CT Global Managed Portfolio Growth

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Annual Financial Report

RNS Number : 3197H

BMO Managed Portfolio Trust PLC

03 August 2021

To: RNS

Date: 3 August 2021

From: BMO Managed Portfolio Trust PLC

LEI: 213800ZA6TW45NM9YY31

Statement of Audited Results for the year ended 31 May 2021

Income shares - financial highlights

- Annual dividendincreased by 1.6% to 6.2p per Income share compared to the prior year.

- Dividend yield⁽¹⁾ of 4.3% at 31 May 2021, based on dividends at the current annual rate of 6.2p per Income share, compared to the yield on the FTSE All-Share Index of 2.8%. Dividends are paid quarterly.

- Net asset value total return⁽²⁾ per Income share of +29.0% for the financial year, outperforming the FTSE All-Share Index total return (+23.1%) by +5.9%.

- Net asset value total return per Income share of +166.8% since launch on 16 April 2008, the equivalent of +7.8% compound per year. This has outperformed the FTSE All-Share Index total return of +109.6%, the equivalent of +5.8% compound per year.

Growth shares - financial highlights

- Net asset value total return per Growth share of +32.5% for the financial year outperforming the FTSE All-Share Index total return (+23.1%) by +9.4%.

- The net asset value per Growth share has increased by +181.6% since launch on 16 April 2008, the equivalent of +8.2% compound per year. This has outperformed the FTSE All-Share Index total return +109.6%, the equivalent of +5.8% compound per year.

- The net asset value total return per Growth share has outperformed the FTSE All-Share Index total return over one year, three years, five years, ten years and from launch to 31 May 2021.

Notes:

(1) Dividend yield - based on dividends at the annual rate of 6.2 pence per Income share for the financial year to 31 May 2021 and the Income share price of 143.5p at 31 May 2021.

(2) Total return - the return to shareholders calculated on a per share basis taking into account both the reinvestment of any dividends paid in the period and the increase or decrease in the share price or NAV in the period.

Chairman's Statement

· Net asset value total return for the financial year for both the Income shares and Growth shares outperformed the benchmark index

- Dividend yield on the Income shares of 4.3% at 31 May 2021

- Tenth consecutive year of dividend increases

Performance

For the Company's financial year to 31 May 2021 the NAV total return (capital performance plus the reinvestment of any dividends paid) was +29.0% for the Income shares and +32.5% for the Growth shares, both of which outperformed the +23.1% total return for the FTSE All-Share Index, the benchmark index for both share classes.

The past financial year split into two quite contrasting periods of performance. Until early November 2020 the nature of performance within equity markets was similar to the final quarter of the last financial year to 31 May 2020. The effect of the pandemic, with accompanying restrictions and lockdowns, severely impacted economies. Due to massive monetary and fiscal stimulus the worst effects in terms of unemployment and corporate bankruptcies were avoided. Yet, during this time, certain sectors and companies prospered, technology and healthcare in particular, as they proved to be essential for economies to function. Both Portfolios were heavily invested in investment companies that were either specialists in, or well exposed to, these areas and performance was very strong as a result.

Everything changed with the announcement of vaccines on 9 November 2020 and overnight leadership within equity markets also changed. Sectors and companies worst affected by the pandemic experienced a sharp recovery in their share prices as investors anticipated an eventual re-opening of economies and examples included oils, miners, banks, retail, leisure and some industrials. Both Portfolios lagged the FTSE All-Share Index over the second half of the financial year although, in the case of the Income Portfolio, it was marginal. The principal contributors to performance are discussed in the Investment Manager's Review.

In addition to the financial year to 31 May 2021, both share classes have also outperformed the benchmark over three years, five years, ten years and from launch to 31 May 2021.

For Income shareholders, I am delighted to report that dividends have now been increased in each of the last ten years. For Growth shareholders seeking long term performance, it is pleasing to note that their compound annual growth rates have been 10.2%, 13.4% and 9.9% over three years, five years and ten years respectively, which is a great testament to our Investment Manager, Peter Hewitt. The Trust's excellent performance was also recognised when the Growth Portfolio once again won the 2020 Investment Week Investment Trust of the Year Award for the Flexible Investment sector.

Revenue and Dividends

For the financial year ended 31 May 2021, four interim dividends have now been paid, totalling 6.2p per Income share (6.1p per Income share for the previous financial year). The fourth interim dividend was paid after the year end on 9 July 2021.

Given the impact of COVID-19 on markets and the uncertain outlook for income during the financial year, the first three interim dividends were maintained at the same rate as in the prior financial year (of 1.4p per Income share). The fourth interim dividend was, however, increased from 1.9p to 2.0p per Income share and therefore, the total annual dividend increased by 1.6% in comparison to the prior financial year. This has been achieved while still adding £172,000 to the revenue reserve.

This is the tenth consecutive year of increase and, as a result, the yield on the Income shares was 4.3% on the year-end Income share price, compared with 2.8% for the FTSE All-Share Index.

From an income perspective, the eventual outcome for revenue generated from both Portfolios was better than expected. Although there were some dividend cuts, the vast majority of investment company holdings maintained, or in some cases raised, their dividends, often by utilising revenue reserves built up over previous years. In addition, the income contribution from holdings in the "alternatives" sector proved very robust.

BMO Managed Portfolio Trust now has a revenue reserve of approximately 73% of the current annual dividend cost, an important future buffer for the dividend which can be used to support the dividend payment to Income shareholders if required. Accordingly, in the absence of unforeseen circumstances, it is the Board's current intention to at least maintain the total level of dividend to Income shareholders for the year to 31 May 2022.

Borrowing

The Board is responsible for the Company's gearing strategy and sets parameters within which the Investment Manager operates. Borrowings are not normally expected to exceed 20% of the total assets of the relevant Portfolio; in practice they have been modest and primarily used to enhance income in the Income Portfolio by investing in higher yielding alternative funds. During the financial year the Company extended its borrowing facilities with The Royal Bank of Scotland International Limited by entering into a one-year unsecured revolving credit facility for £5 million. At the year-end, £2 million had been drawn down, resulting in total borrowings of £7 million in the Income Portfolio (9.5% of gross assets) and zero in the Growth Portfolio.

Management of Share Premium and Discount to NAV

In normal circumstances we aim to maintain the discount to NAV at which our shares trade at not more than 5%. In practice over the years the shares have generally traded close to NAV. During the financial year to 31 May 2021 we have been able to maintain an average discount of 0.1% for the Income shares and an average premium of 0.1% for the Growth shares.

We are active in issuing shares to meet demand and equally buying back when this is appropriate. During the financial year 575,000 new Income shares and 1,815,000 new Growth shares were issued from the Company's block listing facilities at an average premium to NAV of 1.9% and 1.5% respectively. In addition, 425,000 Income shares were bought back for treasury at an average discount to NAV of 2.7% and then subsequently resold from treasury at an average premium to NAV of 1.6%.

The Board is seeking shareholders' approval to renew the powers to allot shares, buy back shares and sell shares from treasury at the forthcoming Annual General Meeting ('AGM'). Specifically, the Board is seeking approval to allow the Company to issue up to 20% of its Income shares and up to 20% of its Growth shares without rights of pre-emption and in this respect there are two resolutions proposed. Each resolution is for up to 10% and, therefore, for an aggregate of up to 20% of each of the Income shares and Growth shares. This approach allows any shareholder who may not wish to give approval to an aggregate limit higher than that recommended by corporate governance guidelines the ability to approve the first resolution for up to 10% and to also consider the second resolution separately for a further 10%. The Board believes the ability to issue and buy back shares helps to reduce the volatility in the premium or discount of the share prices to the NAVs and the 20% overall authority with respect to both the Income shares and Growth shares is in the interests of all shareholders.

Share Conversion Facility

Shareholders have the opportunity to convert their Income shares into Growth shares or their Growth shares into Income shares annually subject to minimum and maximum conversion thresholds which may be reduced or increased at the discretion of the Board.

The ability to convert without incurring UK capital gains tax should be an attractive facility for shareholders who wish to do so, and the next conversion date (subject to minimum and maximum thresholds) will be on 28 October 2021. Information is provided in the Annual Report and Financial Statements and full details will be provided on the Company's website (bmomanagedportfolio.com) from 9 August 2021.

Operations

In addition to the impact on financial markets, the COVID-19 pandemic has also impacted the way in which the Manager and other third-party service providers have had to operate, and this has been monitored closely by the Board. From mid-March 2020 the Manager implemented working from home arrangements for its staff as have many of the Company's other third-party service providers. I am pleased that these arrangements have proved very effective and, consequently, there has been no impact on service delivery or your Company's operations, including the management of the investment Portfolios. Board meetings have been held by video conference without disruption and the Board has been in close contact with the Manager throughout this period.

Board Changes

Both David Harris and I were appointed at the launch of the Company in 2008 and so have now served on the Board for over thirteen years. In accordance with the Board's long-term planning, I will retire following the conclusion of the forthcoming Annual General Meeting on 30 September 2021. I am pleased to report that the Board intends to appoint David Warnock to succeed me as Chairman. David has in-depth knowledge, expertise and experience in the investment management industry and has made a significant contribution to the Company since he joined the Board in January 2019. It is anticipated that further changes to the Board will occur during 2022.

As part of its succession plan, the Board was pleased to appoint Simon Longfellow as a non-executive Director with effect from 14 July 2021. We believe his extensive marketing experience in the investment trust sector will add a valuable dimension to the Board. Simon's biographical details are set out in the Annual Report and Financial Statement and his election will be proposed to shareholders for approval at the forthcoming AGM on 30 September 2021.

BMO

Our Manager is part of BMO Global Asset Management, which is ultimately owned by the Bank of Montreal. It was announced on 12 April 2021 that Bank of Montreal has agreed to sell its European, Middle East and African (EMEA) asset management activities to AMERIPRISE Inc. This sale is expected to conclude towards the end of 2021. For the UK element of this transaction, the new owners will be Columbia Threadneedle. Columbia Threadneedle does not have an investment trust business in the UK and the Board has been informed that this will be a welcome addition to its portfolio.

Both companies have confirmed the importance of maintaining the stability and continuity of the teams which presently support your Company but the change of ownership and subsequent developments are issues that the Board will monitor closely in the coming months.

AGM and Separate Meetings of Income Shareholders and Growth Shareholders

The Annual General Meeting is scheduled to be held on 30 September 2021 at Royal Automobile Club, 89 Pall Mall, London, SW1Y 5HS at 10.30am. Separate meetings of the Income shareholders and Growth shareholders will also be held prior to the AGM, commencing at 10.20am and 10.25am respectively at which shareholders will be asked to consent to Resolution 14 (Cancellation of the Company's share premium account) which is being proposed at the Company's AGM.

We hope to be able to meet shareholders in person this year, but, given the impact of COVID-19, the Board will continue to monitor developments closely and attendance at the physical meetings may still be restricted, depending on the Government's guidelines at the time of the meetings. Shareholders wishing to attend the separate meetings and the AGM in person should register their intention with the Company Secretary by emailing [email protected]. Should any Government restrictions and social distancing measures remain in place at the time of the meetings, entry may be restricted and/or refused in accordance with the Articles, the law and/or Government guidance.

Your Board strongly encourages all shareholders to make use of the proxy form or form of direction provided in order that you can lodge your votes. Voting on all resolutions will be held on a poll, the results of which will be announced and posted on the Company's website following the meetings.

Should there be any changes to the meetings or the location, this will be notified through the Company's website and announcements to the London Stock Exchange.

Should shareholders have any questions or comments in advance, these can be raised with the Company Secretary ([email protected]). In addition, the answers to any frequently asked questions will be posted on the Company's website after the AGM.

Outlook

There is every prospect that economies are on the path of a strong recovery from the pandemic. Although valuations are in some cases extended, corporate earnings and dividends are recovering strongly. The concern is that rising inflation proves sustained and not transitory, which could cause volatility in equity markets should bond yields and interest rates move higher. Notwithstanding this concern, there are reasonable prospects that equities will continue to record positive returns in the coming year.

After years of relative underperformance for the UK equity market, the uncertainties that plagued it have largely abated, with strong growth anticipated, particularly from medium-sized and smaller companies with a domestic bias. Accordingly, both Portfolios have steadily increased exposure to UK equity trusts. However, both Portfolios have also retained holdings in investment companies which are exposed to sectors with secular growth characteristics as experience has shown it is these areas that, if held for the long term, generate returns many times the original investment. As always, the focus is on selecting only the highest quality investment companies with experienced managers in the belief that this will serve shareholders' interests best.

Colin S McGill,

Chairman

2 August 2021

Investment Manager's Review

Stock Market Background

Despite the effect that the COVID-19 pandemic has had on everybody's lives it is perhaps surprising that the past twelve months have delivered remarkably positive returns from many global equity markets. A key factor in the very strong recovery was unprecedented levels of financial support from governments and Central Banks to offset the adverse effects on economies, companies and individuals. The stimulus measures played a major role in supporting economies and minimising unemployment and were very supportive of financial markets, particularly equity markets.

However, by far the most important event in terms of stock markets was the announcement on 9 November 2020 of the first successful vaccine from Pfizer Biontech to be followed in successive weeks by similarly positive vaccine announcements from Moderna and Oxford University/Astra Zeneca. These vaccines have paved the way for the eventual re-opening of economies and ultimately a return to normal life. Stock markets responded by moving sharply upwards, however leadership within equity markets changed overnight. Stocks and sectors which had been badly hit due to the pandemic and accompanying lockdowns recovered sharply as they were viewed as the principal beneficiaries of a re-opening of economies. This change of leadership within markets was behind the improvement in relative performance of the UK market which has a higher exposure to oils, materials, banks, retail and leisure than other markets, particularly the US.

The UK, for the first time since the Brexit referendum of 2016, was not the laggard amongst major equity markets, managing to outperform both the US and Japan when returns were translated back into sterling. The influence of currency was significant on market returns for the sterling investor over the past year. With the uncertainty of Brexit now removed sterling was viewed as being undervalued and, as a result, steadily appreciated by around 15% against the US dollar, nearly 17% against the Japanese yen and an almost 5% rise relative to the Euro. As an illustration of the impact these moves had for a sterling-based investor, the S&P Composite Index rose over 40% in dollar terms, however this was diluted back to a 22% return when translated back into sterling.

Although the UK appears to be somewhere in the middle in terms of returns for the fiscal year, this masks a significant change which happened as a result of the vaccine announcements in November. As mentioned above, a number of sectors that the UK has a heavy weighting in and that had struggled to perform, particularly during the pandemic, were viewed as having substantial recovery prospects should economies move back into a growth phase. As a result of persistent underperformance many UK sectors and companies were viewed as being very attractively valued, especially those with a domestic bias. The result has been that, since November, the UK has been the leading performer amongst major equity markets.

Performance

For the year to 31 May 2021 the FTSE All-Share Index rose by 23.1% (in total return terms). Over the same period the NAV of the Growth Portfolio rose 32.5% whilst that of the Income Portfolio gained 29.0% (again both in total return terms). This represents the ninth consecutive financial year that the Growth Portfolio has been ahead of the FTSE All-Share Index. For the Income Portfolio, in the thirteen years that the Company's shares were listed on the London Stock Exchange, it has been ahead or in line of the benchmark index in eleven of these years.

When reviewing performance over the past year the well-known phrase "a game of two halves" comes to mind as it describes performance quite accurately. As mentioned earlier, the key event was the announcement of a vaccine for COVID-19 on 9 November 2020, almost exactly halfway through the Company's financial year. Until then the Growth Portfolio was significantly outperforming the benchmark index due to holdings in investment companies with substantial exposure to technology and healthcare. The attributes of companies in these sectors came to the fore during the pandemic and they performed strongly in terms of earnings and share prices. These trends in performance reversed following the vaccine announcement as share prices in sectors and companies perceived to benefit from the re-opening of economies began to recover from depressed levels. During the second half of the financial year the Growth Portfolio lagged the benchmark whilst the Income Portfolio almost performed in line with the benchmark. This was because of the requirement for income which meant the Portfolio had lower exposure to low yielding sectors such as technology and more exposure to investment companies which had holdings likely to benefit from recovery. The performance of individual holdings within both Portfolios will be examined later in the review.

Changes in discounts can often be a significant factor behind the performance of investment companies. Over the past financial year the average sector discount has tightened in from 6.1% to 2.5% by 31 May 2021. Most of the discount narrowing took place during the first six months of the year as volatility began to reduce and the effect of monetary and fiscal measures to mitigate the effect of the pandemic were put in place. Latterly discounts have traded in a tighter range of between 2% and 4%.

Growth Portfolio - Leaders and Laggards

There are two common themes amongst most of the principal contributors to performance in the Growth Portfolio. First is that, with the exception of Chrysalis Investments which was only listed in late 2018, all the investment companies featured have been long term holdings, often for many years. Second is the prevalence of UK equity investment companies in the leaders list. Most of those mentioned got onto the list due to very strong performance in the second half of the financial year, as UK stocks with a domestic bias, typically medium-sized and smaller companies rallied strongly on prospects of the economy re-opening.

The single biggest share price gain was achieved by Henderson Opportunities Trust which rose 114% over the past twelve months. The trust, which invests in UK equities, is run by James Henderson and Laura Foll and has a market value of around £130m which means it falls under the radar of the large private wealth groups who would consider it too small to invest in. This resulted in a discount of nearly 20% a year ago; however, since then it has performed very strongly. The trust has an unconstrained mandate and has around 15% in FTSE 100 companies, 10% in FTSE 250 medium-sized companies with the rest in smaller companies with nearly 60% in FTSE AIM stocks. This area is invested in "next generation winners" with a clear focus on capital growth which has been the key driver to performance. The portfolio has significant exposure to the industrial, financial, technology and consumer discretionary sectors. The excellent asset performance has begun to be recognised as the discount has closed to around 5%.

Three other UK equity trusts featured strongly amongst the leaders. Artemis Alpha Trust, Fidelity Special Values and Henderson Smaller Companies Investment Trust with respective share price gains of 71%, 69% and 69%. The Artemis trust has an eclectic portfolio structured to benefit from a recovery in growth as the economy re-opens. It has sizeable positions in low cost airlines, housebuilders, retail and banking. The fund manager undertakes detailed due diligence and has developed a track record as a stock picker. Like Henderson Opportunities Trust, it is also unrecognised by larger wealth management groups with a market value of only £170m. However, due to strong asset performance it has experienced a similar tightening of the discount to around 4%. Fidelity Special Values employs a contrarian value-focused approach and has taken full advantage of a return to favour of "value" stocks since the vaccine announcements. The portfolio has a price earnings ratio of just 11x, a 20% discount to the already undervalued UK market. Once again, the focus is on more domestic companies in financial, consumer discretionary and industrial sectors. Henderson Smaller Companies Investment Trust, as the name suggests, is a UK small and mid-cap specialist, managed by Neil Hermon for nearly 20 years during which time it has built an outstanding performance record. Although employing more of a "growth" stock selection strategy, the trust has benefitted from its mid and small cap exposure with very strong asset performance.

Chrysalis Investments has been a remarkable success story in a very short time. The trust focuses on mainly UK high growth companies, perhaps two to three years from listing on the stock market. It has a concentrated list of ten to fifteen investments and is prepared to continue holding companies as they move from being private into the public arena, a recent example being The Hut Group. Chrysalis Investments is well placed to achieve strong growth in the coming years and its share price rose 82% over the last twelve months.

Of the laggards, none had significant price declines and the largest was BH Macro which fell 2%. Interestingly, the year before it was one of the top performers. This investment company invests in the Brevan Howard Master Fund which is a hedge fund which specialises in taking advantage of movements in interest rates, currencies and bond markets. It should be viewed as a defensive holding which does well when equity markets fall. European Opportunities Trust has been a long time holding in the portfolio; however, it had a sizeable holding in German digital payments company Wirecard that went bankrupt and is the centre of a fraud investigation. The fund manager is now very focused on recovering performance and there are early signs that is happening. The shares were flat over the year. Syncona invests in early stage, mainly British biotechnology companies with the backing of major shareholder, Wellcome Trust and has a highly capable and experienced management team. After some years of strong performance as portfolio companies have been sold realising strong returns, the past year has been quieter with three holdings that are listed in the US trading at lower levels due to adverse sentiment across the wider biotech sector. Longer term prospects for Syncona remain bright; it is extremely well funded with nearly half of net assets in cash. The shares rose 4% over the year. Also recording a 5% share price gain over the year was Worldwide Healthcare Trust. The trust has been held for many years in the Growth Portfolio and has a long-term record of outperformance. It is a specialist global healthcare portfolio investing across a series of different sub-sectors within healthcare. It is managed by Orbimed in New York who have deep resource with over 100 investment professionals focussed on the sector. The trust experienced a period of flat share price performance as the biotechnology and healthcare sectors in the US marked time during the US presidential election and this continued until Democrat plans for the sector became clear. The portfolio is modestly valued relative to the wider market and is well placed for the future.

Personal Assets Trust is another long-term holding in the Growth Portfolio and is part of a sub-group of positions that could be viewed as "portfolio protectors". The others are BH Macro, Ruffer Investment Company, Capital Gearing Trust and RIT Capital Partners. They are defensive in nature and hold their value in market downturns which can affect the rest of the Portfolio adversely. Personal Assets Trust is about 40% invested in equities with the rest in defensive positions such as US TIPS (inflation linked bonds in the US). It would be surprising if the portfolio kept pace with the FTSE All-Share Index when it has a strong up year. In this context and given how its portfolio is structured a 8% share price rise is in line with expectations.

(all share prices are total returns)

Income Portfolio - Leaders and Laggards

Two themes were evident amongst the winners in the Income Portfolio. First was private equity where the Portfolio has significant holdings in Princess Private Equity Holding and NB Private Equity Partners which respectively achieved share price gains of 58% and 60%. As with many investment companies in the sector, they sell at double digit discounts to net asset value despite strong asset performance and have recovered strongly from the worst effects of the pandemic. Geographically NB Private Equity Partners is mainly exposed to the US whilst Princess Private Equity Holding is more global. Both however, tend to focus on medium-sized and smaller companies in sectors like technology, healthcare, education and consumer which have strong long-term growth prospects. Underlying companies which are holdings for these investment companies often are focussed on capital growth and do not pay dividends to shareholders, however the ability of investment companies to pay a dividend from capital reserves allows them to offer an attractive dividend yield to shareholders. From an investment management standpoint, this allows assets (in this case private companies with high growth characteristics) to be included in an income portfolio.

The second theme was exposure to the UK with reference to companies and assets which will benefit from the eventual re-opening of the UK economy. Law Debenture Corporation and Lowland Investment Company are both in the UK equity income sector and had share price rises of 61% and 58% over the past twelve months. The investment portfolios of both investment companies are managed by James Henderson and Laura Foll of Janus Henderson and they employ a similar valuation driven process that aims to identify high quality companies that are undervalued at the time of purchase. Law Debenture Corporation is one of the largest holdings in the Income Portfolio and is a unique investment company. Within it is an independent professional services business which provides a series of niche services to corporate clients that generates steadily growing revenue (last year the division accounted for 68% of revenues but in a normal year it is around 40%). This means the fund managers have significant additional flexibility in terms of the investment portfolio to invest in lower yielding companies. Last year Law Debenture Corporation increased its dividend by 6% to yield 3.6% as at 31 May 2021. Lowland Investment Company managed to maintain its dividend by dipping into reserves, however a similar investment approach saw it achieve a significant recovery in both asset value and share price.

Secure Income REIT is a specialist real estate investment trust which seeks to own a portfolio of assets with very long leases often with an indexed-linked element to the rental charge. It had a share price gain of 58% over the past year. The core of the portfolio is a chain of private hospitals which have done well in the pandemic, however a portfolio of hotels operated by Travelodge was badly affected and stopped paying rent due to lockdown. Prospects have improved going forward and full rents are set to be restored by the end of this calendar year as the economy re-opens. Management maintained a well-financed balance sheet through the past year which puts the company in a strong position going forward with the result it has moved from being a laggard last year to a leader this year.

The theme amongst the laggards is that they all come into the all-embracing category that is called "alternatives". There is no clear definition of what an "alternative" investment company is. However, a common thread amongst the very wide variety of mandates in this category is the lack of exposure to equity markets. In a year when the FTSE All-Share Index appreciated by over 23% (total return), the lack of equity sensitivity is the overriding reason why the investment companies below are in the laggards list.

Assura experienced a 2% fall in share price over the past twelve months after appearing in the top performers for each of the last two financial years. The company is a specialist healthcare REIT (real estate investment trust). It is the owner of primary care properties leased mainly to General Practitioner Partnerships across the UK for typically in excess of 20 years. With the NHS as the ultimate guarantor of the lease payments, of which many are index-linked, a secure and rising stream of income has many attractions; however, the share price lagged simply due to not having any exposure to a rising equity market.

Tetragon Financial Group's share price was flat despite a decent 9% rise in asset value for 2020. The company sells at a 60% discount to asset value mainly as a result of its share structure which gives effective control to the managers. They do, however, have a very significant shareholding of over 25% so it can be argued there is some alignment of interests. The company is a financial conglomerate with divisions in asset management and infrastructure which are performing well and property and CLOs which did less well. A cut dividend did not help.

Biopharma Credit is a specialist credit company which lends against the royalty stream of income from approved drugs and life science products. Target borrowers are small to medium-sized pharmaceutical companies who typically need finance to fund research and development. Pharmakon Advisors manage the trust and have built significant resource, which enables detailed due diligence to be undertaken on the underlying products. Returns from this trust are mainly income-related and the dividend yield is 7%. The shares are priced in US$ and achieved a positive return but when translated to sterling fell 7% over the period.

The last company to feature in the laggards list is The Renewables Infrastructure Group which is one of the largest renewables funds in the UK with a market value of £2.7bn. It is 55% onshore wind, 35% offshore wind with the rest solar. About 40% of its assets are in Europe with the rest in the UK. As with others in the list of relative underperformers in the Income Portfolio, a lack of exposure to equity markets was the main reason it lagged during the past year. The shares still managed a rise of 11% and the dividend yield remains highly attractive.

(all share prices are total returns)

Investment Strategy and Prospects

The focus for the next year will be the nature of the recovery from the COVID-19 pandemic and how robust and sustained it will be. As vaccination programmes across the developed world have picked up momentum, the prospect of a genuine move back towards normality now seems real and likely in the coming months. Due to comparisons with last year when the world was in lockdown, growth rates from the second quarter onwards will appear very high. It will take time for economies to fully recover, however, aided by substantial monetary and fiscal support schemes the spectre of a significant rise in unemployment appears less likely.

With savings levels amongst consumers running at record levels, there is the prospect that a very strong consumer-led recovery will take place in the UK, US and Europe. This has resulted in much attention in financial markets being focussed on whether a serious and sustained rise in inflation could emerge as that could undermine both bond and equity markets.

As economies begin to open up reported inflation data has risen sharply. Much of this is due to shortages of both labour and materials and supply bottlenecks. In addition, the base effect of comparing to last year when economic activity all but stopped during lockdown has resulted in some very big price rises. For example, oil fell to around $30 but has now risen to over $70 with similar rises in other commodity prices. Central banks are holding to the view that inflation will plateau later this year and fall back in 2022 and as such are maintaining current levels of Quantitative Easing with no need to expect imminent interest rate rises. At the time of writing, the Federal Reserve in the US do not see interest rate rises necessary until 2023. It will be some time before it becomes clear whether this policy is correct or whether the inflation genie is out of the bottle and a major policy change with a rise in interest rates is required.

Meantime equity markets are continuing to grind higher with the backdrop remaining broadly supportive. With economies firmly on a recovery path from the pandemic-related recession of last year, corporate profits and earnings in the US, Europe and the UK are growing strongly, albeit from a low base. It is anticipated this will continue for the second half of this year and into 2022 though the pace of growth is likely to moderate.

Prospects for the fundamentals in terms of growth are positive, however valuations everywhere are elevated and require optimistic estimates to be achieved. This is particularly true of by far the largest equity market, that of the US. With, first, a reduction of monetary stimulus measures from the Federal Reserve, then a likely rise in US bond yields to eventually be followed by a rise in interest rates. In this environment, historically high valuations may come under pressure. A period of very strong earnings and dividend growth from the corporate sector would be vital to bring valuations back to less extended ranges.

Though the UK market is affected by some of the above trends it is in an altogether different place in terms of valuation. Since the Brexit referendum in 2016, the UK equity market has been a serial underperformer relative to most global equity markets and is valued in line with long-term averages whereas most others are well above. A number of the uncertainties that have plagued UK equities are no longer present, particularly with regard to Brexit. In addition, the vaccination performance of the UK has been better than most other countries, paving the way for a very robust economic and corporate recovery as the country moves back towards normality.

The re-opening trade may have further to run as sectors like oils, materials, banks, retail, leisure and industrials which have benefitted the most having underperformed for a number of years before the pandemic and traded at historically attractive valuations.

In terms of investment strategy, this has been translated into increasing holdings in UK equity investment trusts which have exposure to UK companies with a domestic bias to their revenues and profits. In practice this often means UK medium-sized and smaller companies. In the Growth Portfolio examples of purchases made were: Fidelity Special Values, Aurora Investment Trust, Artemis Alpha Trust, Lowland Investment Company and Law Debenture Corporation.

The Income Portfolio already had a higher exposure to the UK due to requirements for income; however it also increased exposure in this area. Examples of purchases being: Diverse Income Trust, Lowland Investment Company and Secure Income REIT. It should be noted that all the investment trusts mentioned above, in both Portfolios, were existing holdings which have been built up steadily over the second half of the financial year.

In the Growth Portfolio two other long-term holdings, both with a "value style", have also been increased. One with a European mandate was Henderson European Focus Trust and the other with a global mandate was AVI Global Trust.

For the genuinely long term, the case for exposure to sectors which offer strong secular growth characteristics remains in place. Investment companies focussed on sectors like technology, healthcare and biotechnology will continue to prosper and it is from these types of investment companies that returns, many multiples over the original cost of investment, can be achieved. Examples of trusts with these attributes can be found in the Growth Portfolio and include Allianz Technology Trust, Scottish Mortgage Investment Trust, Biotech Growth Trust, HgCapital Trust and Impax Environmental Markets.

Although it is harder to include these types of trusts in the Income Portfolio because most either do not pay a dividend or have a very low dividend yield, some investment companies take powers to pay a dividend to shareholders from capital reserves. This permits trusts which invest in these sectors to offer reasonable dividend yields and allows the Income Portfolio to gain exposure. Examples include: BB Healthcare Trust, HBM Healthcare Investments, BB Biotech and Princess Private Equity Holding.

Over the past year a feature of the UK equity market and many other equity markets has been widespread dividend reductions forced on companies due to pandemic-related lockdowns causing sizeable losses. The ability of investment companies to use revenue reserves to offset reductions in current year revenues has been a key factor in helping a number of holdings in the Income Portfolio to maintain dividends to shareholders. Another factor which has proved important in the strong revenue performance for the Income Portfolio have been the holdings in the "alternatives" sector. These investment companies are invested in a variety of sectors e.g. song royalties, social housing, care homes, ownership of the properties that supermarkets operate from, specialist healthcare properties, renewables and more recently digital infrastructure. None of these areas are related to equity markets whilst a number have attractive index-linked revenue streams. The financing for these holdings is in large part from borrowings that the Income Portfolio has undertaken so giving a useful uplift to revenues. Examples include: Hipgnosis Songs Fund, Civitas Social Housing REIT, Impact Healthcare REIT, The Renewables Infrastructure Group, Supermarket Income REIT, Assura and Digital 9 Infrastructure.

Equity markets have made a surprisingly strong recovery from the depths of the pandemic and prospects for the next year will be dominated by the strength of the recovery and path of inflation and what might happen to monetary stimulus, bond yields and ultimately interest rates. It is likely that volatility will be higher though strong growth in earnings and recovery in dividends from the corporate sector are a positive and are supportive of markets. In these uncertain times the focus for both Portfolios will remain on holding only the highest quality investment companies with proven management who have had experience of a variety of different market conditions. These characteristics should serve shareholders well.

Peter Hewitt,

Investment Manager

BMO Investment Business Limited

2 August 2021

Income Statement

For the Year Ended 31 May 2021

	Notes	Revenue	Capital	Total
		£'000	£'000	£'000
Gains on investments		-	38,132	38,132
Foreign exchange losses		-	(17)	(17)
Income		4,022	-	4,022
Investment management and performance fees		(290)	(1,360)	(1,650)
Other expenses		(589)	-	(589)
Return on ordinary activities before finance costs and tax		3,143	36,755	39,898
Finance costs		(47)	(69)	(116)
Return on ordinary activities before tax		3,096	36,686	39,782
Tax on ordinary activities		(16)	-	(16)
Return attributable to shareholders		3,080	36,686	39,766
Return per Income share	3	6.59p	25.94p	32.53p
Return per Growth share	3	-	67.27p	67.27p

The total column of this statement is the Profit and Loss Account of the Company. The supplementary revenue and capital columns are prepared under guidance published by The Association of Investment Companies.

Segmental analysis, illustrating the two separate portfolios of assets, the Income Portfolio and the Growth Portfolio, is shown in note 2.

All revenue and capital items in the Income Statement derive from continuing operations.

Return attributable to shareholders represents the profit/(loss) for the year and also total comprehensive income

Income Statement

For the Year Ended 31 May 2020

	Notes	Revenue	Capital	Total
		£'000	£'000	£'000

Losses on investments		-	(5,376)	(5,376)
Foreign exchange losses		-	(13)	(13)
Income		3,851	-	3,851
Investment management and performance fees		(257)	(1,093)	(1,350)
Other expenses		(537)	-	(537)
Return on ordinary activities before finance costs and tax		3,057	(6,482)	(3,425)
Finance costs		(44)	(66)	(110)
Return on ordinary activities before tax		3,013	(6,548)	(3,535)
Tax on ordinary activities		(13)	-	(13)
Return attributable to shareholders		3,000	(6,548)	(3,548)
Return per Income share	3	6.69p	(17.13p)	(10.44p)
Return per Growth share	3	-	3.18p	3.18p

Segmental analysis, illustrating the two separate portfolios of assets, the Income Portfolio and the Growth Portfolio, is shown in note 2.

All revenue and capital items in the Income Statement derive from continuing activities.

Return attributable to shareholders represents the profit/(loss) for the year and also total comprehensive income.

Balance Sheet

As at 31 May 2021

		Income shares	Growth shares	Total
	Notes	£'000	£'000	£'000
Fixed assets
Investments at fair value		72,121	101,052	173,173

Current assets
Debtors		272	54	326
Cash at bank and on deposit		2,040	3,769	5,809

		2,312	3,823	6,135

Creditors: Amounts falling due within one year		(7,667)	(649)	(8,316)

Net current (liabilities)/ assets		(5,355)	3,174	(2,181)

Creditors: Amounts falling due in more than one year		-	-	-

Net assets		66,766	104,226	170,992

Capital and reserves:
Called-up share capital		4,459	3,586	8,045
Share premium		27,608	26,599	54,207
Capital redemption reserve		256	365	621
Special reserve		19,017	17,162	36,179
Capital reserves		12,373	56,514	68,887
Revenue reserve		3,053	-	3,053

Shareholders' funds		66,766	104,226	170,992

Net asset value per share (pence)	6	142.22p	276.01p

Balance Sheet

As at 31 May 2020

		Income shares	Growth shares	Total
	Notes	£'000	£'000	£'000

Fixed assets
Investments at fair value		57,887	72,356	130,243

Current assets
Debtors		219	79	298
Cash at bank and on deposit		1,061	3,071	4,132

		1,280	3,150	4,430
Creditors: Amounts falling due within one year		(173)	(733)	(906)
Net current assets		1,107	2,417	3,524

Creditors: Amounts falling due in more than one year		(5,206)	-	(5,206)
Net assets		53,788	74,773	128,561

Capital and reserves:
Called-up share capital		4,415	3,408	7,823
Share premium		26,909	22,006	48,915
Capital redemption reserve		252	364	616
Special reserve		19,147	17,034	36,181
Capital reserves		240	31,961	32,201
Revenue reserve		2,825	-	2,825

Shareholders' funds		53,788	74,773	128,561

Net asset value per share (pence)	6	115.71p	208.35p

Cash Flow Statement

Year to 31 May 2021

	Notes	Income shares	Growth shares	Total
		£'000	£'000	£'000

Net cash outflow from operations before dividends and interest		(606)	(1,413)	(2,019)
Dividends received		2,891	1,072	3,963
Interest received		1	-	1
Interest paid		(118)	-	(118)
Net cash inflow / (outflow) from operating activities		2,168	(341)	1,827
Investing activities
Purchases of investments		(4,363)	(8,174)	(12,537)
Sales of investments		3,409	4,313	7,722
Net cash flows from investing activities		(954)	(3,861)	(4,815)
Net cash flows before financing activities		1,214	(4,202)	(2,988)
Financing activities
Equity dividends paid Proceeds from issuance of new shares	4	(2,852) 710	- 4,765	(2,852) 5,475
Share conversion - Income to Growth		(300)	300	-
Share conversion - Growth to Income		165	(165)	-
Sale of shares from treasury		599	-	599
Shares purchased to be held in treasury		(557)	-	(557)
Loan drawn down		2,000	-	2,000
Net cash flows from financing activities		(235)	4,900	4,665
Net movement in cash and cash equivalents		979	698	1,677
Cash and cash equivalents at the beginning of the year		1,061	3,071	4,132
Cash and cash equivalents at the end of the year		2,040	3,769	5,809
Represented by: Cash at bank and short-term deposits		2,040	3,769	5,809

Cash Flow Statement

Year to 31 May 2020

	Income shares		Growth shares	Total
	£'000		£'000	£'000

Net cash outflow from operations before dividends and interest	(720)	(758)		(1,478)
Dividends received	2,829	1,028		3,857
Interest received	10	18		28
Interest paid	(102)	-		(102)
Net cash inflow from operating activities	2,017	288		2,305
Investing activities
Purchases of investments	(6,668)	(3,428)		(10,096)
Sales of investments	3,617	1,111		4,728
Net cash flows from investing activities	(3,051)	(2,317)		(5,368)
Net cash flows before financing activities	(1,034)	(2,029)		(3,063)
Financing activities
Equity dividends paid Proceeds from issuance of new shares	(2,713) 3,466	- 594		(2,713) 4,060
Share conversion - Income to Growth	(321)	321		-
Share conversion - Growth to Income	407	(407)		-
Sale of shares from treasury	-	443		443
Shares purchased to be held in treasury	-		(422)	(422)
Net cash flows from financing activities	839	529		1,368
Net movement in cash and cash equivalents	(195)	(1,500)		(1,695)
Cash and cash equivalents at the beginning of the year	1,256	4,571		5,827
Cash and cash equivalents at the end of the year	1,061	3,071		4,132
Represented by: Cash at bank and short-term deposits	1,061	3,071		4,132

Statement of Changes in Equity

For the Year Ended 31 May 2021

Income shares	Share capital £000	Share premium account £000	Capital redemption reserve £000	Special reserve £000	Capital reserves £000	Revenue reserve £000	Total shareholders' funds £000
As at 31 May 2020	4,415	26,909	252	19,147	240	2,825	53,788
Increase in share capital in issue, net of share issuance expenses	55	655	-	-	-	-	710
Shares sold from Treasury	-	44	-	555	-	-	599
Shares purchased for Treasury	-	-	-	(557)	-	-	(557)
Share conversion	(7)	-	-	(128)	-	-	(135)
Cancellation of deferred shares	(4)	-	4	-	-	-	-
Transfer of net income from Growth to Income Portfolio	-	-	-	-	-	564	564
Transfer of capital from Income to Growth Portfolio	-	-	-	-	(564)	-	(564)
Dividends paid	-	-	-	-	-	(2,852)	(2,852)
Return attributable to shareholders	-	-	-	-	12,697	2,516	15,213
As at 31 May 2021	4,459	27,608	256	19,017	12,373	3,053	66,766
Growth shares
As at 31 May 2020	3,408	22,006	364	17,034	31,961	-	74,773
Increase in share capital in issue, net of share issuance expenses	172	4,593	-	-	-	-	4,765
Share conversion	7	-	-	128	-	-	135
Cancellation of deferred shares	(1)	-	1	-	-	-	-
Transfer of net income from Growth to Income Portfolio	-	-	-	-	-	(564)	(564)
Transfer of capital from Income to Growth Portfolio	-	-	-	-	564	-	564
Return attributable to shareholders	-	-	-	-	23,989	564	24,553
As at 31 May 2021	3,586	26,599	365	17,162	56,514	-	104,226
Total Company
As at 31 May 2020	7,823	48,915	616	36,181	32,201	2,825	128,561
Increase in share capital in issue, net of share issuance expenses	227	5,248	-	-	-	-	5,475
Shares sold from treasury	-	44	-	555	-	-	599
Shares purchased for treasury	-	-	-	(557)	-	-	(557)
Share conversion	-	-	-	-	-	-	-
Cancellation of deferred shares	(5)	-	5	-	-	-	-
Dividends paid	-	-	-	-	-	(2,852)	(2,852)
Return attributable to shareholders	-	-	-	-	36,686	3,080	39,766
Total Company as at 31 May 2021	8,045	54,207	621	36,179	68,887	3,053	170,992

Statement of Changes in Equity

For the Year Ended 31 May 2020

Income shares

Share capital

£000

Share premium account

£000

Capital redemption reserve

£000

Special reserve

£000

Capital reserves

£000

Revenue reserve

£000

Total shareholders' funds

£000

As at 31 May 2019

4,372

23,703

19,066

7,919

2,538

57,628

Increase in share capital in issue, net of share issuance expenses

260

3,206

3,466

Share conversion

Cancellation of deferred shares

(222)

222

Transfer of net income from Growth to Income Portfolio

680

Transfer of capital from Income to Growth Portfolio

(680)

Dividends paid

(2,713)

Return attributable to shareholders

(6,999)

2,320

(4,679)

As at 31 May 2020

4,415

26,909

252

19,147

240

2,825

53,788

Growth shares

As at 31 May 2019

3,563

21,417

186

17,117

30,830

73,113

Increase in share capital in issue, net of share issuance expenses

566

594

Shares sold from treasury

420

443

Shares purchased for treasury

(422)

Share conversion

(5)

(81)

(86)

Cancellation of deferred shares

(178)

178

Transfer of net income from Growth to Income Portfolio

(680)

Transfer of capital from Income to Growth Portfolio

680

Return attributable to shareholders

451

680

1,131

As at 31 May 2020

3,408

22,006

364

17,034

31,961

74,773

Total Company

As at 31 May 2019

7,935

45,120

216

36,183

38,749

2,538

130,741

Increase in share capital in issue, net of share issuance expenses

288

3,772

4,060

Shares sold from treasury

420

443

Shares purchased for treasury

(422)

Share conversion

Cancellation of deferred shares

(400)

400

Dividends paid

(2,713)

Return attributable to shareholders

(6,548)

3,000

(3,548)

Total Company as at 31 May 2020

7,823

48,915

616

36,181

32,201

2,825

128,561

Principal Risks and Uncertainties

Most of the Company's principal risks and uncertainties that could threaten the achievement of its objective, strategy, future performance, liquidity and solvency are market related and comparable to those of other investment companies investing primarily in listed securities.

A summary of the Company's internal controls and risk management arrangements is included within the Report of the Audit Committee in the Annual Report and Financial Statements. By means of the procedures set out in that summary, the Board has established an ongoing process for identifying, evaluating and managing the significant risks faced by the Company. Any emerging risks that are identified and that are considered to be of significance would be included on the Company's risk radar with any mitigations. These significant risks, emerging risks and other risks, are regularly reviewed by the Audit Committee and the Board. Ongoing consideration has been given to the impact from Coronavirus (COVID-19) and is referred to in the Chairman's Statement, Investment Manager's Review and below in Market Risk and Operational Risk. They have also regularly reviewed the effectiveness of the Company's risk management and internal control systems for the period.

The principal risks and uncertainties faced by the Company, and the Board's mitigation approach, are described below.

Market Risk

The Company's assets consist mainly of listed closed-end investment companies and its principal risks are therefore market related and include market risk (comprising currency risk, interest rate risk and other price risk), liquidity risk and credit risk. Since early 2020 there has been increased uncertainty in markets due to the effect of COVID-19 which has led to falls and volatility in the Company's NAV.

Mitigation

The Board regularly considers the composition and diversification of the Income Portfolio and the Growth Portfolio and considers individual stock performance together with purchases and sales of investments. Investments and markets are discussed with the Investment Manager on a regular basis. The effect of COVID-19 on markets, which has contributed to significant volatility is discussed in the Chairman's Statement and Managers Review. As a closed-end investment trust the Company is not constrained by asset sales to meet redemptions and is well suited to investors seeking longer term returns and to remain invested through volatile market conditions.

Investment Risk

Incorrect strategy, asset allocation, stock selection, inappropriate capital structure, insufficient monitoring of costs, failure to maintain an appropriate level of discount/premium and the use of gearing could all lead to poor returns for shareholders including impacting the capacity to pay dividends.

Mitigation

The investment strategy and performance against peers and the benchmark are considered by the Board at each meeting and reviewed with the Investment Manager. The Board is responsible for setting the gearing range within which the Manager may operate and gearing is discussed at every meeting and related covenant limits are closely monitored. The Income Portfolio and Growth Portfolio are diversified and comprise listed closed-end investment companies and their composition are reviewed regularly by the Board. BMO GAM's Investment Risk team provide oversight on investment risk management. The Board regularly considers ongoing charges and a discount/premium management policy has operated since the launch of the Company. Underlying dividends from investee companies and the dividend paying capacity of the Company are closely monitored.

Custody Risk: Safe custody of the Company's assets may be compromised through control failures by the Custodian.

Mitigation: The Board receives quarterly reports from the Depositary confirming safe custody of the Company's assets and cash and holdings are reconciled to the Custodian's records. The Custodian's internal controls reports are also reviewed by the Manager and key points reported to the Audit Committee. The Board also receives periodic updates from the Custodian on its own cyber-security controls. The Depositary is specifically liable for loss of any of the Company's assets that constitute financial instruments under the AIFMD.

Operational Risk: Failure of BMO GAM as the Company's main service provider or disruption to its business, or that of an outsourced or third party service provider, could lead to an inability to provide accurate reporting and monitoring, leading to a potential breach of the Company's investment mandate or loss of shareholders' confidence. The risk includes failure or disruption as a consequence of external events such as the COVID-19 pandemic. External cyber attacks could cause such failure or could lead to the loss or sabotage of data.

Mitigation: The Board meets regularly with the management of BMO GAM and its Business Risk team to review internal control and risk reports, which includes oversight of third party service providers. The Manager's appointment is reviewed annually and the contract can be terminated with six months' notice. BMO GAM has a business continuity plan in place to ensure that it is able to respond quickly and effectively to an unplanned event that could affect the continuity of its business.

BMO GAM has outsourced trade processing, valuation and middle office tasks and systems to State Street Bank and Trust Company ('State Street') and supervision of such third party service providers, including SS&C who administer the BMO savings plans, has been maintained by BMO GAM. This includes the review of IT security and heightened cyber threats which was discussed with the Board during the financial year.

As a consequence of the COVID-19 pandemic and the measures put in place by the UK government since March 2020, the Manager has implemented working from home arrangements for its staff and, in accordance with contingency plans designed to safeguard its employees, continue serving clients and keep operations running effectively and in compliance with its regulatory obligations. The arrangements have operated without incident or disruption. The Manager closely monitored the performance of its technology platform which operated within acceptable control levels. The Company's other third party service providers have also implemented similar arrangements to ensure no disruption to their service. Having considered these arrangements and reviewed the service levels over the last year, the Board is confident that the Company continues to operate as normal and expected service levels are being maintained

Viability Assessment and Statement

In accordance with the UK Corporate Governance Code, the Board is required to assess the future prospects for the Company and considered that a number of characteristics of the Company's business model and strategy were relevant to this assessment:

· The Company's investment objective and policy, which are subject to regular Board monitoring, means that the Company is invested principally in two diversified portfolios of listed closed-end investment companies and the level of borrowing is restricted.

· These investments are principally in listed securities which are traded in the UK or another Regulated Exchange and which are expected to be readily realisable.

· The Company is a listed closed-end investment company, whose shares are not subject to redemptions by shareholders.

· Subject to shareholder continuation votes, the next of which will be at the AGM in 2023 and five yearly thereafter, the Company's business model and strategy is not time limited.

Also relevant were a number of aspects of the Company's operational arrangements:

· The Company retains title to all assets held by the Custodian under the terms of a formal agreement with the Custodian and Depositary.

· The borrowing facilities, which remain available until February 2022, are subject to formal agreements, including financial covenants with which the Company complied in full during the year.

· Revenue and expenditure forecasts are reviewed by the Directors at each Board Meeting.

· The operational robustness of key service providers and the effectiveness of alternative working arrangements in particular given the current impact of COVID-19.

· That alternative service providers could be engaged at relatively short notice if necessary.

In considering the viability of the Company, the Directors carried out a robust assessment of the principal risks and uncertainties which could threaten the Company's objective and strategy, future performance and solvency. This included the impact of COVID-19 and the impact of a significant fall in equity markets on the Company's investment portfolios. These risks, their mitigations and the process for monitoring them are set out in Principal Risks and Uncertainties and in the Report of the Audit Committee and in the notes to the financial statements in the Annual Report and Financial Statements.

The Directors also considered:

· The level of ongoing charges incurred by the Company which are modest and predictable and (at 31 May 2021), excluding the performance fee and ongoing charges of underlying funds, total 1.08% and 1.03% of average net assets for the Income shares and Growth shares respectively.

· Future revenue and expenditure projections.

· Its ability to meet liquidity requirements given the Company's investment Portfolios consist principally of listed investment companies which can be realised if required.

· The ability to undertake share buybacks if required.

· Whether the Company's objective and policy continue to be relevant to investors.

· Directors are non-executive and the Company has no employees and consequently the Company does not have redundancy or other employment-related liabilities or responsibilities.

· The uncertainty surrounding the potential length of the COVID-19 pandemic, its impact on the global economy and the prospects for the Company's investment Portfolios.

These matters were assessed over a three year period to August 2024, and the Board will continue to assess viability over three year rolling periods.

As part of this assessment the Board considered a number of stress tests and scenarios which considered the impact of severe stock market volatility on shareholders' funds over a three-year period. The results demonstrated the impact on the Company's net assets and its expenses and its ability to meet its liabilities over that period.

A rolling three year period represents the horizon over which the Directors believe they can form a reasonable expectation of the Company's prospects, although they do have due regard to viability over the longer term.

Based on their assessment, and in the context of the Company's business model, strategy and operational arrangements set out above, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the three year period to August 2024.

Responsibility Statement of the Directors in Respect of the Annual Report and Financial Statements

We confirm that to the best of our knowledge:

· the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company;

· the Strategic Report and the Report of the Directors include a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that they face; and

· we consider the Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

On behalf of the Board

Colin S McGill

Chairman

2 August 2021

Notes

1. The financial statements of the Company, which are the responsibility of, and were approved by, the Board on 2 August 2021, have been prepared on a going concern basis in accordance with the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority, Financial Reporting Standards (FRS 102) and the Statement of Recommended Practice (SORP) "Financial Statements of Investment Trust Companies and Venture Capital Trusts" issued by The Association of Investment Companies (AIC). The audited financial statements for the Company comprise the Income Statement and the total columns of the Balance Sheet, the Cash Flow Statement and the Statement of Changes in Equity and the Company totals shown in the notes to the financial statements.

There have been no significant changes to the Company's accounting policies during the year ended 31 May 2021.

The preparation of the Company's financial statements on occasion requires management to make judgements, estimates and assumptions that affect the reported amounts in the primary financial statements and accompanying disclosures. These assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in the current or future periods, depending on the circumstance. Management do not believe that any significant accounting judgements or estimates have been applied to this set of financial statements that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year.

The Company's assets consist mainly of equity shares in closed-end investment companies which are traded in the UK or another Regulated Stock Exchange and in most circumstances, including in the current market environment, are expected to be readily realisable.

The Company has a fixed rate term loan of £5 million and an unsecured revolving credit facility of £5 million available to the Company until 10 February 2022. The Board has set limits for borrowing and regularly reviews the Company's gearing levels and its compliance with bank covenants. As the current facilities are available until 10 February 2022, the Company's borrowings are disclosed as falling due within one year. At 31 May 2021 the Company had a net current liability position, however, if required, it is expected that new loan facilities could be entered into when the current arrangements expire, but if not, or should the Board decide not to renew these, any outstanding borrowing would be repaid through the use of cash and, if required, from the proceeds of the sale of the Company's investments.

The Board has considered the Company's principal risks and uncertainties and other matters, including the COVID-19 pandemic and has considered a number of stress tests and scenarios which considered the impact of severe stock market volatility on shareholders' funds and demonstrated that if required the Company had the ability to raise sufficient funds so as to remain within its debt covenants and meet its liabilities.

As such, and in light of the controls and review processes in place and the operational robustness of key service providers, and bearing in mind the nature of the Company's business and assets and revenue and expenditure projections, the Directors believe that the Company has adequate resources to continue in operational existence for a period of at least twelve months from the date of approval of the financial statements. For this reason, the Board continues to adopt the going concern basis in preparing the financial statements.

2. Segmental Analysis

The Company carries on business as an investment trust and manages two separate portfolios of assets: the Income Portfolio and the Growth Portfolio. The Company's Income Statement can be analysed as follows. This has been disclosed to assist shareholders' understanding, but this analysis is additional to that required by FRS 102:

Year ended 31 May 2021

	Income Portfolio			Growth Portfolio			Total
	Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000

Gains on investments	-	13,297	13,297	-	24,835	24,835	-	38,132	38,132
Foreign exchange losses	-	(17)	(17)	-	-	-	-	(17)	(17)
Income	2,982	-	2,982	1,040	-	1,040	4,022	-	4,022
Investment management and performance fees	(170)	(514)	(684)	(120)	(846)	(966)	(290)	(1,360)	(1,650)
Other expenses	(233)	-	(233)	(356)	-	(356)	(589)	-	(589)
Return on ordinary activities before finance costs and tax	2,579	12,766	15,345	564	23,989	24,553	3,143	36,755	39,898
Finance costs	(47)	(69)	(116)	-	-	-	(47)	(69)	(116)
Return on ordinary activities before tax	2,532	12,697	15,229	564	23,989	24,553	3,096	36,686	39,782
Tax on ordinary activities	(16)	-	(16)	-	-	-	(16)	-	(16)
Return #	2,516	12,697	15,213	564	23,989	24,553	3,080	36,686	39,766

Year ended 31 May 2020

	Income Portfolio			Growth Portfolio			Total
	Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000

(Losses)/gains on investments	-	(6,472)	(6,472)	-	1,096	1,096	-	(5,376)	(5,376)
Foreign exchange losses	-	(13)	(13)	-	-	-	-	(13)	(13)
Income	2,779	-	2,779	1,072	-	1,072	3,851	-	3,851
Investment management and performance fees	(161)	(448)	(609)	(96)	(645)	(741)	(257)	(1,093)	(1,350)
Other expenses	(241)	-	(241)	(296)	-	(296)	(537)	-	(537)
Return on ordinary activities before finance costs and tax	2,377	(6,933)	(4,556)	680	451	1,131	3,057	(6,482)	(3,425)
Finance costs	(44)	(66)	(110)	-	-	-	(44)	(66)	(110)
Return on ordinary activities before tax	2,333	(6,999)	(4,666)	680	451	1,131	3,013	(6,548)	(3,535)
Tax on ordinary activities	(13)	-	(13)	-	-	-	(13)	-	(13)
Return #	2,320	(6,999)	(4,679)	680	451	1,131	3,000	(6,548)	(3,548)

# Any net revenue return attributable to the Growth Portfolio is transferred to the Income Portfolio and a corresponding transfer of an identical amount of capital is made from the Income Portfolio to the Growth Portfolio and accordingly the whole return in the Growth Portfolio is capital. Refer to the Statement of Changes in Equity.

3. Return per share

The return per share for the year ended 31 May 2021 is as follows:

	Income shares			Growth shares
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Return attributable to Portfolios	2,516	12,697	15,213	564	23,989	24,553
Transfer of net income from Growth to Income Portfolio	564	-	564	(564)	-	(564)
Transfer of capital from Income to Growth Portfolio	-	(564)	(564)	-	564	564
Return attributable to shareholders	3,080	12,133	15,213	-	24,553	24,553
Return per share	6.59p	25.94p	32.53p	-	67.27p	67.27p
Weighted average number of shares in issue during the period	46,772,385			36,497,458

The return per share for the year ended 31 May 2020 is as follows:

	Income shares			Growth shares
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Return attributable to Portfolios	2,320	(6,999)	(4,679)	680	451	1,131
Transfer of net income from Growth to Income Portfolio	680	-	680	(680)	-	(680)
Transfer of capital from Income to Growth Portfolio	-	(680)	(680)	-	680	680
Return attributable to shareholders	3,000	(7,679)	(4,679)	-	1,131	1,131
Return per share	6.69p	(17.13p)	(10.44p)	-	3.18p	3.18p
Weighted average number of shares in issue during the period	44,837,359			35,573,520

4. Dividends

			2021 Income shares Total
Dividends on Income shares	Register date	Payment date	£'000

Amounts recognised as distributions to shareholders during the year:
For the year ended 31 May 2020
- fourth interim dividend of 1.9p per Income share	19 June 2020	10 July 2020	883
For the year ended 31 May 2021
- first interim dividend of 1.4p per Income share	18 September 2020	9 October 2020	657
- second interim dividend of 1.4p per Income share	18 December 2020	8 January 2021	655
- third interim dividend of 1.4p per Income share	19 March 2021	9 April 2021	657
			2,852

Amounts relating to the year but not paid at the year end:
- fourth interim dividend of 2.0p per Income share*	18 June 2021	9 July 2021	939

* Based on 46,944,790 Income shares in issue at the record date of 18 June 2021.

The fourth interim dividend of 2.0p per Income share was paid on 9 July 2021 to shareholders on the register on 18 June 2021, with an ex-dividend date of 17 June 2020.

The Growth shares do not carry an entitlement to receive dividends.

5. (a) Tax on ordinary activities

Year ended 31 May 2021

	Income Portfolio			Growth Portfolio			Total
	Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000

Current tax charge for the year (all irrecoverable overseas tax) being taxation on ordinary activities	16	-	16	-	-	-	16	-	16

(b) Reconciliation of tax charge

	2021
	Income shares	Growth shares	Total
	£'000	£'000	£'000
Return on ordinary activities before tax:	15,229	24,553	39,782
Corporation tax at standard rate of 19 per cent	2,893	4,665	7,558
Effects of:
Gains on investments not taxable	(2,523)	(4,718)	(7,241)
Overseas tax suffered	16	-	16
Non taxable UK dividend income	(293)	(188)	(481)
Non taxable overseas dividend income	(227)	(10)	(237)
Expenses not utilised	150	251	401
Current year tax charge (note 5 (a))	16	-	16

6. The net asset value per Income share is calculated on net assets of £66,766,000 (2020: £53,788,000), divided by 46,944,790 (2020: 46,485,537) Income shares, being the number of Income shares in issue at the year end (excluding any shares held in treasury).

The net asset value per Growth share is calculated on net assets of £104,226,000 (2020: £74,773,000), divided by 37,761,553 (2020: 35,888,210) Growth shares, being the number of Growth shares in issue at the year end (excluding any shares held in treasury).

7. During the year the Company issued 575,000 (2020: 2,700,000) Income shares from the block listing facility for net proceeds of £710,000 (2020: £3,466,000).

During the year, the Company bought back 425,000 (2020: nil) Income shares for treasury at a cost of £557,000 (2020: £nil) and resold out of treasury 425,000 (2020: nil) Income shares, receiving net proceeds of £599,000 (2020: £nil). At 31 May 2021, the Company held no Income shares in treasury (2020: nil).

During the year, valid conversion notices were received to convert 258,490 Income shares. These were converted into 130,294 Growth shares in accordance with the Company's Articles and by reference to the ratio of the relative underlying net asset values of the Growth shares and Income shares on the conversion date. The Company's Articles allow for Deferred shares to be allotted as part of the share conversion to ensure that the conversion does not result in a reduction of the aggregate par value of the Company's issued share capital. The Deferred shares were subsequently repurchased by the Company for nil consideration (as they have no economic value) and as authorised by shareholders at the September 2020 AGM.

8. During the year, the Company issued 1,815,000 (2020: 295,000) Growth shares from the block listing facility for net proceeds of £4,765,000 (2020: £594,000).

During the year, valid conversion notices were received to convert 71,951 Growth shares. These were converted into 142,743 Income shares in accordance with the Company's Articles and by reference to the ratio of the relative underlying net asset values of the Growth shares and Income shares on the conversion date. The Company's Articles allow for Deferred shares to be allotted as part of the share conversion to ensure that the conversion does not result in a reduction of the aggregate par value of the Company's issued share capital. The Deferred shares were subsequently repurchased by the Company for nil consideration (as they have no economic value) and as authorised by shareholders at the September 2020 AGM.

9. Financial Instruments

The Company's financial instruments comprise its investment Portfolios, cash balances, bank borrowings and debtors and creditors that arise directly from its operations. As an investment trust the Company holds a portfolio of financial assets in pursuit of its investment objective.

Listed and quoted fixed asset investments held are valued at fair value.

The fair value of the financial assets and liabilities of the Company at 31 May 2021 and 31 May 2020 is not materially different from their carrying value in the financial statements.

The main risks that the Company faces arising from its financial instruments are:

(i) market price risk, being the risk that the value of investment holdings will fluctuate as a result of changes in market prices caused by factors other than interest rate or currency rate movements;

(ii) interest rate risk, being the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates;

(iii) foreign currency risk, being the risk that the value of investment holdings, investment purchases, investment sales and income will fluctuate because of movements in currency rates;

(iv) credit risk, being the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company; and

(v) liquidity risk, being the risk that the Company may not be able to liquidate its investments quickly or otherwise raise funds to meet financial commitments.

Market Price Risk

The management of market price risk is part of the fund management process and is typical of equity and debt investment. The Portfolios are managed with an awareness of the effects of adverse price movements through detailed and continuing analysis with an objective of maximising overall returns to shareholders.

Interest Rate Risk

Floating Rate

When the Company retains cash balances the majority of the cash is held in variable rate bank accounts yielding rates of interest linked to the UK base rate which was 0.1% at 31 May 2021 (2020: 0.1%). There are no other assets which are directly exposed to floating interest rate risk.

Fixed Rate

Movement in market interest rates will affect the market value of fixed interest investments. Neither the Income Portfolio or the Growth Portfolio holds any fixed interest investments.

The Company has a £5 million fixed rate term loan with an interest rate of 2.03% per annum and £2 million of the revolving credit facility was drawn down at an interest rate of 0.75%.

Foreign Currency Risk

The Company may invest in overseas securities which give rise to currency risks. At 31 May 2021, the Income Portfolio had Swiss Franc denominated investments valued at £4,556,000 (2020: £4,196,000), a Euro denominated investment valued at £2,228,000 (2020: £1,508,000) and a US Dollar denominated investment valued at £1,092,000 (2019: £1,235,000). At 31 May 2021, the Growth Portfolio had a US Dollar denominated investment valued at £1,350,000 (2020: £nil).

As the remainder of the Company's investments and all other assets and liabilities are denominated in sterling there is no other direct foreign currency risk. However, although the Company's performance is measured in sterling and the Company's investments (other than the above) are denominated in sterling, a proportion of their underlying assets are quoted in currencies other than sterling. Therefore movements in the rates of exchange between sterling and other currencies may affect the market price of the Company's investment Portfolios and therefore the market price risk includes an element of currency exposure.

Credit Risk

Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company. The Manager has in place a monitoring procedure in respect of counterparty risk which is reviewed on an ongoing basis. The carrying amounts of financial assets best represents the maximum credit risk exposure at the Balance Sheet date.

Credit risk arising on transactions with brokers relates to transactions awaiting settlement. Risk relating to unsettled transactions is considered to be small due to the short settlement period involved and the acceptable credit quality of the brokers used. The Manager monitors the quality of service provided by the brokers used to further mitigate this risk.

All the assets of the Company which are traded on a recognised exchange are held by JPMorgan Chase Bank, the Company's Custodian. Bankruptcy or insolvency of the Custodian may cause the Company's rights with respect to securities held by the Custodian to be delayed or limited. The Board monitors the Company's risk by reviewing the Custodian's internal control reports.

The credit risk on liquid funds is controlled because the counterparties are banks with acceptable credit ratings, normally rated A or higher, assigned by international credit rating agencies. Bankruptcy or insolvency of such financial institutions may cause the Company's ability to access cash placed on deposit to be delayed, limited or lost.

Liquidity Risk

Liquidity risk is the risk that the Company will encounter difficulty in realising assets or otherwise raising funds to meet financial commitments. The risk of the Company not having sufficient liquidity at any time is not considered by the Board to be significant, given that the Company's listed and quoted securities are considered to be readily realisable.

The Company's liquidity risk is managed on an ongoing basis by the Manager in accordance with policies and procedures in place. The Company's overall liquidity risks are monitored on a quarterly basis by the Board.

The Company maintains sufficient investments in cash and readily realisable securities to pay accounts payable and accrued expenses which are settled in accordance with suppliers stated terms. The Company has a £5 million fixed rate term loan and a £5 million unsecured revolving credit facility which are both available until 10 February 2022 with The Royal Bank of Scotland International Limited. As at 31 May 2021, £5 million of the fixed rate term loan was drawn down (2020: £5 million) and £2 million of the unsecured revolving credit facility was drawn down (2020: nil). The interest rate on the fixed rate term loan, which is fully drawn, is 2.03% per annum.

10. Subject to certain minimum and maximum thresholds which may be set at the discretion of the Board of BMO Managed Portfolio Trust PLC, shareholders have the right to convert their Income shares into Growth shares and/or their Growth shares into Income shares upon certain dates, the next of which will be on 28 October 2021 and then annually or close to annually thereafter. Under current law, such conversions will not be treated as disposals for UK capital gains tax purposes. The Conversion notice period commences on 9 August 2021 and full details will be provided on the Company's website and in the Company's Annual Report and Financial Statements.

11. The Board of Directors (the "Board") is considered a related party. There are no transactions with the Board other than aggregated remuneration for services as Directors as disclosed in the Directors' Remuneration Report within the Annual Report and Financial Statements. The beneficial interests of the Directors in the Income shares and Growth shares of the Company are disclosed in the Annual Report and Financial Statements. There are no outstanding balances with the Board at the year end. Ms S P Inglis is also a non-executive director and chairman of The Bankers Investment Trust. The Income Portfolio has a holding of 1,730,470 shares in this company valued at £1,968,000 at 31 May 2021. Mr D Warnock is also a non-executive director of ICG Enterprise Trust plc. The Growth Portfolio has a holding of 190,000 shares in this company valued at £2,018,000 at 31 May 2021.

Transactions between the Company and the Manager are detailed in the notes to the financial statements in the Annual Report and Financial Statements. The existence of an independent Board of Directors demonstrates that the Company is free to pursue its own financial and operating policies and therefore, under the AIC SORP, the Manager is not considered to be a related party.

12. This statement was approved by the Board on 2 August 2021. It is not the Company's full statutory accounts in terms of Section 434 of the Companies Act 2006. The statutory annual report and financial statements for the year ended 31 May 2021 has been approved and audited and received an unqualified audit report and did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report. This will be sent to shareholders during August and will be available for inspection at 6^th Floor, Quartermile 4, 7a Nightingale Way, Edinburgh, EH3 9EG the registered office of the Company.

The full Annual Report and Financial Statements are available on the Company's website

bmomanagedportfolio.com

The audited financial statements for the year to 31 May 2021 will be lodged with the Registrar of Companies following the Annual General Meeting to be held on 30 September 2021.

Alternative Performance Measures ("APMs")

The Company uses the following "APMs":

Discount/premium - the share price of an investment company is derived from buyers and sellers trading their shares on the stock market. This price is not identical to the net asset value (NAV) per share of the underlying assets less liabilities of the Company. If the share price is lower than the NAV per share, the shares are trading at a discount. This usually indicates that there are more sellers of shares than buyers. Shares trading at a price above NAV per share are deemed to be at a premium usually indicating there are more buyers of shares than sellers.

31 May 2021

31 May 2020

		Income	Growth	Income	Growth
		shares	shares	shares	shares
Net asset value per share	(a)	142.22p	276.01p	115.71p	208.35p
Share price	(b)	143.50p	277.00p	117.50p	212.00p
+Premium/-discount (c = (b-a)/(a))	(c)	+0.9%	+0.4%	+1.5%	+1.8%

Ongoing charges - all operating costs (attributable to the relevant share class of the Company), incurred and expected to be incurred in the foreseeable future, whether charged to capital or revenue in the Company's Income Statement, expressed as a proportion of the average daily net assets (of the relevant share class of the Company) over the reporting year. In accordance with the AIC methodology, the costs of buying and selling investments are excluded in calculating ongoing charges, as are any performance fee, the cost of the Company's borrowings, taxation, non-recurring costs and the costs of buying back or issuing shares. The Company's ongoing charges calculated in accordance with this methodology are shown in column A in the following tables.

The AIC recommends that investment companies also disclose ongoing charges including any performance fee. These calculations are shown in column B in the following tables.

In addition, the AIC recommends that investment companies with a substantial proportion of their portfolio invested in other funds and where the relevant information is readily available should consider incorporating a relevant proportion of ongoing charges of the underlying funds into its own ongoing charges figure. These calculations are shown in column C in the following tables.

The Key Information Document ('KID') on the Company's website contains a measure of costs calculated in accordance with the EU PRIIPs regulation. In addition to the costs included within the Company's ongoing charges figure in column A in the following tables, the KID methodology for calculating costs (attributable to the relevant share class of the Company) includes the costs of buying and selling investments, the cost of the Company's borrowings, any performance fee and a relevant proportion of the ongoing costs of the underlying funds. These underlying costs cover operational costs, performance fees and borrowing costs. The aggregate KID costs are expressed as a proportion of the average daily net assets (of the relevant share class of the Company) over the period. For completeness the Company has included a reconciliation in the following tables between the methodologies. In view of industry concerns over the appropriateness and application of the KID methodology the Company does not use the KID costs as an APM.

Ongoing Charges Calculations

		31 May 2021			31 May 2020
		Column A⁽¹⁾ Income Portfolio	Column B⁽²⁾ Income Portfolio	Column C⁽³⁾ Income Portfolio	Column A⁽¹⁾ Income Portfolio	Column B⁽²⁾ Income Portfolio	Column C⁽³⁾ Income Portfolio
		£'000	£'000	£'000	£'000	£'000	£'000
Investment management fee		425	425	425	403	403	403
Other expenses		233	233	233	241	241	241
Performance fee		-	259	-	-	206	-
Less non-recurring costs		(14)	(14)	(14)	(6)	(6)	(6)
Ongoing charges of underlying funds		-	-	707	-	-	583
Total	(a)	644	903	1,351	638	844	1,221
Average daily net assets	(b)	59,711	59,711	59,711	57,908	57,908	57,908
Ongoing charges (c=a/b)	(c)	1.08%	1.51%	2.26%	1.10%	1.46%	2.54%
Ongoing charges above		1.08%
Borrowing costs (Company level)		0.19%
Costs of underlying funds (including borrowing costs)		1.46%
Performance fees (Company & underlying funds)		0.53%
Portfolio transaction costs		0.35%
Costs per KID methodology		3.61%

⁽¹⁾ excluding performance fee and ongoing charges of underlying funds

⁽²⁾ including performance fee but excluding ongoing charges of underlying funds

⁽³⁾ AIC methodology, excluding performance fee but including ongoing charges of underlying funds

		31 May 2021			31 May 2020
		Column A⁽¹⁾ Growth Portfolio	Column B⁽²⁾ Growth Portfolio	Column C⁽³⁾ Growth Portfolio	Column A⁽¹⁾ Growth Portfolio	Column B⁽²⁾ Growth Portfolio	Column C⁽³⁾ Growth Portfolio
		£'000	£'000	£'000	£'000	£'000	£'000
Investment management fee		600	600	600	478	478	478
Other Expenses		356	356	356	296	296	296
Performance fee		-	366	-	-	263	-
Less non-recurring costs		(22)	(22)	(22)	(9)	(9)	(9)
Ongoing charges of underlying funds		-	-	839	-	-	626
Total	(a)	934	1,300	1,773	765	1,028	1,391
Average daily net assets	(b)	90,603	90,603	90,603	73,922	73,922	73,922
Ongoing charges (c=a/b)	(c)	1.03%	1.43%	1.96%	1.03%	1.39%	1.88%
Ongoing charges above		1.03%
Borrowing costs (Company level)		n/a
Costs of underlying funds (including borrowing costs)		1.00%
Performance fees (Company & underlying funds)		0.59%
Portfolio transaction costs		0.22%
Costs per KID methodology		2.84%

⁽¹⁾ excluding performance fee and ongoing charges of underlying funds

⁽²⁾ including performance fee but excluding ongoing charges of underlying funds

⁽³⁾ AIC methodology, excluding performance fee but including ongoing charges of underlying funds

Total return - the return to shareholders calculated on a per share basis taking into account both any dividends paid in the period and the increase or decrease in the share price or NAV in the period. The dividends are assumed to have been re-invested in the form of shares or net assets, respectively, on the date on which the shares were quoted ex-dividend.

The effect of reinvesting these dividends on the respective ex-dividend dates and the share price total returns and NAV total returns are shown below.

	31 May 2021		31 May 2020
	Income shares	Growth shares	Income Shares	Growth Shares
NAV per share at start of financial year	115.71p	208.35p	131.81p	205.17p
NAV per share at end of financial year	142.22p	276.01p	115.71p	208.35p
Change in the year	+22.9%	+32.5%	-12.2%	+1.5%
Impact of dividend reinvestments†	6.1%	n/a	4.9%	n/a
NAV total return for the year	+29.0%	+32.5%	-7.3%	+1.5%

† During the year to 31 May 2021 dividends totalling 6.1p went ex dividend with respect to the Income shares. During the year to 31 May 2020 the equivalent figure was 6.1p.

	31 May 2021		31 May 2020
	Income shares	Growth shares	Income Shares	Growth Shares
Share price per share at start of financial year	117.5p	212.0p	134.5p	206.0p
Share price per share at end of financial year	143.5p	277.0p	117.5p	212.0p
Change in the year	+22.1%	+30.7%	-12.6%	+2.9%
Impact of dividend reinvestment†	6.1%	n/a	4.3%	n/a
Share price total return for the year	+28.2%	+30.7%	-8.3%	+2.9%

† During the year to 31 May 2021 dividends totalling 6.1p went ex dividend with respect to the Income shares. During the year to 31 March 2020 the equivalent figure was 6.1p.

Compound Annual Growth Rate - converts the total return over a period of more than one year to a constant annual rate of return applied to the compounded value at the start of each year.

	31 May 2021		31 May 2020
	Income shares	Growth shares	Income Shares	Growth Shares
Indexed total return at launch	100.0	100.0	100.0	100.0
Indexed total return at end of financial year	266.8	281.6	206.9	212.6
Period (years)	13.125	13.125	12.125	12.125
Compound annual growth rate	7.8%	8.2%	6.2%	6.4%

Yield - the total annual dividend expressed as a percentage of the year-end share price.

		31 May 2021	31 May 2020
Annual dividend	(a)	6.2p	6.1p
Income share price	(b)	143.5p	117.5p
Yield (c = a/b)	(c)	4.3%	5.2%

Net gearing/net cash - this is the ratio of the borrowings of the Company to its net assets. If the Company has cash assets, these may be assumed to net off against borrowings giving a "net" gearing percentage. Where cash assets exceed borrowings, the Company is described as having "net cash".

	31 May 2021		31 May 2020
	Income Shares £'000	Growth Shares £'000	Income Shares £'000	Growth Shares £'000
Borrowings	(7,000)	-	(5,000)	-
Cash	2,040	3,769	1,061	3,071
	(4,960)	3,769	(3,939)	3,071
Net assets	66,766	104,226	53,788	74,773
-Net gearing/+Net cash	-7.4%	+3.6%	-7.3%	+4.1%

For further information, please contact:

Peter Hewitt, BMO Investment Business Limited 0131 718 1244

Ian Ridge, BMO Investment Business Limited 0131 718 1010

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