000 BSD4DVYU0 USD PUT ZAR CALL 105 0.02 USD (2,897,000) BSD4G3QY0 USD CALL BRL PUT (15) 0.00

USD 1,449,000 BSD4G3QZ7 USD PUT BRL CALL 14 0.00 (801) (0.17)

Futures (0.30%) ((0.02%))

16 Australian Bond 10 Year Futures December 2019 13 0.00 134 Canadian Bond 10 Year Futures December 2019 (241) (0.05)

(151) German Euro BOBL Futures December 2019 74 0.02 10 German Euro BTP Futures December 2019 6 0.00 63 German Euro BUND Futures December 2019 (96) (0.02)

(24) German Euro BUXL 30 Year Bond Futures December 2019 88 0.02

(44) German Euro OAT Futures December 2019 40 0.01 (55) German Euro SCHATZ Futures December 2019 16 0.00 138 German Short Euro BTP Futures December 2019 19 0.00 17 Japan Bond 10 Year Futures December 2019 17 0.00

(51) UK Long Gilt Futures December 2019 (84) (0.01) 95 US Treasury Long Bond Futures December 2019 (233) (0.05)

(541) US Treasury Note 2 Year Futures December 2019 90 0.02



224




Futures (0.30%) ((0.02%)) (continued)

62 US Treasury Note 5 Year Futures December 2019 (90) (0.02) 581 US Treasury Note 10 Year Futures December 2019 (681) (0.15) 147 US Treasury Ultra 10 Year Futures December 2019 (309) (0.07)

(1,371) (0.30)

Forward Currency Contracts (0.06%) ((0.32%))

Bought AUD1,275,270 for GBP709,232 Settlement 15/10/2019 (11) 0.00

Bought BRL8,425,900 for USD2,018,417 Settlement 04/11/2019 0 0.00

Bought CAD6,011,806 for GBP3,700,279 Settlement 15/10/2019 (17) 0.00

Bought COP2,249,225,500 for USD666,033 Settlement 15/10/2019 (16) 0.00

Bought EUR5,173,789 for CHF5,669,059 Settlement 15/10/2019 (37) (0.01)

Bought EUR38,348,586 for GBP34,179,679 Settlement 15/10/2019 (238) (0.05)

Bought EUR2,634,500 for USD2,894,615 Settlement 15/10/2019 (16) 0.00

Bought IDR27,819,159,445 for USD1,973,550 Settlement 15/10/2019 (13) 0.00

Bought INR564,621,400 for USD7,912,346 Settlement 15/10/2019 37 0.01

Bought JPY1,555,892,729 for GBP11,766,318 Settlement 15/10/2019 (80) (0.02)

Bought JPY541,375,400 for USD5,021,933 Settlement 15/10/2019 (7) 0.00

Bought MXN71,849,071 for GBP2,963,872 Settlement 15/10/2019 (19) 0.00

Bought MXN58,586,329 for USD2,982,157 Settlement 15/10/2019 (17) 0.00

Bought NOK142,422,507 for GBP12,850,998 Settlement 15/10/2019 (134) (0.03)

Bought PLN21,299,544 for GBP4,379,808 Settlement 15/10/2019 (70) (0.02) Bought RUB239,884,500 for USD3,648,628 Settlement 15/10/2019 35 0.01

Bought THB89,056,500 for USD2,927,535 Settlement 15/10/2019 (12) 0.00

Bought USD14,034,009 for EUR12,679,000 Settlement 15/10/2019 160 0.03

Bought USD6,777,609 for GBP5,486,312 Settlement 15/10/2019 11 0.00

Bought USD4,414,523 for GBP3,529,124 Settlement 24/10/2019 50 0.01


225



Forward Currency Contracts (0.06%) ((0.32%)) (continued)

Bought USD4,303,901 for JPY462,757,600 Settlement 15/10/2019 15 0.00

Bought USD13,923,460 for KRW16,582,728,650 Settlement 15/10/2019 45 0.01 Bought USD3,652,056 for RUB234,146,200 Settlement 15/10/2019 40 0.01

Bought USD5,331,038 for TWD165,699,700 Settlement 15/10/2019 (11) 0.00

Bought ZAR43,401,100 for USD2,887,459 Settlement 15/10/2019 (24) (0.01)

Bought ZAR10,179,000 for USD666,528 Settlement 13/11/2019 1 0.00

Sold CAD3,555,428 for GBP2,188,486 Settlement 15/10/2019 10 0.00

Sold CHF6,359,963 for GBP5,192,010 Settlement 15/10/2019 13 0.00

Sold CZK174,431,212 for GBP6,005,904 Settlement 15/10/2019 31 0.01


Sold JPY546,367,598 for GBP4,113,727 Settlement 15/10/2019 10 0.00

Sold NOK8,774,207 for GBP791,907 Settlement 15/10/2019 8 0.00

Sold SEK19,418,552 for GBP1,626,408 Settlement 15/10/2019 23 0.00

Sold THB86,147,900 for GBP2,278,346 Settlement 15/10/2019 (7) 0.00


Sold ZAR37,828,572 for GBP2,075,647 Settlement 15/10/2019 56 0.01

(256) (0.06)

Portfolio of investments* 453,251 97.70 Net other assets 10,681 2.30 Net assets 463,932 100.00



* A total of £1,376,000 [2018: £2,609,000] of UK government bonds have been pledged as collateral for derivative positions. This amount is shown separately on the balance sheet as Other loan assets.

Comparative figures shown above in brackets relate to 28 September 2018.

Gross purchases for the year (excl. Derivatives): £323,150,000 [2018: £380,228,000] (See note 16).

Total sales net of transaction costs for the year (excl. Derivatives): £291,563,000 [2018: £285,429,000] (See note 16).



226



Bonds Rating AAA 27.62 AA 15.66 A 28.87 BBB 21.72 BB (0.32) B 1.03 CCC 0.14 CC 0.24 NR 0.08 Bonds 95.04 Uninvested Cash 1.94 CDS 2.78 IRS & Forwards 0.24 Net Assets 100.00




227



29/09/18 to 30/09/19 01/10/17 to 28/09/18

Note £’000 £’000 £’000 £’000

Income: Net capital gains/(losses) 2 50,493 (3,497) Revenue 3 8,655 7,323 Expenses 4 (2,072) (1,751) Interest payable and similar charges 5 (9) (23) Net revenue before taxation 6,574 5,549 Taxation 6 (63) (15) Net revenue after taxation 6,511 5,534 Total return before distributions 57,004 2,037 Distributions 7 (6,511) (5,534) Change in net assets attributable to Shareholders from investment activities 50,493 (3,497)

29/09/18 to 30/09/19 01/10/17 to 28/09/18

£’000 £’000 £’000 £’000

Opening net assets attributable to Shareholders 395,484 309,735 Amounts receivable on issue of Shares 43,103 114,004 Amounts payable on cancellation of Shares (25,148) (24,758)

17,955 89,246 Change in net assets attributable to Shareholders from investment activities (see above) 50,493 (3,497) Closing net assets attributable to Shareholders 463,932 395,484



228



30/09/19 28/09/18

Note £’000 £’000 £’000 £’000

Assets: Fixed assets: Investments 457,665 388,611 Current assets: Debtors 8 6,703 14,618 Cash and bank balances 9 19,602 20,353 Other loan assets 1,376 2,609 Total current assets 26,305 37,580 Total assets 485,346 426,191 Liabilities: Investment liabilities (5,790) (5,964) Creditors: Bank overdrafts 11 (694) (609) Distribution payable (3,389) (3,321) Other creditors 10 (11,541) (20,813) Total creditors (15,624) (24,743) Total liabilities (21,414) (30,707) Net assets attributable to Shareholders 463,932 395,484


229


1. Accounting basis and policies The Fund’s Financial Statements have been prepared on the basis detailed on pages 14 to 17.


30/09/19 28/09/18 £’000 £’000

The net capital gains/(losses) during the year comprise: Brokers commission on futures (66) (70) Currency gains/(losses) 954 (376) Derivative contracts 1,558 (723) Forward currency contracts 2,444 855 Non-derivative securities 45,772 (3,041) Transaction charges (173) (142) Compensation 4 – Net capital gains/(losses) 50,493 (3,497)

3. Revenue 29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

Bank interest 13 20 Interest from Debt Securities 9,298 7,921 Revenue from swaps (656) (618) Total revenue 8,655 7,323

4. Expenses 29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000



159 142 Other expenses Audit fees 10 10 Professional fees 10 16 Publication fees 2 1

22 27 Total expenses 2,072 1,751




230



30/09/19 28/09/18 £’000 £’000


6. Taxation


30/09/19 28/09/18 £’000 £’000

Corporation tax 13 3 Double tax relief (13) (3) Irrecoverable overseas tax 63 15 Total taxation for the year (Note 6 (b)) 63 15



29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

Net revenue before taxation 6,574 5,549 Net revenue for the year multiplied by the standard rate of corporation tax 1,315 1,110 Effects of: Double taxation relief (13) (3) Irrecoverable overseas tax 63 15 Tax deductible interest distributions (1,302) (1,107) Total tax charge for the year 63 15






231


7. Distributions


29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

Interim 3,219 2,563 Final 3,389 3,321 Add: Revenue paid on cancellation of Shares 77 135 Deduct: Revenue received on creation of Shares (174) (485) Net distribution for the year 6,511 5,534 Reconciliation of net revenue after taxation to distributions Net revenue after taxation 6,511 5,534 Net distribution for the year 6,511 5,534


8. Debtors 30/09/19 28/09/18

£’000 £’000 Accrued revenue 2,609 2,319 Amounts receivable for creation of Shares 340 723 Overseas withholding tax recoverable – 29 Sales awaiting settlement 3,753 11,546 Prepaid expenses 1 1 Total debtors 6,703 14,618


£’000 £’000 Cash and bank balances 14,001 17,911 Amount held at futures clearing houses and brokers 5,601 2,442 Total cash and bank balances 19,602 20,353



232


10. Other creditors 30/09/19 28/09/18

£’000 £’000

Amounts payable for cancellation of Shares 143 – Purchases awaiting settlement 11,154 20,631

11,297 20,631 Accrued expenses Manager and Agents AMC fees 173 146

173 146 Depositary and Agents Depositary fees 22 9 Safe custody fees 7 3 Transaction charges 31 13

60 25 Other accrued expenses Audit fees 10 10 Publication fees 1 1


11. Bank overdrafts 30/09/19 28/09/18

£’000 £’000

Amounts overdrawn at futures clearing houses and brokers 694 609 Total bank overdrafts 694 609











233


13. Share Classes


%





Share Class A Income 332,142,621 34,531,896 (20,602,662) – 346,071,855









234



(a) Foreign currency risk (continued)




Australian Dollar 6,071 5,268 Brazilian Real 4,217 71 Canadian Dollar 16,017 10,832 Colombian Peso 524 – Czech Koruna (5,975) 9,624 Danish Krone 525 530 Euro 122,589 75,726Indian Rupee 6,454 5,687Indonesian Rupiah 1,587 6,444 Japanese Yen 77,434 76,852 Malaysian Ringgit 11 (2,088) Mexican Peso 5,346 (8,643)New Russian Ruble 72 – New Taiwan Dollar (4,335) (10,602) New Zealand Dollar – (3,968) Norwegian Krone 12,818 9,657 Polish Zloty 4,310 (56) South African Rand 2,877 (6,765) South Korean Won (11,234) (10,042) Swedish Krona (999) (4,297) Swiss Franc (8,485) (9,468) Thailand Baht 77 – US Dollar 204,155 234,721 Total foreign currency exposure 434,056 379,483 Sterling 29,876 16,001 Total net assets 463,932 395,484

If GBP to foreign currency exchange rates had strengthened/increased or weakened/decreased by 10% as at the balance sheet date, the net asset value of the fund would have decreased or increased by £43,405,000 (2018: £37,948,000). These calculations assume all other variables remain constant.



235





Floating rate Fixed rate Financial assets financial financial not carrying

assets assets interest Total Currency Assets £’000 £’000 £’000 £’000 30/09/19 Australian Dollar 152 5,148 771 6,071 Brazilian Real 72 2,456 1,689 4,217 Canadian Dollar 322 14,332 1,604 16,258 Colombian Peso – – 524 524 Danish Krone – 519 6 525 Euro 4,004 100,763 22,916 127,683 Indian Rupee – – 6,454 6,454 Indonesian Rupiah – – 1,588 1,588 Japanese Yen 892 68,246 8,296 77,434 Malaysian Ringgit 11 – – 11 Mexican Peso – – 5,347 5,347 New Russian Ruble – – 72 72 Norwegian Krone 7 876 11,934 12,817 Polish Zloty – – 4,310 4,310 South African Rand – 1,986 891 2,877 South Korean Won 14 – – 14 Sterling 13,611 21,887 617 36,115 Swedish Krona 2 596 6 604 Swiss Franc – 1,282 28 1,310 Thailand Baht – – 77 77 US Dollar 63,077 176,425 2,235 241,737 Total 82,164 394,516 69,365 546,045 28/09/18 Australian Dollar 128 5,742 109 5,979 Brazilian Real 71 – – 71 Canadian Dollar 8 13,130 101 13,239 Czech Koruna – – 9,624 9,624 Danish Krone 7 516 6 529 Euro 5,766 90,951 6,648 103,365 Indian Rupee – – 5,687 5,687 Indonesian Rupiah – – 6,444 6,444 Japanese Yen 250 55,314 24,127 79,691 Malaysian Ringgit 10 – – 10 Norwegian Krone – 1,223 8,435 9,658 South African Rand 105 – – 105 South Korean Won 15 – – 15 Sterling 21,547 22,299 915 44,761 Swedish Krona 21 635 6 662 Swiss Franc – 1,263 57 1,320 US Dollar 37,796 151,469 57,109 246,374 Total 65,724 342,542 119,268 527,534



236



(b) Interest rate risk profile of financial assets and liabilities (continued)

Financial Floating rate Fixed rate liabilities not

financial financial carrying liabilities liabilities interest Total

Currency Liabilities £’000 £’000 £’000 £’000 30/09/19 Canadian Dollar – – 241 241 Czech Koruna – – 5,975 5,975 Euro 694 – 4,403 5,097 New Taiwan Dollar – – 4,335 4,335 South Korean Won – – 11,248 11,248 Sterling – – 6,239 6,239 Swedish Krona – – 1,603 1,603 Swiss Franc – – 9,795 9,795 US Dollar 38 – 37,542 37,580 Total 732 – 81,381 82,113 28/09/18

Australian Dollar – – 711 711 Canadian Dollar – – 2,407 2,407 Euro 609 – 27,029 27,638 Japanese Yen – – 2,839 2,839 Malaysian Ringgit – – 2,098 2,098 Mexican Peso – – 8,643 8,643 New Taiwan Dollar – – 10,602 10,602 New Zealand Dollar – – 3,968 3,968 Polish Zloty – – 56 56 South African Rand – – 6,870 6,870 South Korean Won – – 10,057 10,057 Sterling – – 28,760 28,760 Swedish Krona – – 4,959 4,959 Swiss Franc – – 10,788 10,788 US Dollar – – 11,654 11,654 Total 609 – 131,441 132,050



237






2019 Barclays – 52 – Bonds BNP Paribas 14 – – Citi 5 41 – Bonds Deutsche Bank 6 – 12 Bonds Goldman Sachs 166 140 – Cash HSBC – 24 – Bonds JPMorgan – 111 – Bonds Morgan Stanley – 2,098 – Cash and Bonds UBS – 246 – Bonds 2018 Barclays – 267 – Bonds BNP Paribas 47 – – – Citi – 420 – Bonds HSBC – 1,212 – Bonds JPMorgan – 710 173 Cash and Bonds Morgan Stanley – 2,436 199 Cash Standard Chartered 209 – 110 Cash State Street – – 20 Cash UBS – – 110 Cash

(d) Leverage



Global Bond 162.82% 361.43% 96.25% 144.18%



238



16. Portfolio transaction costs 29/09/18 to 30/09/19 01/10/17 to 28/09/18 £’000 £’000 £’000 £’000

Analysis of total purchase costs Purchases in the year before transaction costs: Bonds 323,115 380,196

323,115 380,196 Commissions – Derivatives 35 32 Total purchase costs 35 32 Gross purchase total 323,150 380,228 Analysis of total sale costs Gross sales in the year before transaction costs: Bonds 291,595 285,461

291,595 285,461 Commissions – Derivatives (32) (32) Total sale costs (32) (32) Total sales net of transaction costs 291,563 285,429



29/09/18 to 01/10/17 to


Purchases – Commissions Bonds 0.0000 0.0000 Purchases – Taxes Bonds 0.0000 0.0000 Sales – Commissions Bonds 0.0000 0.0000 Sales – Taxes Bonds 0.0000 0.0000

29/09/18 to 01/10/17 to


Commissions 0.0160 0.0181 Taxes 0.0000 0.0000





239





Valuation technique Level 1: The unadjusted quoted price in an active market for identical assets or liabilities 157,963 (1,734) 160,041 (451) Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly 301,078 (4,056) 231,179 (5,513) Level 3: Inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability – – –

459,041 (5,790) 391,220 (5,964)


240




Distribution Distribution Gross paid paid





Distribution Distribution Gross payable paid





241

Omnis Global Emerging Markets Equity Leaders Fund


The Fund aims to achieve a return consisting of both income and capital growth which, after all fees and expenses, exceeds that of the MSCI Emerging Markets TR Index over a five-year rolling period.

Investment Policy

The Fund intends to invest at least 80% in the equity securities of Emerging Markets companies defined as those which are domiciled, incorporated or have a significant exposure to Emerging Markets. The fund will seek to invest in industry-leading companies delivering reliable earning streams. Exposure to established larger companies will be greater than 50% of the fund. Large companies are defined as those with a market cap of $10 billion or more at the time of the Fund’s investment. Companies whose capitalisation no longer meets this definition after investment will continue to be considered large market capitalisation companies.



Derivatives may be used for the purposes of hedging and for efficient portfolio management.

Benchmark


Portfolio Review


In September (the first full month recording attribution), the fund delivered negative returns during and underperformed the index, due to stock selection in the consumer discretionary, energy and materials sectors. However, the lack of exposure to health care companies aided relative performance. At a country level, China and South Korea detracted, while holdings in Taiwan supported performance. The allocation to Taiwan Semiconductor Manufacturing aided returns as the market started pricing in a recovery in memory-chip prices. India’s HDFC Bank was another key contributor. Investors welcomed the meaningful corporate tax cuts announced by the government. However, Hong Kong-based insurer AIA Group fell over the period. Shares in China’s second largest dairy company China Mengniu Dairy also detracted after it announced that it will acquire Bellamy’s, an Australian baby infant formula maker, as it pushes ahead with its goal to expand its presence overseas. The position in African Rainbow Minerals declined as its Platinum Group Metals business continued to disappoint. However, its asset portfolio remains in good shape and has the scope to generate healthy cash flow, which could support an attractive dividend. Sportswear brand manufacturer Li Ning was another notable detractor.


256987 15 Omnis Portfolio Investments pp241-pp257 (Global Emerging Markets Equity Leaders).qxp 29/01/2020 10:40

242


The portfolio is overweight in the consumer and industrials sectors but underweight in the communication services sector. Sector overweights are a result of a bottom-up stock picking strategy, as the portfolio manager employs a benchmark agnostic portfolio construction approach.

Insurer AIA Group should continue to benefit from the structural growth story in the underpenetrated Asian life insurance market. It is expected that its Chinese operations will continue to deliver strong earnings, driven by growth in premium income. The portfolio holds a range of emerging market banks and insurance companies. HDFC Bank has a strong track record, a credible management team and robust growth plans. The portfolio manager prefers Indonesia-based Bank Central Asia for its strong cash management business and focus on retail banking.

Outlook

Emerging markets will be impacted by the US-China trade discussions, and an easing monetary policy by global central banks, particularly the US. Chinese economic growth and the implementing of stimulus measures will also guide asset prices. However, in the short term, investor sentiment, particularly in relation to trade tensions, is likely to have a more significant impact on equities. From a long-term perspective, emerging markets continue to offer numerous opportunities, supported by structural growth drivers such as urbanisation and lifestyle changes. This will drive demand for different goods and services in underpenetrated markets.

Investment Manager FIL Pensions Management 21 October 2019



243


Purchases Sales

Portfolio Name Cost £’000 Portfolio Name Proceeds £’000 AIA 12,588 IShares Core MSCI Bank Central Asia 12,486 Emerging Markets IMI 68,730 Li Ning 10,963 HSBC MSCI Emerging HDFC Bank ADR* 10,660 Markets 21,250 Infosys ADR* 8,303 Amundi MSCI Emerging Lojas Renner 8,300 Markets 18,897 Techtronic Industries 8,264 Amundi MSCI Emerging China Mengniu Dairy 7,995 Markets 16,163 Shenzhou International 7,666 iShares MSCI Emerging MOL 7,498 Markets 13,724 Xtrackers MSCI Emerging Markets 13,695 Samsung Electronics GDR** 13,191 Taiwan Semiconductor Manufacturing ADR* 6,429 China Mobile 2,001 Li Ning 1,361

* American Depositary Receipt. ** Global Depositary Receipt.



244


A Income 30/09/19

(p) Change in net assets per Share Opening net asset value per share 100.00 Return before operating charges* 1.02 Operating charges (1.04) Return after operating charges (0.02) Distributions (0.27) Closing net asset value per share 99.71 * after direct transaction costs of: 0.13 Performance Return after operating charges (0.02%) Other information Closing net asset value (£’000) 229,694 Closing number of shares 230,351,706 Operating charges 0.96% Direct transaction costs 0.12% Prices (p) Highest share price 102.33 Lowest share price 98.79 Share class A Income launched on 24 August 2019 as a price of 100 pence.



245




Date (%) (%) (%) (%)






• The Fund appears as a “6” on the scale. This is because the Fund invests in the shares of companies whose values tend to vary more widely than other asset classes.

Risk Warning








246



Brazil 7.81%

700,983 Itau Unibanco ADR* 4,784 2.08 843,800 Lojas Renner 8,297 3.61 907,300 Petrobras Distribuidora 4,866 2.12

17,947 7.81 China 25.10%

31,824 Alibaba ADR* 4,319 1.88 536,142 Foshan Haitian Flavouring & Food 6,698 2.92

3,804,000 Li Ning 8,840 3.85 6,961,000 Lonking 1,456 0.63 1,196,162 Midea 6,949 3.02

679,900 Shenzhou International 7,179 3.13 131,800 Tencent 4,502 1.96

2,915,000 Weichai Power 3,410 1.48 844,615 Zhejiang Supor 6,887 3.00

2,905,000 Zhongsheng 7,428 3.23 57,668 25.10 Hong Kong 11.79%

1,499,200 AIA 11,484 5.00 2,443,000 China Mengniu Dairy 7,422 3.23 1,449,500 Techtronic Industries 8,177 3.56

27,083 11.79 Hungary 3.15%

945,734 MOL 7,229 3.15 7,229 3.15 India 8.43%

241,506 HDFC Bank ADR* 11,179 4.87 887,719 Infosys ADR* 8,183 3.56

19,362 8.43 Indonesia 5.43%

7,192,600 Bank Central Asia 12,469 5.43 12,469 5.43

Mexico 2.29%

3,464,800 Bolsa Mexicana de Valores 5,272 2.29 5,272 2.29 Peru 2.14%

177,485 Southern Copper 4,913 2.14 4,913 2.14 Russia 4.52%

486,040 Severstal 5,688 2.48 165,345 X5 Retail GDR** 4,692 2.04

10,380 4.52 Singapore 3.30%

1,013,500 BOC Aviation 7,585 3.30 7,585 3.30



247



South Africa 5.31%

688,083 African Rainbow Minerals 5,180 2.26 609,170 Clicks 7,009 3.05

12,189 5.31 South Korea 3.58%

9,942 Samsung Electronics GDR** 8,213 3.58 8,213 3.58 Taiwan 6.32%

385,060 Taiwan Semiconductor Manufacturing ADR* 14,517 6.32 14,517 6.32 Thailand 2.87%

2,425,100 Tisco Financial NVDR*** 6,595 2.87 6,595 2.87

United States 1.80%

84,456 Cognizant Technology Solutions 4,130 1.80 4,130 1.80 Forward Currency Contracts 0.00%

Bought HKD829,947 for USD105,854 Settlement 02/10/2019 – – Bought USD669,814 for HKD5,251,767 Settlement 03/10/2019 – –

- -




* American Depositary Receipt. ** Global Depositary Receipt. *** Non-Voting Depository Receipt.





248


24/08/19 to 30/09/19

Note £’000 £’000

Income: Net capital losses 2 (678) Revenue 3 926 Expenses 4 (232) Net revenue before taxation 694 Taxation 5 (83) Net revenue after taxation 611 Total return before distributions (67) Distributions 6 (611) Change in net assets attributable to Shareholders from investment activities (678)

24/08/19 to 30/09/19 £’000 £’000






249


30/09/19

Note £’000 £’000

Assets: Fixed assets: Investments 215,552 Current assets: Debtors 7 6,712 Cash and bank balances 8 8,784 Total current assets 15,496 Total assets 231,048 Liabilities: Investment liabilities – Creditors: Distribution payable (616) Other creditors 9 (738) Total creditors (1,354) Total liabilities (1,354) Net assets attributable to Shareholders 229,694



250





30/09/19 £’000

The net capital losses during the period comprise: Currency losses (384) Forward currency contracts 23 Non-derivative securities (305) Transaction charges (12) Net capital losses (678)


30/09/19 £’000

Bank interest 6 Offshore funds dividends 8 Overseas dividends 912 Total revenue 926


30/09/19 £’000








251


5. Taxation


30/09/19 £’000




24/08/19 to

30/09/19 £’000

Net revenue before taxation 694 Net revenue for the period multiplied by the standard rate of corporation tax 139 Effects of: Irrecoverable overseas tax 83 Movement in excess management expenses 45 Non taxable overseas dividends (184) Total tax charge for the period 83








252


6. Distributions


24/08/19 to

30/09/19 £’000

Final 616 Deduct: Revenue received on creation of Shares (5) Net distribution for the period 611

Reconciliation of net revenue after taxation to distributions Net revenue after taxation 611 Net distribution for the period 611


7. Debtors 30/09/19

£’000

Accrued revenue 383 Amounts receivable for creation of Shares 1,308 Overseas withholding tax recoverable 32 Sales awaiting settlement 2,087 Inspecie transfer receivable 2,902 Total debtors 6,712


£’000




253



£’000

Purchases awaiting settlement 539 539













11. Share Classes


%








254










30/09/19 Currency £’000

Brazilian Real 13,174 Chinese Yuan 20,534 Hong Kong Dollar 67,571 Hungarian Forint 7,229 Indonesian Rupiah 12,469 Mexican Peso 5,272 New Russian Ruble 133 South African Rand 12,476 Thai Baht 6,595 US Dollar 80,846 Total foreign currency exposure 226,299 Sterling 3,395 Total net assets 229,694 If GBP to foreign currency exchange rates had strengthened/increased or weakened/decreased by 10% as at the balance sheet date, the net asset value of the fund would have decreased or increased by £22,630,000. These calculations assume all other variables remain constant.



As at 30 September 2019, 3.82% of the Fund’s assets were interest bearing .




255



£’000 £’000

Analysis of total purchase costs Purchases in the period before transaction costs: Equities 199,366 Inspecie transfer 194,131

393,497 Commissions – Equities 123 Taxes – Equities 124 Total purchase costs 247 Gross purchase total 393,744 Analysis of total sale costs Gross sales in the period before transaction costs: Equities 25,432 Collective Investment Schemes 152,478

177,910 Commissions – Equities (10) Commissions – Collective Investment Schemes (19) Taxes – Equities (5) Total sale costs (34) Total sales net of transaction costs 177,876





256




Purchases – Commissions Equities 0.0617 Inspecie transfer 0.0000 Purchases – Taxes Equities 0.0622 Inspecie transfer 0.0000 Sales – Commissions Equities 0.0393 Collective Investment Schemes 0.0125 Sales – Taxes Equities 0.0197 Collective Investment Schemes 0.0000

24/08/19 to









215,552 –



257






Share Class A Income Group 1 0.2673 – 0.2673 Group 2 0.1800 0.0873 0.2673 Share class A Income launched on 24 August 2019.



258

Omnis Global Emerging Markets Equity Opportunities Fund


The Fund aims to achieve a return consisting of both income and capital growth which, after all fees and expenses, exceeds the MSCI Emerging Markets TR Index over a five-year rolling period.

Investment Policy

The Fund intends to invest at least 80% in the equity securities of Emerging Markets companies defined as those which are domiciled, incorporated or have a significant exposure to Emerging Markets. The fund will adopt a flexible approach to investment, seeking to invest in companies that are undervalued relative to their economic potential. Exposure to small and medium size companies will be greater than 50% of the fund. Small and medium sized companies are defined as those with a market cap of $10 billion or less at the time of the Fund’s investment. Companies whose capitalisation no longer meets this definition after investment will continue to be considered small and medium market capitalisation companies.




Benchmark


Portfolio Review


The fund’s investment approach is centred on the search for underappreciated change. This guiding principle is rooted in the notion that markets are inherently inefficient when it comes to pricing in change, whether on an industry or company level. We therefore look for companies that are experiencing some form of positive change, but where the market in general has been slow to recognise the long-term impact. Examples of such changes that we can identify at the moment include the trend towards growing financial inclusion in emerging and frontier markets, as many more people have access to financial services and products previously only available in developed markets. In addition, we see unrecognised positive change in some ‘tech enablers’, companies involved in the supply chain for technologies such as electric vehicles or cloud-based internet platforms but that don’t generate headlines or get much attention.

In the short period from the fund’s inception to the end of the reporting period, the largest positive contribution also came from the fund’s largest position: Samsung Electronics. Its share price rallied on an improved outlook for the memory chip market, through better-than-expected demand for smartphones and 5G. Other positive performers included Turkish biscuit maker Ulker Biskuvi, and Orbia Advance, a Mexican producer of PVC pipes for the petrochemical and agriculture industries.


256987 16 Omnis Portfolio Investments pp258-pp275 (Global Emerging Markets Equity Opportunities).qxp 29/01/2020 10:39

259



On the negative side, detractors from the fund’s returns were Chinese online consumer lending company Qudian, while Brazilian payment services provider PagSeguro fell as a result of profit-taking in the market after a strong period of performance for many Brazilian stocks.

The fund’s five largest positions as at the period end include Samsung Electronics. The company is best known as a consumer electronics company, producing televisions and smartphones, but the fund’s investment in Samsung is more based on its position as one of the world’s three largest manufacturers of NAND and DRAM computer memory, as is the fund’s second-largest position in SK Hynix, as we believe the increased pricing power in this consolidated industry has been underappreciated by the market. 3SBio is a leading Chinese pharmaceutical company with a profitable pipeline of drug that is working on a “biosimilar” (a biological medical product that is essentially identical to another drug) for the cancer drug Herceptin. Mediatek is a leader in the field of fabless chip technology, and one that we see as a ‘tech enabler’ that is undergoing positive change as it develops new and more specialised products. Lastly, Guaranty Trust Bank (GT Bank) in Nigeria is a company that we believe is well positioned to benefit from the emerging trend of financial inclusion. GT Bank is an innovator in mobile banking, encouraging small and medium-sized businesses to take credit card payments for the first time.

Outlook

Returns in emerging markets have continued to be driven by short-term geopolitical news. The ongoing trade war between the US and China, the political demonstrations in Hong Kong, and a debt crisis in Argentina provide a backdrop of unease to the narrative surrounding emerging markets. For our part, we endeavour to look through the noise and seek companies which are attractive on a fundamental level as well as being exposed to long-term growth trends that we believe are likely to outlive current events.

The eye-catching negative headlines have drowned out the more mundane – but just as important from an investment standpoint – fact that earnings growth for emerging market companies continues to be strong in many areas. This has left share price valuations looking attractive relative to history and relative to developed markets. We have been able to find pockets of growth among overlooked small and mid-cap companies despite the broad underperformance of these market caps relative to large companies in the index.

Over the coming months, we would like to see the markets return to a focus on company fundamentals. As money flowing into passive funds drives more and more investors into widely held index constituents, this in our view leads to more mis-priced stocks around the periphery of the market that would benefit from a reappraisal of their fortunes. Companies outside the index have become especially overlooked – trading on low share price valuations but delivering good operational performance. There have, however, been recent signs of the market responding to fundamentals (such as Indian shares performing well following a reduction in the corporate tax rate).

All stock markets are volatile, and emerging market can be especially so, but for long-term investors we believe short term fluctuations should be of little concern. The volatility of emerging markets is arguably an effect of the pace and magnitude of change that happens there. So, investors focused on identifying that underappreciated change, we feel confident that there will be plenty of long-term investment opportunities in emerging markets for our active stock-picking strategy.



260



Purchases Sales

Portfolio Name Cost £’000 Portfolio Name Proceeds £’000 SK Hynix 10,303 Samsung Electronics Preference Shares 10,118 MediaTek 7,338 Guaranty Trust Bank 6,898 LG Chem Preference Shares 6,756 Bizlink 5,413 Taiwan Semiconductor Manufacturing 5,222 Chroma ATE 4,929 Sberbank ADR* Preference Shares 4,230 United Bank 4,223 * American Depositary Receipt.

Samsung Electronics 20,566 Taiwan Semiconductor Manufacturing ADR* 17,554 Amundi Msci Emerging Markets 9,909 HSBC Bank 6,789 Sberbank ADR* 4,732 iShares MSCI India 4,575 JP Morgan Structured Products 3,886 Itau Unibanco Preference Shares 3,555 Prosus 1,376 Itau Unibanco 537


261



A Income 30/09/19

(p) Change in net assets per Share Opening net asset value per share 100.00 Return before operating charges* 1.34 Operating charges (1.04) Return after operating charges 0.30 Distributions – Closing net asset value per share 100.30 * after direct transaction costs of: 0.11 Performance Return after operating charges 0.30% Other information Closing net asset value (£’000) 230,739 Closing number of shares 230,058,322 Operating charges 0.96% Direct transaction costs 0.10% Prices (p) Highest share price 102.38 Lowest share price 99.16

Share Class A Income launched on 24 August 2019 at a price of 100 pence.


262





Date (%) (%) (%) (%)







Risk Warning


Share Class A Income 1 2 3 4 5 6 7





263




Collective Investment Schemes 2.98%

7,065,000 Jupiter Emerging & Frontier Income Trust 6,867 2.98 6,867 2.98

Equity 92.01% Argentina 1.20%

302,500 Despegar.com 2,776 1.20 2,776 1.20

Brazil 3.15%

469,398 Itau Unibanco 2,755 1.19 105,411 Pagseguro Digital 3,961 1.72 47,513 Porto Seguro 545 0.24

7,261 3.15

China 14.14%

5,903,000 3SBio 7,931 3.44 62,504 Baidu ADR* 5,212 2.26

22,515,000 Haichang Ocean Park 2,634 1.14 297,193 Hollysys Automation Technologies 3,661 1.58 205,062 JD.com ADR* 4,691 2.03 517,500 Ping An Insurance 4,818 2.09 658,817 Qudian ADR* 3,684 1.60

32,631 14.14

Egypt 1.69%

1,046,176 Commercial International Bank Egypt GDR** 3,910 1.69 3,910 1.69

Georgia 1.95%

335,996 Bank of Georgia 4,489 1.95 4,489 1.95

Hong Kong 4.18%

7,102,000 China Unicom Hong Kong 6,109 2.65 2,822,000 NWS 3,547 1.53

9,656 4.18

India 8.94%

980,419 Biocon 2,509 1.09 149,200 Embassy Office Parks*** 683 0.29 536,154 Fortis Healthcare 828 0.36 919,150 Hindustan Petroleum 3,182 1.38 649,561 Infosys ADR* 5,988 2.59 53,881 InterGlobe Aviation 1,162 0.50

201,878 State Bank of India GDR** 6,283 2.73 20,635 8.94

Indonesia 3.02%

88,065,100 Bumi Serpong Damai 6,973 3.02 6,973 3.02


264




Kenya 0.54%

3,963,100 KCB 1,240 0.54 1,240 0.54

Mexico 8.38%

4,139,888 Corp Inmobiliaria Vesta 5,127 2.22 3,940,049 Fibra Uno Administracion*** 4,673 2.02 1,084,236 Grupo Financiero Banorte 4,726 2.05 3,046,069 Orbia Advance 4,821 2.09

19,347 8.38

Nigeria 3.15%

116,744,219 Guaranty Trust Bank 7,272 3.15 7,272 3.15

Pakistan 1.94%

6,219,209 United Bank 4,471 1.94 4,471 1.94

Philippines 2.10%

367,647 GT Capital 4,835 2.10 4,835 2.10

Russia 6.33%

684,174 Gazprom ADR* 3,831 1.66 319,526 MMC Norilsk Nickel ADR* 6,635 2.88

1,642,055 Sberbank of Russia Preference Shares 4,135 1.79 14,601 6.33

South Africa 2.60%

8,049,091 Ascendis Health 1,745 0.76 34,674 Naspers 4,259 1.84

6,004 2.60

South Korea 11.92%

56,926 LG Chem Preference Shares 6,450 2.80 394,788 Samsung Electronics Preference Shares 10,579 4.58 188,129 SK Hynix 10,466 4.54

27,495 11.92

Taiwan 9.50%

1,226,000 Chroma ATE 4,698 2.04 1,272,000 Hon Hai Precision Industry 2,432 1.05

761,000 MediaTek 7,345 3.18 777,000 Taiwan Semiconductor Manufacturing 5,518 2.39 51,299 Taiwan Semiconductor Manufacturing ADR* 1,934 0.84

21,927 9.50

Turkey 3.59%

631,551 Coca-Cola Icecek 3,057 1.33 1,847,384 Ulker Biskuvi Sanayi 5,217 2.26

8,274 3.59


265



United Arab Emirates 1.44%

7,986,795 Emaar Malls 3,317 1.44 3,317 1.44

United States Of America 2.25%

929,000 Bizlink 5,200 2.25 5,200 2.25

Exchange Traded Funds 2.87%

1,251,401 Amundi Msci Emerging Markets 4,551 1.97 488,479 iShares MSCI India 2,068 0.90

6,619 2.87




* American Depositary Receipt.

** Global Depositary Receipt.

*** Real Estate Investment Trust.





266


24/08/19 to 30/09/19

Note £’000 £’000

Income: Net capital gains 2 651 Revenue 3 255 Expenses 4 (232) Net revenue before taxation 23 Taxation 5 (33) Net expense after taxation (10) Total return before distributions 641 Distributions 6 – Change in net assets attributable to Shareholders from investment activities 641

24/08/19 to 30/09/19 £’000 £’000






267



30/09/19

Note £’000 £’000

Assets: Fixed assets: Investments 225,800 Current assets: Debtors 7 4,766 Cash and bank balances 8 4,001 Total current assets 8,767 Total assets 234,567 Liabilities: Investment liabilities – Creditors: Other creditors 9 (3,828) Total creditors (3,828) Total liabilities (3,828) Net assets attributable to Shareholders 230,739


268



1. Accounting basis and policies The Fund’s Financial Statements have been prepared on the basis detailed on pages 14 to 17.


30/09/19 £’000

The net capital gains during the period comprise: Currency losses (325) Non-derivative securities 988 Transaction charges (12) Net capital gains 651


30/09/19 £’000

Bank interest 1 Overseas dividends 254 Total revenue 255


30/09/19 £’000







269


5. Taxation


30/09/19 £’000




24/08/19 to

30/09/19 £’000

Net revenue before taxation 23 Net revenue for the period multiplied by the standard rate of corporation tax 5 Effects of: Irrecoverable overseas tax 33 Movement in excess management expenses 46 Non taxable overseas dividends (51) Total tax charge for the period 33








270


6. Distributions


24/08/19 to

30/09/19 £’000

Net distribution for the period – Reconciliation of net expense after taxation to distributions Net expense after taxation (10) Revenue deficit 10 Net distribution for the period –


7. Debtors 30/09/19

£’000 Accrued bank interest 1 Accrued revenue 149 Amounts receivable for creation of Shares 1,123 Overseas withholding tax recoverable 1 Sales awaiting settlement 590 Inspecie transfer receivable 2,902 Total debtors 4,766


£’000




271



£’000














11. Share Classes


%








272










30/09/19 Currency £’000

Brazilian Real 3,297 Hong Kong Dollar 25,079 Indian Rupee 6,597 Indonesian Rupiah 6,973 Kenyan Shilling 1,025 Mexican Peso 19,347 Nigerian Naira 7,272 Pakistani Rupee 4,536 Philippine Peso 4,835 South African Rand 6,052 South Korean Won 27,495 Taiwan Dollar 25,225 Turkish Lira 8,274 UAE Dirham 3,317 US Dollar 63,699 Total foreign currency exposure 213,023 Sterling 17,716 Total net assets 230,739

If GBP to foreign currency exchange rates had strengthened/increased or weakened/decreased by 10% as at the balance sheet date, the net asset value of the fund would have decreased or increased by £21,302,000.

These calculations assume all other variables remain constant.







273


14. Portfolio transaction costs 24/08/19 to 30/09/19 £’000 £’000

Analysis of total purchase costs Purchases in the period before transaction costs: Equities 59,927 Collective Investment Schemes 27,399 Inspecie transfer 212,417

299,743 Commissions – Equities 99 Taxes – Equities 45 Total purchase costs 144 Gross purchase total 299,887 Analysis of total sale costs Gross sales in the period before transaction costs: Equities 60,876 Collective Investment Schemes 14,282

75,158 Commissions – Equities (85) Commissions – Collective Investment Schemes (9) Taxes – Equities (1) Total sale costs (95) Total sales net of transaction costs 75,063





274




Purchases – Commissions Equities 0.0364 Collective Investment Schemes 0.0000 Inspecie transfer 0.0000 Purchases – Taxes Equities 0.0165 Collective Investment Schemes 0.0000 Inspecie transfer 0.0000 Sales – Commissions Equities 0.1396 Collective Investment Schemes 0.0630 Sales – Taxes Equities 0.0016 Collective Investment Schemes 0.0000

24/08/19 to




15. Post balance sheet events There are no post balance sheet events which require adjustments at the period end.




225,800 –



275





Share Class A Income Group 1 0.0000 – 0.0000 Group 2 0.0000 – 0.0000

Share class A income launched on 24 August 2019.



Omnis Income and Growth Fund

276



The Fund aims to achieve a return consisting primarily of income and some capital growth which exceeds that of the FTSE All-Share Index TR Index, after all fees and expenses, over a five-year rolling period.

Investment Policy

The Fund aims to invest at least 70% in UK listed securities including companies which are listed but not incorporated in the UK. In addition, the Fund may invest up to 10% in unquoted companies (the “Unlisted Portfolio”).

The Fund may invest in transferable securities, unlisted securities, money market instruments, warrants, units in collective investment schemes (including exchange traded funds and other schemes managed by the ACD or its associates), cash, near cash and deposits as detailed in the Prospectus.

The Fund may make use of derivatives for the purposes of efficient portfolio management.

Benchmark

The performance of the Fund will be measured against the FTSE All-Share TR Index for target return purposes.

Portfolio Review

Over the period the fund returned -28.77% [source: Return after operating charges as per Comparative Table] and the benchmark returned 2.68% [source: Financial Express, bid to bid, net income reinvested]. During the period the fund generated net income of 2.59p per share.

Woodford Investment Management Limited 21 October 2019 (for period from 1 October 2018 to 7 July 2019)

The portfolio delivered a disappointingly negative return during the period under review, in conditions which remained unfavourable for our disciplined, valuation-oriented investment approach.

The portfolio has been biased towards the few areas of the market which continue to offer valuation appeal. This has resulted in a meaningful exposure to domestically-focused businesses, which have been left behind in the late-stage bull market conditions that have prevailed, and therefore represent the most attractively valued stocks in our investment universe. Nevertheless, this positioning proved unhelpful during the period, with continued Brexit uncertainty weighing on the share prices of any business that has a reasonable exposure to the UK, irrespective of their starting valuations.

This explains part of the portfolio’s underperformance during the quarter, with negative contributions from the likes of Provident Financial, NewRiver REIT, Amigo and Babcock International. In most instances, these companies did nothing specific to deserve such a harsh market reception, but this is a consistent feature of valuation-insensitive market conditions such as the ones we confront.

Meanwhile, we also saw a negative contribution from some of the portfolio’s earlier-stage healthcare stocks, including Autolus, Circassia and Mereo Biopharma. Here too, share price weakness was not fundamentally-driven. Indeed, each of these three businesses delivered meaningfully positive operational progress during the period under review, but this was not enough

256987 17 Omnis Portfolio Investments pp276-pp296 (Income and Growth).qxp 29/01/2020 10:39


277

to prevent their share prices from declining in a market environment which remains hostile towards this sort of investment opportunity.

Construction and infrastructure business Kier was also weak during the period. New chief executive, Andrew Davies, joined in April and, as often happens following a change of executive leadership, expectations were reset in a trading update in early June, which represented a c. 20% cut to profit guidance for the current financial year. Later in the month, the company announced the findings of its strategic review, in which it committed to selling non-core divisions, reducing costs and forgoing its dividend for the next two years. Kier is undoubtedly a troubled business, but it is beginning to take appropriate action to address its problems. In our view, its true intrinsic value remains many multiples of its current share price.

More positively, we saw bids for BCA Marketplace and BTG during the period. There are many ways through which under-valuation can ultimately be realised, and corporate activity is one of them. We would expect to see more bids going forward.

Jupiter Asset Management Limited 21 October 2019 (for period from 8 July 2019 to 30 September 2019)

The fund is run with a value based investment philosophy. We screen stock markets for lowly valued securities with strong balance sheets and high levels of cash conversion. We then conduct detailed analysis on each security to understand whether the business is out of favour for temporary reasons or is suffering from more fundamental problems. For example, the fund has a holding in Standard Chartered, an Asian focused trade bank. The shares trade on a very low price to tangible book value due to problems it has faced in the past and the worries over the global economy. We think these worries are encapsulated in the share price.

We have a significant position in WPP (the second largest advertising / data analytics company in the world) which is dealing with changes within its industry. The shares trade on a low valuation because of these worries. We also have significant positions in Aviva (largest UK general insurance and life assurance provider), BT (UK broadband and mobile provider) and Convatec (medical products for wound care, ostomy and continence).

All three of these businesses have new management who are addressing previous poor operational performance with significant changes to the way each business is run. In each case our sense is that the downside is reasonably limited due to the low valuation accorded to the business whereas the upside could be significant if they are run to their full potential.

The fund has very limited investments in the consumer goods and utility sectors where businesses are accorded very high valuations due to their perceived insulation from any problems in the world economy.




278

Outlook

The portfolio has a low valuation compared to the overall valuation of stock markets in the UK and USA. This low level is a deliberate reflection of the process which looks for companies that are out of favour and trade on low valuations. We exclude highly leveraged companies and those that have poor records of generating cash.

Value continues to be very out of favour as an investment style and has reached a low point relative to growth as a style. The extent of this poor relative performance was last seen in the 1990s and 1930s. The poor relative performance of value versus growth over the last 5 years is now one of the worst periods witnessed for value investing in the last one hundred years. This has been caused in part by negative interest rates around the world, worries over the global economy and significant disruption faced by many industries (retail, energy and automotive to name a few). In previous periods of such sustained under performance from value there has been a significant reversal over the next five years. There is clearly no promise that history will repeat itself.

Global stock markets are currently very worried about the world economy, negative interest rates and the relationship between China and USA given their importance in the global economy. The impact of Brexit on the UK and Irish economy is another worry. Our process does not attempt to forecast world economies as the evidence shows that the valuation is the primary determinant of investment returns.

The portfolio has a spread of investments with low valuations in businesses with strong market positions but are out of favour due to poor operational performance or worries over the future. This process has produced strong returns over long periods of time but comes with the caveat that it does not outperform the index each year.

Jupiter Asset Management Limited 21 October 2019




279


Purchases Sales

Portfolio Name Cost £’000 Portfolio Name Proceeds £’000 British American Tobacco 19,249

Legal & General 14,774 Burford Capital 13,100 GlaxoSmithKline 11,749 BP 11,535 BT 11,240 The Royal Bank of Scotland 10,980 AVIVA 10,751 Standard Chartered 10,231 WPP 9,695

British American Tobacco 33,966 Burford Capital 24,905 Legal & General 20,086 Imperial Tobacco 15,658 Countryside Properties 15,643 Taylor Wimpey 11,536 Barratt Developments 11,447 Lloyds Banking 10,874 BTG 10,218 Purplebricks 6,917



280


A Income

30/09/19 28/09/18 30/09/17 (p) (p) (p)

Change in net assets per Share Opening net asset value per share 96.37 104.87 103.65 Return before operating charges* (26.98) (5.65) 4.57 Operating charges (0.75) (1.03) (1.08) Return after operating charges (27.73) (6.68) 3.49 Distributions (2.59) (1.82) (2.27) Closing net asset value per share 66.05 96.37 104.87 * after direct transaction costs of: 0.35 0.32 0.45 Performance Return after operating charges (28.77%) (6.37%) 3.37% Other information Closing net asset value (£’000) 304,652 350,394 258,012 Closing number of shares 461,233,470 363,595,380 246,036,553 Operating charges 0.93% 1.00% 1.03% Direct transaction costs 0.43% 0.31% 0.43% Prices (p) Highest share price 96.80 109.73 110.98 Lowest share price 66.95 94.20 96.95



281

Comparative Table (continued) As at 30 September 2019

A Accumulation

30/09/19 28/09/18 30/09/17 (p) (p) (p)

Change in net assets per Share Opening net asset value per share 101.52 108.44 104.93 Return before operating charges* (28.58) (5.85) 4.59 Operating charges (0.81) (1.07) (1.08) Return after operating charges (29.39) (6.92) 3.51 Distributions (2.74) (1.90) (2.30) Retained distributions on accumulation shares 2.74 1.90 2.30 Closing net asset value per share 72.13 101.52 108.44 * after direct transaction costs of: 0.38 0.33 0.46 Performance Return after operating charges (28.95%) (6.38%) 3.35% Other information Closing net asset value (£’000) 8,990 16,283 22,027 Closing number of shares 12,464,211 16,035,129 20,312,167 Operating charges 0.93% 1.00% 1.02% Direct transaction costs 0.43% 0.31% 0.43% Prices (p) Highest share price 101.99 113.46 113.39 Lowest share price 71.40 97.98 98.13



282

Operating Charges Total


Date (%) (%) (%) (%)

30/09/19 Share Class A Income 0.80 0.13 0.00 0.97 Share Class A Accumulation 0.80 0.13 0.00 0.97

28/09/18 Share Class A Income 0.90 0.10 0.00 1.00 Share Class A Accumulation 0.90 0.10 0.00 1.00







• The Fund is expected to invest up to 10% of its assets in securities that are not readily tradeable (unlisted securities), which are fair valued by the ACD and may be less liquid than listed securities.

Risk Warning









283


Aerospace & Defense 3.99% (2.06%^)

1,400,000 Babcock International 7,812 2.49 2,996,998 Cobham 4,701 1.50

12,513 3.99

Automobiles & Parts 3.29% (0.00%)

150,000 Harley-Davidson 4,377 1.40 43,000 Volkswagen Preference Shares 5,939 1.89

10,316 3.29

Banks 7.18% (0.99%)

4,700,000 Barclays 7,069 2.25 2,750,000 Royal Bank of Scotland 5,709 1.82 1,425,000 Standard Chartered 9,750 3.11

22,528 7.18

Chemicals 0.00% (0.26%)

Construction & Materials 3.00% (4.77%)

2,005,000 Eurocell 3,970 1.27 1,908,365 Forterra 5,429 1.73

9,399 3.00

Electronic & Electrical Equipment 0.00% (1.21%)

Financial Services 11.78% (20.05%)

3,803,768 Allied Minds 2,001 0.64 3,443,482 Amigo 2,307 0.74 2,838,798 Arix Bioscience 3,123 1.00 6,611,678 IP 4,212 1.34 2,386,302 Morses Club 2,935 0.94 5,682,311 Non-Standard Finance 2,273 0.72 1,866,953 Provident Financial 7,598 2.42 2,325,000 Standard Life Aberdeen 6,645 2.12

310,000 Western Union 5,831 1.86 36,925 11.78

Fixed Line Telecommunications 2.42% (0.00%)

4,250,000 BT 7,590 2.42 7,590 2.42

General Industrials 2.25% (0.34%)

1,871,842 RM2 International~ 0 0.00 450,000 Smiths 7,058 2.25

7,058 2.25




284



General Retailers 5.18% (0.74%)

290,000 H&R Block 5,559 1.77 3,800,000 Kingfisher 7,858 2.51 4,173,197 Topps Tiles 2,838 0.90

16,255 5.18

Health Care Equipment & Services 4.50% (1.43%)

4,200,000 ConvaTec 7,358 2.35 7,999,614 NetScientific 400 0.13 2,129,565 Rutherford Health* 3,748 1.19 2,488,274 Sensyne Health 2,613 0.83

14,119 4.50

Household Goods & Home Construction 3.16% (15.31%)

1,300,000 Countryside Properties 4,368 1.39 1,200,000 Crest Nicholson 4,548 1.45

40,661,007 Eve Sleep 1,016 0.32 9,932 3.16

Industrial Engineering 0.35% (0.23%)

16,778,067 Xeros Technology 1,091 0.35 1,091 0.35

Industrial Transportation 1.30% (2.64%)

8,393,830 Eddie Stobart Logistics 2,829 0.90 3,066,262 GYG 1,257 0.40

4,086 1.30

Life Insurance 3.25% (1.37%)

2,550,000 Aviva 10,182 3.25 10,182 3.25

Media 7.59% (1.82%)

4,000,000 ITV 5,036 1.61 1,000,000 Pearson 7,380 2.35

20,000 Wolters Kluwer 1,182 0.38 1,000,000 WPP 10,180 3.25

23,778 7.59

Mining 1.52% (0.00%)

255,000 Anglo American 4,772 1.52 4,772 1.52

Mobile Telecommunications 3.05% (0.00%)

5,900,000 Vodafone 9,558 3.05 9,558 3.05



285


Non-Equity Investment Instrument 0.00% (0.40%)

Oil & Gas Producers 5.13% (0.00%)

2,100,000 BP 10,832 3.45 220,000 Royal Dutch Shell 5,271 1.68

16,103 5.13

Personal Goods 1.87% (0.00%)

180,000 Pandora 5,876 1.87 5,876 1.87

Pharmaceuticals & Biotechnology 11.52% (11.92%)

2,317,198 4d pharma 2,317 0.74 705,356 Autolus Therapeutics 7,103 2.26

16,909,375 Circassia Pharmaceuticals 2,824 0.90 1,237,613 Evofem Biosciences 5,062 1.61

710,000 GlaxoSmithKline 12,387 3.95 9,238,696 Hvivo 1,432 0.46 2,844,406 Mereo Biopharma 1,678 0.54

400,000 ReNeuron 980 0.31 2,975,358 Synairgen 253 0.08

47,401,230 Tissue Regenix 1,469 0.47 4,614,618 Verseon 415 0.13 2,178,427 Verseon* 207 0.07

36,127 11.52

Real Estate Investment & Services 0.00% (2.89%)

Real Estate Investment Trusts 0.00% (2.26%)

Support Services 4.71% (7.15%^)

3,500,000 BCA Marketplace 8,246 2.63 4,500,000 Capita 6,518 2.08 2,149,819 Utilitywise~ 0 0.00

14,764 4.71

Tobacco 2.39% (11.96%)

410,000 Imperial Tobacco 7,496 2.39 7,496 2.39

Travel & Leisure 0.00% (1.92%)

Unquoted 6.66% (9.20%)

2,224,347 Atom Bank [Price basis A] 2,725 0.87 4,013 BenevolentAI [Price basis B] 1,583 0.50

425,000 Cambridge Innovation Capital [Price basis D] 399 0.13 528,164 Carrick Therapeutics [Price basis C] 754 0.24 58,275 Cell Medica ‘C’ [Price basis C] 129 0.04

1,044,294 Drayson [Price basis A] 8 0.00 55,401 Econic Technologies Shares ‘B Preference’ [Price basis C] 299 0.10 66,667 Econic Technologies Shares ‘C Preference’ [Price basis C] 373 0.12




286


Unquoted 6.66% (9.20%) (continued)

970,253 Federated Wireless ‘B Preference’ [Price basis B] 1,094 0.35 82,814,570 Lignia Wood ‘Conv Preference’ [Price basis A] 1,988 0.63

464,468 Hawkeye [Price basis C] 1,018 0.32 7,163 Kind Consumer [Price basis C] 1,431 0.46 5,671 Kind Consumer ‘F Preference’ [Price basis C] 1,291 0.41 5,287 Metalysis ‘G Preference’ [Price basis D] 0 0.00

60,533 Novabiotics [Price basis D] 0 0.00 47,311 Oxford Nanopore [Price basis A] 2,448 0.78

6,428,147 Oxford Pharmascience [Price basis D] 0 0.00 36,588 Ratesetter (Retail Money Market) [Price basis A] 1,571 0.50 54,260 Seedrs [Price basis D] 1,397 0.45

3,126,575 Sphere Medical [Price basis C] 0 0.00 375,000 Sphere Medical ‘B Preference’ [Price basis C] 0 0.00

35,435,861 Sphere Medical ‘Conv Preference’ [Price basis C] 0 0.00 750,000 Sphere Medical ‘Conv Preference Ordinary Shares’ [Price basis C] 0 0.00 79,239 Ultrahaptics [Price basis C] 642 0.20 75,681 Ultrahaptics ‘C Preference’ [Price basis A] 750 0.24

261,780 Viamet Pharmaceuticals ‘E Preference’ [Price basis D] 110 0.03 20 Wath [Price basis D] 0 0.00

195,122 Wath ‘Conv Preference’ [Price basis D] 0 0.00 107,775 Yoyo Wallet ‘B1 Preference’ [Price basis A] 536 0.17 62,412 Yoyo Wallet ‘B2 Preference’ [Price basis A] 367 0.12

20,913 6.66


~ Suspended ^ Since the previous report the classification headings have been updated by data providers. Comparative figures have been updated where appropriate. * Fair valued by ACD The investments have been valued in accordance with note 1(h) of the Accounting Policies and Financial Instruments. All investments are ordinary shares unless otherwise stated and admitted to official stock exchange listings. Comparative figures shown above in brackets relate to 28 September 2018.

The basis used to defined the Fair Value of the Unquoted Assets held at the year-end was as follows:

Price basis A: the price of recent transactions; Price basis B: a milestone approach; Price basis C: probability weighted expected returns; Price basis C: the financial performance of the company.

Fair Value is defined consistently with the definition contained in International Financial Reporting Standard 13: Fair Value Measurement; which states that Fair Value is “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date” (“Fair Value”). In estimating Fair Value, it is assumed that the underlying business activities of the Investments to be ongoing.


Total sales net of transaction costs for the year: £276,137,000 [2018: £167,729,000] (See note 15).




287

29/09/18 to 30/09/19 01/10/17 to 28/09/18

Note £’000 £’000 £’000 £’000

Income: Net capital losses 2 (128,037) (29,321) Revenue 3 14,512 9,458 Expenses 4 (3,312) (3,353) Interest payable and similar charges 5 (3) (3) Net revenue before taxation 11,197 6,102 Taxation 6 (76) (13) Net revenue after taxation 11,121 6,089 Total return before distributions (116,916) (23,232) Distributions 7 (11,121) (6,089) Change in net assets attributable to Shareholders from investment activities (128,037) (29,321)

29/09/18 to 30/09/19 01/10/17 to 28/09/18

£’000 £’000 £’000 £’000

Opening net assets attributable to Shareholders 366,679 280,039 Amounts receivable on issue of Shares 88,578 142,572 Amounts payable on cancellation of Shares (13,949) (26,930)

74,629 115,642 Change in net assets attributable to Shareholders from investment activities (see above) (128,037) (29,321) Retained distributions on accumulation Shares 371 319 Closing net assets attributable to Shareholders 313,642 366,679





288

30/09/19 28/09/18

Note £’000 £’000 £’000 £’000

Assets: Fixed assets: Investments 301,381 370,055 Current assets: Debtors 8 3,589 1,682 Cash and bank balances 9 17,902 593 Total current assets 21,491 2,275 Total assets 322,872 372,330 Liabilities: Investment liabilities – – Creditors: Distribution payable (7,298) (4,578) Other creditors 10 (1,932) (1,073) Total creditors (9,230) (5,651) Total liabilities (9,230) (5,651) Net assets attributable to Shareholders 313,642 366,679




289




2. Net capital losses 29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

The net capital losses during the year comprise: Currency gains/(losses) 56 (11) Forward currency contracts (3) – Non-derivative securities (128,077) (29,296) Transaction charges (13) (14) Net capital losses (128,037) (29,321)

3. Revenue 29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

Bank interest 5 4 Offshore funds dividends 45 90 Overseas dividends 1,115 304 UK dividends 12,820 8,429 UK property income dividends 527 631 Total revenue 14,512 9,458

4. Expenses 29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000



114 112 Other expenses Audit fees 19 19 Professional fees* 287 191 Publication fees 5 4

311 214 Total expenses 3,312 3,353


* Professional fees include amounts paid for the independent valuation of unquoted assets.



290



30/09/19 28/09/18 £’000 £’000


6. Taxation


30/09/19 28/09/18 £’000 £’000




29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

Net revenue before taxation 11,197 6,102 Net revenue for the year multiplied by the standard rate of corporation tax 2,239 1,220 Effects of: Irrecoverable overseas tax 76 13 Movement in excess management expenses 558 544 Non taxable overseas dividends (233) – Non taxable UK dividends (2,564) – Revenue not subject to corporation tax – (1,764) Total tax charge for the year 76 13





At the year end, after offset against revenue taxable on receipt, there is a potential deferred tax asset of £1,516,139 (2018: £958,503) in relation to surplus management expenses. It is unlikely that the Fund will generate sufficient taxable profits in the future to utilise this amount and therefore no deferred tax asset has been recognised in the year.



291


7. Distributions


29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

Interim 4,341 1,843 Final 7,508 4,790 Add: Revenue paid on cancellation of Shares 101 156 Deduct: Revenue received on creation of Shares (829) (700) Net distribution for the year 11,121 6,089

Reconciliation of net revenue after taxation to distributions Net revenue after taxation 11,121 6,089 Net distribution for the year 11,121 6,089


8. Debtors 30/09/19 28/09/18

£’000 £’000

Accrued bank interest 1 – Accrued revenue 598 1,016 Amounts receivable for creation of Shares 2,155 662 Income tax recoverable – 3 Overseas withholding tax recoverable 21 – Sales awaiting settlement 814 – Prepaid expenses – 1 Total debtors 3,589 1,682


£’000 £’000

Cash and bank balances 17,902 593 Total cash and bank balances 17,902 593



292


10. Other creditors 30/09/19 28/09/18

£’000 £’000

Amounts payable for cancellation of Shares 53 1 Purchases awaiting settlement 1,503 719

1,556 720 Accrued expenses Manager and Agents AMC fees 209 277

209 277 Depositary and Agents Depositary fees 15 9 Safe custody fees 3 1 Transaction charges 2 1

20 11 Other accrued expenses Audit fees 19 19 Professional fees 127 45 Publication fees 1 1












293


12. Share Classes


%

Share Class A Income 0.80 Share Class A Accumulation 0.80




Share Class A Income 363,595,380 110,299,044 (12,660,954) – 461,233,470 Share Class A Accumulation 16,035,129 1,025,673 (4,596,591) – 12,464,211










Danish Krone 5,895 – Euro 7,122 – US Dollar 30,987 – Total foreign currency exposure 44,004 – Sterling 269,638 – Total net assets 313,642 –




294








£’000 £’000 £’000 £’000

Analysis of total purchase costs Purchases in the year before transaction costs: Equities 334,170 281,165 Collective Investment Schemes – 3,330

334,170 284,496 Commissions – Equities 115 125 Taxes – Equities 1,254 829 Total purchase costs 1,369 954 Gross purchase total 335,539 285,450 Analysis of total sale costs Gross sales in the year before transaction costs: Equities 271,863 167,810 Collective Investment Schemes 4,400 –

276,263 167,810 Commissions – Equities (122) (81) Commissions – Collective Investment Schemes (4) – Total sale costs (126) (81) Total sales net of transaction costs 276,137 167,729




295




29/09/18 to 01/10/17 to



29/09/18 to 01/10/17 to




16. Post balance sheet events There are no post balance sheet events which require adjustments at the year end.



Valuation technique Level 1: The unadjusted quoted price in an active market for identical assets or liabilities 276,513 – 336,302 – Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly – – – – Level 3: Inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability 24,868 – 33,753 –

301,381 – 370,055 –

The level 3 holdings are Unquoted Investments detailed in the Portfolio Statement prices were not readily available through published sources, and as such required to be manually calculated or had to be sourced from a third party. The valuation techniques and the ACD’s policy is disclosed in note 1(h).



296






Share Class A Accumulation Group 1 1.0554 – 1.0554 0.5767 Group 2 0.5218 0.5336 1.0554 0.5767









297

Omnis Japanese Equity Fund


The Fund aims to achieve a return consisting of both income and capital growth which, after all fees and expenses, exceeds that of the FTSE World Japan TR index over a five-year rolling period.

Investment Policy

The Fund intends to invest at least 80% in the equity securities of Japanese companies, defined as those which are domiciled, incorporated or have a significant exposure to Japan. The Fund may also invest in other transferable securities (for example, equity securities of other international companies), units in collective investment schemes (including exchange traded funds and schemes managed and operated by the ACD or its associates), money market instruments, warrants, cash, near cash and deposits as detailed in the Prospectus.



Benchmark

The performance of the Fund will be measured against the FTSE World Japan TR Index for target return purposes.

Portfolio Review

Over the period the fund returned -4.98% [source: Return after operating charges as per Comparative Table] and the benchmark returned -0.05% [source: Financial Express, bid to bid, net income reinvested].

The stock market fell sharply in the final quarter of 2018, reflecting the deterioration in market sentiment globally. Although there has been some recovery in 2019, the FT Japan Index delivered a negative total return of -9.8% for the last twelve months in local currency terms. Currency markets were extraordinarily volatile in late December and early January but, for the full 12 months, there was a significant net strengthening of the yen, as a result of which the total return for the market was improved in sterling terms.

Throughout the period, market sentiment has been heavily influenced by trade friction and global macro conditions. As a result investors have tended to focus on a relatively narrow range of stocks while others have remained consistently out of favour, even if they appear significantly undervalued. Within Japan there has also been a strong focus on the increase in consumption tax on 1st October and on the likely direction of monetary policy. These factors have often obscured the gradual, but persistent, improvements in the domestic economy.

The performance reflected the negative impact from stock selection. Performance was also hampered by the overall market environment which tended to favour stable growth stocks, while the portfolio typically has a modest bias towards value style stocks as a result of our fundamental research.

The most significant negative contribution came from T&D Holdings, a major life insurance company, which underperformed for most of the period in line with financial stocks generally. JXTG, an oil refiner and distributor, also underperformed. Although we have a positive long-term view of restructuring within this industry, petrochemical margins have remained stubbornly low. Some of these negatives were offset by a steady outperformance from Bandai Namco Holdings, whose group companies cover many entertainment areas from toys to video games.


256987 18 Omnis Portfolio Investments pp297-pp316 (Japanese Equity).qxp 29/01/2020 10:38

298



With recent economic data continuing to show a steady domestic economy, we believe that valuations already discount a recessionary scenario and should provide solid support for the market going forward. Our research continues to generate opportunities for investment in areas benefiting from the gradual recovery in Japan’s domestic economy and increases in capital expenditure. This encouraged us to start a holding in Nomura Research Institute, an IT consultant, which should benefit from higher spending on networks and integration. At the end of 2018 an opportunity also arose to purchase Takeda, a major pharmaceutical maker, which had been weak throughout last year ahead of the acquisition of UK-listed Shire. Towards the end of the period a new position was added in Asahi Group, a major beer producer. The company is gradually reallocating capital from the mature domestic beer market to faster growth areas overseas, which we believe will generate long-term value for shareholders. Our emphasis throughout is on sustainable mid- to long-term earnings, focusing on company-specific factors and valuation.

These new positions were funded from the sales of several positions where our level of conviction on future growth has been reduced. These included Dowa Holdings, a metal refiner and recycling specialist where we now have lower expectations for some of their newer businesses. Yamada Denki, a nationwide electronics retailer, was also sold. We also reflected more clearly our preferences within the banking sector by selling out of Mitsubishi UFJ Financial and increasing the weighting in Sumitomo Mitsui Financial Group.

Outlook

In the short-term, investors and the central bank will be examining economic data in the wake of the consumption tax increase on 1 October. The government is also likely to start discussion on a supplementary budget for next year, in addition to the current targeted fiscal stimulus, which is aimed at mitigating the fiscal drag from the tax rise. The Bank of Japan has released its latest survey of corporate sentiment which, although weaker than the previous quarter, showed a smaller deterioration than expected in the outlook. In some specific sectors, particularly retail, the negative impact on corporate sentiment from the consumption tax increase is much smaller than the previous tax rise in 2014.

Overall, the Tankan data is consistent with no immediate change in monetary policy but market expectations are still growing for interest rates to be cut further into negative territory later in the year. If, in the process, the Bank of Japan can successfully steepen the yield curve, the implied coordination of both fiscal and monetary policy could be taken positively. We should, however, remain slightly wary of the impact on the financial sector, unless banks are able to generate new revenue sources such as account maintenance fees.

Although the current profits progress for Japanese companies appears sluggish, we believe that most of this is already discounted in stock prices and the underlying economic fundamentals continue to improve gradually, within a stable policy environment. The scope remains for a profit recovery in the second half of the fiscal year and even the current level of profits provides attractive valuation multiples for the market. We continue to base our positive long-term assessment on improvements in governance driving both structurally higher returns on equity and increasing pay-outs to shareholders. The recent evidence of improved shareholder returns, despite the cyclical slowdown in earnings, provides some encouragement, as do the anecdotal examples of unwinding of cross-shareholding.


299


One central issue for relative performance is whether the market swings back to ‘value’ shares, those on below-average valuations. The portfolio holdings are concentrated in this areas, while being underweight stocks selling on traditional ‘growth’ measures. This is illustrated both in the largest overweights relative to the index (holdings like Sankyu, Sumitomo Mitsui Financial Group, Nippon Telegraph and Telephone Corporation, and Disco Corporation) and in the corresponding underweights (eg Sony, Softbank, Keyence and Honda). The goal is to pick the stocks that we feel offer future growth at a price well below our vison of the stocks’ fair value, and as before we look to our analysts in Tokyo as the main insight into these opportunities.

Investment Manager Schroder Investment Management Limited 21 October 2019



300


Purchases Sales

Portfolio Name Cost £’000 Portfolio Name Proceeds £’000 Toyota Motor 15,257 SoftBank 19,600 Sumitomo Mitsui Financial 13,141 Shiseido 14,028 Mitsui 9,051 Kakaku.com 12,351 Sankyu 8,803 Hoya 11,988 Nippon Telegraph & Telephone 8,789 SBI 11,742 KDDI 8,716 Nidec 11,153 TDK 8,267 Astellas Pharma 9,984 Takeda Pharmaceutical 8,266 Advantest 9,515 Mitsubishi UFJ Financial 7,755 Kao 8,968 T&D 7,295 Pigeon 8,660



301



A Income 30/09/19

(p) Change in net assets per Share Opening net asset value per share 100.00 Return before operating charges* (4.32) Operating charges (0.66) Return after operating charges (4.98)

Distributions (1.68) Closing net asset value per share 93.34

* after direct transaction costs of: 0.05

Performance Return after operating charges (4.98%)

Other information Closing net asset value (£’000) 348,397 Closing number of shares 373,247,628 Operating charges 0.73% Direct transaction costs 0.05%

Prices (p) Highest share price 100.57 Lowest share price 84.80

Share Class A Income launched on 29 September 2018 at a price of 100 pence.


302





Date (%) (%) (%) (%) 30/09/19 Share Class A Income 0.66 0.06 0.01 0.73 The Operating Charge is the ratio of the Fund’s total disclosable costs (excluding overdraft interest) to the average net assets of the Fund.





Risk Warning







303





255,300 Bridgestone 8,011 2.30 144,700 Koito Manufacturing 5,715 1.64 291,200 NGK Spark Plug 4,493 1.29 64,000 Toyota Industries 2,970 0.85

308,000 Toyota Motor 16,663 4.79 190,600 Yamaha Motor 2,796 0.80

40,648 11.67

Banks 4.00%

148,100 Fukuoka 2,262 0.65 420,600 Sumitomo Mitsui Financial 11,656 3.35

13,918 4.00

Beverages 1.17%

101,400 Asahi 4,067 1.17 4,067 1.17

Chemicals 4.67%

483,400 Daicel 3,310 0.95 90,200 JSP 1,204 0.35

140,300 JSR 1,819 0.52 61,200 Kureha 2,941 0.84

684,400 Mitsubishi Chemical 3,956 1.14 156,000 Nippon Soda 3,049 0.87

16,279 4.67


145,000 Aica Kogyo 3,451 0.99 309,900 Haseko 2,923 0.84 221,200 Nichias 3,174 0.91 101,600 Nippon Densetsu Kogyo 1,701 0.49 178,000 Sanki 1,707 0.49

3,700 SK Kaken 1,210 0.35 14,166 4.07


67,300 Enplas 1,764 0.50 255,900 Hitachi 7,728 2.22 155,500 Ibiden 2,532 0.73 191,700 Murata Manufacturing 7,463 2.14 45,300 Nidec 4,937 1.42 97,500 TDK 7,050 2.02

31,474 9.03


304





227,300 Hitachi Capital 3,744 1.07 629,100 Nomura 2,160 0.62 430,200 Orix 5,199 1.49 354,800 Tokai Tokyo 789 0.23

11,892 3.41

Fixed Line Telecommunications 2.76%

248,500 Nippon Telegraph & Telephone 9,619 2.76 9,619 2.76


148,500 Fuji Oil 3,484 1.00 3,484 1.00

General Industrials 2.53%

175,600 IHI 3,092 0.89 341,400 Itochu 5,714 1.64

8,806 2.53


206,600 H2O Retailing 1,829 0.53 96,300 Izumi 3,055 0.88

324,800 Pan Pacific International 4,397 1.26 143,200 Seven & I 4,438 1.27

13,719 3.94

Healthcare Equipment & Services 0.70%

71,200 Ship Healthcare 2,454 0.70 2,454 0.70

Household Goods & Home Construction 3.12%

214,600 Daiwa House Industry 5,635 1.62 417,000 Sekisui Chemical 5,235 1.50

10,870 3.12


46,300 Disco 7,106 2.04 414,900 Isuzu Motors 3,703 1.06 297,600 JGC 3,146 0.90 92,500 Nabtesco 2,316 0.67

160,100 Shimadzu 3,272 0.94 18,900 SMC 6,530 1.87 77,800 Trusco Nakayama 1,470 0.42 65,500 Tsubakimoto Chain 1,699 0.49

29,242 8.39


193,400 Hitachi Transport 4,582 1.32 197,700 Sankyu 8,298 2.38

12,880 3.70


305




Leisure Goods 1.30%

89,800 Bandai Namco 4,524 1.30 4,524 1.30

Life Insurance 2.73%

616,600 Japan Post 4,597 1.32 571,800 T&D 4,910 1.41

9,507 2.73

Mobile Telecommunications 2.12%

349,600 KDDI 7,399 2.12 7,399 2.12

Non-life Insurance 2.25%

180,900 Tokio Marine 7,840 2.25 7,840 2.25


1,376,500 JXTG 5,084 1.46 5,084 1.46

Personal Goods 0.68%

60,200 Paltac 2,382 0.68 2,382 0.68


214,800 Mitsubishi Tanabe Pharma 1,910 0.55 120,900 Otsuka Holdings 3,647 1.05 406,400 Santen Pharmaceutical 5,715 1.64 268,800 Takeda Pharmaceutical 7,441 2.13

18,713 5.37

Real Estate Investment & Services 1.86%

264,800 Mitsui Fudosan 5,320 1.52 67,400 Nomura Real Estate 1,177 0.34

6,497 1.86


298,200 Nomura Research Institute 4,812 1.38 137,300 Otsuka 4,438 1.27 88,400 SRA 1,583 0.46

10,833 3.11


66,600 Glory 1,510 0.43 593,800 Mitsui 7,874 2.26 235,500 Recruit 5,802 1.67

15,186 4.36


138,500 Fujifilm 4,917 1.41 4,917 1.41


306



Tobacco 1.68%

330,000 Japan Tobacco 5,858 1.68 5,858 1.68


29,400 Central Japan Railway 4,894 1.41 92,700 East Japan Railway 7,166 2.06

201,600 Japan Airlines 4,854 1.39 16,914 4.86


The investments have been valued in accordance with note 1(h) of the Notes to the Accounting Policies and Financial Instruments.


Gross purchases for the year: £376,132,000 (See note 15). In addition, transfers totalling £259,295,000 were made via inspecie into the portfolio during the year.




307


29/09/18 to 30/09/19

Note £’000 £’000

Income: Net capital losses 2 (18,272) Revenue 3 9,176 Expenses 4 (2,237) Interest payable and similar charges 5 (12) Net revenue before taxation 6,927 Taxation 6 (895) Net revenue after taxation 6,032 Total return before distributions (12,240) Distributions 7 (6,032) Change in net assets attributable to Shareholders from investment activities (18,272)

29/09/18 to 30/09/19 £’000 £’000






308


30/09/19

Note £’000 £’000

Assets: Fixed assets: Investments 339,172 Current assets: Debtors 8 4,166 Cash and bank balances 9 9,114 Total current assets 13,280 Total assets 352,452 Liabilities: Investment liabilities – Creditors: Distribution payable (3,336) Other creditors 10 (719) Total creditors (4,055) Total liabilities (4,055) Net assets attributable to Shareholders 348,397



309






30/09/19 £’000

The net capital losses during the year comprise: Currency losses (164) Non-derivative securities (18,072) Transaction charges (36) Net capital losses (18,272)


30/09/19 £’000

Bank interest 4 Overseas dividends 9,172 Total revenue 9,176

4. Expenses 29/09/18 to 30/09/19

£’000



150 Other expenses Audit fees 10 Professional fees 7 Publication fees 3




310




30/09/19 £’000


6. Taxation

(a) Analysis of the tax charge in the year 29/09/18 to 30/09/19

£’000




29/09/18 to

30/09/19 £’000

Net revenue before taxation 6,927 Net revenue for the year multiplied by the standard rate of corporation tax 1,385 Effects of: Irrecoverable overseas tax 895 Movement in excess management expenses 449 Non taxable overseas dividends (1,834) Total tax charge for the year 895





At the year end, after offset against revenue taxable on receipt, there is a potential deferred tax asset of £448,941 in relation to surplus management expenses. It is unlikely that the Fund will generate sufficient taxable profits in the future to utilise this amount and therefore no deferred tax asset has been recognised in the year.


311



7. Distributions


29/09/18 to

30/09/19 £’000

Interim 2,720 Final 3,336 Deduct: Revenue received on creation of Shares (24) Net distribution for the year 6,032 Reconciliation of net revenue after taxation to distributions Net revenue after taxation 6,032 Net distribution for the year 6,032


8. Debtors 30/09/19

£’000

Accrued revenue 3,677 Amounts receivable for creation of Shares 178 Sales awaiting settlement 310 Prepaid expenses 1 Total debtors 4,166


£’000



312




£’000

Amounts payable for cancellation of Shares 77 Purchases awaiting settlement 410

487 Accrued expenses Manager and Agents AMC fees 189













313



12. Share Classes


%








14 . Derivatives and other financial instruments






30/09/19 Currency £’000

Japanese Yen 345,026 US Dollar 1 Total foreign currency exposure 345,027

Sterling 3,370 Total net assets 348,397





314




£’000 £’000


635,331 Commissions – Equities 96 Total purchase costs 96 Gross purchase total 635,427 Analysis of total sale costs Gross sales in the period before transaction costs: Equities 278,166




315





29/09/18 to









339,172 –



316













Share class A Income launched on 29 September 2018.


317

Omnis Short-Dated Bond Fund



The Fund aims to achieve a return consisting of both income and capital above the ICE BofAML 1-5 Year Sterling Non-Gilt Index by 1%, before all fees and expenses, over a five-year rolling period. There is no guarantee that this will be achieved over this, or any, timeframe and capital is at risk.

Investment Policy

The fund intends to invest at least 80% in bonds (including index-linked bonds) with shorter maturities (less than 5 years) issued by governments, government agencies and companies worldwide (including emerging markets). The fund will invest in bonds issued either in sterling, or in another currency which will be hedged back into sterling. The Fund may invest 60% in sub-investment grade bonds (considered to be Standard & Poor’s credit rating of below BBB or equivalent).

The Fund may also invest in transferable securities, units in collective investment schemes (including schemes managed and operated by the ACD or its associates), money market instruments, warrants, cash, near cash and deposits as detailed in the Prospectus.


Benchmark

The performance of the Fund will be measured against the ICE BofA Merrill Lynch 1-5-year Sterling Non-Gilt Index for target return purposes.

Portfolio Review


During the period the fund generated net income of 0.15p per share.

The Omnis Short-Dated Bond Fund benefited from lower government bond yields and its attractive carry during the period, as the US Federal Reserve and European Central Bank cut interest rates and credit spreads remained range-bound following mixed signals over the US-China trade conflict. We retained our bias towards investment grade in the Fund, while remaining cautious on high yield and emerging markets due to expensive valuations. We were active during the period, investing across a range of names, including US commercial real estate company Simon Property Group in US dollars, German energy company Wintershall in euro and Belgian financial-services company Euroclear in sterling. All were new additions to the Fund and bought in the primary market.

Outlook

For the time being, we plan to remain defensively positioned within the fund. This view is firstly driven by the current slowdown in global economic growth which has increased the risk of a recession in 2020, due to continuing trade tensions between the US and China. This risk is further compounded by the fact that some central banks, such as the European Central Bank, have few tools left to support economic growth through monetary policy and are therefore more and more relying on the hope that countries, who can afford it, start pursuing fiscal easing policies.

256987 19 Omnis Portfolio Investments pp317-pp338 (Short-Dated Bond).qxp 29/01/2020 10:37

318



Additionally, political risks, particularly in the UK and US, could lead to much wider credit spreads. Whilst the risk of a “hard Brexit” has significantly receded for now, an early UK general election could create more uncertainties for businesses, particularly if a Labour-led government starts implementing its radical economic program. On the other side of the Atlantic, the impeachment process of US President Trump could also create increased volatility in financial markets, particularly since it is difficult to know how President Trump would react if such outcome became a real possibility.

Finally, valuations across fixed income markets look fairly expensive versus the heightened risk of recession. Credit and government bond markets are sending different signals with regards to the state of the global economy. As such, we do not see any incentives to be overweight riskier asset classes such as high yield and emerging markets at this stage. Therefore, we maintain a defensive bias with a higher allocation to investment grade, to allow us to add gradually to high yield and emerging markets at better levels. Within investment grade we favour the financial sector while in Emerging Markets we focus on well rated investment grade names from the Middle East. In high yield, we focus on defensive sectors in order to capture additional carry while limiting potential volatility.

Investment Manager AXA Investment Managers UK Limited 21 October 2019


319



Purchases Sales

Portfolio Name Cost £’000 Portfolio Name Proceeds £’000 AXA US Short Duration High

Yield Fund 2,896 United States Treasury Inflation Indexed Bonds 0.125% 15/04/2021 1,004 United States Treasury Inflation Indexed Bonds 0.125% 15/04/2022 982 Nykredit Realkredit 0.875% 17/01/2024 923 Bank of America 2.369% 21/07/2021 860 Simon Property 2% 13/09/2024 818 Close Brothers 4.25% 24/01/2027 685 Regions Financial 3.8% 14/08/2023 685 Heathrow Funding 7.125% 14/02/2024 678 National Express 2.5% 11/11/2023 676

iShares Core GBP Corporate Bond 0-5yr 59,298 SPDR Bloomberg Barclays 0-5 yr 8,561 iShares GBP Ultrashort Bond 6,381 Petroleos Mexicanos 4.875% 24/01/2022 458 Healthcare Trust of America 3.375% 15/07/2021 451 Matterhorn Telecom 3.875% 01/05/2022 268 Intrum 2.75% 15/07/2022 132


320



A Income 30/09/19

(p) Change in net assets per Share Opening net asset value per share 100.00 Return before operating charges* (0.27) Operating charges (0.05) Return after operating charges (0.32) Distributions (0.15) Closing net asset value per share 99.53 * after direct transaction costs of: 0.03 Performance Return after operating charges (0.32%) Other information Closing net asset value (£’000) 86,579 Closing number of shares 86,990,313 Operating charges 0.44% Direct transaction costs 0.03% Prices (p)** Highest share price 100.11 Lowest share price 99.70

Share Class A Income launched on 24 August 2019 at a price of 100 pence.

** The highest and lowest share prices are based on published price. The opening and closing net asset values per share include accounting adjustments, therefore they may appear higher or lower as a result.


321





Date (%) (%) (%) (%)






• The Fund appears as a “2” on the scale. This is because the Fund invests in financial markets and uses techniques and instruments which are subject to low levels of variation under normal market conditions but, which may still result in losses.

Risk Warning







322




Bonds 90.80% Australia 1.59%

USD 550,000 Macquarie 6.25% 14/01/2021 468 0.54 EUR 500,000 National Australia Bank 2% 12/11/2024 443 0.51 GBP 450,000 Scentre Management 2.375% 08/04/2022 463 0.54

1,374 1.59

Belgium 1.53%

EUR 500,000 Belfius Bank 1.625% 15/03/2028 442 0.51 GBP 426,000 Euroclear Bank 1.25% 30/09/2024 427 0.49 EUR 500,000 KBC 1.875% 11/03/2027 459 0.53

1,328 1.53

Bermuda 0.76%

GBP 650,000 Hiscox 2% 14/12/2022 657 0.76 657 0.76

Brazil 0.54%

USD 550,000 Natura Cosmeticos 5.375% 01/02/2023 466 0.54 466 0.54

Canada 1.06%

USD 550,000 Bank of Montreal 3.3% 05/02/2024 464 0.53 USD 550,000 Manulife 4.9% 17/09/2020 458 0.53

922 1.06

Cayman Islands 1.78%

USD 550,000 Fibria Overseas Finance 5.25% 12/05/2024 475 0.55 GBP 250,000 Mizzen Bondco 7% 01/05/2021 233 0.27 GBP 236,300 Punch Taverns Finance 5.943% 30/09/2022 247 0.28 USD 700,000 Qatar National Bank 3.5% 28/03/2024 587 0.68

1,542 1.78

China 0.52%

GBP 450,000 Industrial & Commercial Bank of China 1.5% 31/07/2022 451 0.52

451 0.52

Colombia 0.52%

USD 500,000 Ecopetrol 5.875% 18/09/2023 451 0.52 451 0.52

Denmark 1.56%

EUR 500,000 ISS Global 1.125% 09/01/2020 442 0.51 EUR 1,000,000 Nykredit Realkredit 0.875% 17/01/2024 907 1.05

1,349 1.56

Dominican Republic 0.46%

USD 466,667 Dominican Republic International Bond 7.5% 06/05/2021 395 0.46

395 0.46


323




Egypt 0.53%

USD 550,000 Egypt Government International Bond 5.577% 21/02/2023 456 0.53

456 0.53

Finland 0.53%

EUR 500,000 Sampo 1.5% 16/09/2021 456 0.53 456 0.53

France 6.68%

EUR 300,000 Altice 5.625% 15/05/2024 274 0.32 GBP 400,000 Banque Federative du Credit Mutuel

0.875% 08/06/2020 399 0.46 USD 750,000 BNP Paribas 3.5% 01/03/2023 629 0.73 EUR 500,000 BPCE 2.75% 08/07/2026 462 0.53 EUR 500,000 Carrefour 0.875% 12/06/2023 451 0.52 USD 550,000 Credit Agricole 2.956% 24/04/2023 448 0.52 GBP 400,000 Dexia Credit Local 1.125% 15/06/2022 404 0.47 EUR 250,000 Fnac Darty 1.875% 30/05/2024 227 0.26 EUR 500,000 La Banque Postale 2.75% 23/04/2026 460 0.53 EUR 500,000 RCI Banque 0.012% 12/01/2023 438 0.50 EUR 500,000 Societe Fonciere Lyonnaise 2.25% 16/11/2022 471 0.54 EUR 500,000 Societe Generale 1.25% 15/02/2024 459 0.53 EUR 250,000 SPCM 2.875% 15/06/2023 223 0.26 EUR 500,000 Veolia Environnement 0% 23/11/2020 443 0.51

5,788 6.68

Germany 2.07%

EUR 300,000 ADLER Real Estate 1.5% 17/04/2022 266 0.31 EUR 300,000 DEMIRE Deutsche Mittelstand Real Estate

1.875% 15/10/2024 265 0.31 GBP 400,000 Deutsche Bank 1.75% 16/12/2021 396 0.46 GBP 400,000 Deutsche Bank 1.875% 28/02/2020 400 0.46 EUR 500,000 Schaeffler 1.875% 26/03/2024 463 0.53

1,790 2.07

Guernsey 0.54%

GBP 450,000 Credit Suisse 3% 27/05/2022 471 0.54 471 0.54

Ireland 2.33%

USD 750,000 AerCap Ireland Capital 4.875% 16/01/2024 655 0.76 EUR 500,000 AIB 1.25% 28/05/2024 451 0.52 USD 500,000 MMC Finance 6.625% 14/10/2022 444 0.51 USD 550,000 Steel Funding 4.5% 15/06/2023 466 0.54

2,016 2.33


324



Isle of Man 0.27%

EUR 250,000 Playtech 3.75% 12/10/2023 231 0.27 231 0.27

Italy 3.31%

GBP 600,000 Autostrade per l’Italia 6.25% 09/06/2022 656 0.76 GBP 650,000 FCA Bank 1.625% 29/09/2021 650 0.75 GBP 600,000 Intesa Sanpaolo 5.25% 28/01/2022 646 0.75 EUR 500,000 UniCredit 1.625% 03/07/2025 455 0.53 EUR 500,000 Unione di Banche Italiane 1.5% 10/04/2024 455 0.52

2,862 3.31

Japan 2.26%

USD 800,000 Mitsubishi UFJ 2.7296% 25/07/2022 651 0.75 USD 800,000 Mizuho 3.0844% 28/02/2022 653 0.76 USD 800,000 Sumitomo Mitsui 2.7433% 18/10/2022 650 0.75

1,954 2.26

Jersey 2.72%

GBP 650,000 AA Bond 4.875% 31/07/2024 647 0.75 GBP 550,000 CPUK Finance 7.239% 28/02/2024 669 0.77 GBP 550,000 Heathrow Funding 7.125% 14/02/2024 673 0.78 GBP 350,000 Porterbrook Rail Finance 6.5% 20/10/2020 368 0.42

2,357 2.72

Luxembourg 3.11%

EUR 500,000 Allergan 1.5% 15/11/2023 466 0.54 EUR 450,000 Becton Dickinson Euro Finance 0.632% 04/06/2023 402 0.46 USD 550,000 Gazprom 4.95% 19/07/2022 472 0.55 EUR 500,000 HeidelbergCement Finance 3.25% 21/10/2020 458 0.53 EUR 500,000 Logicor Financing 0.75% 15/07/2024 444 0.51 EUR 500,000 Medtronic 0.375% 07/03/2023 448 0.52

2,690 3.11

Netherlands 10.54%

EUR 500,000 ABN AMRO Bank 6.375% 27/04/2021 485 0.56 EUR 500,000 Achmea 2.5% 19/11/2020 456 0.53 EUR 500,000 BMW Finance 0.625% 06/10/2023 452 0.52 GBP 450,000 BMW International Investment 1.375% 01/10/2024 449 0.52 GBP 500,000 Daimler International Finance 1.25% 05/09/2022 499 0.58 EUR 500,000 de Volksbank 0.125% 28/09/2020 444 0.51 GBP 300,000 EDP Finance 8.625% 04/01/2024 387 0.45 USD 600,000 Equate Petrochemical 3% 03/03/2022 489 0.56 EUR 500,000 ING 0.1% 03/09/2025 438 0.50 GBP 350,000 innogy Finance 6.5% 20/04/2021 378 0.44 EUR 500,000 Koninklijke 3.75% 21/09/2020 459 0.53 EUR 500,000 NN Group 1% 18/03/2022 454 0.52 EUR 250,000 OCI 5% 15/04/2023 231 0.27 EUR 275,000 OI European 6.75% 15/09/2020 258 0.30



325



Netherlands 10.54% (continued)

USD 550,000 Petrobras Global Finance 4.375% 20/05/2023 466 0.54 USD 700,000 SABIC 4% 10/10/2023 597 0.69 EUR 304,000 Siemens Financieringsmaatschappij 0% 05/09/2024 269 0.31 USD 600,000 Teva Pharmaceutical Finance Netherlands III

6% 15/04/2024 422 0.49 GBP 500,000 Volkswagen Financial Services 2.125% 27/06/2024 508 0.59 EUR 500,000 Vonovia Finance 0.875% 03/07/2023 453 0.52 EUR 600,000 Wintershall Dea Finance 0.452% 25/09/2023 532 0.61

9,126 10.54

Peru 0.54%

USD 550,000 Inretail Pharma 5.375% 02/05/2023 469 0.54 469 0.54

Spain 2.21%

GBP 600,000 Banco Santander 1.375% 31/07/2024 600 0.69 EUR 500,000 Bankia 0.875% 25/03/2024 454 0.52 EUR 500,000 Bankinter 0.875% 05/03/2024 457 0.53 GBP 400,000 Telefonica 5.597% 12/03/2020 408 0.47

1,919 2.21

Sweden 1.32%

EUR 150,000 Intrum 2.75% 15/07/2022 134 0.15 GBP 550,000 Scania 1.875% 28/06/2022 554 0.64 GBP 450,000 Svenska Handelsbanken 1.625% 18/06/2022 458 0.53

1,146 1.32

Turkey 1.03%

USD 550,000 Akbank 4% 24/01/2020 444 0.51 USD 550,000 KOC 5.25% 15/03/2023 449 0.52

893 1.03

United Arab Emirates 0.69%

USD 700,000 Abu Dhabi Commercial Bank 4% 13/03/2023 594 0.69 594 0.69


EUR 500,000 Babcock 1.75% 06/10/2022 456 0.53 GBP 350,000 Barclays Bank 10% 21/05/2021 396 0.46 GBP 650,000 Close Brothers 4.25% 24/01/2027 683 0.79 GBP 250,000 Co-Operative 5.125% 17/05/2024 262 0.30 GBP 250,000 Drax Finco 4.25% 01/05/2022 253 0.29 EUR 300,000 EC Finance 2.375% 15/11/2022 268 0.31 GBP 600,000 Firstgroup 5.25% 29/11/2022 655 0.76 GBP 450,000 Great Rolling 6.25% 27/07/2020 468 0.54 GBP 650,000 HSBC Holdings 2.175% 27/06/2023 661 0.76 GBP 720,000 Intu SGS Finance 3.875% 17/03/2023 652 0.75 GBP 450,000 Investec Bank 4.25% 24/07/2028 459 0.53



326



United Kingdom 13.68% (continued)

GBP 650,000 Land Securities Capital Markets 1.974% 08/02/2024 668 0.77 GBP 550,000 Lendlease Europe Finance 6.125% 12/10/2021 595 0.69 GBP 450,000 Lloyds Bank 1.75% 11/07/2024 452 0.52 GBP 450,000 Lloyds Bank 5.75% 09/07/2025 464 0.54 GBP 650,000 National Express 2.5% 11/11/2023 671 0.78 EUR 500,000 NatWest Markets 1.125% 14/06/2023 454 0.52 GBP 237,000 Rothesay Life 5.5% 17/09/2029 244 0.28 GBP 450,000 RSA Insurance 1.625% 28/08/2024 451 0.52 EUR 700,000 Santander 0.44% 27/03/2024 614 0.71 GBP 450,000 Tate & Lyle International Finance 6.75% 25/11/2019 453 0.52 GBP 450,000 Tesco Personal Finance 3.5% 25/07/2025 457 0.53 GBP 650,000 Thames Water 5.05% 30/06/2020 666 0.77 EUR 500,000 WPP Finance 0.054% 20/03/2022 441 0.51

11,843 13.68


USD 750,000 American Express 2.75% 20/05/2022 618 0.71 GBP 450,000 American Honda Finance 1.3% 21/03/2022 454 0.52 USD 800,000 AT&T 3% 30/06/2022 662 0.76 USD 550,000 Athene Global Funding 2.75% 20/04/2020 448 0.52 USD 550,000 Aviation 7.125% 15/10/2020 467 0.54 USD 750,000 Avnet 3.75% 01/12/2021 622 0.72

USD 1,050,000 Bank of America 2.369% 21/07/2021 852 0.98 USD 139,000 BP Capital 2.8141% 19/09/2022 113 0.13 USD 550,000 Charter Communications Operating


4.464% 23/07/2022 213 0.25 GBP 450,000 Citigroup 2.75% 24/01/2024 473 0.55 USD 550,000 Citizens Bank 2.25% 02/03/2020 446 0.51 USD 550,000 Comcast 3.45% 01/10/2021 459 0.53 USD 550,000 Dell International 4.42% 15/06/2021 460 0.53 GBP 450,000 Digital Stout 2.75% 19/07/2024 474 0.55 USD 550,000 Enterprise Products Operating 2.8% 15/02/2021 450 0.52 USD 550,000 Exelon Generation 2.95% 15/01/2020 447 0.52 EUR 500,000 Fiserv 0.375% 01/07/2023 446 0.52 EUR 500,000 Ford Motor Credit 3.021% 06/03/2024 464 0.54 EUR 500,000 General Electric 1.25% 26/05/2023 451 0.52 USD 550,000 General Mills 3.2% 16/04/2021 453 0.52 EUR 463,000 General Motors Financial 0.2% 02/09/2022 408 0.47 USD 500,000 Goldman Sachs 3.85% 08/07/2024 429 0.50 USD 550,000 Ingersoll-Rand Global Holding 2.9% 21/02/2021 450 0.52 USD 550,000 JPMorgan 3.207% 01/04/2023 456 0.53 USD 500,000 JPMorgan 3.797% 23/07/2024 428 0.49 USD 550,000 Kinder Morgan Energy 5.8% 01/03/2021 467 0.54



327




USD 550,000 Manufacturers & Traders 2.7776% 01/12/2021 444 0.51 USD 550,000 Marriott International 7.15% 01/12/2019 450 0.52 GBP 350,000 Metropolitan Life 2.875% 11/01/2023 370 0.43 USD 500,000 Morgan Stanley 3.875% 29/04/2024 431 0.50 GBP 450,000 New York Life 1.625% 15/12/2023 460 0.53 USD 550,000 NextEra Energy Capital 2.9% 01/04/2022 454 0.52 USD 550,000 Occidental Petroleum 2.7% 15/08/2022 450 0.52 USD 550,000 Office Properties Income Trust 3.6% 01/02/2020 447 0.52 USD 550,000 Omnicom 4.45% 15/08/2020 454 0.52 USD 750,000 Penske Truck Leasing/PTL Finance

4.25% 17/01/2023 642 0.74 USD 750,000 People’s United 3.65% 06/12/2022 625 0.72 USD 800,000 Regions Financial 3.8% 14/08/2023 684 0.79 USD 550,000 Ryder System 3.5% 01/06/2021 455 0.53

USD 1,000,000 Simon Property 2% 13/09/2024 804 0.93 USD 1,150,000 United States Treasury Inflation Indexed Bonds

0.125% 15/04/2021 999 1.15 USD 1,150,000 United States Treasury Inflation Indexed Bonds

0.125% 15/04/2022 975 1.13 USD 550,000 Williams Cos 4% 15/11/2021 458 0.53

22,162 25.60

Virgin Islands 0.52%

USD 550,000 Gold Fields 4.875% 07/10/2020 454 0.52 454 0.52

78,612 90.80

Collective Investment Schemes 3.35% United Kingdom 3.35%

2,000,000 AXA US Short Duration High Yield Fund 2,904 3.35 2,904 3.35

Forwards Currency Contracts 0.48%

Sold EUR25,364,912 for GBP22,919,586 Settlement 02/10/2019 398 0.46 Sold USD41,300,000 for GBP33,593,521 Settlement 02/10/2019 19 0.02

417 0.48




328


The investments have been valued in accordance with note 1(h) of the Notes to the Accounting Policies and Financial Instruments.





Bonds Rating AAA 0.00 AA 5.00 A 19.00 BBB 57.00 BB 9.00 B 5.00 CCC 0.00 D 0.00 Not rated 0.00 Bonds 95.00 Uninvested Cash 4.00 Equities 0.00 Interest Rate Swaps and Forwards 1.00 Net Assets 100.00 The above information has been supplied by the Investment Manager. Bonds not rated are of investment grade, but rating not sought by issuer.



329


24/08/19 to 30/09/19

Note £’000 £’000

Income: Net capital losses 2 (363) Revenue 3 131 Expenses 4 (44) Net revenue before taxation 87 Taxation 5 – Net revenue after taxation 87 Total return before distributions (276) Distributions 6 (131) Change in net assets attributable to Shareholders from investment activities (407)

24/08/19 to 30/09/19

£’000 £’000






330


30/09/19

Note £’000 £’000

Assets: Fixed assets: Investments 81,933 Current assets: Debtors 7 1,209 Cash and bank balances 8 4,324 Total current assets 5,533 Total assets 87,466 Liabilities: Investment liabilities – Creditors: Distribution payable (133) Other creditors 9 (754) Total creditors (887) Total liabilities (887) Net assets attributable to Shareholders 86,579



331






30/09/19 £’000

The net capital losses during the period comprise: Currency gains 163 Forward currency contracts 417 Non-derivative securities (939) Transaction charges (4) Net capital losses (363)


30/09/19 £’000

Bank interest 1 Interest from Debt Securities 130 Total revenue 131


30/09/19 £’000




9 Total expenses 44



332



5. Taxation


30/09/19 £’000

Total taxation for the period (Note 5 (b)) –



24/08/19 to

30/09/19 £’000

Net revenue before taxation 87 Net revenue for the period multiplied by the standard rate of corporation tax 17 Effects of: Tax deductible interest distributions (17) Total tax charge for the period –



There is no provision required for deferred taxation at the Balance Sheet date in the current period or prior period.

6. Distributions


24/08/19 to

30/09/19 £’000

Final 133 Deduct: Revenue received on creation of Shares (2) Net distribution for the period 131 Reconciliation of net revenue after taxation to distributions

Net revenue after taxation 87 Expenses charged to capital 44 Net distribution for the period 131

Details of the distributions per Share are set out in the distribution tables on page 338 .


333



7. Debtors 30/09/19

£’000

Accrued revenue 786 Amounts receivable for creation of Shares 400 Inspecie transfer receivable 23 Total debtors 1,209


£’000



£’000

Purchases awaiting settlement 712 712










334



10. Related party transactions (continued)





11. Share Classes


%









The main risks from the Fund’s holding of financial instruments, together with the ACD’s policy for managing these risks, are disclosed in note 2 on pages 8 to 22 of the report.






335







financial assets financial assets interest Total Currency Assets £’000 £’000 £’000 £’000

30/09/19 Euro 2,128 20,349 398 22,875 Sterling 2,336 24,938 4,113 31,387 US Dollar 3,868 29,317 19 33,204 Total 8,332 74,604 4,530 87,466

Floating rate Fixed rate Financial

financial financial liabilities not liabilities liabilities carrying interest Total


30/09/19 Euro – – 264 264 Sterling – – 623 623 Total – – 887 887

(c) Leverage



Short-Dated Bond 70.88% 160.12% 62.05% 63.92%


336




£’000 £’000

Analysis of total purchase costs Purchases in the period before transaction costs: Bonds 83,910 Inspecie transfer 74,182

158,092 Total purchase costs – Gross purchase total 158,092

Analysis of total sale costs Gross sales in the period before transaction costs: Bonds 1,309 Collective Investment Schemes 74,267

75,576 Commissions – Collective Investment Schemes (27) Total sale costs (27) Total sales net of transaction costs 75,549


24/08/19 to


Purchases – Commissions Bonds 0.0000 Inspecie transfer 0.0000 Purchases – Taxes Bonds 0.0000 Inspecie transfer 0.0000 Sales – Commissions Bonds 0.0000 Collective Investment Schemes 0.0364 Sales – Taxes Bonds 0.0000 Collective Investment Schemes 0.0000

24/08/19 to





337







Valuation technique Level 1: The unadjusted quoted price in an active market for identical assets or liabilities 1,974 – Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly 79,959 – Level 3: Inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability – –

81,933 –


338





Distribution Gross payable



Share Class A Income launched on 24 August 2019.


339

Omnis Sterling Corporate Bond Fund



The Fund aims to achieve a return consisting primarily of income and some capital growth which exceeds that of the ICE BoAML Sterling Corporate Bond TR Index, after all fees and expenses, over a five-year rolling period.

Investment Policy

The Fund intends to invest at least 80% in sterling denominated and sterling hedged corporate bond securities, rated BBB or higher.

The Fund may also invest in other transferable securities, units in collective investment schemes (including exchange traded funds and other schemes managed and operated by the ACD or its associates), money market instruments, warrants, cash, near cash and deposits as detailed in the Prospectus.


Benchmark

The performance of the Fund will be measured against the ICE BoAML Sterling Corporate Bond TR Index for target return purposes.

Portfolio Review

Over the period the fund returned 11.35% [source: Return after operating charges as per Comparative Table] and the benchmark returned 11.43% [source: Financial Express, bid to bid, net income reinvested]. During the period the fund generated net income of 3.30p per share.

During the period, interest-rate strategies added value overall. Duration positioning detracted, though this was more than offset by favourable positioning along the yield curve – particularly an underweight exposure to the 1–5 year area.

Asset allocation had a positive impact. This was due to our defensive positioning with respect to credit risk during the fourth quarter (Q4) of 2018 when credit spreads widened, as well as our selective addition of credit risk to the portfolio thereafter, when spreads tightened.

However, the main driver of outperformance was security selection. The top contributor at this level was the overweight exposure to Tesco Property, which rallied on regaining its investment grade rating from Moody’s. The portfolio also benefited from positioning in General Electric (GE) – a zero weighting early on, and later an overweight. This issuer missed earnings estimates, cut its dividend and was downgraded to Baa1/BBB+ by the main credit-rating agencies during Q4, and we initiated a holding to take advantage of the extreme spread-widening that ensued. The bonds tightened thereafter, notably in September when the company’s plans for debt reduction were well received. Other positives included overweights in Berkshire Hathaway and Prudential. Notable detractors included AT&T, GKN and Wellcome Trust.

Over the period, we marginally increased the portfolio’s exposure to credit market risk following the widening of credit spreads in Q4. As we appear to be at a mature phase of a lengthy credit cycle, the compensation for reaching down the credit spectrum for extra return seems unappealing. Consequently, we have been favouring more defensive industry sectors, as described in the outlook section below.

256987 20 Omnis Portfolio Investments pp339-pp359 (Strling Corporate Bond).qxp 29/01/2020 10:37

340



In terms of individual securities, we participated in a broad range of new issues over the year. The largest of these purchases included new deals from financial-services technology companies Fidelity and Fiserv, banking groups BFCM, Wells Fargo and Lloyds, insurers MetLife and New York Life, and energy companies BP and Total. We also took part in new issues from a number of UK housing associations.

In the secondary market, we started new positions in some issuers, including Bacardi, Deutsche Telekom, and the aforementioned GE. We increased exposure to others, such as Innogy, Unite and Heinz.

On the disposals side, we reduced a number of issuers, including BP, Aviva, Barclays, Digital Realty and Glencore; while exiting Natwest, AIG, Standard Life, Credit Suisse, and BHP Billiton, among others.

Outlook

Looking ahead, the main risk to the UK economy is Britain crashing out of the EU without securing a withdrawal agreement. In spite of the prime minister’s recent efforts to keep such an outcome on the negotiating table, this looks unlikely to occur unless he can increase his parliamentary majority. An early election is likely to take place, but the result will be even harder to predict than usual.

Globally, the current environment of low, but positive, GDP growth and gentle inflation is a benign investment background for corporate markets. The recent dovish shift at the Fed is supportive for risk assets such as sterling IG credit, as is the announcement of further stimulus from the ECB, including open-ended quantitative easing of Є20bn per month.

The corporate credit cycle is, however, fairly mature, and while earnings have been reasonable, the benefits are largely accruing to shareholders. In addition, the ongoing macroeconomic slowdown is beginning to cause earnings to deteriorate in some sectors, most notably autos.

With regard to sectors, the fund remains overweight in defensive areas of the market, such as regulated utilities and infrastructure, and more recently, UK housing associations; these should be more resilient given the late stage of the credit cycle and the level of credit spreads.

Investment Manager Threadneedle Asset Management Limited 21 October 2019


341



Purchases Sales

Portfolio Name Cost £’000 Portfolio Name Proceeds £’000 United Kingdom Gilt 1.75%

22/07/2057 16,127 United Kingdom Gilt 1.75% 07/09/2037 10,703 United Kingdom Gilt 1.5% 22/07/2037 8,549 United Kingdom Gilt 1.625% 22/10/2071 8,198 Bacardi 4.7% 15/05/2028 7,133 United Kingdom Gilt 3.25% 22/01/2044 5,758 United Kingdom Gilt 2.5% 22/07/2065 4,752 United Kingdom Gilt 4.5% 07/12/2042 4,656 GE Capital International Funding 4.418% 15/11/2035 4,507 DS Smith 1.375% 26/07/2024 3,940

United Kingdom Gilt 1.75% 22/07/2057 13,466 United Kingdom Gilt 1.75% 07/09/2037 11,049 United Kingdom Gilt 1.5% 22/07/2037 8,871 United Kingdom Gilt 3.25% 22/01/2044 5,736 BP Capital Markets 2.274% 03/07/2026 5,053 United Kingdom Gilt 4.5% 7/12/2042 4,653 National Westminster Bank 6.5% 07/09/2021 4,553 DS Smith 1.375% 26/07/2024 4,181 Aviva 1% 03/06/2041 4,059 Barclays Bank 1% 03/06/2041 3,864


342



A Income 30/09/19

(p) Change in net assets per Share Opening net asset value per share 100.00 Return before operating charges* 11.85 Operating charges (0.50) Return after operating charges 11.35 Distributions (3.30) Closing net asset value per share 108.05 * after direct transaction costs of: 0.00 Performance Return after operating charges 11.35% Other information Closing net asset value (£’000) 350,115 Closing number of shares 324,026,975 Operating charges 0.48% Direct transaction costs 0.00% Prices (p) Highest share price 110.75 Lowest share price 98.97



343





Date (%) (%) (%) (%)








Risk Warning







344




Australia 2.30%

GBP 3,110,000 APT Pipelines 3.5% 22/03/2030 3,484 1.00 GBP 2,584,000 APT Pipelines 4.25% 26/11/2024 2,922 0.83 GBP 1,485,000 Pacific National Finance 5% 19/09/2023 1,660 0.47

8,066 2.30

Belgium 1.86%

GBP 5,280,000 Anheuser-Busch InBev 2.25% 24/05/2029 5,497 1.57 GBP 600,000 Anheuser-Busch InBev 2.85% 25/05/2037 643 0.18 EUR 400,000 KBC 4.75% Perpetual 377 0.11

6,517 1.86

Bermuda 2.35%

USD 9,310,000 Bacardi 4.7% 15/05/2028 8,230 2.35 8,230 2.35

France 7.24%

GBP 3,900,000 Banque Federative du Credit Mutuel 1.5% 07/10/2026 3,868 1.10 GBP 1,200,000 BPCE 5.25% 16/04/2029 1,488 0.44 GBP 1,900,000 Credit Agricole 1.25% 02/10/2024 1,897 0.54 GBP 4,600,000 Electricite de France 5.5% 17/10/2041 6,754 1.93 GBP 1,200,000 Electricite de France 6% 23/01/2114 1,977 0.56 GBP 1,700,000 Orange 3.25% 15/01/2032 1,923 0.55 GBP 2,190,000 Orange 8.125% 20/11/2028 3,365 0.96 GBP 1,000,000 Total Capital International 1.405% 03/09/2031 988 0.28 GBP 2,000,000 Total Capital International 1.66% 22/07/2026 2,067 0.59

GBP 900,000 Vinci 2.75% 15/09/2034 1,023 0.29 25,350 7.24

Ireland 1.61%

USD 6,620,000 GE Capital International Funding 4.418% 15/11/2035 5,627 1.61 5,627 1.61

Jersey 0.90%

GBP 651,000 Glencore Finance Europe 3.125% 26/03/2026 669 0.19 GBP 1,055,000 Hastings 3% 24/05/2025 1,046 0.30 GBP 1,220,000 Porterbrook Rail Finance 4.625% 04/04/2029 1,440 0.41

3,155 0.90

Luxembourg 0.47%

EUR 1,800,000 Grand City Properties 1.375% 03/08/2026 1,657 0.47 1,657 0.47


345



Mexico 0.59%

GBP 893,000 Mexico Government International Bond 5.625% 19/03/2114 982 0.28

GBP 1,113,000 Petroleos Mexicanos 3.75% 16/11/2025 1,065 0.31 2,047 0.59

Netherlands 5.84%

GBP 1,850,000 Deutsche Telekom International Finance 2.25% 13/04/2029 1,916 0.55

GBP 3,641,000 E.ON International Finance 6.375% 07/06/2032 5,306 1.51 GBP 1,450,000 Innogy Finance 6.125% 06/07/2039 2,251 0.64 GBP 5,505,000 Innogy Finance 6.25% 03/06/2030 7,655 2.19 GBP 1,506,000 LafargeHolcim Sterling Finance Netherlands 3%

12/05/2032 1,598 0.46 GBP 1,600,000 Volkswagen International Finance 3.375% 16/11/2026 1,717 0.49

20,443 5.84

Sweden 1.56%

EUR 2,210,000 Akelius Residential Property 1.75% 07/02/2025 2,058 0.59 GBP 3,320,000 Akelius Residential Property 2.375% 15/08/2025 3,409 0.97

5,467 1.56

Switzerland 0.86%

USD 1,550,000 UBS Group Fdg Switzerland 7% Perpetual 1,335 0.38 USD 1,900,000 UBS Group Funding Switzerland 7% Perpetual 1,691 0.48

3,026 0.86


GBP 910,000 Anglian Water Services Financing 2.625% 15/06/2027 914 0.26 GBP 983,000 Annington Funding 3.184% 12/07/2029 1,047 0.30

GBP 3,411,000 Aviva 4.375% 12/09/2049 3,629 1.04 GBP 2,731,000 Barclays 3.25% 17/01/2033 2,759 0.79 EUR 1,200,000 Barclays Bank 6.625% 30/03/2022 1,214 0.35 GBP 1,339,000 BP Capital Markets 1.827% 08/09/2025 1,388 0.40 GBP 1,500,000 British Telecommunications 3.125% 21/11/2031 1,617 0.46 GBP 4,985,000 Bunzl 2.25% 11/06/2025 5,125 1.46 GBP 2,000,000 BUPA Finance 2% 05/04/2024 2,054 0.59 GBP 3,604,000 BUPA Finance 5% 08/12/2026 4,074 1.16 GBP 2,030,000 Cadent Finance 2.125% 22/09/2028 2,077 0.59 GBP 3,720,000 Cadent Finance 2.625% 22/09/2038 3,854 1.10 GBP 1,300,000 Cadent Finance 2.75% 22/09/2046 1,364 0.39

GBP 398,000 Catalyst Housing 3.125% 31/10/2047 460 0.13 GBP 1,550,000 CYBG 3.125% 22/06/2025 1,513 0.43

EUR 809,000 DS Smith 0.875% 12/09/2026 706 0.20 GBP 845,000 DS Smith 2.875% 26/07/2029 877 0.25

GBP 1,920,000 Eversholt Funding 3.529% 07/08/2042 2,052 0.59 GBP 985,000 Eversholt Funding 6.359% 02/12/2025 1,226 0.35

GBP 2,030,000 Experian Finance 2.125% 27/09/2024 2,115 0.60



346




GBP 337,000 Futures Treasury 3.375% 08/02/2044 404 0.12 GBP 2,735,000 GKN 4.625% 12/05/2032 2,770 0.79 GBP 1,195,000 GKN 5.375% 19/09/2022 1,300 0.37

GBP 600,000 Heathrow Funding 4.625% 31/10/2046 846 0.24 GBP 980,000 Home 3.125% 27/03/2043 1,082 0.31

GBP 1,290,000 HSBC 3% 22/07/2028 1,377 0.39 GBP 1,055,000 HSBC Bank 4.75% 24/03/2046 1,359 0.39 GBP 3,867,000 HSBC Bank 5.375% 22/08/2033 5,009 1.43 GBP 3,299,000 Imperial Brands Finance 5.5% 28/09/2026 3,982 1.14 GBP 1,003,000 Incommunities Treasury 3.25% 21/03/2049 1,218 0.35

GBP 888,384 Juturna European Loan Conduit No 16 5.0636% 10/08/2033 1,142 0.33

GBP 345,000 Legal & General 5.125% 14/11/2048 383 0.11 GBP 3,322,000 Legal & General 5.375% 27/10/2045 3,720 1.06 GBP 1,243,000 Legal & General 5.5% 27/06/2064 1,448 0.41 GBP 2,359,000 Lloyds Bank 1.75% 11/07/2024 2,368 0.68 GBP 1,081,000 Lloyds Bank 6% 08/02/2029 1,533 0.44 GBP 4,700,000 Lloyds Bank 7.625% 22/04/2025 6,022 1.72 GBP 1,684,000 Lloyds Banking 2.25% 16/10/2024 1,716 0.49 GBP 1,900,000 London & Quadrant Housing Trust 2.625%

28/02/2028 2,011 0.57 GBP 1,170,000 London Power Networks 2.625% 01/03/2029 1,257 0.36 GBP 3,311,000 London Power Networks 6.125% 07/06/2027 4,358 1.25

GBP 900,000 Marks & Spencer 4.75% 12/06/2025 988 0.28 GBP 572,000 Marston's Issuer 2.105% 15/10/2027 519 0.15 GBP 839,352 Mitchells & Butlers Finance 5.574% 15/12/2030 968 0.28

GBP 1,453,000 Motability Operations 2.375% 03/07/2039 1,527 0.44 GBP 1,961,000 Motability Operations 4.375% 08/02/2027 2,380 0.68 GBP 1,128,000 National Grid Electricity Transmission 2%

16/09/2038 1,140 0.33 GBP 1,243,000 National Grid Electricity Transmission 2.75%

06/02/2035 1,391 0.40 GBP 1,600,000 NewRiver REIT 3.5% 07/03/2028 1,620 0.46 GBP 3,140,000 NGG Finance 5.625% 18/06/2073 3,523 1.01 GBP 3,000,000 NIE Finance 2.5% 27/10/2025 3,165 0.90 GBP 2,279,000 Northern Gas Networks Finance 4.875% 30/06/2027 2,849 0.81 GBP 1,090,000 Northern Powergrid Yorkshire 2.5% 01/04/2025 1,156 0.33 GBP 2,030,000 Northumbrian Water Finance 1.625% 11/10/2026 2,039 0.58

GBP 485,000 Peabody Capital No 2 4.625% 12/12/2053 722 0.21 GBP 1,655,000 Pension Insurance 5.625% 20/09/2030 1,714 0.49 GBP 1,200,000 Places For People Treasury 2.875% 17/08/2026 1,245 0.36

GBP 800,000 Prudential 6.25% 20/10/2068 954 0.27 GBP 775,000 Prudential 6.34% 19/12/2063 923 0.26

GBP 1,890,000 Rolls-Royce 3.375% 18/06/2026 2,089 0.60 GBP 4,470,000 Royal Bank of Scotland 2.875% 19/09/2026 4,604 1.31 GBP 1,282,000 Royal Bank of Scotland 3.125% 28/03/2027 1,331 0.38



347




GBP 1,625,000 Royal London Finance 5.25% 07/10/2049 1,592 0.45 GBP 1,081,000 Scottish Hydro Electric Transmission 2.25% 27/09/2035 1,090 0.31 GBP 2,754,000 Severn Trent Utilities Finance 3.625% 16/01/2026 3,096 0.88 GBP 3,092,000 Southern Gas Networks 3.1% 15/09/2036 3,538 1.01

GBP 545,000 Standard Chartered 5.125% 06/06/2034 647 0.19 GBP 1,990,000 Telereal Securitisation 4.0902% 10/12/2033 2,063 0.59 GBP 1,193,675 Tesco Property Finance 1 7.6227% 13/07/2039 1,743 0.50 GBP 1,247,953 Tesco Property Finance 3 5.744% 13/04/2040 1,619 0.46 GBP 2,228,934 Tesco Property Finance 5 5.6611% 13/10/2041 2,872 0.82 GBP 2,100,000 Thames Water Utilities Finance 2.625% 24/01/2032 2,179 0.62

GBP 893,000 Thames Water Utilities Finance 3.5% 25/02/2028 992 0.28 GBP 1,865,000 TSB Banking 5.75% 06/05/2026 1,889 0.54 GBP 1,888,000 Unilever 1.5% 22/07/2026 1,929 0.55 GBP 1,832,000 UNITE 3.5% 15/10/2028 1,993 0.57

GBP 980,000 UNITE USAF II M/BKD 3.921% 30/06/2025 1,102 0.31 GBP 2,422,000 UNITE USAF II SNR SEC 3.921% 30/06/2025 2,714 0.78 GBP 7,206,000 United Kingdom Gilt 1.625% 22/10/2071 9,575 2.73 GBP 2,669,000 United Kingdom Gilt 1.75% 22/07/2057 3,400 0.97 GBP 3,492,000 United Kingdom Gilt 2.5% 22/07/2065 5,623 1.61

GBP 717,000 United Utilities Water Finance 2.625% 12/02/2031 794 0.23 GBP 765,000 University of Oxford 2.544% 08/12/2117 972 0.28

GBP 1,400,000 University of Southampton 2.25% 11/04/2057 1,476 0.42 GBP 1,330,000 Vodafone 3% 12/08/2056 1,299 0.37 GBP 1,282,000 Wales & West Utilities Finance 3% 03/08/2038 1,479 0.42

GBP 140,000 Wellcome Trust Finance 4.625% 25/07/2036 213 0.06 GBP 1,610,000 Western Power Distribution 3.5% 16/10/2026 1,722 0.49

GBP 779,000 Western Power Distribution East Midlands 1.75% 09/09/2031 767 0.22

GBP 1,937,000 Western Power Distribution South West 5.875% 25/03/2027 2,495 0.71

GBP 2,063,000 Western Power Distribution West Midlands 5.75% 16/04/2032 2,899 0.83

GBP 360,000 WPP Finance 2013 2.875% 14/09/2046 334 0.10 GBP 818,000 Yorkshire Water Finance 2.75% 18/04/2041 914 0.26

187,237 53.48


GBP 1,660,000 Amgen 5.5% 07/12/2026 2,094 0.60 USD 1,130,000 Anheuser-Busch InBev Worldwide 4.7% 01/02/2036 1,059 0.30 GBP 3,850,000 AT&T 4.25% 01/06/2043 4,513 1.29 GBP 2,359,000 AT&T 4.375% 14/09/2029 2,767 0.79

GBP 260,000 AT&T 5.2% 18/11/2033 335 0.10 GBP 1,685,000 Bank of America 2.3% 25/07/2025 1,764 0.50 GBP 4,885,000 BAT Capital 2.125% 15/08/2025 4,925 1.41 GBP 5,863,000 Becton Dickinson 3.02% 24/05/2025 6,244 1.78 GBP 1,419,000 Berkshire Hathaway 2.625% 19/06/2059 1,653 0.47



348




GBP 2,880,000 Digital Stout 3.3% 19/07/2029 3,120 0.89 GBP 1,745,000 Digital Stout 3.75% 17/10/2030 1,958 0.56 GBP 1,512,000 Discovery Communications 2.5% 20/09/2024 1,557 0.45 GBP 1,202,000 Fidelity National Information Services 2.602%

21/05/2025 1,268 0.36 GBP 4,485,000 Fidelity National Information Services 3.36%

21/05/2031 4,977 1.42 GBP 870,000 Fiserv 2.25% 01/07/2025 901 0.26

GBP 2,682,000 Fiserv 3% 01/07/2031 2,879 0.82 GBP 999,000 Ford Motor Credit 4.535% 06/03/2025 1,061 0.30 EUR 597,000 General Electric 2.125% 17/05/2037 542 0.16

GBP 2,541,000 Goldman Sachs 3.125% 25/07/2029 2,759 0.79 GBP 4,593,000 Kraft Heinz Foods 4.125% 01/07/2027 5,011 1.43 GBP 1,100,000 McDonald's 2.95% 15/03/2034 1,228 0.35 GBP 2,610,000 Metropolitan Life Global Funding I 1.625%

21/09/2029 2,623 0.75 GBP 1,865,000 New York Life Global Funding 1.25% 17/12/2026 1,871 0.54 GBP 1,199,000 Time Warner Cable 5.25% 15/07/2042 1,415 0.40

GBP 900,000 Time Warner Cable 5.75% 02/06/2031 1,100 0.31 GBP 2,789,000 Verizon Communications 1.875% 19/09/2030 2,789 0.80

GBP 510,000 Verizon Communications 2.5% 08/04/2031 542 0.16 GBP 1,629,000 Verizon Communications 3.375% 27/10/2036 1,892 0.54

GBP 983,000 Wells Fargo 2% 28/07/2025 1,006 0.29 GBP 2,694,000 Wells Fargo 2.125% 24/09/2031 2,731 0.78 GBP 1,142,000 Wells Fargo 2.5% 02/05/2029 1,204 0.34

GBP 630,000 Welltower 4.5% 01/12/2034 779 0.22 GBP 2,171,000 Welltower 4.8% 20/11/2028 2,634 0.75

73,201 20.91

Forward Currency Contracts 0.00%



2 0.00

Futures (0.09)%

(14) German Euro BOBL Futures December 2019 8 0.00 (6) German Euro BUND Futures December 2019 6 0.00 (2) German Euro BUXL Futures December 2019 4 0.00

(271) UK Long Gilt Futures December 2019 (364) (0.10) (40) US Treasury Long Bond December 2019 8 0.00 (11) US Treasury Note 5 Year Futures December 2019 1 0.00 (63) US Treasury Ultra 10 Year Futures December 2019 20 0.01 (317) (0.09)



349



Portfolio of investments 349,708 99.88 Net other assets 407 0.12 Net assets 350,115 100.00

The investments have been valued in accordance with note 1(h) of the Notes to the Aggregated Financial Statements.

All investments are ordinary bonds unless otherwise stated and admitted to official stock exchange listings. Gross purchases for the year (excl. Derivatives): £221,640,000. In addition, transfers totalling £304,769,000 were made via inspecie into the portfolio during the year (See Note 16).

Total sales net of transaction costs for the year (excl. Derivatives): £205,850,000 (See Note 16).


Bonds Rating AAA 0.78 AA 7.40 A 16.59 BBB 63.77 BB 8.76 B 0.00 Not rated 2.30 Bonds 99.60 Uninvested Cash 0.79 FX/Derivatives (0.39) Net Assets 100.00




350


29/09/18 to 30/09/19

Note £’000 £’000

Income: Net capital gains 2 26,656 Revenue 3 10,357 Expenses 4 (1,547) Interest payable and similar charges 5 (3) Net revenue before taxation 8,807 Taxation 6 – Net revenue after taxation 8,807 Total return before distributions 35,463 Distributions 7 (10,354) Change in net assets attributable to Shareholders from investment activities 25,109

29/09/18 to 30/09/19

£’000 £’000


8,661 Change in net assets attributable to Shareholders from investment activities (see above) 25,109 Closing net assets attributable to Shareholders 350,115




351


30/09/19

Note £’000 £’000

Assets: Fixed assets: Investments 350,102 Current assets: Debtors 8 10,531 Cash and bank balances 9 7,490 Total current assets 18,021 Total assets 368,123 Liabilities: Investment liabilities (394) Creditors: Bank overdrafts 11 (2,097) Distribution payable (5,299) Other creditors 10 (10,218) Total creditors (17,614) Total liabilities (18,008) Net assets attributable to Shareholders 350,115



352






30/09/19 £'000

The net capital gains during the year comprise: Brokers commission on futures (5) Currency losses (178) Derivative contracts (3,629) Forward currency contracts (841) Non-derivative securities 31,329 Transaction charges (20) Net capital gains 26,656


30/09/19 £'000

Bank interest 2 Interest from Debt Securities 10,355 Total revenue 10,357


30/09/19 £'000







353




30/09/19 £’000


6. Taxation

(a) Analysis of the tax charge in the year

29/09/18 to 30/09/19

£’000

Total taxation for the year (Note 6 (b)) –



29/09/18 to

30/09/19 £'000

Net revenue before taxation 8,807 Net revenue for the year multiplied by the standard rate of corporation tax 1,761 Effects of: Tax deductible interest distributions (1,761) Total tax charge for the year –





354



7. Distributions


29/09/18 to

30/09/19 £'000

Interim 5,208 Final 5,299 Add: Revenue paid on cancellation of Shares 107 Deduct: Revenue received on creation of Shares (260) Net distribution for the year 10,354 Reconciliation of net revenue after taxation to distributions Net revenue after taxation 8,807 Expenses charged to capital 1,547 Net distribution for the year 10,354


8. Debtors 30/09/19

£'000

Accrued revenue 4,119 Amounts receivable for creation of Shares 806 Sales awaiting settlement 5,606 Total debtors 10,531


£'000

Cash and bank balances 4,305 Amount held at futures clearing houses and brokers 3,185 Total cash and bank balances 7,490


355




£'000







£'000

Bank overdrafts 2,097 Total bank overdrafts 2,097










356



13. Share Classes


%




28/09/18 Issued Cancelled Converted 30/09/19 Share Class A Income – 347,878,776 (23,851,801) – 324,026,975













30/09/19 Euro 36 6,554 1,284 7,874 Sterling 7,348 325,526 9,298 342,172 US Dollar 106 17,942 29 18,077 Total 7,490 350,022 10,611 368,123


357




(b) Interest rate risk profile of financial assets and liabilities (continued) Floating rate Fixed rate Financial

financial financial liabilities not liabilities liabilities carrying interest Total

Currency Liabilities £'000 £'000 £'000 £'000

30/09/19 Euro 318 – – 318 Sterling – – 15,881 15,881 US Dollar 1,779 – 30 1,809 Total 2,097 – 15,911 18,008




Derivative Collateral Collateral Collateral Counterparty Exposure £ Posted £ Received £ Asset Class

HSBC 32 – 240,000 Cash

(d) Leverage



Sterling Corporate Bond 22.09% 42.28% 0.00% 23.01%

16. Portfolio transaction costs 29/09/18 to 30/09/19 £'000 £'000

Analysis of total purchase costs Purchases in the period before transaction costs: Bonds 222,143 Inspecie transfer 304,769

526,912 Commissions – Derivatives 2 Total purchase costs 2 Gross purchase total 526,914 Analysis of total sale costs Gross sales in the period before transaction costs: Bonds 206,358

206,358 Commissions – Derivatives (3) Total sale costs (3) Total sales net of transaction costs 206,355


358





29/09/18 to 30/09/19

Transaction costs as percentage of principal amounts %

Purchases – Commissions Bonds 0.0000 Inspecie transfer 0.0000 Purchases – Taxes Bonds ` 0.0000 Inspecie transfer 0.0000 Sales – Commissions Bonds 0.0000 Sales – Taxes Bonds 0.0000

29/09/18 to








Valuation technique Level 1: The unadjusted quoted price in an active market for identical assets or liabilities 18,645 (364) Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly 331,457 (30) Level 3: Inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability – –

350,102 (394)


359





Distribution Gross paid










360

Omnis Strategic Bond Fund


The Fund aims to achieve a return consisting primarily of income and some capital growth which exceeds that of the ICE BoAML Global Broad Market TR Index (GBP Hedged), after all fees and expenses, over a five-year rolling period.

Investment Policy

The Fund will obtain global exposure by investing at least 70% in a broad range of Sterling-denominated (or hedged back to Sterling) debt instruments, which may include developed and emerging market government bonds, inflation linked bonds, investment grade and high yield corporate bonds. The Fund may also obtain exposure to transferable securities, money market instruments, collective investment schemes (including exchange traded funds and other schemes managed and operated by the ACD or its associates) cash, near cash and deposits as detailed in the Prospectus.


Benchmark

The performance of the Fund will be measured against the ICE BoA ML Global Broad Market TR Index (GBP Hedged) for target return purposes.

Portfolio Review



The portfolio benefitted from interest rate risk exposure as most core government bond yields slumped to new record lows (many of them below zero) reflecting the expectations of weaker growth and hope that central banks will repeat their previous doses of extraordinary monetary policy. Against this backdrop, the fund’s skew towards US dollar duration was the most significant positive contributor to performance. The exposure to euro and sterling interest rate risk also enhanced returns. The portfolio’s headline duration has remained in a tight range over the last 12months, staying between 5.5 and 6.0 years. We remain biased towards US rates, although we are keeping a close watch amid expectations of a steeper US Treasury yield curve. Instead, the exposure to euro duration was increased as macroeconomic data in the eurozone has been very poor. Our aim is to keep duration neutral across the board as it is too risky to stay short in the current market environment.

The portfolio’s credit strategy was a small detractor with idiosyncratic events weighing on returns. For instance, holdings in Thomas Cook was a key detractor as the company filed for bankruptcy. Holdings in Intu was also a notable detractor amid rising expectations that it will trigger an event of default in the near term. Elsewhere, the weakness in energy bonds persisted in 2019 taking the returns for the sector into negative territory. Consequently, the allocation to US energy names weighed on returns. On the credit front, we continue to like the Chinese property sector as a source of yield, as Chinese authorities are becoming more supportive of the economy. We are also finding value in the European investment grade space as the ECB restarted its corporate sector purchase programme (CSPP). We also reduced the position in European high yield names in recent months as we do not expect spreads to compress further unless there is a pick-up in growth.


256987 21 Omnis Portfolio Investments pp360-pp391 (Omnis Strategic Bond).qxp 29/01/2020 10:36

361


Outlook

Global bonds have witnessed an unprecedented rally this year. Asset prices have been increasingly dependent on the monetary policy actions of central banks, despite growing consensus that monetary stimulus is insufficient to rekindle real economic growth. We believe that central banks will continue to be the key driver of markets as they attempt to tackle volatility over the next year or so with interest rate cuts, quantitative easing, or other innovative policies. The BoE is the only notable central bank to not have cut interest rates so far this year. It is increasingly looking like the central bank will join its counterparts sooner rather than later, regardless of the Brexit outcome, as the domestic economy continues to falter at a rapid rate. Undoubtedly, at some point, central banks will disappoint the heightened expectations that markets have, but we don’t expect this to happen any time soon as growth and inflation remain in check. Furthermore, there are growing headwinds from a macroeconomic perspective, including the trade war and Brexit, as well as a global manufacturing recession that is gaining momentum.

Disappointing inflation figures and decelerating PMIs are offset by still buoyant employment and consumer confidence figures. However, employment data is historically lagging indicators. Against this backdrop, we are positive credit beta but in a cautious way. We are not getting too carried away with regards to risk despite the rate cuts in the pipeline. We also maintain caution when it comes to credit selection.

Investment Manager FIL Pensions Management 21 October 2019



362


Purchases Sales

Portfolio Name Cost £’000 Portfolio Name Proceeds £’000 United Kingdom Gilt 1.75%

22/07/2019 29,406 United States Treasury Note/Bond 2.375% 15/03/2021 8,154 United Kingdom Gilt 3.75% 07/09/2019 7,030 United States Treasury Bill 3.125% 15/11/2028 6,913 United States Treasury Bill 2.625% 15/02/2029 5,987 United States Treasury Bill 2.375% 15/05/2029 5,955 United States Treasury Inflation Indexed Bonds 0.75% 15/07/2028 5,367 United States Treasury Note/Bond 3% 31/10/2025 4,692 United States Treasury Note/Bond 1.625% 15/08/2029 4,501 United States Treasury Note/Bond 2.875% 31/10/2023 2,498

United Kingdom Gilt 1.75% 22/07/2019 31,036 United States Treasury Bill 2.75% 15/02/2028 12,210 United States Treasury Note/Bond 2.25% 15/02/2027 8,154 United States Treasury Bill 3.125% 15/11/2028 7,122 United Kingdom Gilt 3.75% 07/09/2019 7,016 United States Treasury Bill 2.375% 15/05/2029 6,581 United States Treasury Bill 2.625% 15/02/2029 6,151 United States Treasury Inflation Indexed Bonds 0.75% 15/07/2028 5,146 Bundesrepublik Deutschland 0.5% 15/02/2028 2,524 United Kingdom Gilt 1.25% 22/07/2027 2,366



363


A Accumulation

30/09/19 28/09/18 (p) (p)

Change in net assets per Share Opening net asset value per share 97.07 100.00 Return before operating charges* 8.57 (2.40) Operating charges (0.69) (0.53) Return after operating charges 7.88 (2.93) Distributions (3.58) (2.11) Retained distributions on accumulation shares 3.58 2.11 Closing net asset value per share 104.95 97.07 * after direct transaction costs of: 0.01 0.00 Performance Return after operating charges 8.12% (2.93%) Other information Closing net asset value (£’000) 72,537 69,517 Closing number of shares 69,118,263 71,612,254 Operating charges 0.69% 0.66% Direct transaction costs 0.01% 0.00% Prices (p) Highest share price 105.63 100.08 Lowest share price 95.51 96.95

Share class A Accumulation launched on 5 December 2017 at a price of 100 pence.



364




Date (%) (%) (%) (%)

30/09/19 Share Class A Accumulation 0.50 0.06 0.13 0.69 28/09/18 Share Class A Accumulation 0.50 0.06 0.10 0.66







Risk Warning








365



Argentina 0.40% (0.35%)

USD 500,000 Argentine Republic Government International Bond 5.875% 11/01/2028 166 0.23

USD 200,000 YPF 8.5% 28/07/2025 127 0.17 293 0.40

Armenia 0.25% (0.00%)

USD 225,000 Republic of Armenia International Bond 3.95% 26/09/2029 178 0.25

178 0.25

Australia 0.64% (1.04%)

GBP 250,000 APT Pipelines 3.125% 18/07/2031 272 0.38 USD 200,000 BHP Billiton Finance USA 6.75% 19/10/2075 189 0.26

461 0.64

Belgium 0.72% (0.00%)

GBP 523,000 Euroclear Bank 1.25% 30/09/2024 524 0.72 524 0.72

Canada 0.41% (0.96%)

GBP 300,000 Royal Bank of Canada 1.125% 22/12/2021 301 0.41 301 0.41

Cayman Islands 0.56% (0.79%*)

USD 250,000 Global Aircraft Leasing 6.5% 15/09/2024 206 0.29 USD 56,250 Transocean Phoenix 2 7.75% 15/10/2024 48 0.07 USD 56,250 Transocean Proteus 6.25% 01/12/2024 47 0.06

USD 127,000 Transocean Sentry 5.375% 15/05/2023 103 0.14 404 0.56

China 2.15% (2.03%*)

USD 200,000 CIFI 5.375% Perpetual 151 0.21 USD 200,000 Envision Energy Overseas Capital 7.5% 26/04/2021 109 0.15 USD 200,000 Future Land Development 6.15% 15/04/2023 144 0.20 USD 200,000 Future Land Development 7.5% 22/01/2021 156 0.21 USD 200,000 Lenovo 3.375% 24/01/2024 174 0.24 EUR 200,000 Rail Transit International Development

1.625% 22/06/2022 182 0.25 USD 300,000 Redsun Properties 9.95% 11/04/2022 221 0.30 USD 400,000 Sino-Ocean Land Treasure III 4.9% Perpetual 276 0.38 USD 200,000 Yango Justice International 10.25% 18/03/2022 150 0.21

1,563 2.15

Denmark 0.53% (0.00%)

USD 469,000 Danske Bank 3.244% 20/12/2025 383 0.53 383 0.53



366



Ecuador 0.57% (0.00%)

USD 500,000 Ecuador Government International Bond 9.5% 27/03/2030 410 0.57

410 0.57

Egypt 0.27% (0.00%)

USD 225,000 Egypt Government International Bond 7.6003% 01/03/2029 193 0.27

193 0.27

El Salvador 0.26% (0.00%)

USD 200,000 El Salvador Government International Bond 6.375% 18/01/2027 168 0.23

USD 25,000 El Salvador Government International Bond 8.625% 28/02/2029 24 0.03

192 0.26

France 3.15% (4.96%)

GBP 400,000 Banque Federative du Credit Mutuel 1.875% 13/12/2022 408 0.56

USD 350,000 Electricite de France 6% 22/01/2114 348 0.48 GBP 200,000 Electricite de France 6% Perpetual 217 0.30 EUR 250,000 Orano 4.875% 23/09/2024 258 0.35 EUR 400,000 Renault 1.25% 24/06/2025 362 0.50 USD 401,000 SPCM 4.875% 15/09/2025 332 0.46 EUR 200,000 Total Capital International 1.535% 31/05/2039 202 0.28 EUR 33,278 Vallourec 4.125% 04/10/2022 156 0.22

2,283 3.15

Germany 2.39% (5.89%)

EUR 204,000 ADLER Real Estate 2.125% 06/02/2024 185 0.26 EUR 200,000 ADLER Real Estate 3% 27/04/2026 188 0.26 EUR 210,000 CeramTec BondCo 5.25% 15/12/2025 193 0.27 EUR 406,000 Daimler 0.75% 08/02/2030 357 0.49 EUR 413,000 Deutsche Telekom 1.375% 05/07/2034 380 0.52 USD 200,000 IHO Verwaltungs 6% 15/05/2027 165 0.23 EUR 300,000 Infineon Technologies 3.625% Perpetual 264 0.36

1,732 2.39

Hong Kong 1.07% (1.77%*)

EUR 300,000 CNRC Capital 1.871% 07/12/2021 274 0.38 USD 200,000 ESR Cayman 7.875% 04/04/2022 165 0.23 USD 200,000 RKI Overseas Finance 2017 A 7% Perpetual 135 0.18 USD 250,000 Shui On Development 7.5% Perpetual 205 0.28

779 1.07

India 0.34% (0.42%)

USD 300,000 ReNew Power Synthetic 6.67% 12/03/2024 249 0.34 249 0.34



367



Indonesia 0.65% (0.59%)

USD 263,450 Star Energy Geothermal Wayang Windu 6.75% 24/04/2033 223 0.31

IDR 4,480,000,000 Wijaya Karya Persero 7.7% 31/01/2021 247 0.34 470 0.65

Ireland 1.96% (1.31%)

EUR 318,000 FCA Bank 0.5% 13/09/2024 281 0.39 USD 550,000 GE Capital International Funding 4.418% 15/11/2035 467 0.64 EUR 100,000 Roadster Finance 1.625% 09/12/2029 91 0.13 EUR 200,000 Roadster Finance 2.375% 08/12/2032 184 0.25 EUR 400,000 Zurich Finance Ireland Designated Activity

1.625% 17/06/2039 398 0.55 1,421 1.96

Italy 6.03% (2.49%)

EUR 200,000 Assicurazioni Generali 5.5% 27/10/2047 213 0.29 EUR 425,000 Autostrade per l’Italia 1.625% 12/06/2023 377 0.52 EUR 150,000 Autostrade per l’Italia 1.875% 26/09/2029 127 0.18 EUR 179,000 Banca Monte dei Paschi di Siena 10.5% 23/07/2029 152 0.21 EUR 232,000 Enel 3.5% 24/05/2080 222 0.31 EUR 46,000 Enel 5.451% 10/01/2074 47 0.07

GBP 200,000 Enel 6.625% 15/09/2076 218 0.30 EUR 246,580 Erna FRN 2.25% 25/07/2031 219 0.30 USD 667,000 Intesa Sanpaolo 4% 23/09/2029 539 0.74 EUR 400,000 Italy Buoni Poliennali Del Tesoro 2.05% 01/08/2027 393 0.54

EUR 1,161,000 Italy Buoni Poliennali Del Tesoro 3.1% 01/03/2040 1,282 1.77 EUR 200,000 Telecom Italia 1.125% 26/03/2022 177 0.24 EUR 400,000 UniCredit 9.25% Perpetual 409 0.56

4,375 6.03

Japan 2.18% (0.00%)

JPY 95,000,000 Japan Government Ten Year Bond 0.1% 20/06/2029 736 1.01 JPY 55,000,000 Japan Government Thirty Year Bond

0.4% 20/06/2049 418 0.58 JPY 55,000,000 Japan Government Twenty Year Bond

0.4% 20/03/2039 430 0.59 1,584 2.18

Jersey 1.49% (1.04%)

GBP 101,000 AA Bond 5.5% 31/07/2043 87 0.12 GBP 250,000 CPUK Finance 7.239% 28/02/2024 304 0.42 GBP 350,000 HSBC Bank Capital Funding Sterling

1 5.844% Perpetual 464 0.64 GBP 300,000 Intu Jersey 2 2.875% 01/11/2022 225 0.31

1,080 1.49



368



Kenya 0.23% (0.00%)

USD 200,000 Kenya Government International Bond 8% 22/05/2032 170 0.23

170 0.23

Luxembourg 5.32% (3.02%)

EUR 300,000 Aroundtown 1.45% 09/07/2028 271 0.37 EUR 393,000 Blackstone Property Partners Europe

1.75% 12/03/2029 349 0.48 EUR 243,000 CPI Property 4.875% Perpetual 224 0.31

EUR 1,200,000 European Investment Bank 0.05% 13/10/2034 1,070 1.48 USD 200,000 FAGE International 5.625% 15/08/2026 146 0.20 GBP 300,000 Garfunkelux Holdco 3 8.5% 01/11/2022 281 0.39 EUR 350,000 Holcim Finance Luxembourg 1.75% 29/08/2029 333 0.46 EUR 248,000 Logicor Financing 0.5% 30/04/2021 221 0.30 USD 300,000 SES 3.6% 04/04/2023 248 0.34 EUR 400,000 TLG Finance 3.375% Perpetual 360 0.50 EUR 400,000 Vivion Investments 3% 08/08/2024 353 0.49

3,856 5.32

Mauritius 0.22% (0.00%)

USD 200,000 Neerg Energy 6% 13/02/2022 160 0.22 160 0.22

Mexico 1.41% (2.97%)

USD 1,325,000 Petroleos Mexicanos 5.35% 12/02/2028 1,026 1.41 1,026 1.41

Mongolia 0.26% (0.00%)

USD 250,000 Mongolian Mining 9.25% 15/04/2024 192 0.26 192 0.26

Netherlands 6.16% (5.58%)

GBP 367,000 BMW International Investment 1.25% 11/07/2022 368 0.51 GBP 400,000 Daimler International Finance 1.5% 18/08/2021 402 0.55 EUR 510,000 EDP Finance 0.375% 16/09/2026 450 0.62 USD 200,000 Enel Finance International 3.5% 06/04/2028 166 0.23 USD 400,000 Greenko Dutch 5.25% 24/07/2024 325 0.45 EUR 203,000 LeasePlan 7.375% Perpetual 193 0.27 EUR 228,000 LYB International Finance II 0.875% 17/09/2026 201 0.28 EUR 217,000 LYB International Finance II 1.625% 17/09/2031 194 0.27 EUR 425,000 Mondelez International Holdings Netherlands

0.875% 01/10/2031 375 0.52 USD 200,000 Nostrum Oil & Gas Finance 7% 16/02/2025 83 0.11 EUR 215,000 Sigma Holdco 5.75% 15/05/2026 188 0.26 EUR 175,000 Stichting AK Rabobank Certificaten 6.5% Perpetual 195 0.27 USD 300,000 Syngenta Finance 5.182% 24/04/2028 258 0.35 EUR 400,000 Telefonica Europe 2.875% Perpetual 356 0.49



369



Netherlands 6.16% (5.58%) (continued)

USD 500,000 Teva Pharmaceutical Finance Netherlands III 6% 15/04/2024 351 0.48

EUR 400,000 Wintershall Dea Finance 1.823% 25/09/2031 362 0.50 4,467 6.16

Oman 0.42% (0.00%)

USD 400,000 Oman Government International Bond 6.75% 17/01/2048 306 0.42

306 0.42

Qatar 1.09% (0.00%)

USD 600,000 Qatar Government International Bond 4% 14/03/2029 540 0.74

USD 250,000 Qatar Government International Bond 4.817% 14/03/2049 251 0.35

791 1.09

Romania 0.00% (0.38%)

Saudi Arabia 0.92% (0.00%)

USD 550,000 Saudi Arabian Oil 3.5% 16/04/2029 465 0.64 USD 225,000 Saudi Arabian Oil 4.375% 16/04/2049 200 0.28

665 0.92

South Africa 0.46% (0.00%)

USD 400,000 Eskom 7.125% 11/02/2025 334 0.46 334 0.46

Spain 0.52% (0.88%)

EUR 400,000 Cellnex Telecom 0.5% 05/07/2028 376 0.52 376 0.52

Sweden 0.28% (0.62%)

EUR 225,000 Intrum 3.5% 15/07/2026 202 0.28 202 0.28

Turkey 0.55% (1.64%)

USD 500,000 Turkey Government International Bond 6.125% 24/10/2028 397 0.55

397 0.55

Ukraine 0.25% (0.00%)

USD 200,000 Ukraine Government International Bond 8.994% 01/02/2024 178 0.25

178 0.25

United Arab Emirates 0.29% (0.72%)

USD 250,000 GEMS MENASA Cayman 7.125% 31/07/2026 209 0.29 209 0.29



370



United Kingdom 9.53% (18.53%*)

USD 100,000 AstraZeneca 3.5% 17/08/2023 85 0.12 EUR 350,000 Aviva 6.125% 05/07/2043 362 0.50 EUR 400,000 Barclays Bank 6.625% 30/03/2022 405 0.56 EUR 500,000 Channel Link Enterprises Finance

2.706% 30/06/2050 461 0.63 GBP 300,000 Channel Link Enterprises Finance

3.043% 30/06/2050 318 0.44 EUR 150,000 eG Global Finance 4.375% 07/02/2025 129 0.18 GBP 400,000 EI 6.375% 26/09/2031 406 0.56 GBP 150,000 Greene King Finance 3.593% 15/03/2035 160 0.22 GBP 233,721 Income Contingent Student Loans 2 2007-2009

FRN 1.8575% 24/07/2058 232 0.32 GBP 143,746 Intu Debenture 5.562% 31/12/2027 129 0.18 GBP 300,000 Investec Bank 9.625% 17/02/2022 349 0.48 EUR 420,000 ITV 1.375% 26/09/2026 375 0.52 GBP 200,000 Nationwide Building Society 5.875% Perpetual 204 0.28 GBP 114,000 Newday Funding 2019-1 FRN 3.2102% 15/06/2027 114 0.16 GBP 128,000 Newday Funding 2019-2 FRN 3.111% 15/09/2027 128 0.18 GBP 200,000 Pension Insurance 5.625% 20/09/2030 207 0.28 GBP 200,000 Phoenix 4.125% 20/07/2022 209 0.29 GBP 350,000 RAC Bond 4.565% 06/05/2046 352 0.48 USD 200,000 Royal Bank of Scotland 7.648% Perpetual 222 0.31 GBP 200,000 Shaftesbury Carnaby 2.487% 30/09/2031 206 0.28 GBP 400,000 SSE 3.875% Perpetual 403 0.55 GBP 100,000 Thames Water Utilities Finance 7.738% 09/04/2058 209 0.29 GBP 104,971 Unique Pub Finance 5.659% 30/06/2027 118 0.16 GBP 400,000 Virgin Media Secured Finance 5.125% 15/01/2025 413 0.57 GBP 353,000 Westfield Stratford City Finance

NO 2 1.642% 04/08/2031 361 0.50 GBP 350,000 Yorkshire Building Society 3% 18/04/2025 359 0.49

6,916 9.53

United States 39.78% (37.93%)

EUR 540,000 AbbVie 0.75% 18/11/2027 481 0.66 USD 143,000 AMC Entertainment 5.75% 15/06/2025 110 0.15 USD 107,000 AMC Entertainment 6.125% 15/05/2027 79 0.11 USD 225,000 Baker Hughes 3.337% 15/12/2027 187 0.26 USD 300,000 Baker Hughes 4.08% 15/12/2047 244 0.34 USD 200,000 CommScope 6% 01/03/2026 168 0.23 USD 300,000 CVS Health 4.78% 25/03/2038 268 0.37 USD 300,000 Denbury Resources 9% 15/05/2021 229 0.31 USD 250,000 FXI 7.875% 01/11/2024 179 0.25

USD 8,000 General Electric 4.125% 09/10/2042 7 0.01 USD 500,000 General Motors Financial 3.55% 08/07/2022 414 0.57 USD 283,000 Global Partners 7% 01/08/2027 236 0.32 USD 40,000 Global Partners 7% 15/06/2023 33 0.05



371




USD 115,000 HCA 4.125% 15/06/2029 98 0.13 USD 64,000 HCA 5.125% 15/06/2039 57 0.08

USD 150,000 Mosaic Solar Loan Trust 2018-1 2% 22/06/2043 115 0.16 USD 196,765 Mosaic Solar Loans 2017-2 LLC 0% 22/06/2043 149 0.20 USD 168,611 Mosaic Solar Loans 2017-2 LLC 2% 22/06/2043 132 0.18 GBP 477,000 New York Life Global Funding 1.25% 17/12/2026 478 0.66 USD 150,000 Nutanix 0% 15/01/2023 113 0.16 USD 350,000 Occidental Petroleum 4.4% 15/04/2046 289 0.40 USD 100,000 Occidental Petroleum 4.625% 15/06/2045 84 0.12 USD 250,000 Par Pharmaceutical 7.5% 01/04/2027 186 0.26 USD 300,000 Parsley Energy 5.625% 15/10/2027 252 0.35 EUR 120,000 Thermo Fisher Scientific 0.5% 01/03/2028 106 0.15 EUR 240,000 Thermo Fisher Scientific 1.5% 01/10/2039 214 0.30 USD 370,000 Time Warner Cable 5.875% 15/11/2040 335 0.46


USD 350,000 United States Treasury Inflation Indexed Bonds 0.75% 15/07/2028 305 0.42


USD 450,000 United States Treasury Note/Bond 1.25% 31/08/2024 360 0.50 USD 2,790,000 United States Treasury Note/Bond

1.625% 15/08/2029 2,254 3.11 USD 500,000 United States Treasury Note/Bond

2.125% 31/05/2026 419 0.58 USD 3,400,000 United States Treasury Note/Bond 2.25% 15/02/2027 2,878 3.97 USD 7,550,000 United States Treasury Note/Bond

2.375% 15/03/2021 6,181 8.52 USD 150,000 United States Treasury Note/Bond

2.375% 29/02/2024 126 0.17 USD 900,000 United States Treasury Note/Bond 2.75% 15/11/2047 828 1.14 USD 300,000 United States Treasury Note/Bond

2.875% 15/05/2049 284 0.39 USD 700,000 United States Treasury Note/Bond

2.875% 31/10/2023 597 0.82 USD 5,000,000 United States Treasury Note/Bond 3% 31/10/2025 4,384 6.04

EUR 646,000 Verizon Communications 0.875% 19/03/2032 575 0.79 GBP 540,000 Wells Fargo 2.125% 24/09/2031 547 0.75 USD 350,000 Welltower 4.125% 15/03/2029 310 0.43 USD 288,000 Western Midstream Operating 4.5% 01/03/2028 226 0.31 USD 68,000 Western Midstream Operating 4.75% 15/08/2028 54 0.07

USD 250,000 Xerox 4.8% 01/03/2035 173 0.24 28,857 39.78



372



Swap (0.59)% ((0.72)%)

USD 900,000 Citi Credit Default Swap USD 1% 20/06/2024 10 0.01 KRW 837,780,000 Citi Interest Rate Swap KRW 1.81% 10/01/2029 30 0.04

ILS 8,500,000 HSBC Interest Rate Swap ILS 1.5627% 07/06/2029 (139) (0.20) USD 1,270,000 JP Morgan Credit Default Swap USD 1% 20/06/2024 (12) (0.02)

MXN 23,500,000 JP Morgan Interest Rate Swap MXN 8.15% 19/05/2028 101 0.14

MYR 20,000 JP Morgan Interest Rate Swap MYR 3.965% 09/01/2029 0 0.00

EUR 2,450,000 Morgan Stanley Credit Default Swap EUR 5% 20/12/2024 (283) (0.39)

USD 950,000 Morgan Stanley Credit Default Swap USD 1% 20/06/2024 2 0.01

USD 500,000 Morgan Stanley Credit Default Swap USD 1% 20/12/2024 8 0.01

USD 1,000,000 Morgan Stanley Credit Default Swap USD 5% 20/12/2024 56 0.08

AUD 2,000,000 Morgan Stanley Interest Rate Swap AUD 1.0748% 16/08/2029 4 0.01

AUD 900,000 Morgan Stanley Interest Rate Swap AUD 1.4803% 26/07/2029 (17) (0.02)

AUD 1,900,000 Morgan Stanley Interest Rate Swap AUD 2.1457% 23/04/2029 100 0.14

BRL 490,000 Morgan Stanley Interest Rate Swap BRL 8.78% 02/01/2025 (14) (0.02)

CAD 1,600,000 Morgan Stanley Interest Rate Swap CAD 1.852% 04/07/2029 (12) (0.01)

CHF 900,000 Morgan Stanley Interest Rate Swap CHF 0.2853% 29/07/2029 (10) (0.01)

CHF 930,000 Morgan Stanley Interest Rate Swap CHF 0.41% 04/04/2028 63 0.09



CLP 509,730,000 Morgan Stanley Interest Rate Swap CLP 4.045% 10/01/2029 (75) (0.10)

CZK 7,900,000 Morgan Stanley Interest Rate Swap CZK 1.85% 10/01/2029 (15) (0.02)

CZK 30,770,000 Morgan Stanley Interest Rate Swap CZK 1.9975% 08/03/2029 (74) (0.10)

CZK 104,650,000 Morgan Stanley Interest Rate Swap CZK 2.31% 10/12/2020 47 0.07

EUR 700,000 Morgan Stanley Interest Rate Swap EUR 0.0678% 29/07/2029 15 0.02



373



Swap (0.59)% ((0.72)%) (continued)




GBP 500,000 Morgan Stanley Interest Rate Swap GBP 0.6328% 15/08/2029 (1) 0.00

GBP 600,000 Morgan Stanley Interest Rate Swap GBP 0.9723% 11/07/2029 18 0.02

HKD 16,200,000 Morgan Stanley Interest Rate Swap HKD 1.9925% 10/06/2029 43 0.06

HUF 100,250,000 Morgan Stanley Interest Rate Swap HUF 2.34% 08/03/2029 (32) (0.05)

HUF 114,850,000 Morgan Stanley Interest Rate Swap HUF 2.44% 10/01/2029 (40) (0.06)

JPY 188,600,000 Morgan Stanley Interest Rate Swap JPY 0.0085% 24/06/2029 8 0.01

JPY 93,100,000 Morgan Stanley Interest Rate Swap JPY 0.0427% 13/08/2029 2 0.01

JPY 122,300,000 Morgan Stanley Interest Rate Swap JPY 0.078% 27/08/2029 (3) (0.01)

JPY 12,500,000 Morgan Stanley Interest Rate Swap JPY 0.09395% 09/09/2029 (1) 0.00

JPY 14,300,000 Morgan Stanley Interest Rate Swap JPY 0.1298%18/03/2029 2 0.00

KRW 754,820,000 Morgan Stanley Interest Rate Swap KRW 1.7975% 08/03/2029 27 0.03

NZD 1,700,000 Morgan Stanley Interest Rate Swap NZD 1.67% 30/07/2029 39 0.06

NZD 2,000,000 Morgan Stanley Interest Rate Swap NZD 2.36% 18/03/2029 (111) (0.15)

NZD 1,900,000 Morgan Stanley Interest Rate Swap NZD 2.415% 12/02/2029 (110) (0.15)

PLN 5,810,000 Morgan Stanley Interest Rate Swap PLN 2.0308% 05/07/2029 (42) (0.06)

SEK 14,600,000 Morgan Stanley Interest Rate Swap SEK 0.90920% 08/04/2029 (87) (0.12)

SEK 9,500,000 Morgan Stanley Interest Rate Swap SEK 1.299% 12/11/2028 (92) (0.13)

SGD 910,000 Morgan Stanley Interest Rate Swap SGD 2.32% 11/03/2029 (31) (0.05)

SGD 730,000 Morgan Stanley Interest Rate Swap SGD 2.3325% 11/01/2029 (24) (0.03)



374



Swap (0.59)% ((0.72)%) (continued)

USD 700,000 Morgan Stanley Interest Rate Swap USD 1.6023% 12/08/2029 1 0.00

USD 1,600,000 Morgan Stanley Interest Rate Swap USD 2.3578% 01/04/2029 92 0.13

USD 700,000 Morgan Stanley Interest Rate Swap USD 2.6843% 04/02/2029 56 0.08

USD 1,600,000 Morgan Stanley Interest Rate Swap USD 2.7183% 19/02/2029 132 0.18

ZAR 8,600,000 Morgan Stanley Interest Rate Swap ZAR 7.7375% 05/06/2029 4 0.01

ZAR 21,000,000 Morgan Stanley Interest Rate Swap ZAR 7.9% 03/04/2029 26 0.04

(432) (0.59)

Futures (0.03)% (0.21%)

2 Australian Bond 10 Year Futures December 2019 (1) 0.00 4 Canadian Bond 10 Year Futures December 2019 1 0.00

11 German Euro BOBL Futures December 2019 3 0.01 (12) German Euro BTP Futures December 2019 (11) (0.02) (17) German Euro BUND Futures December 2019 (13) (0.02) (1) German Euro BUXL Futures December 2019 2 0.00 14 German Euro SCHATZ Futures December 2019 (4) (0.01) 16 UK Long Gilt Futures December 2019 6 0.01

(33) US Treasury 10 Year Ultra Futures December 2019 (34) (0.05) (24) US Treasury Note 10 Year Futures December 2019 25 0.04

3 US Treasury Note 2 Year Futures December 2019 (1) 0.00 3 US Treasury Note 5 Year Futures December 2019 1 0.00

(1) US Treasury Ultra Bond Futures December 2019 5 0.01 (21) (0.03)

Forward Currency Contracts 1.66% (0.82%)

Bought AUD1,707,000 for GBP946,999 Settlement 14/11/2019 (13) (0.02) Bought BRL602,000 for USD144,209 Settlement 14/11/2019 0 0.00 Bought CAD1,179,000 for GBP729,206 Settlement 14/11/2019 (7) (0.01) Bought CLP509,462,000 for USD711,293 Settlement 14/11/2019 (9) (0.01) Bought COP1,662,877,000 for USD484,631 Settlement 14/11/2019 (6) (0.01) Bought CZK1,466,000 for GBP52,359 Settlement 14/11/2019 (2) 0.00 Bought EUR419,000 for GBP370,220 Settlement 02/10/2019 0 0.00 Bought EUR5,825,000 for GBP5,251,352 Settlement 14/11/2019 (90) (0.12)



375



Forward Currency Contracts 1.66% (0.82%) (continued)

Bought HUF201,284,000 for GBP563,881 Settlement 14/11/2019 (32) (0.04) Bought IDR10,764,819,000 for USD746,652 Settlement 14/11/2019 7 0.01 Bought ILS4,090,000 for GBP954,568 Settlement 14/11/2019 1 0.00 Bought INR146,937,000 for USD2,044,727 Settlement 14/11/2019 16 0.02 Bought JPY84,620,000 for GBP648,948 Settlement 14/11/2019 (13) (0.02) Bought KRW1,363,897,000 for USD1,135,697 Settlement 14/11/2019 5 0.01 Bought MXN10,950,000 for GBP448,441 Settlement 14/11/2019 (2) 0.00 Bought MYR3,827,000 for USD912,059 Settlement 14/11/2019 1 0.00 Bought NOK26,298,000 for GBP2,377,673 Settlement 14/11/2019 (31) (0.04) Bought NZD3,033,000 for GBP1,572,244 Settlement 14/11/2019 (30) (0.04) Bought PEN447,000 for USD132,811 Settlement 14/11/2019 (1) 0.00 Bought PHP3,047,000 for USD58,122 Settlement 14/11/2019 0 0.00 Bought PLN2,248,000 for GBP466,235 Settlement 14/11/2019 (12) (0.02) Bought RUB42,499,000 for USD635,513 Settlement 14/11/2019 13 0.01 Bought SEK18,684,000 for GBP1,596,771 Settlement 14/11/2019 (53) (0.07) Bought SGD100,000 for GBP59,498 Settlement 14/11/2019 (1) 0.00 Bought THB3,080,000 for GBP82,157 Settlement 14/11/2019 (1) 0.00 Bought TRY3,268,000 for GBP468,764 Settlement 14/11/2019 (7) (0.01) Bought TWD43,012,000 for USD1,377,354 Settlement 14/11/2019 10 0.01 Bought USD1,377,743 for INR99,460,000 Settlement 14/11/2019 (16) (0.02) Bought USD1,411,203 for IDR20,164,943,000 Settlement 14/11/2019 (2) 0.00 Bought USD1,841,048 for TWD57,542,000 Settlement 14/11/2019 (15) (0.02)



376




Bought USD10,182,000 for GBP8,254,960 Settlement 14/11/2019 (6) (0.01) Bought USD144,909 for BRL602,000 Settlement 14/11/2019 1 0.00 Bought USD172,397 for PHP9,050,000 Settlement 14/11/2019 (2) 0.00 Bought USD181,498 for PEN618,000 Settlement 14/11/2019 (1) 0.00 Bought USD223,349 for MYR938,000 Settlement 14/11/2019 0 0.00 Bought USD486,849 for COP1,665,640,000 Settlement 14/11/2019 7 0.01 Bought USD579,999 for RUB37,826,000 Settlement 14/11/2019 0 0.00 Bought USD668,951 for CLP480,945,000 Settlement 14/11/2019 6 0.01 Bought USD977,590 for KRW1,176,800,000 Settlement 14/11/2019 (6) (0.01) Bought ZAR7,089,000 for GBP377,523 Settlement 14/11/2019 (1) 0.00 Sold AUD2,937,000 for GBP1,628,841 Settlement 14/11/2019 22 0.03 Sold CAD2,050,000 for GBP1,246,737 Settlement 14/11/2019 (8) (0.01) Sold CHF194,000 for GBP164,340 Settlement 14/11/2019 6 0.01 Sold EUR25,866,000 for GBP23,693,811 Settlement 14/11/2019 777 1.07 Sold HKD720,000 for GBP75,641 Settlement 14/11/2019 1 0.00 Sold HUF226,615,000 for GBP634,112 Settlement 14/11/2019 35 0.05 Sold ILS3,494,000 for GBP816,068 Settlement 14/11/2019 0 0.00 Sold JPY292,611,000 for GBP2,260,265 Settlement 14/11/2019 61 0.08 Sold MXN13,186,000 for GBP537,643 Settlement 14/11/2019 0 0.00 Sold NOK18,291,000 for GBP1,671,956 Settlement 14/11/2019 40 0.05 Sold NZD2,886,000 for GBP1,504,161 Settlement 14/11/2019 37 0.05 Sold PLN2,836,000 for GBP585,350 Settlement 14/11/2019 12 0.02



377




Sold SEK11,500,000 for GBP961,342 Settlement 14/11/2019 11 0.02 Sold THB30,237,000 for GBP805,755 Settlement 14/11/2019 4 0.01 Sold TRY1,257,000 for GBP174,213 Settlement 14/11/2019 (4) (0.01) Sold USD58,806,000 for GBP48,129,512 Settlement 14/11/2019 490 0.67 Sold ZAR8,782,000 for GBP476,419 Settlement 14/11/2019 10 0.01

1,202 1.66

Portfolio of investments** 68,726 94.75 Net other assets 3,811 5.25 Net assets 72,537 100.00



* Since the previous report the classification headings have been updated by data providers. Comparative figures have been updated where appropriate.

** A total of £206,000 [2018: £2,235,000] of US government bonds have been pledged as collateral for derivative positions. This amount is shown separately on the balance sheet as Other loan assets.

Comparative figures shown above in brackets relate to 28 September 2018.

Gross purchases for the year (excl. Derivatives): £198,067,000 [2018: £152,063,000] (See note 16).

Total sales net of transaction costs for the year (excl. Derivatives): £204,113,000 [2018: £85,048,000] (See note 16).


Bonds Rating AAA 2.39 AA 32.55 A 8.88 BBB 23.62 BB 13.77 B 8.84 CCC 1.75 Not rated 2.87 Bonds 94.67 Uninvested Cash 4.45 FX/Derivatives 0.88 Net Assets 100.00 The above information has been supplied by the Investment Manager. Bonds not rated are of investment grade, but rating not sought by issuer.



378


29/09/18 to 30/09/19 05/12/17 to 28/09/18

Note £’000 £’000 £’000 £’000

Income: Net capital gains/(losses) 2 3,574 (2,829) Revenue 3 2,613 1,444 Expenses 4 (411) (290) Interest payable and similar charges 5 (18) (7) Net revenue before taxation 2,184 1,147 Taxation 6 – (1) Net revenue after taxation 2,184 1,146 Total return before distributions 5,758 (1,683) Distributions 7 (2,595) (1,436) Change in net assets attributable to Shareholders from investment activities 3,163 (3,119)

29/09/18 to 30/09/19 05/12/17 to 28/09/18

£’000 £’000 £’000 £’000

Opening net assets attributable to Shareholders 69,517 – Amounts receivable on issue of Shares 14,590 107,612 Amounts payable on cancellation of Shares (17,346) (36,555)

(2,756) 71,057 Dilution adjustment 20 26 Change in net assets attributable to Shareholders from investment activities (see above) 3,163 (3,119) Retained distributions on accumulation Shares 2,593 1,553 Closing net assets attributable to Shareholders 72,537 69,517




379


30/09/19 28/09/18

Note £’000 £’000 £’000 £’000

Assets: Fixed assets: Investments 70,376 65,439 Current assets: Debtors 8 1,996 1,287 Cash and bank balances 9 4,043 2,185 Other loan assets 206 2,235 Total current assets 6,039 5,707 Total assets 76,621 71,146 Liabilities: Investment liabilities (1,856) (783) Creditors: Bank overdrafts 11 (3) – Other creditors 10 (2,225) (846) Total creditors (2,228) (846) Total liabilities (4,084) (1,629) Net assets attributable to Shareholders 72,537 69,517



380





30/09/19 28/09/18 £'000 £'000

The net capital gains/(losses) during the period comprise: Brokers commission on futures (6) (3) Currency (losses)/gains (67) 525 Derivative contracts (1,235) (293) Forward currency contracts (2,458) (2,858) Non-derivative securities 7,435 (149) Transaction charges (95) (51) Net capital gains/(losses) 3,574 (2,829)

3. Revenue 29/09/18 to 05/12/17 to

30/09/19 28/09/18 £’000 £’000

Bank interest 14 2 Interest from Debt Securities 2,635 1,546 Overseas dividends 5 – Revenue from swaps (41) (104) Total revenue 2,613 1,444

4. Expenses 29/09/18 to 05/12/17 to

30/09/19 28/09/18 £’000 £’000

Payable to the ACD, associates of the ACD, and agents of either of them AMC fees 365 260

365 260 Payable to the Depositary, associates of the Depositary and agents of either of them Depositary fees 21 15 Safe custody fees 6 4


19 11 Total expenses 411 290




381



30/09/19 28/09/18 £’000 £’000


6. Taxation


30/09/19 28/09/18 £’000 £’000

Irrecoverable overseas tax – 1 Total current tax charge – 1 Total taxation for the year (Note 6 (b)) – 1



29/09/18 to 05/12/17 to

30/09/19 28/09/18 £’000 £’000

Net revenue before taxation 2,184 1,147 Net revenue for the year multiplied by the standard rate of corporation tax 437 229 Effects of: Irrecoverable overseas tax – 1 Tax deductible interest distributions (437) (229) Total tax charge for the year – 1






382


7. Distributions


29/09/18 to 05/12/17 to

30/09/19 28/09/18 £’000 £’000

Interim 1,935 1,036 Final 658 517 Add: Revenue paid on cancellation of Shares 69 150 Deduct: Revenue received on creation of Shares (67) (267) Net distribution for the year 2,595 1,436 Reconciliation of net revenue after taxation to distributions Net revenue after taxation 2,184 1,146 Expenses charged to capital 411 290 Net distribution for the year 2,595 1,436


8. Debtors 29/09/18 28/09/18

£’000 £’000

Accrued revenue 538 634 Amounts receivable for creation of Shares 10 195 Sales awaiting settlement 1,448 458 Total debtors 1,996 1,287


£’000 £’000

Cash and bank balances 3,241 2,053 Amount held at futures clearing houses and brokers 802 132 Total cash and bank balances 4,043 2,185



383


10. Other creditors 30/09/19 28/09/18

£’000 £’000

Amounts payable for cancellation of Shares 27 – Purchases awaiting settlement 2,136 803

2,163 803 Accrued expenses Manager and Agents AMC fees 30 28

30 28 Depositary and Agents Depositary fees 3 2 Safe custody fees 1 – Transaction charges 17 6


11 7 Total other creditors 2,225 846

11. Bank overdrafts 30/09/19 28/09/18

£’000 £’000

Bank overdrafts 3 – Total bank overdrafts 3 –











384


13. Share Classes


%

Share Class A Accumulation 0.50




Share Class A Accumulation 71,612,254 14,855,586 (17,349,577) – 69,118,263










385







30/09/19 Argentine Peso 6 – – 6 Australian Dollar 110 – 127 237 Brazilian Real – – – – Canadian Dollar 126 – 1 127 Chilean Peso – – – – Colombian Peso – – – – Czech Koruna – – 47 47 Euro 456 16,954 1,662 19,072 Hong Kong Dollar 6 – 45 51 Hungarian Forint – – 35 35 Indian Rupee – – 16 16 Indonesian Rupiah – 247 10 257 Japanese Yen 12 1,584 73 1,669 Malaysian Ringgit – – 1 1 Mexican Peso 1 – 101 102 New Israeli Sheqel 2 – 1 3 New Russian Ruble – – 13 13 New Taiwan Dollar – – 10 10 New Zealand Dollar 1 – 76 77 Norwegian Krone – – 40 40 Peruvian Nouveau Sol – – – – Philippine Peso – – – – Polish Zloty 3 – 12 15 Singapore Dollar 1 – – 1 South African Rand 3 – 40 43 South Korean Won – – 62 62 Sterling 3,042 9,973 127 13,142 Swedish Krona 1 – 11 12 Swiss Franc 17 – 173 190 Thailand Baht – – 4 4 Turkish Lira – – – – US Dollar 256 39,219 1,914 41,389 Total 4,043 67,977 4,601 76,621 Currency Assets 28/09/18 Argentine Peso 9 – – 9 Australian Dollar 3 – 4 7 Canadian Dollar 34 – 26 60 Colombian Peso – – 72 72



386



(b) Interest rate risk profile of financial assets and liabilities (continued) Financial assets


Currency Assets £’000 £’000 £’000 £’000 Euro 3,572 14,063 353 17,988 Hong Kong Dollar 2 192 1 195 Indonesian Rupiah – 214 3 217 Japanese Yen 5 – – 5 Mexican Peso – 1,192 11 1,203 New Russian Ruble – – 70 70 New Zealand Dollar 2 – 40 42 Polish Zloty 15 – 19 34 South Korean Won – – 447 447 Sterling 4,910 11,002 53,369 69,281 Swiss Franc 1 – – 1 US Dollar 1,288 32,380 756 34,424 Total 9,841 59,043 55,171 124,055

Financial assets



30/09/19 Argentine Peso – – – – Australian Dollar – – 31 31 Brazilian Real – – 14 14 Canadian Dollar – – 28 28 Chilean Peso – – 84 84 Colombian Peso – – 6 6 Czech Koruna – – 92 92 Euro – – 2,380 2,380 Hong Kong Dollar 1 – – 1 Hungarian Forint – – 104 104 Indian Rupee – – – – Indonesian Rupiah – – – – Japanese Yen – – 17 17 Malaysian Ringgit – – – – Mexican Peso – – 2 2 New Israeli Sheqel – – 139 139 New Russian Ruble – – – – New Taiwan Dollar – – – – New Zealand Dollar – – 251 251 Norwegian Krone – – 31 31 Peruvian Nouveau Sol – – 1 1 Philippine Peso – – – – Polish Zloty – – 54 54 Singapore Dollar 1 – 56 57



387



(b) Interest rate risk profile of financial assets and liabilities (continued) Financial

Floating rate Fixed rate liabilities financial financial not carrying liabilities liabilities interest Total

Currency Liabilities £’000 £’000 £’000 £’000 South African Rand – – 1 1 South Korean Won – – – – Sterling – – 91 91 Swedish Krona – – 232 232 Swiss Franc – – 11 11 Thailand Baht – – 1 1 Turkish Lira – – 10 10 US Dollar 1 – 445 446 Total 3 – 4,081 4,084

28/09/18 Australian Dollar – – 1 1 Canadian Dollar – – 2 2 Euro – – 17,611 17,611 Hong Kong Dollar – – 193 193 Hungarian Forint – – 61 61 Indonesian Rupiah – – 485 485 Japanese Yen – – 4 4 Mexican Peso – – 1,133 1,133 New Zealand Dollar – – 15 15 South African Rand – – 140 140 Sterling – – 198 198 Swiss Franc – – 4 4 Turkish Lira – – 108 108 US Dollar – – 34,583 34,583 Total – – 54,538 54,538



388






2019 BNP Paribas 29 – – – Canadian Imperial Bank of Commerce 4 – – – Citibank 747 – – – HSBC 330 130 – Cash JP Morgan Chase Bank (London) 72 – 110 Cash Morgan Stanley – 316 – Cash and Bonds Royal Bank of Canada (UK) 40 – – – 2018 BNP Paribas 15 – – – Canadian Imperial Bank of Commerce 3 – – – Citibank 23 – – – HSBC 192 – – – Merrill Lynch – – 100 Cash Morgan Stanley – 2,235 10 Cash and Bonds Royal Bank of Canada (UK) 11 – – – State Street Bank and Trust 310 – – – UBS 144 – – –

(d) Leverage



Strategic Bond 48.55% 541.16% 174.64% 278.87%



389



£’000 £’000 £’000 £’000

Analysis of total purchase costs Purchases in the year before transaction costs: Bonds 198,064 152,062

198,064 152,062 Commissions – Derivatives 3 1 Total purchase costs 3 1 Gross purchase total 198,067 152,063 Analysis of total sale costs Gross sales in the year before transaction costs: Bonds 204,116 85,049

204,116 85,049 Commissions – Derivatives (3) (1) Total sale costs (3) (1) Total sales net of transaction costs 204,113 85,048





390




Purchases – Commissions Bonds 0.0000 0.0000 Purchases – Taxes Bonds 0.0000 0.0000 Sales – Commissions Bonds 0.0000 0.0000 Sales – Taxes Bonds 0.0000 0.0000

29/09/18 to 05/12/17 to








Valuation technique Level 1: The unadjusted quoted 25,031 (64) 29,538 (26) price in an active market for identical assets or liabilities Level 2: Inputs other than quoted 45,551 (1,792) 38,136 (757) prices included within Level 1 that are observable for the asset or liability, either directly or indirectly Level 3: Inputs are unobservable – – – – (i.e. for which market data is unavailable) for the asset or liability

70,582 (1,856) 67,674 (783)



391


First Distribution in pence per Share

Group 1 Shares purchased prior to 29 September 2018 Group 2 Shares purchased on or after 29 September 2018 to 31 December 2018



Share Class A Accumulation Group 1 0.9240 – 0.9240 N/A Group 2 0.4427 0.4813 0.9240 N/A

Second Distribution in pence per Share

Group 1 Shares purchased prior to 1 January 2019 Group 2 Shares purchased on or after 1 January 2019 to 31 March 2019




Third Distribution in pence per Share

Group 1 Shares purchased prior to 1 April 2019 Group 2 Shares purchased on or after 1 April 2019 to 30 June 2019





Group 1 Shares purchased prior to 1 July 2019 Group 2 Shares purchased on or after 1 July 2019 to 30 September 2019

Distribution Distribution Gross payable paid





392

Omnis UK All Companies Fund



The Fund aims to achieve a return consisting of both income and capital growth which, after all fees and expenses, exceeds that of the FTSE All-Share TR Index over a five-year rolling period.

Investment Policy

The Fund intends to invest at least 80% in the equity securities of UK companies, defined as those which are domiciled, incorporated or have a significant exposure to the UK. The Fund may also invest in other transferable securities (for example international equities), units in collective investment schemes (including exchange traded funds and other schemes managed and operated by the ACD or its associates), money market instruments, warrants, cash, near cash and deposits as detailed in the Prospectus.



Benchmark

The performance of the Fund will be measured against the FTSE All-Share TR Index for target return purposes.

Portfolio Review


On a sector basis, security selection in the Media sector, an underweight in Oil & Gas and a slight overweight in Technology supported relative returns. Security selection and an overweight in Industrial Goods & Services, an overweight in Automobiles & Parts and security selection in Chemicals weighed on relative performance, as these more economically sensitive areas of the markets struggled amidst the heightened uncertainty.

Deal news helped to bolster performance as overseas buyers take advantage of the weak UK currency to acquire attractive UK assets. Entertainment One Ltd. was a significant contributor following a bid from a US toy company, highlighting this trend. Other contributors included financial firms Intermediate Capital Group PLC and Ashmore Group PLC. Intermediate Capital Group’s third-party funds under management continue to grow strongly and we believe this will continue to drive a re-rating of the group. Recent quarterly results have shown resilient investor inflows. Emerging markets debt specialist Ashmore rose as momentum appeared to have returned to its asset under management growth.

On the downside, UK staffing firm Hays PLC struggled as it continued to see little improvement in some of its key end markets, including Germany. With the a more challenging economic environment in Germany and globally, we disposed of the position late in the reporting period. Cardboard manufacturer DS Smith was hurt by concerns about potential global economic weakness as well as revelations in late 2018 of substantial use of invoice factoring arrangements, as a mechanism to hasten cash receipts.

256987 22 Omnis Portfolio Investments pp392-pp409 (UK All Companies Fund).qxp 29/01/2020 10:36

393



Whist the practice was defensible from an economic and accountancy standpoint, the prior lack of disclosure and its incorporation into valuation assumptions saw the shares marked lower. Speciality chemicals company Elementis PLC was a negative influence amidst concerns surrounding its acquisition of an industrial talc producer and on concerns more broadly about a challenging global market environment for chemicals producers.

Outlook

Recent economic data releases have disappointed and the perception is that the risk of a global recession has increased. In the United Kingdom, the impact of the Brexit impasse on the economy is becoming increasingly evident and the political risks remain elevated with a real chance that the rupturing of the ruling Conservative party leads to a change of government. We continue to believe that a new administration with a vastly different policy agenda, and not Brexit per se, is the real risk faced by UK equity investors. The increasing concerns regarding the growth outlook have prompted further responses from policymakers around the world. In September, we had a second interest rate cut by the US Federal Reserve and a package of measures from the European Central Bank, whilst China and Japan sent clear signals that they are ready to take more steps to stimulate domestic demand. The Bank of England is understandably on hold, awaiting the resolution of the Brexit discussions. We hesitate to say we will have a resolution soon as the can has been kicked down the road on so many earlier occasions and a further extension followed by a general election is perhaps the most likely outcome over the next few weeks.

The immediate outlook for the UK economy is for modest growth, in our view, with support from real wage growth and a marked increase in government spending offsetting the decline in investment spending and falling industrial production.

The UK equity market currently trades on a forward price earnings multiple of less than 13 times forecast 2020 earnings with a prospective dividend yield of 4.8%. This valuation appears, at first glance, modest but the market is heavily bifurcated. Lower bond yields and sterling weakness have helped push many international growth stocks on to ever higher multiples, whilst so-called value stocks languish at multi-year lows. Earnings growth expectations for 2019 have fallen from 8% at the start of the year to less than 2% now, and we would not be surprised to see a similar pattern unfold for 2020 as the current earnings growth forecasts appear unrealistically high. The extent to which this is already priced into the market is open to debate, but we are confident there is scope for multiple expansion should progress be made on any of the major uncertainties hanging over the market.

Investment Manager Franklin Templeton Fund Management Limited 21 October 2019


394



Purchases Sales

Portfolio Name Cost £’000 Portfolio Name Proceeds £’000 Tesco 26,136

BP 16,840 Royal Dutch Shell 16,406 Meggitt 16,272 Rotork 15,159 Serco 14,929 Phoenix 14,273 Cranswick 14,237 HSBC 11,731 Prudential 10,770

Homeserve 18,603 Aveva 17,706 Hays 14,590 RPC 13,406 Sainsbury 10,193 Just 7,272 Entertainment One 4,166 Intermediate Capital 3,007 AstraZeneca 1,563 Spectris 1,152


395


A Income 30/09/19

(p) Change in net assets per Share Opening net asset value per share 100.00 Return before operating charges* 6.14 Operating charges (0.64) Return after operating charges 5.50 Distributions (3.41) Closing net asset value per share 102.09 * after direct transaction costs of: 0.15 Performance Return after operating charges 5.50% Other information Closing net asset value (£’000) 1,165,922 Closing number of shares 1,142,103,509 Operating charges 0.65% Direct transaction costs 0.15% Prices (p) Highest share price 104.81 Lowest share price 88.02




396





Date (%) (%) (%) (%)








Risk Warning







397





3,100,000 Meggitt 19,685 1.69 19,685 1.69


4,300,000 TI Fluid Systems 8,273 0.71 8,273 0.71

Banks 4.69% 980,000 Close Brothers 13,808 1.18

6,550,000 HSBC 40,912 3.51 54,720 4.69

Beverages 3.04%

1,065,000 Diageo 35,496 3.04 35,496 3.04

Chemicals 0.55%

4,300,000 Elementis 6,360 0.55 6,360 0.55

Construction & Materials 2.35% 5,800,000 Ibstock 13,676 1.17 3,400,000 Polypipe 13,770 1.18

27,446 2.35

Electricity 1.58%

1,475,000 SSE 18,371 1.58 18,371 1.58


680,000 Spectris 16,619 1.43 16,619 1.43


3,000,000 Ashmore 15,180 1.30 1,300,000 Intermediate Capital 18,915 1.62 4,000,000 Jupiter Fund Management 14,216 1.22 2,900,000 Paragon 13,990 1.20

62,301 5.34


11,200,000 Tesco 26,992 2.32 26,992 2.32


398




Food Producers 2.97% 800,000 Associated British Foods 18,424 1.58 550,000 Cranswick 16,203 1.39

34,627 2.97

Gas, Water & Multiutilities 2.31%

3,050,000 National Grid 26,898 2.31 26,898 2.31


4,800,000 DS Smith 17,299 1.48 17,299 1.48


267,000 Next 16,517 1.42 16,517 1.42

Health Care Equipment & Services 1.83%

1,091,822 Smith & Nephew 21,389 1.83 21,389 1.83

Household Goods & Home Construction 4.13% 660,000 Bellway 22,084 1.90 410,000 Reckitt Benckiser 26,010 2.23

48,094 4.13


2,301,060 Bodycote 16,487 1.41 5,100,000 Rotork 15,887 1.36 1,190,000 Weir 16,963 1.46

49,337 4.23


420,000 James Fisher & Sons 8,631 0.74 8,631 0.74

Leisure Goods 6.35%

7,500,000 Legal & General 18,630 1.60 2,100,000 Phoenix 14,517 1.25 1,705,000 Prudential 25,149 2.16 1,600,000 St James’s Place 15,670 1.34

73,966 6.35

Media 4.53% 3,800,000 Entertainment One 21,508 1.84 1,620,000 RELX 31,307 2.69

52,815 4.53


399




Mining 3.97% 1,180,000 BHP 20,442 1.75

615,000 Rio Tinto 25,885 2.22 46,327 3.97


810,000 Hiscox 13,446 1.15 13,446 1.15

Oil & Gas Producers 10.13% 11,400,000 BP 58,801 5.04 2,475,000 Royal Dutch Shell 59,301 5.09

118,102 10.13

Personal Goods 3.15%

750,000 Unilever 36,675 3.15 36,675 3.15

Pharmaceuticals & Biotechnology 7.71% 605,000 AstraZeneca 43,929 3.77

2,630,000 GlaxoSmithKline 45,883 3.94 89,812 7.71

Real Estate Investment Trusts 2.79% 547,000 Derwent London 18,434 1.58

1,650,000 Land Securities 14,131 1.21 32,565 2.79


2,750,000 Sage 19,008 1.63 19,008 1.63


930,000 Bunzl 19,763 1.69 433,000 Ferguson 25,720 2.21

3,150,000 Howden Joinery 17,652 1.51 10,400,000 Serco 15,486 1.33

78,621 6.74

Tobacco 4.10% 1,130,000 British American Tobacco 33,985 2.91

758,000 Imperial Tobacco 13,858 1.19 47,843 4.10


400



Travel & Leisure 4.32% 1,450,000 Compass 30,348 2.60 2,700,000 GVC 20,072 1.72

50,420 4.32

Portfolio of investments 1,158,655 99.38 Net other assets 7,267 0.62 Net assets 1,165,922 100.00


All investments are ordinary shares unless otherwise stated and admitted to official stock exchange listings. Gross purchases for the year: £292,970,000 (See note 14). In addition, transfers totalling £929,216,000 were made via inspecie into the portfolio during the year.




401


29/09/18 to 30/09/19

Note £’000 £’000

Income: Net capital gains 2 30,092 Revenue 3 42,128 Expenses 4 (6,613) Net revenue before taxation 35,515 Taxation 5 (14) Net revenue after taxation 35,501 Total return before distributions 65,593 Distributions 6 (35,501) Change in net assets attributable to Shareholders from investment activities 30,092

29/09/18 to 30/09/19

£’000 £’000


194,040 Change in net assets attributable to Shareholders from investment activities (see above) 30,092 Closing net assets attributable to Shareholders 1,165,922




402



30/09/19

Note £’000 £’000

Assets: Fixed assets: Investments 1,158,655 Current assets: Debtors 7 5,497 Cash and bank balances 8 28,413 Total current assets 33,910 Total assets 1,192,565 Liabilities: Investment liabilities – Creditors: Distribution payable (20,934) Other creditors 9 (5,709) Total creditors (26,643) Total liabilities (26,643) Net assets attributable to Shareholders 1,165,922


403






30/09/19 £’000

The net capital gains during the year comprise: Non-derivative securities 30,097 Transaction charges (5) Net capital gains 30,092


30/09/19 £’000

Bank interest 14 Overseas dividends 1,686 UK dividends 39,417 UK property income dividends 1,011 Total revenue 42,128


30/09/19 £’000







404



5. Taxation


30/09/19 £’000




29/09/18 to

30/09/19 £’000

Net revenue before taxation 35,515 Net revenue for the year multiplied by the standard rate of corporation tax 7,103 Effects of: Irrecoverable overseas tax 14 Movement in excess management expenses 1,117 Non taxable overseas dividends (336) Non taxable property revenue from UK REITS – non PID (16) Non taxable UK dividends (7,868) Total tax charge for the year 14





At the year end, after offset against revenue taxable on receipt, there is a potential deferred tax asset of £1,116,961 in relation to surplus management expenses. It is unlikely that the Fund will generate sufficient taxable profits in the future to utilise this amount and therefore no deferred tax asset has been recognised in the year.


405



6. Distributions


29/09/18 to

30/09/19 £’000

Interim 16,335 Final 20,934 Add: Revenue paid on cancellation of Shares 66 Deduct: Revenue received on creation of Shares (1,834) Net distribution for the year 35,501


Net revenue after taxation 35,501 Net distribution for the year 35,501


7. Debtors 30/09/19

£’000

Accrued bank interest 2 Accrued revenue 1,379 Amounts receivable for creation of Shares 4,114 Prepaid expenses 2 Total debtors 5,497


£’000



406




£’000














11. Share Classes


%





Share Class A Income – 1,150,840,364 (8,736,855) – 1,142,103,509


407










Changes in exchange rates would have no material impact on the valuation of foreign currency financial assets or liabilities as at the balance sheet date.Consequently, no sensitivity analysis has been presented.






£’000 £’000


1,220,724 Commissions – Equities 127 Taxes – Equities 1,335 Total purchase costs 1,462 Gross purchase total 1,222,186

Analysis of total sale costs Gross sales in the year before transaction costs: Equities 91,709

91,709 Commissions – Equities (51) Taxes – Equities – Total sale costs (51) Total sales net of transaction costs 91,658


408






29/09/18 to








Valuation technique Level 1: The unadjusted quoted price in an active market for identical assets or liabilities 1,158,655 – Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly – – Level 3: Inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability – –

1,158,655 –


409















410

Omnis UK Equity Income Fund


The Fund aims to provide income of 110% of that of the FTSE All Share Index and provide some capital growth over a rolling three-year period.

Investment Policy

The Fund intends to invest at least 80% in UK companies, defined as those which are domiciled, incorporated or have a significant exposure to the UK. The Fund may also invest in other transferable securities (for example, other international equities), units in collective investment schemes (including exchange traded funds and other schemes managed and operated by the ACD or its associates), money market instruments, warrants, cash and near cash deposits as detailed in the Prospectus.


Derivatives may be used for efficient portfolio management.

Benchmark

The performance of the Fund will be measured against the income of the FTSE All Share Index for target return purposes.

Portfolio Review



There were a number of strong performances over the 12 month review period. Among the strongest performers was pub retailer and brewer Greene King. The company bounced back from oversold levels in 2018 after reporting encouraging trading results early in the review period. After performing positively in 2019 the company received an agreed all-cash bid in August at a 50% premium to the prevailing share price from CK Asset Holdings, a vehicle of billionaire Li Ka-Shing and his Hong Kong based company. We sold out of the holding following the agreed bid, given that the shares were trading at a small discount to the bid price and we thought that a counter bid for the company was unlikely.

The home furnishing retailer Dunelm was another strong contributor to performance. Similar to Greene King, the company bounced back early in the review period following a positive trading update. The positive share price performance continued throughout the first half of 2019, supported by another trading update in June that confirmed strong momentum within its business. The broker forecast upgrades were partly weather-related, just as their downgrades at the same period a year earlier had been partly weather-related. We took some profits in the position after the update, though remain keen on the fundamentals of the stock and retain a substantial holding.

The largest single contributor to performance in the first half of the review period was dairy products business Dairy Crest, which received an agreed all-cash bid in May by Canadian cheese maker Saputo. We subsequently sold out of the position, using the profits to add to such existing holdings as 3i Group, ITV, BAE Systems, Daily Mail and Paragon. We also increased our exposure to BBA Aviation towards the end of 2018 following share price weakness, which proved positive as the company benefitted in 2019 from better industry flight data in the US. Other noteworthy performers over the review period included Marshalls, McCarthy & Stone and Rio Tinto.


256987 23 Omnis Portfolio Investments pp410-pp427 (UK Equity Income).qxp 29/01/2020 10:36

411


Saga, the provider of services for those aged 50 and over, saw its shares fall sharply at the end of March following a significant rebasing of its insurance profits and a dividend cut. We thought the company was vulnerable to an opportunistic takeover approach should its revised strategy not gain traction, given the strength of the Saga brand within its core demographic. De La Rue, which prints security products such as passports, suffered at the same time, after an unexpected profit warning and the departure of its Chief Executive Officer. We believe the company has an attractive portfolio of authentication technologies and that the share price reaction was overdone.

Despite a resurgence in early 2019, cinema chain Cineworld shares struggled over the review period. Cineworld stock had been very weak at the end of 2017, when the chain made an acquisition in the US funded by debt and equity. We took advantage of the brief rally in its shares by taking profits in the company, particularly since its dividend yield had become less compelling. That mitigated some of the negative impact of our exposure to the chain over the review period. We capitalised on its weak share price by increasing our exposure to the chain. Other notable detractors from performance included IG Group, ITV and Brewin Dolphin.

Outlook

As has been the case for a while, a key risk to global growth remains the threat of trade wars, with comments from Trump occasionally fuelling investor concerns. Given that the US is less dependent on external trade than many economies, it is likely to be less impacted by escalating tariffs and sanctions than more externally reliant economies. Historically, US trade terms have often been closely aligned to the country’s regional security interests. We suspect that this may be the case again this time around; only time will tell. The real test for the US will be China, which will play out over an extended period.

In the UK, Brexit continues to dominate the newspaper headlines. Parliamentary arithmetic remains very challenging for Prime Minister Boris Johnson and events over the next couple of months are likely to be career defining for many politicians. Political parties are currently realigning themselves on each side of the Brexit debate. The Labour party has a big challenge in balancing its pro-Remain London base with its pro-Leave Northern heartland, while the Conservative Party risks tearing itself apart. The uncertainty makes it challenging for the stockmarket to make meaningful progress. We are not clear on how Brexit will be resolved and so have not positioned the fund for any particular Brexit outcome. Ultimately, the bigger picture geopolitical threats to Europe should ensure that there is a mutually beneficial outcome. However, in the meantime, there is scope for further unexpected twists and turns, as we have seen so far in 2019.

Any Brexit-inspired sterling weakness provides opportunities for international companies to buy UK corporate assets more cheaply, which is clearly supportive for the stockmarket. It also argues for keeping a significant overseas earnings element within any UK equity portfolio. We expect UK growth to remain sluggish while Brexit uncertainty persists, with business investment decisions being deferred until there is greater clarity. Markets hate uncertainty and we could well see further bouts of market volatility in the rest of 2019, driven by Brexit worries and fears over trade wars.

Overall, the fund is underpinned by cautious economic growth assumptions, and its focus on strong market positions, cashflow-backed dividends and robust balance sheets should provide resilience across the spectrum of possible economic outcomes. In a world that is hungry for income, we believe that the yield on the UK stockmarket remains attractive and that well executed equity income strategies should continue to flourish.

Investment Manager Royal London Asset Management Limited 21 October 2019



412


Purchases Sales

Portfolio Name Cost £’000 Portfolio Name Proceeds £’000 Royal Dutch Shell ‘B’ Shares 2,452

British American Tobacco 1,849 Imperial Tobacco 1,594 Land Securities 1,548 BP 1,545 Euromoney Institutional Investor 1,364 ITV 971 AstraZeneca 971 GlaxoSmithKline 961 HSBC 937

Greene King 2,689 Dairy Crest 1,686 AstraZeneca 1,021 Daily Mail & General Trust 947 Intu 863 Hargreaves Lansdown 835 Halma 779 BT 736 Spirax-Sarco Engineering 586 Diploma 521



413


A Accumulation

30/09/19 28/09/18 (p) (p)

Change in net assets per Share Opening net asset value per share 103.78 100.00 Return before operating charges* 4.14 4.43^ Operating charges (0.72) (0.65) Return after operating charges 3.42 3.78^ Distributions (3.32) (3.55) Retained distributions on accumulation shares 3.32 3.55^ Closing net asset value per share 107.20 103.78 * after direct transaction costs of: 0.21 0.87 Performance Return after operating charges 3.30% 3.78%^ Other information Closing net asset value (£’000) 102,802 79,773 Closing number of shares 95,899,273 76,869,880 Operating charges 0.71% 0.77% Direct transaction costs 0.20% 0.84% Prices (p) Highest share price 107.49 107.10 Lowest share price 90.96 94.55

Share class A Accumulation launched on 5 December 2017 at a price of 100 pence. ^ Prior period figures have been restated to reflect the retained distributions on accumulation shares.



414




Date (%) (%) (%) (%)

30/09/19 Share Class A Accumulation 0.65 0.05 0.01 0.71 28/09/18 Share Class A Accumulation 0.65 0.05 0.07 0.77







Risk Warning








415



Aerospace & Defence 2.36% (2.23%)

425,422 BAE Systems 2,425 2.36 2,425 2.36

Banks 6.18% (6.27%)

174,000 Close Brothers 2,452 2.39 624,000 HSBC 3,897 3.79

6,349 6.18

Chemicals 2.21% (2.21%)

74,400 Johnson Matthey 2,274 2.21 2,274 2.21

Construction & Materials 1.80% (1.13%)

279,774 Marshalls 1,852 1.80 1,852 1.80

Electronic & Electrical Equipment 2.67% (3.22%)

59,339 Halma 1,170 1.14 64,400 Spectris 1,574 1.53

2,744 2.67

Financial Services 11.32% (10.75%)

175,000 3i 2,042 1.99 563,000 Brewin Dolphin 1,784 1.73 90,000 Hargreaves Lansdown 1,871 1.82

357,000 IG 2,151 2.09 390,000 Investec 1,633 1.59 447,000 Paragon 2,156 2.10

11,637 11.32

Fixed Line Telecommunications 1.08% (1.70%)

620,000 BT 1,107 1.08 1,107 1.08

Food Producers 0.00% (1.28%)

Gas, Water & Multiutilities 5.42% (4.65%)

215,625 Pennon 1,784 1.74 85,639 Severn Trent 1,854 1.80

233,616 United Utilities 1,929 1.88 5,567 5.42

General Industrials 1.82% (1.74%)

118,962 Smiths 1,866 1.82 1,866 1.82



416



General Retailers 4.47% (4.83%)

236,000 Dunelm 1,977 1.92 1,150,000 Saga 581 0.57

102,500 WH Smith 2,037 1.98 4,595 4.47

Household Goods & Home Construction 1.74% (1.60%)

1,233,902 McCarthy & Stone 1,790 1.74 1,790 1.74

Industrial Engineering 3.90% (4.34%)

212,000 IMI 2,035 1.98 13,725 Spirax-Sarco Engineering 1,077 1.05 72,000 Vitec 893 0.87

4,005 3.90

Industrial Transportation 3.62% (3.03%)

850,000 BBA Aviation 2,654 2.58 843,000 Stobart 1,067 1.04

3,721 3.62

Life Insurance 2.84% (3.16%)

575,000 Aviva 2,296 2.23 225,412 Chesnara 629 0.61

2,925 2.84

Media 9.55% (7.79%)

164,556 Daily Mail & General Trust 1,400 1.36 106,000 Euromoney Institutional Investor 1,569 1.53 254,400 Informa 2,167 2.11

1,790,000 ITV 2,254 2.19 125,739 RELX 2,430 2.36

9,820 9.55

Mining 2.69% (2.50%)

65,806 Rio Tinto 2,770 2.69 2,770 2.69

Non-life Insurance 0.30% (0.38%)

88,198 Personal 305 0.30 305 0.30

Oil & Gas Producers 10.73% (10.15%)

894,000 BP 4,612 4.48 268,000 Royal Dutch Shell ‘B’ Shares 6,421 6.25

11,033 10.73



417



Pharmaceuticals & Biotechnology 9.21% (9.02%)

67,000 AstraZeneca 4,865 4.73 264,000 GlaxoSmithKline 4,606 4.48

9,471 9.21

Real Estate Investment Trust 3.96% (4.09%)

345,000 Land Securities 2,954 2.87 138,000 Segro 1,119 1.09

4,073 3.96

Support Services 2.57% (3.66%)

227,207 De La Rue 505 0.49 84,000 Diploma 1,397 1.36 89,000 Ricardo 566 0.55

589,924 Shanks 177 0.17 2,645 2.57

Tobacco 4.82% (3.21%)

92,000 British American Tobacco 2,767 2.69 119,864 Imperial Tobacco 2,191 2.13

4,958 4.82

Travel & Leisure 3.11% (4.65%)

773,000 Cineworld 1,763 1.72 1,008,000 Restaurant 1,433 1.39

3,196 3.11


The investments have been valued in accordance with note 1(h) of the Accounting Policies and Financial Statements.


Comparative figures shown above in brackets relate to 28 September 2018. Gross purchases for the year: £35,497,000 [2018: £79,185,000] (See note 14).

Total sales net of transaction costs for the year: £12,728,000 [2018: £2,250,000] (See note 14).



418


29/09/18 to 30/09/19 05/12/17 to 28/09/18

Note £’000 £’000 £’000 £’000

Income: Net capital gains 2 699 888 Revenue 3 4,256 1,937 Expenses 4 (635) (308) Net revenue before taxation 3,621 1,629 Taxation 5 – – Net revenue after taxation 3,621 1,629 Total return before distributions 4,320 2,517 Distributions 6 (4,229) (1,918) Change in net assets attributable to Shareholders from investment activities 91 599

29/09/18 to 30/09/19 05/12/17 to 28/09/18

£’000 £’000 £’000 £’000

Opening net assets attributable to Shareholders 79,773 – Amounts receivable on issue of Shares 23,632 80,636 Amounts payable on cancellation of Shares (5,064) (3,762)

18,568 76,874 Dilution adjustment 12 9 Change in net assets attributable to Shareholders from investment activities (see above) 91 599 Retained distributions on accumulation Shares 4,358 2,291 Closing net assets attributable to Shareholders 102,802 79,773




419


30/09/19 28/09/18

Note £’000 £’000 £’000 £’000

Assets: Fixed assets: Investments 101,128 77,853 Current assets: Debtors 7 457 527 Cash and bank balances 8 1,301 1,446 Total current assets 1,758 1,973 Total assets 102,886 79,826 Liabilities: Investment liabilities – – Creditors: Other creditors 9 (84) (53) Total creditors (84) (53) Total liabilities (84) (53) Net assets attributable to Shareholders 102,802 79,773



420





30/09/19 28/09/18 £’000 £’000

The net capital gains during the year comprise: Non-derivative securities 709 918 Transaction charges (10) (30) Net capital gains 699 888

3. Revenue 29/09/18 to 05/12/17 to

30/09/19 28/09/18 £’000 £’000

Bank interest 1 – Overseas dividends 25 31 UK dividends 4,093 1,810 UK property income dividends 137 96 Total revenue 4,256 1,937

4. Expenses 29/09/18 to 05/12/17 to

30/09/19 28/09/18 £’000 £’000

Payable to the ACD, associates of the ACD, and agents of either of them AMC fees 589 283

589 283 Payable to the Depositary, associates of the Depositary and agents of either of them Depositary fees 26 12 Safe custody fees 4 2


16 11 Total expenses 635 308




421


5. Taxation


30/09/19 28/09/18 £’000 £’000

Total current tax charge – – Total taxation for the year (Note 5 (b)) – –



29/09/18 to 05/12/17 to

30/09/19 28/09/18 £’000 £’000

Net revenue before taxation 3,621 1,629 Net revenue for the year multiplied by the standard rate of corporation tax 724 326 Effects of: Movement in excess management expenses 99 42 Non taxable overseas dividends (5) (6) Non taxable UK dividends (818) (362) Total tax charge for the year – –








422


6. Distributions


29/09/18 to 05/12/17 to

30/09/19 28/09/18 £’000 £’000

Interim 3,108 1,433 Final 1,250 858 Add: Revenue paid on cancellation of Shares 25 32 Deduct: Revenue received on creation of Shares (154) (405) Net distribution for the year 4,229 1,918 Reconciliation of net revenue after taxation to distributions Net revenue after taxation 3,621 1,629 Expenses charged to capital 635 308 Tax relief from capital* (27) (19) Net distribution for the year 4,229 1,918

* Tax relief has arisen whereby excess revenue expenses have been utilised to reduce the tax arising on offshore capital gains.


7. Debtors 29/09/18 28/09/18

£’000 £’000

Accrued revenue 399 240 Amounts receivable for creation of Shares 58 287 Total debtors 457 527


£’000 £’000




423


9. Other creditors 30/09/19 28/09/18

£’000 £’000

Amounts payable for cancellation of Shares 12 – 12 –

Accrued expenses Manager and Agents AMC fees 54 42

54 42 Depositary and Agents Depositary fees 5 2 Safe custody fees 1 – Transaction charges 1 2













424


11. Share Classes


%

Share Class A Accumulation 0.65




Share Class A Accumulation 76,869,880 24,072,044 (5,042,651) – 95,899,273














425



£’000 £’000 £’000 £’000

Analysis of total purchase costs Purchases in the year before transaction costs: Equities 35,320 78,738

35,320 78,738 Commissions – Equities 13 60 Taxes – Equities 164 387 Total purchase costs 177 447 Gross purchase total 35,497 79,185 Analysis of total sale costs Gross sales in the year before transaction costs: Equities 12,735 2,251

12,735 2,251 Commissions – Equities (7) (1) Total sale costs (7) (1) Total sales net of transaction costs 12,728 2,250



29/09/18 to 05/12/17 to



29/09/18 to 05/12/17 to






426






Valuation technique Level 1: The unadjusted quoted price in an active market for identical assets or liabilities 101,128 – 77,853 – Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly – – – – Level 3: Inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability – – – –

101,128 – 77,853 –



427


First Distribution in pence per Share

Group 1 Shares purchased prior to 29 September 2018 Group 2 Shares purchased on or after 29 September 2018 to 31 December 2018



Share Class A Accumulation Group 1 1.0316 – 1.0316 N/A Group 2 0.4055 0.6261 1.0316 N/A

Second Distribution in pence per Share

Group 1 Shares purchased prior to 1 January 2019 Group 2 Shares purchased on or after 1 January 2019 to 31 March 2019




Third Distribution in pence per Share

Group 1 Shares purchased prior to 1 April 2019 Group 2 Shares purchased on or after 1 April 2019 to 30 June 2019





Group 1 Shares purchased prior to 1 July 2019 Group 2 Shares purchased on or after 1 July 2019 to 30 September 2019






428

Omnis UK Gilt Fund

Investment Objective The Fund aims to achieve a return consisting primarily of income and some capital growth which exceeds that of the ICE BoAML UK Gilt TR Index, after all fees and expenses, over a five-year rolling period.

Investment Policy The Fund intends to invest at least 95% in sterling denominated (or hedged back to sterling) AA-rated, government-backed securities, with at least 75% invested in UK government securities (Gilts). The Fund may also invest in other transferable securities, units in collective investment schemes (including exchange traded funds and schemes managed and operated by the ACD or its associates), money market instruments, warrants, cash, near cash and deposits as detailed in the Prospectus. Derivatives may be used both for investment purposes and for efficient portfolio management.

Benchmark The performance of the Fund will be measured against the ICE BoAML UK Gilt TR Index for target return purposes.

Portfolio Review Over the period the fund returned 13.65% [source: Return after operating charges as per Comparative Table] and the benchmark returned 13.41% [source: Financial Express, bid to bid, net income reinvested].

Performance In the fourth quarter of 2018, the fund’s overweight duration stance enhanced relative returns in October, as yields fell. Some of the resulting outperformance was given back in November, as the yield curve steepened, driven in part by a poor ultra-long gilt auction and less liability driven investment participation, due to the relative attractiveness of swaps. Performance was strong in December, as much of November’s yield – curve steepening reversed. The fund was underweight duration during much of the first quarter of 2019, primarily in shorter – maturity gilts, in expectation that a recovery in sentiment in the event of a ‘hard’ Brexit being avoided would prompt a 0.25% UK rate hike, and higher yields. While extended Brexit uncertainty and weaker global growth kept yields low, the fund’s overweight in longer maturity gilts mitigated the resulting impact upon performance, as the curve flattened. The fund held a small underweight duration position through much of the second quarter of 2019, as yields remained close to the bottom of the range in the early part of the quarter. An underweight in the shorter-maturity part of the curve was partially offset by an overweight in longer-dated securities. Core government yields remained capped as global tensions and weak inflation led central banks to shift to a more dovish stance. Although the Bank of England (BoE) continued to signal a mild tightening bias, global conditions and raised Brexit uncertainty drove gilt yields to new lows for the year into quarter end. The fund held a small underweight duration position at the start of the third quarter of 2019 but moved to a long duration position in mid-July, following a sell-off in core markets. The underweight in short-maturity versus overweight in long-maturity positioning was reduced. Yields moved within a 35-basis-point range for the remainder of the quarter. Heightened Brexit worries, and global economic conditions pushed gilt yields towards the bottom of this trading range by quarter-end, despite the BoE continuing to signal a mild tightening bias.


256987 24 Omnis Portfolio Investments pp428-pp443 (UK Gilt Fund).qxp 29/01/2020 10:35

429

Omnis UK Gilt Fund


Portfolio Activity The fund entered the review period 0.8 years long of the index in terms of relative duration. In October 2018, we adjusted exposures around the 2071 syndication, then reduced exposure across most maturity buckets as yields approached the bottom of the trading range. Yields rose as a Brexit deal appeared imminent; we switched some exposure from 20-year and ultra-long gilts into the 30-year segment. We made numerous relative value trades in November 2018, taking advantage of the steeper curve and resulting significant improvements in yield pick-ups. In December 2018, we moved some of the fund’s flattening bias from the ultra-long segment to the 20-year sector and made further numerous relative value trades for record pick-ups in yield. As yields fell to the year’s low as the parliamentary vote on the Brexit deal was postponed, we reduced duration by closing the overweight in the 25-30-year area. We increased our bearish flattener strategy in January 2019, reducing duration and extending the underweight in the 3-7-year segment. We maintained the flattening bias in February 2018, expecting that an Article 50 extension would lift yields on shorter-dated bonds. We increased duration in mid and late February but lowered it back in mid-March as yields approached the bottom of the year’s trading range. We then increased duration again, as yields fell below the bottom of the range on mounting Brexit fears and as the Federal Reserve signalled US rates would not rise this year. In July 2019, we increased duration following a sell-off, and as yields returned to the month’s opening levels. We sold 3-year gilts into 18-month and 5-year gilts for a pick-up in yield, as the shorter-end of the curve inverted. In August 2019, we largely maintained positioning as the fund’s strategies played out but shifted some duration further along the curve following late July’s steepening and switched 2047s into 5- and 10-year gilts ahead of 30-year supply. In September 2019, we increased duration as yields peaked, and reduced the flattening bias following dovish comments from the MPC. The fund ended the review period with an overall relative duration of +0.3 years long of the index.

Outlook The UK’s GDP was weaker than expected in the second quarter, contracting for the first time in seven years. This was largely due to the unwinding of the stockpiling which had bolstered growth in the first quarter, and a further deterioration in investment. Looking ahead, the main risk to the UK economy is if Britain crashes out of the EU without securing a withdrawal agreement. Despite the prime minister’s efforts, parliament has now passed a law forbidding a no-deal Brexit, so such an outcome looks unlikely to occur unless Mr Johnson can increase his majority. An early election is likely to take place, probably this year, but the result is even harder to predict than usual. The BoE left official interest rates unchanged at 0.75% throughout the period but made clear that its future assumptions did not take account of a no-deal Brexit. The BoE retains a hiking bias, which is driven by well-anchored inflation expectations, inflation at target and policymakers’ perception of a limited amount of spare capacity. However, the trajectory of the economy suggests that the window for hiking this year is gone, and our expectation for rising political uncertainty will constrain the bank’s ability to act later this year.

Investment Manager Threadneedle Asset Management Limited 21 October 2019


430

Omnis UK Gilt Fund

Purchases Sales

Cost Proceeds Portfolio Name £’000 Portfolio Name £’000 UK Treasury 4.25% 07/06/2032 124,724 UK Treasury 1.625% 22/10/2028 131,328 UK Treasury 1.75% 22/07/2019 114,981 UK Treasury 1.5% 22/07/2026 126,578 UK Treasury 1.75% 07/09/2022 110,293 UK Treasury 1.75% 22/07/2019 114,792 UK Treasury 1.625% 22/10/2028 104,817 UK Treasury 0.75% 22/07/2023 104,888 UK Treasury 3.25% 22/01/2044 99,962 UK Treasury 1.25% 22/07/2027 90,333 UK Treasury 2% 22/07/2020 90,930 UK Treasury 1% 22/04/2024 86,854 UK Treasury 0.625% 07/06/2025 81,241 UK Treasury 4.25% 07/03/2036 85,551 UK Treasury 3.75% 07/09/2019 78,303 UK Treasury 3.75% 07/09/2019 77,385 UK Treasury 1.75% 07/09/2037 75,475 UK Treasury 1.75% 22/07/2057 72,447 UK Treasury 0.875% 22/10/2029 72,521 UK Treasury 1.75% 07/09/2022 70,874



431

Omnis UK Gilt Fund


A Income 30/09/19

(p) Change in net assets per Share Opening net asset value per share 100.00 Return before operating charges* 14.02 Operating charges (0.37) Return after operating charges 13.65

Distributions (1.35) Closing net asset value per share 112.30


Performance Return after operating charges 13.65%

Other information Closing net asset value (£’000) 944,956 Closing number of shares 841,419,726 Operating charges 0.38% Direct transaction costs 0.00%

Prices (p) Highest share price 114.28 Lowest share price 97.82 Share class A Income launched on 29 September 2018 at a price of 100 pence.


432

Omnis UK Gilt Fund



Other operating AMC expenses charge

Date (%) (%) (%) 30/09/19 Share Class A Income 0.34 0.04 0.38 The Operating Charge is the ratio of the Fund’s total disclosable costs (excluding overdraft interest) to the average net assets of the Fund.





Risk Warning







433

Omnis UK Gilt Fund



Corporate Bond 3.72%

GBP 3,800,000 European Investment Bank 1.125% 07/09/2021 3,838 0.40 GBP 5,875,000 Export Development Canada FRN 1.0212% 29/05/2024 5,873 0.62 GBP 4,275,000 International Bank for Reconstruction &

Development 0.875% 13/12/2024 4,327 0.46 GBP 8,600,000 Network Rail Infrastructure Finance 4.625% 21/07/2020 8,868 0.94 GBP 7,788,000 Oesterreichische Kontrollbank 1.125% 15/12/2022 7,892 0.83 GBP 4,160,000 Transport for London 2.125% 24/04/2025 4,422 0.47

35,220 3.72

Government Bond 95.96%

GBP 80,802,000 UK Treasury 0.625% 07/06/2025 82,225 8.70 GBP 71,819,000 UK Treasury 0.875% 22/10/2029 74,575 7.89 GBP 27,914,000 UK Treasury 1.25% 22/07/2027 29,890 3.16 GBP 61,897,000 UK Treasury 1.5% 22/01/2021 62,711 6.64 GBP 54,003,000 UK Treasury 1.5% 22/07/2047 60,797 6.43 GBP 37,119,000 UK Treasury 1.625% 22/10/2054 44,681 4.73 GBP 10,350,000 UK Treasury 1.625% 22/10/2071 13,752 1.46 GBP 38,000,000 UK Treasury 1.75% 07/09/2022 39,603 4.19 GBP 79,287,000 UK Treasury 1.75% 07/09/2037 90,768 9.61 GBP 58,800,000 UK Treasury 1.75% 22/01/2049 70,377 7.45 GBP 12,100,000 UK Treasury 1.75% 22/07/2057 15,415 1.63 GBP 28,091,000 UK Treasury 2% 22/07/2020 28,412 3.01 GBP 37,274,000 UK Treasury 2.5% 22/07/2065 60,016 6.35 GBP 20,058,000 UK Treasury 2.75% 07/09/2024 22,484 2.38 GBP 63,796,000 UK Treasury 3.25% 22/01/2044 95,133 10.07 GBP 34,609,000 UK Treasury 3.75% 07/09/2020 35,643 3.77 GBP 41,229,000 UK Treasury 4.25% 07/06/2032 59,481 6.29 GBP 13,552,000 UK Treasury 4.5% 07/09/2034 20,795 2.20

906,758 95.96


The investments have been valued in accordance with note 1(h) of the Accounting Policies and Financial Statements.

All investments are ordinary bonds unless otherwise stated.

Gross purchases for the year: £2,011,784,000 (See note 14). In addition, transfers totalling £697,766,000 were made via inspecie into the portfolio during the year.

Total sales net of transaction costs for the year: £1,864,301,000 (See note 14).


434

Omnis UK Gilt Fund


Credit Rating as at 30 September 2019 % of Total Net Assets

Bonds Rating AAA 1.48 AA 97.92 A 0.00 BBB 0.00 BB 0.00 B NR 0.00 Bonds 99.40 Uninvested Cash 0.60 FX/Derivatives 0.00 Net Assets 100.00 The above information has been supplied by the Investment Manager. Bonds not rated are of investment grade, but rating not sought by issuer.


435

Omnis UK Gilt Fund

29/09/18 to 30/09/19

Note £’000 £’000

Income: Net capital gains 2 102,349 Revenue 3 10,567 Expenses 4 (3,103) Net revenue before taxation 7,464 Taxation 5 – Net revenue after taxation 7,464 Total return before distributions 109,813 Distributions 6 (10,567) Change in net assets attributable to Shareholders from investment activities 99,246

29/09/18 to 30/09/19 £’000 £’000


107,571 Change in net assets attributable to Shareholders from investment activities (see above) 99,246 Closing net assets attributable to Shareholders 944,956




436

Omnis UK Gilt Fund

30/09/19

Note £’000 £’000




437

Omnis UK Gilt Fund





30/09/19 £’000

The net capital gains during the year comprise: Non-derivative securities 102,353 Transaction charges (4) Net capital gains 102,349


30/09/19 £’000

Bank interest 10 Interest from Debt Securities 10,557 Total revenue 10,567


30/09/19 £’000







438

Omnis UK Gilt Fund


5. Taxation

(a) Analysis of the tax charge in the year 29/09/18 to 30/09/19

£’000

– Total taxation for the year (Note 5 (b)) –



29/09/18 to

30/09/19 £’000

Net revenue before taxation 7,464 Net revenue for the year multiplied by the standard rate of corporation tax 1,493 Effects of: Tax deductible interest distributions (1,493) Total tax charge for the year –




6. Distributions


29/09/18 to 30/09/19

£’000

Interim 5,449 Final 5,395 Add: Revenue paid on cancellation of Shares 47 Deduct: Revenue received on creation of Shares (324) Net distribution for the year 10,567 Reconciliation of net revenue after taxation to distributions Net revenue after taxation 7,464 Expenses charged to capital 3,103 Net distribution for the year 10,567



439

Omnis UK Gilt Fund


7. Debtors 30/09/19

£’000

Accrued bank interest 1 Accrued revenue 2,995 Amounts receivable for creation of Shares 1,565 Sales awaiting settlement 19,013 Total debtors 23,574


£’000



£’000




53 Other accrued expenses Audit fees 10 Professional fees (2) Publication fees 1







440

Omnis UK Gilt Fund


10. Related party transactions (continued)





11. Share Classes


%

















assets assets interest Total Currency Assets £’000 £’000 £’000 £’000

30/09/19 Sterling 9,778 936,105 23,574 969,457 Total 9,778 936,105 23,574 969,457


441

Omnis UK Gilt Fund



(b) Interest rate risk profile of financial assets and liabilities (continued)


assets assets interest Total Currency Liabilities £’000 £’000 £’000 £’000

30/09/19 Sterling – – 24,501 24,501 Total – – 24,501 24,501 Changes in interest rates would have no material impact on the valuation of floating rate financial assets or liabilities as at the balance sheet date. Consequently, no sensitivity analysis has been presented.

14. Portfolio transaction costs 29/09/18 to

30/09/19 £’000

Analysis of total purchase costs Purchases in the period before transaction costs: Bonds 2,011,784 Inspecie transfer 697,766 Total purchase costs – Gross purchase total 2,709,550 Analysis of total sale costs Gross sales in the period before transaction costs: Bonds 1,864,301 Total sale costs – Total sales net of transaction costs 1,864,301

29/09/18 to


Purchases – Commissions Bonds 0.0000 Purchases – Taxes Bonds 0.0000 Sales – Commissions Bonds 0.0000 Sales – Taxes Bonds 0.0000

29/09/18 to





442

Omnis UK Gilt Fund





Valuation technique Level 1: The unadjusted quoted price in an active market for identical assets or liabilities 912,631 – Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly 29,347 – Level 3: Inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability – –

941,978 –



443

Omnis UK Gilt Fund



Distribution Gross paid











444

Omnis UK Smaller Companies Fund


The Fund aims to achieve a return consisting of both income and capital growth which, after all fees and expenses, exceeds that of the Numis Smaller Companies ex-Investment Trusts TR Index over a five-year rolling period.

Investment Policy

The Fund intends to invest at least 70% in the equity securities of smaller UK companies. UK smaller companies are defined as those which are domiciled, incorporated or have significant exposure to the UK and which have a market capitalisation no greater than the largest company in the Numis Smaller Companies ex-Investment Trusts TR Index at the point of purchase. The Fund may also invest in other transferable securities (for example, equity securities of smaller, mid and large international companies), units in collective investment schemes (including exchange traded fund and other schemes managed and operated by the ACD or its associates), money market instruments, warrants, cash, near cash and deposits as detailed in the Prospectus.



Benchmark

The performance of the Fund will be measured against the Numis Smaller Companies ex-Investment Trusts TR Index for target return purposes.

Portfolio Review

Over the period the fund returned -4.95% [source: Return after operating charges as per Comparative Table] and the benchmark returned -4.05% [source: Financial Express, bid to bid, net income reinvested].

On a sector basis, security selection in the Construction and Materials and Health Care sectors supported relative performance, as did a lack of exposure to the Oil and Gas sector. Security selection in the Travel and Leisure and Financial Services sectors and an overweight in Chemicals were headwinds for relative returns during the 12-month period.

Deal news helped to bolster performance as overseas buyers take advantage of the weak UK currency to acquire attractive UK assets. Entertainment One Ltd. was a significant contributor following a bid from a US toy company, highlighting this trend. Other contributors included patent translation services provider RWS Holdings PLC supported relative performance as earnings results have been strong in recent quarters, leading to a series of forecast upgrades. Finally, discoverIE Group, which designs, manufactures and supplies components for electronic applications, was amongst the positive standouts on a strong underlying fundamental performance over the year. The stock has enjoyed a rerating after a period of good underlying trading, and we believe the company’s strong and growing order book bodes well for future financial performance potential, in our view.

Adhesives manufacturer Scapa Group PLC was down sharply in late 2018 after a badly communicated acquisition prompted a near-term profit downgrade. The company faced further pressure during the 12-month period after a major client terminated a contract with three years left to run. A position in bakery chain Patisserie Holdings PLC weighed on relative performance after it was discovered early in the reporting period that the company had engaged in accounting fraud.


256987 25 Omnis Portfolio Investments pp444-pp461 (UK Smallar Companies Fund).qxp 29/01/2020 10:35

445


We wrote the position down to zero after the company entered administration. Leisure technology company accesso Technology Group PLC also weighed on relative performance amidst disappointment in its financial targets. The company announced that increased investment would be needed to develop and integrate its product suite, pushing the expected profitability out by at least three years.

UK small-cap equities continue to look attractive on a valuation basis compared to other equity markets and other asset classes, however, investors will likely remain underweight until we have some clarity over Brexit negotiations. We continue to take a cautious stance adding quality companies when the opportunity arises.

Outlook

Recent economic data releases have disappointed and the perception is that the risk of a global recession has increased. In the United Kingdom, the impact of the Brexit impasse on the economy is becoming increasingly evident and the political risks remain elevated with a real chance that the rupturing of the ruling Conservative party leads to a change of government. We continue to believe that a new administration with a vastly different policy agenda, and not Brexit per se, is the real risk faced by UK equity investors. The increasing concerns regarding the growth outlook have prompted further responses from policymakers around the world. In September, we had a second interest rate cut by the US Federal Reserve and a package of measures from the European Central Bank, whilst China and Japan sent clear signals that they are ready to take more steps to stimulate domestic demand. The Bank of England is understandably on hold, awaiting the resolution of the Brexit discussions. We hesitate to say we will have a resolution soon as the can has been kicked down the road on so many earlier occasions and a further extension followed by a general election is perhaps the most likely outcome over the next few weeks.

The immediate outlook for the UK economy is for modest growth, in our view, with support from real wage growth and a marked increase in government spending offsetting the decline in investment spending and falling industrial production.

The UK equity market currently trades on a forward price earnings multiple of less than 13 times forecast 2020 earnings with a prospective dividend yield of 4.8%. This valuation appears, at first glance, modest but the market is heavily bifurcated. Lower bond yields and sterling weakness have helped push many international growth stocks on to ever higher multiples, whilst so-called value stocks languish at multi-year lows. Earnings growth expectations for 2019 have fallen from 8% at the start of the year to less than 2% now, and we would not be surprised to see a similar pattern unfold for 2020 as the current earnings growth forecasts appear unrealistically high. The extent to which this is already priced into the market is open to debate, but we are confident there is scope for multiple expansion should progress be made on any of the major uncertainties hanging over the market.

Investment Manager Franklin Templeton Fund Management Limited 21 October 2019



446


Purchases Sales

Portfolio Name Cost £’000 Portfolio Name Proceeds £’000 iShares FTSE 250 11,203

Smart Metering Systems 3,117 Spirent Communications 3,010 DFS Furniture 2,967 Vitec 2,748 Restore 2,600 Clinigen Healthcare 2,538 dotdigital 2,453 JTC 2,416 Watkin Jones 2,305

iShares FTSE 250 11,258 Unite 2,380 Entertainment One 2,354 Dunelm 1,963 Superdry 1,873 Clinigen Healthcare 1,771 Hill & Smith 1,771 Elementis 1,346 Restore 1,102 Eddie Stobart Logistics 945



447


A Income 30/09/19

(p)

Change in net assets per Share Opening net asset value per share 100.00 Return before operating charges* (4.24) Operating charges (0.71) Return after operating charges (4.95) Distributions (1.53) Closing net asset value per share 93.52 * after direct transaction costs of: 0.16 Performance Return after operating charges (4.95%) Other information Closing net asset value (£’000) 141,421 Closing number of shares 151,216,555 Operating charges 0.77% Direct transaction costs 0.17% Prices (p) Highest share price 100.44 Lowest share price 83.38




448





Date (%) (%) (%) (%)







• The Fund appears as a “5” on the scale. This is because the Fund invests in assets that typically carry medium risk and offer medium reward compared with other categories of assets.

Risk Warning







449



Aerospace & Defence 3.39%

170,000 Avon Rubber 2,825 2.00 1,000,000 Chemring 1,968 1.39

4,793 3.39

Chemicals 1.33%

875,000 Scapa 1,877 1.33 1,877 1.33


1,150,000 Ibstock 2,712 1.92 850,000 Polypipe 3,442 2.43

6,154 4.35


1,300,000 DiscoverIE 5,460 3.86 210,000 Gooch & Housego 2,468 1.75

1,640,000 TT Electronics 4,100 2.90 12,028 8.51


465,000 IntegraFin 1,841 1.30 1,350,000 JTC 4,738 3.35

600,000 Polar Capital 3,264 2.31 1,133,100 Premier Asset Management 2,108 1.49 2,800,000 XPS Pensions 3,248 2.30

15,199 10.75


120,000 Cranswick 3,535 2.50 470,000 Hotel Chocolat 1,739 1.23

5,274 3.73


1,250,000 DFS Furniture 2,763 1.95 2,763 1.95


700,000 Countryside Properties 2,352 1.66 450,000 IG Design 2,709 1.92

1,100,000 Watkin Jones 2,469 1.75 7,530 5.33



450




290,000 Bodycote 2,078 1.47 514,800 Vitec 6,383 4.51

8,461 5.98


90,000 Clarkson 2,205 1.56 75,000 James Fisher & Sons 1,541 1.09

3,746 2.65

Leisure Goods 3.65%

900,000 Codemasters 1,980 1.40 2,000,000 Sumo 3,180 2.25

5,160 3.65

Media 5.85%

900,000 Bloomsbury Publishing 2,160 1.53 739,600 Entertainment One 4,186 2.96

2,250,000 Huntsworth 1,922 1.36 8,268 5.85


3,700,000 Alliance Pharma 2,646 1.87 300,000 Clinigen Healthcare 2,586 1.83

5,232 3.70


790,000 Urban & Civic 2,560 1.81 2,560 1.81

Real Estate Investment Trusts 4.31%

1,700,000 LondonMetric Property 3,696 2.61 250,000 Workspace 2,404 1.70

6,100 4.31


3,800,000 dotdigital 3,458 2.44 700,000 iomart 2,516 1.78

1,050,000 NCC 1,825 1.29 330,000 Tracsis 1,964 1.39

9,763 6.90



451





707,459 Clipper Logistics 1,507 1.07 1,000,000 Equiniti 2,164 1.53 1,325,000 Restore 5,366 3.79

390,000 Ricardo 2,480 1.75 700,000 Robert Walters 3,822 2.70 808,200 RWS 4,736 3.35

1,244,444 Simplybiz 2,427 1.72 700,000 Smart Metering Systems 2,814 1.99

25,316 17.90


1,867,300 Spirent Communications 3,708 2.62 3,708 2.62


1,300,000 City Pub 2,665 1.88 2,665 1.88



All investments are ordinary shares unless otherwise stated and admitted to official stock exchange listings. Gross purchases for the year: £83,296,000. In addition, transfers totalling £93,440,000 were made via inspecie into the portfolio during the year (See note 14).

Total sales net of transaction costs for the year: £35,672,000 (See Note 14).


452



29/09/18 to 30/09/19

Note £’000 £’000

Income: Net capital losses 2 (4,472) Revenue 3 3,027 Expenses 4 (924) Net revenue before taxation 2,103 Taxation 5 (3) Net revenue after taxation 2,100 Total return before distributions (2,372) Distributions 6 (2,100) Change in net assets attributable to Shareholders from investment activities (4,472)

29/09/18 to 30/09/19

£’000 £’000





453


30/09/19

Note £’000 £’000




454





30/09/19 £’000

The net capital losses during the year comprise: Non-derivative securities (4,465) Transaction charges (7) Net capital losses (4,472)


30/09/19 £’000

Bank interest 5 Overseas dividends 60 Scrip dividends 15 UK dividends 2,740 UK property income dividends 207 Total revenue 3,027


30/09/19 £’000








455


5. Taxation


30/09/19 £’000



The tax assessed for the year is different from that calculated when the standard rate of corporation tax for an open ended investment company of 20% is applied to the net revenue before taxation.The differences are explained below:

29/09/18 to

30/09/19 £’000

Net revenue before taxation 2,103 Net revenue for the year multiplied by the standard rate of corporation tax 421 Effects of: Irrecoverable overseas tax 3 Movement in excess management expenses 142 Non taxable overseas dividends (12) Non taxable property revenue from UK REITS - non PID (7) Non taxable scrip dividends (3) Non taxable UK dividends (541) Total tax charge for the year 3





At the period end, after offset against revenue taxable on receipt, there is a potential deferred tax asset of £142,431 in relation to surplus management expenses. It is unlikely that the Fund will generate sufficient taxable profits in the future to utilise this amount and therefore no deferred tax asset has been recognised in the year.



456


6. Distributions


29/09/18 to

30/09/19 £’000

Interim 511 Final 1,768 Add: Revenue paid on cancellation of Shares 23 Deduct: Revenue received on creation of Shares (202) Net distribution for the year 2,100 Reconciliation of net revenue after taxation to distributions Net revenue after taxation 2,100 Net distribution for the year 2,100


7. Debtors 30/09/19

£’000

Accrued revenue 312 Amounts receivable for creation of Shares 290 Sales awaiting settlement 1,402 Total debtors 2,004


£’000




457



£’000
















458


11. Share Classes


%













Changes in exchange rates would have no material impact on the valuation of foreign currency financial assets or liabilities as at the balance sheet date.Consequently, no sensitivity analysis has been presented.






459



£’000 £’000

Analysis of total purchase costs Purchases in the year before transaction costs Equities 71,897 Collective Investment Schemes 11,203 Inspecie transfer 93,440

176,540 Commissions – Equities 33 Commissions – Inspecie transfer 1 Taxes – Equities 162 Total purchase costs 196 Gross purchase total 176,736 Analysis of total sale costs Gross sales in the year before transaction costs: Equities 24,429 Collective Investment Schemes 11,259

35,688 Commissions – Equities (15) Commissions – Collective Investment Schemes (1) Total sale costs (16) Total sales net of transaction costs 35,672



29/09/18 to


Purchases – Commissions Equities 0.0459 Collective Investment Schemes 0.0000 Inspecie transfer 0.0011 Purchases – Taxes Equities 0.2253 Collective Investment Schemes 0.0000 Inspecie transfer 0.0000 Sales – Commissions Equities 0.0614 Collective Investment Schemes 0.0089 Sales – Taxes Equities 0.0000 Collective Investment Schemes 0.0000



460











136,597 –



461















462

Omnis US Equity Fund


The Fund aims to achieve a return consisting primarily of capital growth (and potentially a low level of income) which exceeds that of the Russell 1000 TR Index after all fees and expenses, over a five-year rolling period.

Investment Policy

The Fund intends to invest at least 70% in US companies, defined as those which are domiciled, incorporated or have a significant exposure to the United States of America.



Benchmark

The performance of the Fund will be measured against the Russell 1000 TR Index for target return purposes.

Portfolio Review

The financial sector was the largest contributor to relative returns due to stock selection. Property and casualty insurance broker Willis Towers Watson, global electronic futures and over-the-counter market exchange operator Intercontinental Exchange, and global insurance broker Marsh & McLennan performed well. Within utilities, stock selection and an overweight allocation aided relative gains. Regulated water and wastewater services company American Water Works and vertically integrated utility holding company NextEra Energy outperformed. Stock selection in the information technology sector was also beneficial, led by information technology services firms Fidelity National Information Services and Fiserv.

Conversely, the consumer staples sector was the largest detractor from relative performance due to security selection. Packaged food company Conagra Brands and tobacco company Philip Morris International declined. Stock selection in the energy sector also weighed on relative results, although an underweight allocation partially offset the negative impact. U.S. onshore exploration and production company Concho Resources underperformed.

We maintain an overweight position and remain optimistic on health care because we believe it provides an attractive combination of solid fundamentals and reasonable valuations. It also has a strong secular tailwind from an aging population. We favor companies that offer compelling, relatively stable growth potential and/or that are well positioned to take advantage of long-term industry trends such as highly innovative product offerings. Our primary exposure is in the health care equipment and supplies industry.


256987 26 Omnis Portfolio Investments pp462-pp476 (US Equity).qxp 29/01/2020 10:34

463


The information technology sector represents our largest absolute weighting within the portfolio but is one of our smallest positions relative to the benchmark. Within the IT sector, we favor companies with durable business models that address large and growing markets, such as increasing demand for business technology solutions. Within the sector, our largest exposure is to the IT services industry.

Overall, during the period we took advantage of select buying opportunities, as we identified high-quality companies trading at compelling valuations. We added to our holding in technology giant Apple and initiated positions in aerospace company Boeing, snack and beverage giant PepsiCo, industrial conglomerate GE, and multinational chemical company Linde. We eliminated bank holding company regional bank U.S. Bancorp, integrated oil and gas company ExxonMobil, and scaled analytical instrument manufacturer Agilent Technologies, and trimmed our positions in diversified managed care company UnitedHealth Group and digital entertainment services provider AT&T.

Investment Manager T. Rowe Price International Limited 21 October 2019



464


Net asset value

Omnis US Equity Fund merged with Omnis US Equity Leaders Fund and Omnis US Smaller Companies Fund on 24 August 2019 and therefore the Net Asset Value of all Classes is nil. This Fund has no shareholders as at year end.



465




Date (%) (%) (%) (%)

30/09/19 Share Class A Income – – – N/A 28/09/18 Share Class A Income 0.65 0.03 0.01 0.69


Omnis US Equity Fund merged with Omnis US Equity Leaders Fund and Omnis US Smaller Companies Fund on 24 August 2019.


Risk Warning




466









467


29/09/18 to 30/09/19 01/10/17 to 28/09/18

Note £’000 £’000 £’000 £’000

Income Net capital gains 2 82,157 107,435 Revenue 3 15,811 11,410 Expenses 4 (4,768) (4,448) Interest payable and similar charges 5 (1) (8) Net revenue before taxation 11,042 6,954 Taxation 6 (1,658) (1,450) Net revenue after taxation 9,384 5,504 Total return before distributions 91,541 112,939 Distributions 7 (9,516) (5,508) Change in net assets attributable to Shareholders from investment activities 82,025 107,431

29/09/18 to 30/09/19 01/10/17 to 28/09/18 £’000 £’000 £’000 £’000

Opening net assets attributable to Shareholders 751,402 550,951 Inspecie transfer 831,248 – Amounts receivable on issue of Shares (749,710) 130,237 Amounts payable on cancellation of Shares (914,965) (37,217)

(1,664,675) 93,020 Change in net assets attributable to Shareholders from investment activities (see above) 82,025 107,431 Closing net assets attributable to Shareholders – 751,402




468


30/09/19 28/09/18

Note £’000 £’000 £’000 £’000

Assets: Fixed assets: Investments – 724,103 Current assets: Debtors 8 – 5,856 Cash and bank balances 9 6,212 31,813 Total current assets 6,212 37,669 Total assets 6,212 761,772 Liabilities: Investment liabilities – – Creditors: Distribution payable (5,904) (3,112) Other creditors 10 (308) (7,258) Total creditors (6,212) (10,370) Total liabilities (6,212) (10,370) Net assets attributable to Shareholders – 751,402



469






30/09/19 28/09/18 £’000 £’000

The net capital gains during the period comprise: Currency (losses)/gains (967) 785 Non-derivative securities 83,156 106,692 Transaction charges (32) (42) Net capital gains 82,157 107,435

3. Revenue 29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

Bank interest 125 58 Overseas dividends 15,686 11,352 Total revenue 15,811 11,410

4. Expenses 29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000




166 32 Total expenses 4,768 4,448 Audit fees are £3,250 ex VAT (2018: £8,050).


470




30/09/19 28/09/18 £’000 £’000


6. Taxation


30/09/19 28/09/18 £’000 £’000

Irrecoverable overseas tax 1,658 1,450 Total taxation for the year (Note 6 (b)) 1,658 1,450



29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

Net revenue before taxation 11,042 6,954 Net revenue for the year multiplied by the standard rate of corporation tax 2,208 1,391 Effects of: Expenses not deductible for tax purposes 29 – Irrecoverable overseas tax 1,658 1,450 Movement in excess management expenses 257 847 Movement in excess management expenses in respect of prior year adjustment (5) – Overseas tax expensed (7) – Rebated capital expenses deductible for tax purposes 2 4 Revenue not subject to corporation tax (2,484) (2,242) Total tax charge for the year 1,658 1,450





At the period end, after offset against revenue taxable on receipt, there is a potential deferred tax asset of £2,319,180 (2018: £2,061,881) in relation to surplus management expenses. It is unlikely that the Fund will generate sufficient taxable profits in the future to utilise this amount and therefore no deferred tax asset has been recognised in the year.


471



7. Distributions


29/09/18 to 01/10/17 to

30/09/19 28/09/18 £’000 £’000

Interim 9,661 2,522 Final – 3,112 Add: Revenue paid on cancellation of Shares 49 88 Deduct: Revenue received on creation of Shares (194) (214) Net distribution for the year 9,516 5,508 Reconciliation of net revenue after taxation to distributions Net revenue after taxation 9,384 5,504 Expenses charged to capital 142 – Net movement in revenue account (12) – Tax relief from capital* 2 4 Net distribution for the year 9,516 5,508

* Tax relief has arisen whereby excess revenue expenses have been utilised to reduce/write off the tax arising on offshore capital gains.


8. Debtors 30/09/19 28/09/18

£’000 £’000

Accrued revenue – 844 Amounts receivable for creation of Shares – 522 Sales awaiting settlement – 4,483 Prepaid expenses – 2 Receivable for research cost – 5 Total debtors – 5,856


£’000 £’000



472



10. Other creditors 30/09/19 28/09/18

£’000 £’000

Amounts payable for cancellation of Shares – 39 Purchases awaiting settlement – 6,784 Retained cash 142 – Transfer to other Omnis fund 5 –

147 6,823 Accrued expenses Manager and Agents AMC fees – 401



146 11 Total other creditors 308 7,258






473



12. Share Classes


%















Canadian Dollar – 97 US Dollar 876,451 753,960 Total foreign currency exposure 876,451 754,057 Sterling (876,451) (2,655) Total net assets – 751,402

If GBP to foreign currency exchange rates had strengthened/increased or weakened/decreased by 10% as at the balance sheet date, the net asset value of the fund would have decreased or increased by £87,645,000 (2018: £75,406,000). These calculations assume all other variables remain constant.


474








£’000 £’000 £’000 £’000

Analysis of total purchase costs Purchases in the year before transaction costs: Equities 512,930 517,221

512,930 517,221 Commissions – Equities 74 81 Total purchase costs 74 81 Gross purchase total 513,004 517,302

Analysis of total sale costs Gross sales in the year before transaction costs: Equities 489,139 424,036 Inspecie transfer 831,248

1,320,387 424,036 Commissions – Equities (61) (69) Taxes – Equities (8) (7) Total sale costs (69) (76) Total sales net of transaction costs 1,320,318 423,960




475





Purchases – Commissions Equities 0.0145 0.0157 Purchases – Taxes Equities 0.0000 0.0000 Sales – Commissions Equities 0.0125 0.0164 Inspecie transfer 0.0000 0.0000 Sales – Taxes Equities 0.0017 0.0017 Inspecie transfer 0.0000 0.0000

29/09/18 to 01/10/17 to 30/09/19 28/09/18

Transaction costs as percentage of average net asset value % %








– – 724,103 –


476












Share Class A Income Group 1 1.3883 – 1.3883 0.7617 Group 2 1.0204 0.3679 1.3883 0.7617 At the period end there will be no distribution, as revenue was distributed to the Shareholders along with their final redemption proceeds on 24 August 2019.


477

Omnis US Equity Leaders Fund


The Fund aims to achieve a return consisting of both income and capital growth, which, after all fees and expenses, exceeds that of the Russell 1000 TR Index over a five-year rolling period.

Investment Policy

The sub-fund intends to invest at least 80% in the equity securities of US companies defined as those which are domiciled, incorporated or have a significant exposure to the US. Exposure to established larger companies will be greater than 50% of the fund. Large companies are defined as those with a market cap of $10 billion or more at the time of the Fund’s investment. Companies whose capitalisation no longer meets this definition after investment will continue to be considered large capitalisation companies.




Benchmark

The performance of the Fund will be measured against the Russell 1000 TR Index for target return purposes.

Portfolio Review


Over the period stock selection contributed to relative returns while sector allocation was slightly negative. The utilities sector was the largest contributor to relative results due to an overweight allocation and stock selection. Vertically integrated utility holding company NextEra Energy outperformed sector peers. Within the financials sector, global electronic futures and over-the-counter market exchange operator Intercontinental Exchange, insurance carrier American International Group, and banking company Wells Fargo performed well.

Conversely, the energy sector was the largest detractor from relative performance due to stock selection, although an underweight allocation partially offset the negative impact. Shares of U.S. onshore exploration and production company Concho Resources, oil and gas producer EOG Resources, and low-cost oil supplier Pioneer Natural Resources declined. Stock selection in the consumer staples sector also weighed on relative returns. Tobacco giant Philip Morris International and agricultural chemical and seed company Corteva underperformed.

Within the portfolio, our positioning is mainly driven by fundamental, stock-specific views. We took advantage of select buying opportunities, as we identified high-quality companies trading at compelling valuations. We also sold shares of certain holdings following their strong performance. We will continue to look for high-quality companies that have opportunities to increase their market share or have barriers to entry around their business that will allow them to grow organically in a variety of market environments.


256987 27 Omnis Portfolio Investments pp477-pp495 (US Equity Leaders).qxp 29/01/2020 10:34

478


The information technology sector represents our largest absolute weighting. Within the sector, we favour companies with durable business models that address large and growing markets, such as increasing demand for business technology solutions. Within the sector, our largest exposure is to the IT services industry.

We think certain companies within the utilities sector feature durable earnings growth potential, strong dividend yields, and exposure to longer-term trends such as the proliferation of renewable energy.

The health care sector continues to play a significant role in the portfolio, as we believe it offers an attractive combination of solid fundamentals and reasonable valuations. It also has a strong secular tailwind from an aging population. We favour companies that offer compelling, relatively stable growth potential and/or that are well positioned to take advantage of long-term industry trends such as highly innovative product offerings. Our largest industry weight is in health care equipment and supplies. We also maintain a sizable position in pharmaceuticals.

Financials remains one of our larger absolute sector weights, as we continue to seek to invest in high-quality companies that are well-capitalised, have strong industry positions, and have diversified revenue streams. Our largest industry weights are in banks and insurance.

Outlook

U.S. stocks delivered mixed returns in the third quarter of 2019 amid heightened volatility as trade tensions between the U.S. and China continued to weigh on markets. Fears of a recession also intensified, as disappointing manufacturing data and an inversion of closely watched portions of the yield curve undermined investor sentiment. Conversely, investors were encouraged by monetary policy developments, as the Federal Reserve reduced short-term interest rates twice and other central banks around the world also took measures to sustain economic growth.

While U.S. economic data remains largely positive as consumers continue to benefit from record low unemployment and rising wages, we remain cautious as we expect market volatility will persist until there is more clarity into how the long-standing U.S.-China trade tensions will be resolved. We are concerned that global trade policy uncertainty may continue to dampen business capital spending and other growth-driving efforts. However, recent volatility has created compelling buying opportunities within more cyclical areas of the market and in higher-quality, traditionally defensive names.

Within the portfolio, we expect stock selection will be the primary driver of longer-term outperformance. We believe careful fundamental research will be necessary to find opportunities, and we will continue to search for investment opportunities in select areas of the market, utilizing our bottom-up stock selection approach. As always, we rely on our global research team of industry specialists to uncover fundamentally sound companies and remain committed to providing quality risk-adjusted returns over the long term.




479


Purchases Sales

Portfolio Name Cost £’000 Portfolio Name Proceeds £’000 AbbVie 7,340 UnitedHealth 8,217 Vertex Pharmaceuticals 5,522 Johnson & Johnson 6,721 Amphenol 4,921 International Paper 6,509 Apple 4,307 Agilent Technologies 5,270 Xilinx 3,146 Conagra Brands 4,962 Boston Scientific 2,760 Pioneer Natural Resources 4,771 AT&T 2,395 Cognizant Technology Solutions 4,063 Exelon 2,370 AT&T 3,943 DowDuPont 2,265 American Water Works 2,653 JPMorgan Chase 2,188 Apple 2,224



480


A Income 30/09/19

(p) Change in net assets per Share Opening net asset value per share 100.00 Return before operating charges* 0.52 Operating charges (0.08) Return after operating charges 0.44 Distributions (0.09) Closing net asset value per share 100.35


Performance Return after operating charges 0.44%

Other information Closing net asset value (£’000) 781,450 Closing number of shares 778,708,186 Operating charges 0.70% Direct transaction costs 0.00% Prices (p) Highest share price 102.21 Lowest share price 98.83




481




Date (%) (%) (%) (%)






• The Fund appears as a “5” on the scale. This is because the Fund invests in assets that typically carry medium risk and offer medium reward compared with other categories of assets.

Risk Warning








482




Aerospace & Defence 3.88%

59,548 Boeing 18,381 2.35 39,354 Northrop Grumman 11,969 1.53

30,350 3.88


186,619 Magna International 8,073 1.03 8,073 1.03

Banks 5.99%

156,414 JPMorgan Chase 14,936 1.91 540,497 KeyCorp 7,820 1.00 109,962 PNC Financial Services 12,504 1.60 281,798 Wells Fargo 11,535 1.48

46,795 5.99

Beverages 2.00%

140,715 PepsiCo 15,658 2.00 15,658 2.00

Chemicals 4.44%

53,861 Air Products & Chemicals 9,693 1.24 184,987 DowDuPont 10,702 1.37 91,047 Linde 14,307 1.83

34,702 4.44

Electricity 3.27%

265,576 Exelon 10,411 1.33 80,312 NextEra Energy 15,183 1.94

25,594 3.27


64,800 Amphenol 5,074 0.65 5,074 0.65


160,441 Intercontinental Exchange 12,004 1.54 322,941 Morgan Stanley 11,182 1.43 138,712 Visa 19,449 2.49

42,635 5.46

Fixed Line Telecommunication 1.21%

308,163 AT&T 9,458 1.21 9,458 1.21


198,450 Corteva 4,514 0.58 313,490 Mondelez International 14,073 1.80

18,587 2.38


483




Gas, Water & Multi-utilities 3.13%

105,030 American Water Works 10,588 1.35 116,137 Sempra Energy 13,910 1.78

24,498 3.13


145,204 Danaher 17,009 2.18 1,763,187 General Electric 12,791 1.64

55,726 Honeywell International 7,648 0.98 37,448 4.80


19,359 Amazon.com 27,259 3.49 72,527 Dollar General 9,354 1.20 6,300 Netflix 1,368 0.17

37,981 4.86


44,770 Becton Dickinson 9,191 1.18 298,241 Boston Scientific 9,848 1.26 85,861 Cigna 10,581 1.35

223,400 Medtronic 19,686 2.52 67,521 Stryker 11,849 1.52 9,356 UnitedHealth 1,650 0.21

62,805 8.04


72,452 Kansas City Southern 7,821 1.00 7,821 1.00

Media 1.55%

114,346 Walt Disney 12,087 1.55 12,087 1.55


322,875 American International 14,591 1.87 154,116 Marsh & McLennan 12,509 1.60 80,191 Willis Towers Watson 12,550 1.61

39,650 5.08


87,790 Concho Resources 4,838 0.62 96,400 EOG Resources 5,805 0.74

10,643 1.36


297,700 Halliburton 4,554 0.58 4,554 0.58


484





124,800 AbbVie 7,668 0.98 108,417 Johnson & Johnson 11,385 1.46 490,972 Pfizer 14,311 1.83 38,500 Vertex Pharmaceuticals 5,292 0.68

38,656 4.95

Real Estate Investment Trust 1.14%

49,800 American Tower 8,934 1.14 8,934 1.14


31,838 Alphabet 31,481 4.03 80,900 Cognizant Technology Solutions 3,956 0.50 99,529 Facebook 14,383 1.84

299,079 Microsoft 33,738 4.32 76,500 salesforce.com 9,211 1.18

92,769 11.87


64,642 Accenture 10,086 1.29 119,781 Fidelity National Information Services 12,901 1.65 166,637 Fiserv 14,005 1.79 169,296 Waste Connections 12,639 1.62

49,631 6.35


131,644 Apple 23,926 3.06 114,059 Applied Materials 4,619 0.59 312,148 Cisco Systems 12,516 1.60 143,195 Micron Technology 4,978 0.64 39,900 Xilinx 3,105 0.40

49,144 6.29

Tobacco 1.25%

158,579 Philip Morris International 9,767 1.25 9,767 1.25


485




70,465 McDonald’s 12,276 1.57 370,365 MGM Resorts 8,334 1.07 119,911 Yum! Brands 11,034 1.41

31,644 4.05








486


24/08/19 to 30/09/19

Note £’000 £’000

Income: Net capital gains 2 2,750 Revenue 3 1,468 Expenses 4 (570) Net revenue before taxation 898 Taxation 5 (190) Net revenue after taxation 708 Total return before distributions 3,458 Distributions 6 (708) Change in net assets attributable to Shareholders from investment activities 2,750

24/08/19 to 30/09/19 £’000 £’000


427 Change in net assets attributable to Shareholders from investment activities (see above) 2,750 Closing net assets attributable to Shareholders 781,450




487


30/09/19

Note £’000 £’000

Assets: Fixed assets: Investments 754,958 Current assets: Debtors 7 4,835 Cash and bank balances 8 30,176 Total current assets 35,011 Total assets 789,969 Liabilities: Investment liabilities – Creditors: Distribution payable (707) Other creditors 9 (7,812) Total creditors (8,519) Total liabilities (8,519) Net assets attributable to Shareholders 781,450



488






30/09/19 £’000

The net capital gains during the period comprise: Currency losses (335) Non-derivative securities 3,093 Transaction charges (8) Net capital gains 2,750


30/09/19 £’000

Bank interest 8 Overseas dividends 1,460 Total revenue 1,468


30/09/19 £’000




10 Total expenses 570 Audit fees are £8,000 ex VAT.

5. Taxation


30/09/19 £’000



489



5. Taxation (continued)



24/08/19 to

30/09/19 £’000

Net revenue before taxation 898 Net revenue for the period multiplied by the standard rate of corporation tax 180 Effects of: Irrecoverable overseas tax 190 Movement in excess management expenses 105 Revenue not subject to corporation tax (285) Total tax charge for the period 190







490



6. Distributions


24/08/19 to

30/09/19 £’000

Final 707 Add: Revenue paid on cancellation of Shares 2 Deduct: Revenue received on creation of Shares (1) Net distribution for the period 708 Reconciliation of net revenue after taxation to distributions Net revenue after taxation 708 Net distribution for the period 708


7. Debtors 30/09/19

£’000

Accrued revenue 507 Amounts receivable for creation of Shares 269 Sales awaiting settlement 3,931 Inspecie transfer receivable 128 Total debtors 4,835


£’000



491




£’000

Amounts payable for cancellation of Shares 885 Purchases awaiting settlement 6,459

7,344 Accrued expenses Manager and Agents AMC fees 419













492



11. Share Classes


%














30/09/19 Currency £’000

US Dollar 782,629 Total foreign currency exposure 782,629 Sterling (1,179) Total net assets 781,450



493








£’000 £’000


819,542 Commissions – Equities 8 Total purchase costs 8 Gross purchase total 819,550

Analysis of total sale costs Gross sales in the period before transaction costs: Equities 67,695

67,695 Commissions – Equities (9) Taxes – Equities (2) Total sale costs (11) Total sales net of transaction costs 67,684




494






24/08/19 to









754,958 –


495










496

Omnis US Smaller Companies Fund


The Fund aims to achieve a return consisting of both income and capital growth, which, after all fees and expenses, exceeds that of the Russell 2500 TR Index over a five-year rolling period.

Investment Policy

The sub-fund intends to invest at least 70% in the equity securities of smaller US companies defined as those which are domiciled, incorporated or have a significant exposure to the US and which have a market capitalisation no greater than the largest company in the Russell 2500 TR index at the time of the Fund’s investment.



Benchmark

The performance of the Fund will be measured against the Russell 2500 TR Index for target return purposes only.

Portfolio Review


Over the period, stock selection was mainly responsible for underperformance.

Stock selection in industrials and business services detracted most from relative results. Shares of CoStar Group pulled back from all-time highs reached in August. In our opinion, this is an attractive business with recurring demand, high barriers to entry, and low competition. We also have a favourable view of the company’s recently announced acquisition of STR, the leader in data and analytics for the hospitality industry, which improves the existing business and increases CoStar’s total addressable market. Stock choices in consumer discretionary also hindered performance. After rising on strong second-quarter results, shares of worksite child-care services provider Bright Horizons Family Solutions gave back gains. We maintain a high conviction of the company, which serves an undersupplied market. Recent investments in the Backup Care segment create additional growth opportunities.

Conversely, information technology added value due to stock picks. Entegris, a filtration specialist for semiconductors, weathered near-term industry weakness better than many peers. Shares climbed higher amid a general rebound in semiconductor companies, as the perception that the industry had bottomed out gained traction. We like the company’s product breadth and customer diversification, as well as its solid management team and balance sheet. Its dominance in growing niche markets creates a substantial runway for growth.

We do not make sector “bets,” and sector weightings are formed as a residual of our bottom-up investment process. Industrials and business services, information technology, financials, and health care remain the dominating sectors in the portfolio, all with greater than 10% of the equity


256987 28 Omnis Portfolio Investments pp496-pp517 (US Smaller Companies Fund).qxp 29/01/2020 10:34

497



allocation. During the quarter, we continued to find select opportunities within names across various industries where we feel valuations may underestimate the sustainability of growth or turnaround potential within the company. At the strategy level, new positions initiated during the third quarter included Edgewell Personal Care, Ollie’s Bargain Outlet, Clarivate Analytics, UniFirst, and LCI Industries.

Edgewell Personal Care: We have a favorable view of the company’s recent acquisition of Harry’s, a direct-to-consumer razor startup. We believe the combination of Harry’s marketing skills and Edewell’s technology and private label capabilities positions the company to offer best-in-class innovation and a full price ladder of nice products.

Ollie’s Bargain Outlet: We found a compelling entry point in Ollie’s Bargain Outlet. The company operates in the attractive closeout retail industry, has a strong customer value proposition, and a long runway for unit growth.

Clarivate Analytics: We added a position in Clarivate Analytics, a set of information services assets in the patent services, trademarks, and education industries. We have confidence in CEO Jerre Stead’s ability to utilize his successful data services experience to initiate a turnaround.

UniFirst: We initiated a position in UniFirst, a uniform rental and facility services company. The company is well positioned as the number three player in an industry with high barriers to scale. We believe the investments new CEO Steven Sintros is making in the company’s teams and technology will accelerate organic uniform revenue growth and expand margins.

LCI Industries: We added a position in LCI Industries, the largest supplier of components to the RV industry in the U.S. We believe the company’s business model is superior to industry peers, allowing it to outgrow the industry with less cyclicality while generating strong free cash flow.

Outlook

U.S. equity markets were mixed in the third quarter of 2019, with large-cap stocks outperforming small-caps and value beating growth. Volatility remained in the third quarter, with all broad market indexes providing positive returns in July, followed by a sharp reversal in August, and a mixed September where value indexes handily outpaced their growth counterparts. Small-caps picked up some ground on large-caps in September but remain well behind for the year, with the Russell 2500 Index trailing the Russell 1000 Index by 2.81% in 2019 and 7.91% over the trailing 12 months. The Russell 2500 was down 1.28% bps for the quarter, with health care and energy being the largest detractors. Real estate and utilities were the two best-performing sectors in the benchmark.

It was another quarter of geopolitical headlines. U.S. and China trade negotiations continued to wax and wane, with President Donald Trump slapping additional tariffs on China in early August only to put a pause on the additional hike in mid-September, with trade negotiators from both countries scheduled to meet in Washington in October. Central banks continued their accommodative policies abroad and the Fed cut rates twice in the quarter. The U.S. political landscape is getting more complicated as the Democratic field of presidential candidates narrows, and President Trump faces an impeachment inquiry, though markets have somewhat ignored the latter thus far. Tensions in the Middle East continued to rise after an attack on a Saudi oil production facility, which caused oil prices to briefly spike and sent fears across the globe that larger conflict may follow. Since then, diplomacy has prevailed, tensions have somewhat cooled, and Saudi oil production has gotten back online.


498



The US Smaller Companies Equity Strategy seeks to capitalize on opportunities across the broad range of the small-cap and mid-cap U.S. equity market. The portfolio has a collection of core holdings in high-quality companies we expect to compound value over time. We also look for select investments in “deeper value” opportunities; companies experiencing challenge or controversy of one sort or another, that the investment team believes can be resolved in a reasonable period of time. The portfolio holds a number of income-oriented, dividend growth companies, as well as a collection of high-growth investments in which the investment team believes other investors do not yet fully appreciate the companies’ long-term growth potential. Overall, the strategy remains modestly overweight the high-quality compounding companies but has been finding opportunities in real estate investment trusts, consumer staples, and consumer discretionary.

Since the strategy’s inception over 15 years ago, we have relied upon T. Rowe Price’s team of fundamental research analysts to provide unique perspective and insight on the companies they follow. Going forward, the portfolio manager will continue to work closely with this talented team of investment professionals to identify the most attractive opportunities across the full range of the small-cap and mid-cap segment of the U.S. equity market.



499



Purchases Sales


Entegris 333 CoStar 317 JBG Smith Properties 284 Ollie’s Bargain Outlet 269 Avery Dennison 269 NiSource 247 American Water Works 241 LCI Industries 239 Atmos Energy 238 Aaron’s 229

Keysight Technologies 279 Entegris 276 Alder Biopharmaceuticals 216 Cable One 210 Marvell Technology 188 TransUnion 156 Exact Sciences 150 Proofpoint 142 Acceleron Pharma 130 Vulcan Materials 105


500



A Income 30/09/19 (p)

Change in net assets per Share Opening net asset value per share 100.00 Return before operating charges* (0.40) Operating charges (0.11) Return after operating charges (0.51) Distributions – Closing net asset value per share 99.49 * after direct transaction costs of: 0.00 Performance Return after operating charges (0.51%) Other information Closing net asset value (£’000) 86,189 Closing number of shares 86,629,578 Operating charges 0.96% Direct transaction costs 0.00% Prices (p) Highest share price 101.51 Lowest share price 98.22 Share class A Income launched on 24 August 2019 at a price of 100 pence.


501





Date (%) (%) (%) (%)







Risk Warning







502




14,046 Aerojet Rocketdyne 576 0.67 26,664 BWX Technologies 1,238 1.44 9,472 Cubic 541 0.63 4,621 Teledyne Technologies 1,207 1.40 8,030 Triumph 149 0.17

3,711 4.31


9,592 Gentherm 320 0.37 7,133 Stoneridge 179 0.21 2,511 Visteon 168 0.19

667 0.77

Banks 6.87%

40,695 CenterState Bank 792 0.92 8,738 Equity BancShares 190 0.22

11,284 FB Financial 343 0.40 12,025 Heritage Financial 263 0.30 54,952 Home BancShares 838 0.97 7,995 Live Oak BancShares 117 0.14

21,171 Pacific Premier Bancorp 536 0.62 5,572 PCSB Financial 90 0.10

16,006 Pinnacle Financial Partners 737 0.86 26,697 Seacoast Banking Corporation of Florida 548 0.64 3,202 South State 196 0.23 6,536 Southern First BancShares 210 0.24

18,176 Webster Financial 691 0.80 9,982 Western Alliance Bancorp 373 0.43

5,924 6.87

Chemicals 3.13%

15,676 Avery Dennison 1,445 1.68 1,330 Balchem 107 0.12 3,205 Quaker Chemical 411 0.48

13,164 RPM International 734 0.85 2,697 3.13


14,071 Gibraltar Industries 524 0.61 69,860 Mueller Water Products 637 0.74 16,300 PGT Innovations 228 0.26 4,630 Simpson Manufacturing 260 0.30 1,808 Valmont Industries 203 0.24

10,414 Vulcan Materials 1,278 1.48 1,006 Watsco 138 0.16

3,268 3.79



503



Electricity 0.34%

5,225 Alliant Energy 228 0.26 25,321 Bloom Energy 67 0.08

295 0.34


3,754 Allegion 316 0.37 13,428 CTS 352 0.41 10,068 ESCO Technologies 650 0.75

815 Keysight Technologies 64 0.07 2,255 Littelfuse 324 0.38

11,471 National Instruments 391 0.45 11,135 Novanta 738 0.86 11,231 PerkinElmer 776 0.90

3,611 4.19


11,444 Ally Financial 308 0.36 8,016 Cboe Global Markets 747 0.87

17,278 Encore Capital 467 0.54 22,975 Fidelity National Financial 828 0.96 1,340 MarketAxess 356 0.41

12,443 Voya Financial 549 0.64 3,255 3.78


13,210 Performance Food 494 0.57 494 0.57


11,392 Cal-Maine Foods 369 0.43 7,950 Conagra Brands 198 0.23 6,988 Sanderson Farms 858 0.99

15 Seaboard 53 0.06 1,478 1.71

Forestry & Paper 0.56%

56,618 Interfor 484 0.56 484 0.56

Gas, Water & Multi-utilities 7.18%

12,975 American Water Works 1,308 1.52 9,848 Aqua America 358 0.41

14,429 Atmos Energy 1,333 1.55 6,242 Chesapeake Utilities 482 0.56

57,121 NiSource 1,387 1.61 5,331 ONE Gas 416 0.48 5,008 SJW 278 0.32 8,531 Southwest Gas 630 0.73

6,192 7.18



504




4,400 Actuant 78 0.09 7,362 Packaging Corporation of America 634 0.74

712 0.83


21,217 Aaron’s 1,106 1.28 8,251 Bright Horizons Family Solutions 1,020 1.18 2,602 Burlington Stores 422 0.49 7,619 Chegg 185 0.21 5,064 Monro 325 0.38

11,682 National Vision 228 0.27 5,538 Ollie’s Bargain Outlet 263 0.31 3,031 Strategic Education 334 0.39

3,883 4.51


4,285 Amedisys 455 0.53 5,420 Bruker 193 0.22 7,177 Centene 252 0.29 3,040 Cooper Companies 733 0.85

30,260 Hanger 500 0.58 19,498 Hologic 799 0.93 6,601 Molina Healthcare 588 0.68 2,066 Nevro 144 0.17

10,809 Patterson Companies 156 0.18 693 Penumbra 76 0.09

16,432 Quidel 818 0.95 3,836 Teleflex 1,057 1.23 1,743 WellCare Health Plans 367 0.42 3,968 West Pharmaceutical Services 457 0.53

6,595 7.65


14,932 Edgewell Personal Care 393 0.46 186 NVR 560 0.65

953 1.11


9,531 Flowserve 361 0.42 26,655 Gardner Denver 612 0.71 6,655 Graco 249 0.29 7,787 Helios Technologies 256 0.30

10,315 John Bean Technologies 832 0.96 2,163 Toro 128 0.15

2,438 2.83



505




9,149 JB Hunt Transport Services 821 0.95 4,480 Old Dominion Freight Line 618 0.72

17,041 Schneider National 301 0.35 1,740 2.02

Leisure Goods 0.92%

3,200 LCI Industries 239 0.27 118,200 Zynga 558 0.65

797 0.92

Life Insurance 1.62%

10,366 Assurant 1,058 1.23 18,749 AXA Equitable 337 0.39

1,395 1.62

Media 1.07%

905 Cable One 920 1.07 920 1.07


8,031 Arthur J Gallagher 583 0.68 8,207 Axis Capital 444 0.51 4,980 Hanover Insurance 548 0.64 5,815 State Auto Financial 153 0.18

1,728 2.01


7,104 Concho Resources 392 0.46 4,419 Diamondback Energy 322 0.37

18,965 Kosmos Energy 96 0.11 810 0.94


7,025 Chart Industries 356 0.41 25,132 Liberty Oilfield Services 221 0.26

577 0.67


6,136 ACADIA Pharmaceuticals 179 0.21 1,570 Agios Pharmaceuticals Inc 41 0.05 8,926 Aimmune Therapeutics 152 0.18 1,545 Ascendis Pharma ADR* 121 0.14 1,660 Blueprint Medicines 99 0.11 4,339 Exact Sciences 318 0.37 3,100 G1 Therapeutics 57 0.07 5,527 Global Blood Therapeutics 217 0.25 1,857 GW Pharmaceuticals ADR* 173 0.20

11,642 Insmed 167 0.19 1,760 MyoKardia 75 0.09



506



Pharmaceuticals & Biotechnology 2.87% (continued)

2,069 Neurocrine Biosciences 151 0.18 2,424 Sage Therapeutics Inc 276 0.32 1,092 Sarepta Therapeutics 67 0.08 1,532 Seattle Genetics 106 0.12 4,590 Ultragenyx Pharmaceutical 159 0.18 4,203 Xencor 115 0.13

2,473 2.87


11,793 Altus Group 289 0.34 16,378 American Campus Communities 639 0.74 22,780 CubeSmart 645 0.75 22,590 Douglas Emmett 785 0.91 23,520 Duke Realty 648 0.75 4,334 Federal Realty Investment Trust 479 0.55 4,872 FirstService 406 0.47

50,911 JBG Smith Properties 1,619 1.88 18,725 Terreno Realty 776 0.90

6,286 7.29


25,771 Black Knight 1,276 1.48 7,039 Ceridian HCM 282 0.33

21,519 Descartes Systems 704 0.82 7,400 DocuSign 372 0.43

11,468 Eventbrite 165 0.19 8,106 Leidos 565 0.65 4,976 Paycom Software 845 0.98 8,432 Proofpoint 883 1.02

17,710 RealPage 903 1.05 7,117 Rosetta Stone 100 0.12 9,124 Splunk 873 1.01

18,927 SS&C Technologies 792 0.92 11,597 Synopsys 1,292 1.50 3,082 Twilio 275 0.32 3,423 Workiva 122 0.14

9,449 10.96


11,864 Brink’s 799 0.93 16,643 Clarivate Analytics 228 0.26 21,182 CoreLogic 795 0.92 4,045 CoStar 1,947 2.26 4,005 Euronet Worldwide Inc 475 0.55 1,000 FTI Consulting 86 0.10

14,290 SiteOne Landscape Supply 858 1.00 10,931 TransUnion 719 0.83



507



Support Services 7.74% (continued)

1,546 UniFirst 245 0.28 7,000 Waste Connections 523 0.61

6,675 7.74


48,507 Entegris 1,852 2.15 19,947 Lattice Semiconductor 296 0.34 57,203 Marvell Technology 1,159 1.35 1,823 Monolithic Power Systems 230 0.27

16,505 Pure Storage 227 0.26 3,764 4.37


4,159 Alaska Air 219 0.25 2,131 Darden Restaurants 205 0.24

23,563 Denny’s 435 0.51 3,102 Domino’s Pizza 616 0.72 8,890 Dunkin’ Brands 572 0.66

2,047 2.38

Portfolio of investments 85,318 98.99 Net other assets 871 1.01 Net assets 86,189 100.00



* American Depositary Receipt Gross purchases for the year: £16,687,000 (See note 14). In addition, transfers totalling £72,874,000 were made via inspecie into the portfolio during the year.




508


24/08/19 to 30/09/19

Note £’000 £’000

Income: Net capital losses 2 (406) Revenue 3 73 Expenses 4 (95) Net expenses before taxation (22) Taxation 5 (11) Net expenses after taxation (33) Total return before distributions (439) Distributions 6 – Change in net assets attributable to Shareholders from investment activities (439)

24/08/19 to 30/09/19

£’000 £’000

Opening net assets attributable to Shareholders – Inspecie transfer 86,475 Amounts receivable on issue of Shares 539 Amounts payable on cancellation of Shares (386)

153 Change in net assets attributable to Shareholders from investment activities (see above) (439) Closing net assets attributable to Shareholders 86,189




509


30/09/19

Note £’000 £’000




510






30/09/19 £'000

The net capital losses during the period comprise: Currency gains 23 Non-derivative securities (428) Transaction charges (1) Net capital losses (406)


30/09/19 £'000

Bank interest 1 Overseas dividends 72 Total revenue 73


30/09/19 £'000







511



5. Taxation


30/09/19 £'000



The tax assessed for the period is different from that calculated when the standard rate of corporation tax for an open ended investment company of 20% is applied to the net (expense)/revenue before taxation. The differences are explained below:

24/08/19 to 30/09/19

£'000

Net expense before taxation (22) Net expense for the period multiplied by the standard rate of corporation tax (4) Effects of: Irrecoverable overseas tax 11 Movement in excess management expenses 17 Non taxable overseas dividends (13) Total tax charge for the period 11 OEICs are exempt from tax on capital gains in the UK. Therefore, any capital return is not included within the reconciliation above.






512



6. Distributions


24/08/19 to 30/09/19

£'000

Net distribution for the period – Reconciliation of net expenses after taxation to distributions Net expenses after taxation (33) Revenue deficit 33 Net distribution for the period – Details of the distributions per Share are set out in the distribution tables on page 517.

7. Debtors 30/09/19

£'000

Accrued revenue 27 Amounts receivable for creation of Shares 37 Sales awaiting settlement 95 Inspecie transfer receivable 14 Total debtors 173


£'000



£'000

Amounts payable for cancellation of Shares 76 Purchases awaiting settlement 207

283 Accrued expenses Manager and Agents AMC fees 64





513











11. Share Classes


%






The Fund launched on 24 August 2019.






514








30/09/19 Currency £’000

Canadian Dollar 774 US Dollar 85,334 Total foreign currency exposure 86,108 Sterling 81 Total net assets 86,189




As at 30 September 2019, 0.00% of the Fund's assets were interest bearing.



515



14. Portfolio transaction costs 24/08/19 to 30/09/19 £'000 £'000


89,558 Commissions – Equities 3 Total purchase costs 3 Gross purchase total 89,561

Analysis of total sale costs Gross sales in the period before transaction costs: Equities 3,816



24/08/19 to



24/08/19 to







516




Assets Liabilities £'000 £'000


85,318 –


517







Share Class A Income Group 1 0.0000 – 0.0000 Group 2 0.0000 0.0000 0.0000 Share class A Income launched on 24 August 2019.


518


Classes of Shares

The Company can issue different Classes of Shares in respect of any Fund. Holders of Income Shares are entitled to be paid the revenue attributable to such Shares, in respect of each annual or interim accounting period. 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 valuation point for each Fund is 12 noon on each dealing day (being each day which is a business day in London). Valuations may be made at other times under the terms contained within the Prospectus.

Buying and Selling of Shares

The ACD will accept orders to deal in the shares on normal business days between 9:00 am and 5:00 pm. Instructions to buy or sell shares may be either in writing to: PO Box 10191, Chelmsford, CM99 2AP or by telephone on 0345 140 0070*. 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 prices of shares for each Class in each Fund will be posted on www.trustnet.com and can also be obtained by telephoning the Administrator on 0345 140 0070* during the ACD’s normal business hours.

Significant Information

• Change of Investment Manager on Omnis Income & Growth Fund from Woodford investment Management to Jupiter Asset Management on 8 July 2019.

• Following approval from shareholders on 22 July 2019 a Scheme of Arrangement was implemented on 24 August 2019 transferring assets from existing funds to new funds as follows;

o Omnis Alternative Strategies Fund – 25% to Omnis Absolute Return Bond Fund (new Fund) 50% to Omnis Diversified Returns Fund (new Fund) 25% to Omnis Short-Dated Bond Fund (new Fund)

o Omnis Emerging Markets Equity Fund – 50% to Omnis Global Emerging Markets Equity Leaders Fund (new Fund) 50% to Omnis Global Emerging Markets Equity Opportunities Fund (new Fund)

o Omnis European Equity Fund – 50% to Omnis European Equity Leaders Fund (new Fund) 50% to Omnis European Equity Opportunities Fund (new Fund)

o Omnis US Equity Fund – 90% to Omnis US Equity Leaders Fund (new Fund) 10% to Omnis US Smaller Companies Fund (new Fund)

• During the period the Omnis UK Bond Fund and Omnis UK Equity Fund were Terminated.

General Information

256987 29 Omnis Portfolio Investments pp518-end (General Information).qxp 29/01/2020 10:51

519


Shares were applied as follows:

o For each share in the Omnis Alternative Strategies Equity Fund you will have received 0.2577755 shares in the Omnis Absolute Return Bond Fund, 0.51555101 shares in the Omnis Diversified Returns Fund and 0.2577755 shares in the Omnis Short-Dated Bond Fund.

o For each share in the Omnis Emerging Markets Equity Fund you will have received 0.67775367 shares in the Omnis Global Emerging Markets Equity Leaders Fund and 0.67775367 shares in the Omnis Global Emerging Markets Equity Opportunities Fund.

o For each share in the Omnis European Equity Fund you will have received 0.63540498 shares in the Omnis European Equity Leaders Fund and 0.63540498 shares in the Omnis European Equity Opportunities Fund.

o For each share in the Omnis US Equity Fund you will have received 1.83009097 shares in Omnis US Equity Leaders Fund and 0.20334344 shares in the Omnis US Smaller Companies Fund.

Other Information

The Instrument of Incorporation, Prospectus and the most recent interim and annual reports may be inspected at the office of the ACD which is also the Head Office of the Company and copies may be obtained, free of charge, upon application to Omnis Investments Limited, PO Box 10191, Chelmsford CM99 2AP.

Shareholders who have any complaints about the operation of the Company 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 Exchange Tower, London E14 9SR.

* Please note that telephone calls may be recorded for monitoring and training purposes, and to confirm investors’ decisions.

Report

The annual report of the Company will be published within four months of each annual accounting period and the interim report will be published within two months of each interim accounting period.

Interim financial statements period ended 31 March

Annual financial statements year ended 30 September

Distribution Payment Dates

Interim – 31 May (for Omnis UK Equity Income and Omnis Strategic Bond Fund only - 31 May, 31 August and 28 February)

Final – 30 November

Data Protection

The details you have provided will be held electronically by the Funds’ Registrar but will not be used for any purpose except to fulfil its obligations to shareholders.

General Information (continued)


520


Effects of Personal Taxation

Investors should be aware that unless their shares are held within an ISA, or switched between Funds in this OEIC, selling shares is treated as a disposal for the purpose of Capital Gains tax.

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 income from them may 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 of a fund are subject to fluctuation in exchange rates, which may be favourable or unfavourable.

Protected Cell Regime

Please note, on 21 December 2011, the Open Ended Investment Companies Regulations 2001 (SI 2001/1228) (“the Regulations”) were amended to introduce a Protected Cell Regime (“PCR”) for OEICs. Under the PCR each Fund represents a segregated portfolio of assets and accordingly, the assets of a Fund belong exclusively to that Fund and shall not be used or made available to discharge (directly or indirectly) the liabilities of, or claims against, any other person or body, including any other Fund and shall not be available for any such purpose. The Regulations allowed a transitional period for implementation of the PCR, until 20 December 2013. However, the Company adopted the PCR on 30 September 2013. No reallocation of liabilities as described above was necessary at any time prior to 30 September 2013.

Remuneration

Omnis Investment Limited has a Remuneration Policy in place which aims to identify, and to govern the remuneration of, the personnel whose professional activities have a material impact on the risk profile of the firm and the Companies for which it acts as ACD. The personnel identified under this policy are called ‘UCITS Code Staff’.

UCITS Code Staff include executive directors, senior managers and Control Function personnel. UCITS Code Staff may also work for other Openwork Group companies and the disclosures below relate only to the proportion of their remuneration deemed to relate to Omnis.

The Remuneration Policy seeks to ensure that Omnis’ remuneration policies and practices for UCITS Code Staff are consistent with, and promote, sound and effective risk management and do not impair Omnis in its duty to act in the best interests of the UCITS it manages. Furthermore, the policy aims to ensure that risk taking is consistent with the risk profiles or the instrument constituting the funds or the prospectus, as applicable, of the UCITS that Omnis manages.

UCITS Code Staff are remunerated through a mix of base salary and discretionary variable remuneration (including long-term incentive awards). Any payment of variable remuneration is based on the regular and structured assessment of the individual’s performance against their objectives, their adherence to the Openwork Group’s CORE values and on the overall performance of the Openwork Group.

In the year to 31 December 2018, the aggregate amount paid to UCITS Code Staff specifically in respect of professional activities relating to Omnis was £642,883; of which £493,997 was fixed remuneration and £148,886 was variable remuneration.

The policy will be reviewed at least annually and will be made available to shareholders free of charge.



521


Value Assessment

Omnis will undertake a value assessment in relation to the sub-funds in the Omnis Portfolio Investments ICVC on 31 August 2020, and at least annually thereafter.

Within the assessment, Omnis will consider three elements. These are:

a) how the shares in a sub-fund have performed compared to the investment objectives;

b) the cost of operating the sub-fund compared to funds with similar objectives and strategies, and;

c) the quality of service provided by Omnis and its third-party providers to sub-fund investors.

The assessment for performance purposes will be conducted as at the date of the assessment and will consider only sub-funds that have a three-year performance record at that date. The assessment of costs and service will be performed on the basis of the 12-month period to the assessment date and will consider only sub-funds that have existed for the entire period.

A summary of findings, together with any improvement plans, will be published on Omnis’ website no later than 31 December 2020.



Perivan 256987


Annual Report &

Financial Statements Omnis Portfolio Investments ICVC For the year ended 30 September 2019

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